Future Oriented Financial Statements - March 31st, 2014

Statement of Management Responsibility

Management of the Parole Board of Canada is responsible for these future-oriented financial statements, including responsibility for the appropriateness of the assumptions on which these statements are prepared.  These statements are based on the best information available and assumptions adopted as at November 30th, 2012 and reflect the plans described in the Report on Plans and Priorities.

                                                                                                                             

Harvey Cenaiko                                                          Cathy Gaudet, CPA, CA
Chairperson                                                                Chief Financial Officer 

Ottawa, Canada
January 28th, 2013

Future-oriented Statement of Financial Position
As at March 31 

(in thousands of dollars)

Planned Results 2014

Estimated Results 2013


Liabilities

 

 

Accounts payable and accrued liabilities (note 6)

           $        1,648

       $       1,648

Vacation pay and compensatory leave

1,613

1,613

Employee future benefits (note 7)

1,961

2,017

Total liabilities

5,222

5,278

 

 

 

Financial assets

 

 

Due from Consolidated Revenue Fund

1,639

1,639

Accounts receivable and advances (note 8)

422

422

Total gross financial assets

2,061

2,061

 

 

 

Financial assets held on behalf of Government

 

 

Accounts receivable and advances (note 8)

(100)

(100)

Total financial assets held on behalf of Government

(100)

(100)

Total net financial assets

1,961

1,961

PBC net debt

3,261

3,317

Non-financial assets

 

 

Prepaid expenses

200

294

Tangible capital assets (note 9)

2,840

2,310

Total non-financial assets

3,040

2,604

 

 

 

PBC net financial position

$       (221)

$       (713)

Information for the year ended March 31st, 2013 includes actual amounts from April 1st, 2012 to November 30th, 2012.

The accompanying notes form an integral part of these future-oriented financial statements.

 

Harvey Cenaiko                                                                     Cathy Gaudet, CPA, CA
Chairperson                                                                           Chief Financial Officer 

Ottawa, Canada
January 28th, 2013

Future-oriented Statement of Operations and Net Financial Position
For the Year Ended March 31 

(in thousands of dollars)

Planned Results 2014

Estimated Results 2013

 

 

 

Expenses

 

 

Conditional release decisions

$       41,463

$       39,750

Conditional release openness and accountability

6,940

6,333

Record suspension decisions and clemency
recommendations


9,006


6,302

Internal services

6,557

5,983

Total expenses

63,966

58,368

 

 

 

Revenues

 

 

Regulatory fees

7,578

7,063

Revenues earned on behalf of Government

(1,933)

(1,802)

Total revenues

5,645

5,261

Net cost of operations before government funding
and transfers


58,321


53,107

 

 

 

Government funding and transfers

 

 

Net cash provided by Government

51,867

47,755

Change in due from Consolidated Revenue Fund

-

(62)

Services provided without charge by other government departments (note 11)


6,947


6,888

Net cost of operations after government funding and
transfers


(492)


(1,474)

PBC net financial position – Beginning of year

(713)

(2,188)

PBC net financial position – End of year

$       (221)

$       (713)

Information for the year ended March 31st, 2013 includes actual amounts from April 1st, 2012 to November 30th, 2012.

Segmented information (note 12)

The accompanying notes form an integral part of these future-oriented financial statements.

Future-oriented Statement of Change in Net Debt
For the Year Ended March 31

(in thousands of dollars)

Planned Results 2014

Estimated Results 2013

 

 

 

Net cost of operations after government funding and transfers

 $       (492)

$       (1,474)

Change due to tangible capital assets

 

 

       Acquisition of tangible capital assets

986

506

       Amortization of tangible capital assets

(456)

(411)

Total change due to tangible capital assets

530

95

Change due to prepaid expenses

(94)

94

Net Increase (decrease) in net debt

(56)

(1,285)

Net debt – Beginning of year

3,317

4,602

Net debt – End of year

$       3,261

$       3,317

Information for the year ended March 31st, 2013 includes actual amounts from April 1st, 2012 to November 30th, 2012.

The accompanying notes form an integral part of these future-oriented financial statements.

Future-oriented Statement of Cash Flow
For the Year Ended March 31

(in thousands of dollars)

Planned Results 2014

Estimated Results 2013

 

 

 

Operating activities:

 

 

Net cost of operations before government funding and transfers

$       58,321

$       53,107

Non cash items:

 

 

    Services provided without charge by other government departments (note 11)

(6,947)

(6,888)

    Amortization of tangible capital assets

(456)

(411)

Variations in Statement of Financial Position:

 

 

    Increase (decrease) in net accounts receivable and advances

-

(20)

    Increase (decrease) in prepaid expenses

(94)

94

    Decrease (increase) in accounts payable and accrued liabilities

-

64

    Decrease (increase) in vacation pay and compensatory leave

-

150

    Decrease (increase) in future employee benefits

56

1,153

Cash used in operating activities

50,881

47,249

Capital investing activities:

 

 

Acquisitions of tangible capital assets

986

506

Cash used in capital investing activities

986

506

Net cash provided by Government of Canada

$       51,867

$       47,755

Information for the year ended March 31st, 2013 includes actual amounts from April 1st, 2012 to November30th, 2012. 

