Report on Plans and Priorities 2016-17: Future-oriented Statement of Operations March 31st, 2017

Table of contents

Statement of management responsibility

Responsibility for the compilation, content and presentation of the accompanying Future-oriented Statement of Operations for the year ending March 31, 2017 rests with organizational management. The Future-oriented Statement of Operations has been prepared by management in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector. The Future-oriented Statement of Operations is submitted for Part III of the Estimates (Report on Plans and Priorities) and will be used in the Public Service Commission's Departmental Performance Report to compare with actual results.

Management is responsible for the integrity and objectivity of the information contained in Future-oriented Statement of Operations and for the process of developing assumptions. Assumptions and estimates are based on information available and known to management at the time of development and reflect continuation in organizational mandates and strategic objectives. Much of the Future-oriented Statement of Operations is based on these assumptions, estimates and judgment, and gives due consideration to materiality. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. However, as with all such assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.

The actual results achieved for the fiscal years covered in the accompanying Future-oriented Statement of Operations will vary from the information presented and the variations may be material.

Christine Donoghue
A/President, Public Service Commission

Omer Boudreau
Chief Financial Officer
Vice-President, Corporate Management

Philip Morton, CPA, CGA
Deputy Chief Financial Officer
Director General, Financial and Administration

Gatineau, Canada
February 2016

Future-oriented Statement of Operations (Unaudited)

For the year ended March 31

2016 2017
Staffing system integrity and political impartiality 16,275,170 18,029,801
Staffing services and assessment 39,519,787 48,633,671
Oversight of integrity in staffing and of non-partisanship 20,567,131 20,287,245
Internal services 33,843,569 33,431,313
Total Expenses 110,205,657 120,412,030
Revenues 9,867,961 15,814,609
Net cost of operations 100,337,696 104,597,421

Information for the year ending March 31, 2016 includes actual amounts from April 1 to September 30, 2015. The information for the remainder of fiscal year 2015-16 and for fiscal year 2016-17 is based on estimates.

The accompanying notes form an integral part of this Future-oriented Statement of Operations.

Notes to Future-oriented Statement of Operations (Unaudited)

1. Authority and objectives

The Public Service Commission of Canada (PSC) was established under the Public Service Employment Act (PSEA) and is listed in schedules I.1 and IV of the Financial Administration Act. The PSC reports independently to Parliament and is dedicated to building a public service that strives for excellence by protecting merit, non-partisanship, representativeness of Canadian society and the use of both official languages. This responsibility is performed in the best interests of the public service as part of Canada’s governance system, by administering and applying the provisions of the PSEA and by carrying out responsibilities as provided for in the Employment Equity Act and the Official Languages Act. The current PSEA came into force in December 2005. This legislation emphasizes the PSC’s accountability to Parliament and allows the PSC to delegate staffing authority to deputy heads, who, in turn, are accountable to the PSC for exercising this power. The Commission also carries out audits and investigations and administers measures under the PSEA regarding the political activities of public servants.

The PSC offered recruitment programs and mandatory and optional staffing and assessment products and services through its offices located in Vancouver, Toronto, Gatineau, Montreal and Halifax. The PSC has three programs and Internal Services that contribute to the achievement of its objectives:

The Staffing System Integrity and Political Impartiality program is focused on independently safeguarding merit and non-partisanship in the federal public service. This program includes developing and advancing strategic policy positions and directions; conducting policy research; establishing Public Service Commission (PSC) policies and standards; providing advice, interpretation and guidance; and administering delegated and non-delegated authorities, including official languages, the political activities regime and priority administration.

The Staffing Services and Assessment program maintains the systems that link Canadians and public servants seeking employment opportunities in the federal public service with hiring departments and agencies. It provides assessment-related products and services in the form of research and development, consultation, assessment operations and counselling for use in recruitment, selection and development throughout the federal public service. This program also includes delivering staffing services, programs and products to departments and agencies, to Canadians and public servants, through client service units located across Canada.

