Future-oriented Financial Statements 2012-13

RCMP EXTERNAL REVIEW COMMITTEE

Management of the RCMP External Review Committee (ERC) 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 January 19, 2012 and reflect the plans described in the Report on Plans and Priorities.

Catherine Ebbs
Chair
Ottawa, Canada
March 30, 2012

David Paradiso
Executive Director and Senior Counsel
Ottawa, Canada
March 30, 2012

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

Segmented information (Note 8)

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

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

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

For the Year Ended March 31, 2013

1. Authority and purpose

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. The ERC ensures that its findings and recommendations in each case are clearly explained for the parties and the RCMP Commissioner. Summaries of the findings and recommendations in each case, as well as articles of interest on the role of the ERC, relevant legal principles and information on related issues are distributed widely.

2. Significant assumptions

The future-oriented statements of operations have been prepared on the basis of the government priorities and the plans of the ERC as described in the Report on Plans and Priorities. The Statements of Operations are prepared based on the new Program Activity Architecture Structure approved by TBS for fiscal year 2011-12.

The main assumptions are as follows:

1. The ERC's activities will remain substantially the same as in 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 the likely outcome of actual situation.
4. Estimated year end information for 2011-12 is used as the opening position for the 2012-13 forecasts.

These assumptions are adopted as at January 19^th, 2012.

3. Variations and changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results for the remainder of 2011-12 and for 2012-13, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material. In preparing these financial statements, the ERC has made estimates and assumptions concerning the future. These estimates and judgements may differ from the subsequent actual results. Estimates and judgements 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 statements of operations and historical statements of operations include:

1. The timing and amounts of acquisitions and disposals of property, equipment may affect gains/losses and amortization expense.
2. 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 ERC 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 accounting policies

The future-oriented statements of operations have been prepared in accordance with the Treasury Board accounting policies stated below, which 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:

(a) Parliamentary appropriations: The ERC is financed by the Government of Canada through Parliamentary appropriations. The cash accounting basis is used to recognize transactions affecting parliamentary appropriations. The future-oriented statements of operations are based on accrual accounting. Consequently, items presented in the Future-oriented Statements of Operations are not necessarily the same as those provided through appropriations from Parliament. Note 5 provides a 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 Government.

(c) Amount due from/to CRF: 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 ERC is entitled to draw from the CRF without further appropriations to discharge its liabilities.

(d) Revenues: Revenues are presented on an accrual basis:

• Revenues from regulatory fees are recognized in the acccounts based on the services provided in the year. Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in which the related expenses are incurred.
• Funds that have been received are recorded as deferred revenue, provided the ERC has an obligation to other parties for the provision of goods, services or the use of assets in the future. Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

(e) Expenses: Expenses are recorded on an accrual basis:

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

(f) Employee future benefits

1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer pension plan administered by the Government of Canada. The ERC's contributions to the Plan are charged to expenses in the year incurred and represent the ERC's total obligation to the Plan. Current legislation does not require the ERC to make contributions for any actuarial deficiencies of the Plan.
2. 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.

5. Parliamentary appropriations

The ERC receives most of its funding through annual Parliamentary authorities. 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:

Forecast authorities requested for the year ending March 31, 2013 are the planned spending amounts presented in the 2012-13 Report on Plans and Priorities. Estimated authorities requested for the year ending March 31, 2012 include amounts presented in the 2011-12 Main Estimates and Supplementary Estimates (A) and (B), planned for presentation in Supplementary Estimates (C) and estimates of amounts to be allocated at year-end from Treasury Board central votes.

6. 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.

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. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, measured as at March 31, is as follows:

7. 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 common services which were obtained without charge from other Government departments as disclosed below:

(a) Common services provided without charge by other government departments
During the year the ERC is forecasted to receive services without charge from other departments, accommodation, legal fees, 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 ERC's Statement of Operations as follows:

The Government has centralized some of its administrative activities for efficiency and cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common services organization 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 ERC's Statement of Operations.

(b) Other transactions with related parties

8. Segmented Information

Presentation by segment is based on the ERC's program activity 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 expenses incurred and revenue generated for the main program activities, by major object of expenses and by major type of revenues. The segment results for the period are as follows:

Amortization expense for the year ended March 31, 2013 is $94,089 ($94,723 for the year ended March 31, 2012)