The accompanying notes form an integral part of these future-oriented financial statements. 

1. Authority and Objectives 

The Parole Board of Canada (PBC or “the Board”) is an agency within the Public Safety Portfolio, which also includes the Royal Canadian Mounted Police (RCMP), the Canadian Security Intelligence Service (CSIS), the Canada Border Services Agency (CBSA) and the Correctional Service of Canada (CSC).

The Board is an independent administrative tribunal that has exclusive jurisdiction and absolute discretion under the Corrections and Conditional Release Act (CCRA) to grant, cancel, terminate or revoke day parole and full parole. The PBC may also order (on referral by CSC) that certain offenders be held in custody until the end of their sentence. This is called detention during the period of statutory release. Further, the Board has the authority to terminate or revoke a period of statutory release. In addition, the Board makes conditional release decisions for offenders in provinces and territories that do not have their own parole boards. Only the provinces of Ontario and Quebec currently have their own parole boards, which make parole decisions for offenders serving sentences of less than two years.

The Board has legislated responsibilities related to openness and accountability, which are the provision of information and assistance to victims of crime, observers at hearings, access to the PBC’s decision registry, and delivery of a program of public information.

The Board has exclusive jurisdiction and absolute discretion to order, refuse to order or revoke a record suspension under the Criminal Records Act (CRA). In addition, the PBC is authorized to investigate Royal Prerogative of Mercy (RPM) requests under Section 110 of the CCRA. The Board makes clemency recommendations to the Minister of Public Safety. 

The Board has one strategic outcome: Conditional release and record suspension decisions and decision processes that safeguard Canadian communities. This strategic outcome is the cornerstone of the Board’s public accountability and reporting of results. 

Further details on the Board’s authority, mandate and program activities may be found in the PBC’s Report on Plans and Priorities.

2. Methodology and Significant Assumptions

These future-oriented statements have been prepared on the basis of the government priorities and the plans of the Board as described in the Report on Plans and Priorities.

The information in the estimated results for fiscal year 2012-13 is based on actual results as at November 30th, 2012 and forecasts for the remainder of the fiscal year.  Estimated year end information for 2012-13 is used as the opening position for the 2013-14 planned results, and forecasts have been made for the planned results for the 2013-14 fiscal year. 

The main assumptions underlying the forecasts are as follows:

  1.  The Board’s activities will remain substantially the same as for the previous year.
  2.  Expenses and revenues, including the determination of amounts internal and external to the government are based on historical experience.  The general historical pattern is expected to continue.
  3.  Allowances for uncollectibility are based on historical experience.  The general historical pattern is expected to continue.
  4.  Assets and liabilities are based on historical costs, trend analysis and other analytical methodologies.
  5. Estimated year end information for 2012-13 is used as the opening position for the 2013-14 forecasts.

These assumptions are adopted as at November 30st, 2012.

3. Variation and Changes to the Forecast Financial Information 

While every attempt has been made to forecast final results for the remainder of 2012-13 and for 2013-14, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing these future-oriented financial statements the Parole Board of Canada has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Factors that could lead to material differences between the future-oriented financial statements and the historical financial statements include:

  1. The timing and amounts of acquisitions and disposals of equipment may affect gains/losses and amortization expense.
  2. Implementation of new collective agreements.
  3. Economic conditions may affect the amount of revenue earned.
  4. Further changes to the operating budget through additional new initiatives or technical adjustments later in the year. 

Once the Report on Plans and Priorities is presented, the PBC will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

4. Summary of Significant Accounting Policies

The future-oriented financial statements have been prepared in accordance with Treasury Board accounting policies in effect for the 2012-13 fiscal year. These accounting policies, stated below, are based on Canadian generally accepted accounting principles for the public sector. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian generally accepted accounting principles.

Significant accounting policies are as follows:

  1. Parliamentary authorities - The PBC is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the department do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Future-oriented Statement of Operations and Net Financial Position and the Future-oriented Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a reconciliation between the bases of reporting.

  2. Net Cash Provided by Government – The Parole Board of Canada operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada.  All cash received by the Board is deposited to the CRF and all cash disbursements made by the Board are paid from the CRF.  The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the Government.