The Oversight of Integrity in Staffing and of Non-Partisanship program provides an accountability regime for the implementation of the appointment policy and regulatory framework for safeguarding the integrity of public service staffing and ensuring staffing is free from political influence. This program includes monitoring departments’ and agencies’ staffing performance and compliance with legislative requirements; conducting audits and studies; carrying out investigations; and reporting to Parliament on the integrity of public service staffing and the non-partisanship of the public service.

Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. Internal services include only those activities and resources that apply across an organization, and not those provided to a specific program. The groups of activities are Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Materiel Services; and Acquisition Services.

2. Methodology and significant assumptions

The Future-oriented Statement of Operations has been prepared on the basis of the Government priorities and the plans of the Public Service Commission (PSC) as described in its Report on Plans and Priorities.

The main assumptions are as follows:

  1. The PSC's core functions 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 and/or estimated business volume changes. The general historical pattern is expected to continue.
  3. Allowances are mainly based on experience and trends. The general historical pattern is expected to continue.
  4. Estimated year-end information for 2015-16 is used as the opening position for the 2016-17 planned results.

These assumptions were adopted as of November 6, 2015.

3. Variations and changes to the Future-oriented Statement of Operations

While every attempt has been made to forecast final results for the remainder of 2015-16 and for 2016-17, actual results achieved for both years are likely to vary from the forecast information presented. This variation could be material.

In preparing this Future-oriented Statement of Operations, the PSC has made estimates and assumptions concerning the future. These may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on 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 Statement of Operations and the historical statement of operations include the following:

  1. The timing and amounts of acquisitions and disposals of property, plants and equipment may affect gains/losses and amortization expenses;
  2. Implementation of new collective agreements;
  3. Economic conditions that 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 PSC will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

4. Summary of significant accounting policies

The Future-oriented Statement of Operations has been prepared using Government's accounting policies that came into effect for the 2015-16 fiscal year and which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

The significant accounting policies are as follows:

  1. Parliamentary appropriations
    The Public Service Commission (PSC) is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the PSC does 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 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 the government
    The PSC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the PSC is deposited to the CRF and all cash disbursements made by the PSC are paid from the CRF. The net cash provided by the government is the difference between all cash receipts and all cash disbursements, including transactions between organizations of the government.
  3. Revenues
    Revenues are recorded on an accrual basis. They are accounted for in the period in which the underlying transaction or event that gave rise to the revenues occurred. Planned revenues for fiscal year 2016-2017 reflect the total authority for the year, including revenue not available for spending.
  4. Expenses
    Expenses are recorded on an accrual basis. Expenses for organizational operations are recorded when goods are received or services are rendered, including services provided without charge for accommodation, employer contributions to health and dental insurance plans, legal services, workers’ compensation and information technology which are recorded as expenses at their estimated cost. Vacation pay, compensatory leave and severance benefits are accrued and expenses are recorded as the benefits are earned by employees under their respective terms of employment.
  5. Employees’ future benefits
    • Pension benefits:
      Eligible employees of the PSC participate in the Public Service Pension Plan administered by the Government of Canada. The PSC’s contributions to the Plan are charged to expenses in the year incurred and represent the total organizational obligation to the Plan. Current legislation does not require the PSC to make contributions for any actuarial deficiencies of the Plan.
    • Severance benefits:
      Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated with an organizational internal analysis of the PSC’s current head count and eligibility for severance benefits.
  6. Contingent liabilities
    Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fails to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable, or an amount cannot be reasonably estimated, the contingency is disclosed in the Notes to the Future-oriented Statement of Operations.
  7. Tangible capital assets
    All tangible capital assets and leasehold improvements having an initial cost of $5,000 or more are recorded at their acquisition cost. The PSC does not capitalize intangibles. The cost of assets under development by the PSC includes materiel, direct labour and related overhead. Amounts included in assets under development are transferred to the appropriate class of asset upon completion, and then amortized. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset, as follows:
    Tangible capital assets
    Asset class Amortization period
    Office equipment 3 and 10 years
    Informatics hardware and infrastructure 4 and 5 years
    Computer software 3 years
    In-house developed software Lesser of 12 years and useful life
    Furniture and fixtures 15 years
    Vehicles 6 years
    Leasehold improvements Lesser of 10 years and term of lease
    Leased tangible capital assets Lesser of term and useful life
  8. Measurement uncertainty
    The preparation of this Future-oriented Statement of Operations requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses reported. At the time of preparation of this statement, management believes the estimates and assumptions to be reasonable. Actual results could differ from those estimated.

