Financial Statements 2008-09 RCMP External Review Committee

RCMP EXTERNAL REVIEW COMMITTEE

Responsibility for the integrity and objectivity of the accompanying financial statements for the period ended March 31, 2008 and all information contained in these statements rests with the RCMP External Review Committee (ERC) management. These financial statements have been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgment and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the ERC's financial transactions. Financial information submitted to the Public Accounts of Canada and included in the ERC's Departmental Performance Report is consistent with these financial statements.

Management maintains a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are in accordance with the Financial Administration Act, are executed in accordance with prescribed regulations, within Parliamentary authorities, and are properly recorded to maintain accountability of Government funds. Management also seeks to ensure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility, and by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the ERC.

The financial statements of the ERC have not been audited.

Catherine Ebbs
Chair

David Paradiso
Executive Director and Senior Counsel

Date:

RCMP EXTERNAL REVIEW COMMITTEE

(*) Amount for estimated for accrued liabilities has not changed from 2008, as the related expenses are not material
The accompanying notes form and integral part of these financial statements.

RCMP EXTERNAL REVIEW COMMITTEE

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

RCMP EXTERNAL REVIEW COMMITTEE

RCMP EXTERNAL REVIEW COMMITTEE

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

RCMP EXTERNAL REVIEW COMMITTEE

1. Authority and Objectives

Under the Royal Canadian Mounted Police (RCMP) Act, the RCMP Commissioner refers all appeals of formal discipline and all discharge and demotion appeals to the ERC unless the member of the RCMP requests that the matter not be referred. In addition, pursuant to section 33 of the RCMP Act, the RCMP Commissioner refers certain types of grievances to the ERC in accordance with regulations made by the Governor in Council. Section 36 of the RCMP Regulations specifies the grievances which the RCMP Commissioner is obliged to refer to the ERC, namely grievances respecting:

• the Force's interpretation and application of government policies that apply to government departments and that have been made to apply to members;
• the stoppage of pay and allowances of members made pursuant to subsection 22(3) of the RCMP Act;
• the Force's interpretation and application of the Isolated Posts Directive;
• the Force's interpretation and application of the RCMP Relocation Directive; and
• administrative discharge on the grounds of physical or mental disability, abandonment of post, or irregular appointment.

The ERC is also responsible for outreach and information dissemination.

2. Significant accounting policies

The financial statements have been prepared in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

Significant accounting policies are as follows:

(a) Parliamentary appropriations
The ERC is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to the ERC do not parallel financial reporting according to generally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the statement of operations and the statement of financial position are not necessarily the same as those provided through appropriations from Parliament. Note 3 provides a high-level reconciliation between the bases of reporting.

(b) Net Cash Provided by Government
The ERC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the ERC is deposited to the CRF and all cash disbursements made by the ERC 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 federal government.

(c) Change in net position in the Consolidated Revenue Fund
The change in net position in the Consolidated Revenue Fund is the difference between the net cash provided by Government and appropriations used in a year, excluding the amount of non respendable revenue recorded by the ERC. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.

(d) Expenses
Expenses are recorded on the accrual basis:

• Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
• Services provided without charge by other government departments for accommodation and the employer's contribution to the health and dental insurance plans are recorded as operating expenses at their estimated cost.

(e) Employee future benefits

i) Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer administered by the Government of Canada. The ERC's contributions to the Plan are charged to expenses in the year incurred and represent the total obligation to the Plan. Current legislation does not require the ERC to make contributions for any actuarial deficiencies of the Plan.

ii) 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 using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

(f) Receivables
Accounts receivables are stated at amounts expected to be ultimately realized; a provision is made for receivables where recovery is considered uncertain.

(g) Tangible capital assets
All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. The ERC 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.

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

(h) Measurement uncertainty
The preparation of these financial statements in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where an estimate is used are the liability for employee severance benefits and the estimated useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3. Parliamentary Appropriations

The ERC receives its funding through annual Parliamentary appropriations. Items recognized in the Statement of Operations and the Statement of Financial Position in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, the ERC 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:

4. Accounts Receivable and Advances

The following table presents details of accounts receivable and advances:

5. Employee Benefits

(a) Pension benefits
The ERC's employees participate in the Public Service Pension Plan, which 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 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plans benefits and they are indexed to inflation.

Both the employees and the ERC contribute to the cost of the Plan. The 2008-09 expense amounts to $114,944 ($110,706 in 2007-08), which represents approximately 2.0 times (2.1 in 2007-08) the contributions by employees.

The ERC'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 ERC provides severance benefits to its employees based on eligibility, years of service and final salary. Benefits will be paid from future appropriations. Information about the severance benefits, measured as at March 31, is as follows:

6. Related Party Transactions

The ERC is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The ERC enters into transactions with these entities in the normal course of business and on normal trade terms. Also, during the year, the ERC received services which were obtained without charge from other Government departments as presented in part (a).

(a) Services received without charge from other government departments
During the year the ERC received service without charge from other departments. These services have been recognized in the ERC's Statement of Operations as follows:

The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge. The costs of these services, which include 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 as an expense in the ERC's Statement of Operations

(b) Payables and receivables outstanding at year-end with related parties:

7. Tangible Capital Assets