  3. Amounts due from/to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that the Board is entitled to draw from the CRF without further parliamentary expenditure authorities to discharge its liabilities.

  4. Revenues – are recorded on an accrual basis:

    Revenues from regulatory fees are recognized in the accounts based on the services provided in the year on a Vote Netted revenue basis.

    Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.

  5. Expenses – are recorded on an accrual basis:

    Vacation pay and compensatory leave are accrued as the benefits are earned under the respective terms of employment.

    Services provided without charge by other government departments for accommodation, the employer’s contribution to the health and dental insurance plans, worker’s compensation and legal services are reported as operating expenses at their estimated cost.

  6. Employee future benefits:

    1. Pension benefits: Eligible employees participate in the Public Service Superannuation Plan, a multiemployer pension plan administered by the Government. The Board’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The Board’s responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan’s sponsor.

    2. Severance benefits: Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

  7. Tangible capital assets - All tangible capital assets and leasehold improvements having an initial cost of $1,000 or more are recorded at their acquisition cost. The Board does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections.

  8. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:

    Asset Class

    Amortization period

    Machinery and equipment

    3 to 5 years

    Other equipment (including furniture)

    15 years

    Motor vehicles

    7 years

    Leasehold Improvements

    Lesser of remaining term of lease or useful life

    Assets under construction are recorded in the applicable capital asset class in the year that they become available for use and are not amortized until they become available for use.

  9. Measurement uncertainty - The preparation of these future-oriented financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the future-oriented financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. Actual results could significantly differ from those estimated.

5. Parliamentary Authorities

The PBC receives all of its funding through annual Parliamentary authorities. Items recognized in the Future-oriented Statements of Operations and Net Financial Position and in the Future-oriented Statement of Financial Position in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, the Board has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

a) Reconciliation of net cost of operations to requested
authorities

(in thousands of dollars)

Planned Results 2014

Estimated Results 2013

 

 

 

Net cost of operations before government funding and transfers

$       58,321

$       53,107

Adjustments for items affecting net cost of operations but not
affecting authorities:

 

 

Services provided without charge by other government departments

(6,947)

(6,888)

Amortization of tangible capital assets

(456)

(411)

Prepaid expenses previously charged to authorities

(133)

(133)

Decrease in employee future benefits

   56

1,153

Decrease in vacation pay and compensatory leave

-

150

 

(7,480)

(6,129)

Adjustments for items not affecting net cost of operations but
affecting authorities:

 

 

Acquisitions of tangible capital assets

986

506

Prepaid expenses

200

294

 

1,186

800

Forecast authorities available

$       52,027

$       47,778

b) Authorities requested
(in thousands of dollars)

Planned Results 2014

Estimated Results 2013

Authorities requested

 

 

Vote 35 - Program expenditures

$       45,786

$       48,992

Statutory amounts

6,241

5,938

 

 

 

Less:

 

 

Authorities available for future years

-

(5,044)

Lapsed authorities: Program expenditures

-

(2,108)

Lapsed authorities: Statutory

-

-

Forecast authorities available

$       52,027

$       47,778

6. Accounts payable and accrued liabilities

The following table presents details of Board’s accounts payable and accrued liabilities:

(in thousands of dollars)

Planned Results 2014

Estimated Results 2013

 

 

 

Accounts payable - Other government departments and agencies

$       362

$       362

Accounts payable - External parties

-

-

 

362

362

Accrued liabilities

1,286

1,286

Total Accounts Payable and Accrued Liabilities

$    1,648

$    1,648

7. Employee future benefits

(a) Pension benefits

The Board’s employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Quebec Pension Plans benefits and they are indexed to inflation.

Both the employees and the Board contribute to the cost of the Plan. The forecasted expenses are $4,240K for 2012-13 and $4,304K for 2013-14, representing approximately 1.8 times the contributions by employees.

The Board’s responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan’s sponsor.

(b) Severance benefits

The Board provides severance benefits to its employees based on eligibility, years of service and salary at termination of employment. These severance benefits are not pre-funded. Benefits will be paid from future authorities.

As part of collective agreement negotiations with certain employee groups, and changes to conditions of employment for executives and certain non-represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.