5. Parliamentary authorities

The Public Service Commission (PSC) receives most of its funding through expenditure authorities provided by Parliament. Items recognized in the Future-oriented Statement of Operations in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, the PSC has different net cost 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) Authorities requested

Authorities requested
Forecast 2016 2017
Authorities requested
Operating Vote 69,897,357 71,160,178
Statutory contributions to employee benefit plans 10,897,424 12,442,885
Authorities Forecasted to be Used 80,794,781 83,603,063

(b) Reconciliation of net cost of operations to requested authorities

Reconciliation of net cost of operations to requested authorities
Forecast 2016 2017
Net cost of operations 100,337,696 104,597,421
Adjustments for items affecting net cost of operations but not affecting appropriations

Add (Less):
Services provided without charge by other government departments/agencies ( Note 8) (21,005,522) (22,167,574)
Amortization of tangible capital assets ( Note 7) (686,864) (560,158)
Revenues not available for spending 1,568,139 1,562,609
Decrease (increase) in employee severance benefits 600,372 500,000
Decrease (increase) in vacation pay and compensatory leave 38,508 (318,721)
Net (loss) or gain on disposal of capital assets ( Note 7) (86,390) (10,514)
Total adjustments affecting net cost (19,571,757) (20,994,358)
Adjustments for items not affecting net cost of operations but affecting appropriations

Add (Less):
Acquisitions of tangible capital assets ( Note 7) 28,842
Authorities forecasted to be used 80,794,781 83,603,063

6. Employee benefits

(a) Pension benefits:

The Public Service Commission’s (PSC) eligible employees participate in the Public Service Pension Plan that is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years, at a rate of 2% per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada and Quebec Pension Plan benefits and are indexed to inflation.

The PSC'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 PSC provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, estimated as at the date of these statements, is as follows:

Severance benefits
Forecast 2016 2017
Accrued benefit obligation – Beginning of the year 5,398,299 4,797,927
Forecasted payments (600,372) (500,000)
Accrued benefit obligation – End of year 4,797,927 4,297,927

7. Tangible capital assets

Tangible capital assets
Forecast 2016 2017
Opening balance 3,020,124 2,275,712
Acquisitions of tangible capital assets 28,842 -
Current-year amortization (686,864) (560,158)
Net (loss) or gain on disposal of capital assets (86,390) (10,514)
Net book value 2,275,712 1,705,040

8. Related party transactions

The Public Service Commission (PSC) is related in terms of common ownership to all Government of Canada departments, agencies and Crown corporations. The PSC enters into transactions with these entities in the normal course of business and on normal trade terms.

During the year, the PSC is forecasted to receive the following, without charge, from certain common service organizations: accommodation, employer’s contributions to health and dental insurance plans, legal services, workers’ compensation coverage and information technology services. These services provided without charge have been recorded in the PSC’s Future-oriented Statement of Operations, as follows:

Related party transactions
Forecast 2016 2017
Accomodation 9,810,914 9,893,940
Employer’s contributions to the health and dental insurance plans 5,646,912 6,727,839
Legal services 774,236 774,236
Workers’ compensation 38,008 36,107
Information technology services (Shared Services Canada) 4,735,452 4,735,452
Total 21,005,522 22,167,574

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