Information about the severance benefits estimated as at the date of these statements, is as follows:

(in thousands of dollars)

Planned Results 2014

Estimated Results 2013

 

 

 

Accrued benefit obligation, beginning of year

$       2,017

$       3,170

Expense for the year

736

(344)

Benefits paid during the year

(792)

(809)

Accrued benefit obligation, end of year

$       1,961

$       2,017

8. Accounts receivable and advances

The following table presents details of the Board’s accounts receivable and advances balances:

(in thousands of dollars)

Planned Results 2014

Estimated Results 2013

Receivables – Other government departments and agencies

$           9

$           9

Receivable – External parties

408

408

Petty cash advances

5

5

Gross accounts receivable

422

422

Accounts receivable held on behalf of Government

100

100

Net accounts receivable

$       322

$       322

9. Tangible Capital Assets

(in thousands of dollars)

Cost

 

Accumulated Amortization

 

Net Book Value

Capital Asset Class

Opening balance

Acquisitions

Adjustments

Disposal and write-offs

Closing balance

 

Opening Balance

Amortization

Disposals and write-offs

Closing balance

 

2014

2013

Machinery & equipment

$ 332

$ 1

-

-

$ 333

 

$ 271

$ 23

-

$ 294

 

$ 39

$ 62

Other equipment

2,052

291

-

-

2,343

 

858

133

-

991

 

1,352

1,193

Motor vehicles

802

-

-

-

802

 

375

117

-

492

 

310

427

Leasehold improvements

1,221

694

-

-

1,915

 

603

183

-

786

 

1,129

618

Work-in- progress

10

-

-

-

10

 

-

-

-

-

 

10

10

Total

$ 4,417

$ 986

-

-

$ 5,403

 

$ 2,107

$ 456

-

$ 2,563

 

$ 2,840

$ 2,310

10. Contingent liabilities

Claims have been made against the Board in the normal course of operations (conditional release decisions).  However, the potential liabilities arising from the cases pending at March 31, 2013 are considered to be minimal by management as the Board is an independent administrative tribunal and is provided with an immunity clause (Section 154) in the Corrections and Conditional Release Act making the likelihood of future loss negligible. Consequently, no accrual for these contingent liabilities has been made in the financial statements.

11. Related party transactions

The Board is related as a result of common ownership to all Government departments, agencies and Crown Corporations. The Board enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the Board received common services which were obtained without charge from other government departments as disclosed below.

  1. Common services provided without charge by other government departments

    During the year, the Board received services without charge from certain common services organizations related to accommodation, legal services, the employer’s contribution to the health and dental insurance plans and workers' compensation coverage. These services provided without charge have been recorded in the Board's Future-oriented Statement of Operations and Net Financial Position as follows:

    (in thousands of dollars)

    Planned Results 2014

    Estimated Results 2013

    Accommodation

    $       3,691

    $       3,711

    Employer’s contribution to the health and dental insurance plans


    2,966


    2,891

    Legal services

    288

    284

    Workers’ compensation

    2

    2

    Total

    $       6,947

    $       6,888

    The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General are not included in the Board's Future-oriented Statement of Operations and Net Financial Position.

  2. Other transactions with related parties:

    (in thousands of dollars)

    Planned Results 2014

    Estimated Results 2013

    Expenses – Other government departments and agencies

    $       8,902

    $       8,902

Expenses disclosed in (b) exclude common services provided without charge, which are already disclosed in (a).

12.  Segmented Information

Presentation by segment is based on the Parole Board of Canada program alignment architecture. The presentation by segment is based on the same accounting policies as described in the Summary of Significant Accounting Policies in note 4. The following table presents the forecasted expenses incurred and revenues generated for the main programs, by major object of expense and by major type of revenue. The segment results for the period are as follows:

Operating expenses
 (in thousands of dollars)

Conditional Release Decisions

Conditional Release Openness & Accountability

Record Suspension Decisions & Clemency Recommendation

Internal Services

Planned Results 2014

Estimated Results 2013

Salaries and employee benefits

32,040

5,046

6,899

3,873

47,856

45,357

Professional and special services

3,030

1,173

994

909

6,107

4,523

Accommodation

2,513

403

576

399

3,891

3,711

Travel

1,713

186

42

83

2,024

2,080

Utilities, materials and supplies

590

31

131

626

1,378

800

Communication services

324

11

28

150

514

374

Amortization of tangible capital assets

227

10

11

207

456

411

Repairs and maintenance

279

37

37

94

447

232

Relocation

350

-

-

-

350

285

Information services

141

31

125

51

348

254

Rentals

126

12

36

137

310

226

Postage, freight, express, and cartage

128

-

128

28

284

116

Total Expenses

41,462

6,940

9,006

6,557

63,966

58,368

Regulatory fees

-

-

7,578

-

7,578

7,063

Revenues earned on behalf of Government

-

-

(1,933)

-

(1,933)

(1,802)

Total revenues

-

-

5,645

-

5,645

5,261

Net cost of operations before government funding and transfers

 41,462

6,940

 3,361

6,557

58,320

53,107

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