Financial Statements (Unaudited) for the Year Ended March 31, 2014 - 2013–14 Departmental Performance Report - Treasury Board of Canada Secretariat

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Treasury Board of Canada Secretariat
Financial Statements (Unaudited)
for the Year Ended March 31, 2014

Statement of Management Responsibility Including Internal Control Over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2014, and all information contained in these statements rests with the management of the Treasury Board of Canada Secretariat (Secretariat). These financial statements have been prepared by management using the government’s accounting policies, which are based on Canadian public sector accounting standards.

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 Secretariat’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada and included in the Secretariat’s Departmental Performance Report is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the Secretariat; and through conducting an annual risk-based assessment of the effectiveness of the system of internal control over financial reporting. 

A risk-based assessment for the year ended March 31, 2014, was completed in accordance with the Policy on Internal Control, and the results and action plans are summarized in the annex.

The system of internal control over financial reporting is designed to mitigate risks to a reasonable level based on an ongoing process to assess key risks, to assess effectiveness of associated key controls and to make any necessary adjustments.

The system of internal control is monitored by Internal Audit, which conducts periodic audits and reviews of different areas of the Secretariat’s operations. In addition, the Chief Audit Executive has free access to the Audit Committee, which oversees and provides advice to management on its responsibilities for maintaining adequate control systems and the quality of financial reporting. This committee undertakes a review of the financial statements, including all significant accounting estimates and judgments therein, and advises the Secretariat on any apparent material concerns.

The financial statements of the Secretariat have not been audited.

Treasury Board of Canada Secretariat
Statement of Financial Position (Unaudited)
as at March 31
(in thousands of dollars)

	2014	2013
Table Notes The accompanying notes form an integral part of these financial statements. For contractual obligations, see Note 9. For contingent liabilities, see Note 10.
Liabilities
Accounts payable and accrued liabilities ( Note 4)	518,507	445,510
Vacation pay and compensatory leave	7,888	7,998
Employee future benefits ( Note 5)	9,814	25,131
Lease obligation for tangible capital assets ( Note 6)	73	0
Total liabilities	536,282	478,639
Financial assets
Due from Consolidated Revenue Fund	235,899	275,809
Accounts receivable and advances ( Note 7)	208,989	171,312
Total gross financial assets	444,888	447,121
Financial assets held on behalf of government
Accounts receivable and advances ( Note 7)	(511)	(347)
Total financial assets held on behalf of government	(511)	(347)
Total net financial assets	444,377	446,774
Departmental net debt	91,905	31,865
Non-financial assets
Prepaid expenses	31	36
Tangible capital assets ( Note 8)	12,833	8,070
Total non-financial assets	12,864	8,106
Departmental net financial position	(79,041)	(23,759)

Treasury Board of Canada Secretariat
Statement of Operations and Departmental Net Financial Position (Unaudited)
for the Year Ended March 31
(in thousands of dollars)

	2014 Planned Results	2014	2013
Table Notes The accompanying notes form an integral part of these financial statements. For segmented information, see Note 13. Planned results were presented in the 2013–14 future-oriented financial statements and included in the Secretariat’s 2013–14 Report on Plans and Priorities (RPP), based on plans as at February 28, 2013 (see also Note 2a).
Expenses
Government-Wide Funds and Public Service Employer Payments	2,706,143	2,610,909	2,492,654
Management Frameworks	57,644	59,014	60,325
People Management	55,525	138,956	69,763
Expenditure Management	38,058	36,490	42,087
Financial Management	34,925	31,659	31,349
Internal Services	76,392	82,372	88,656
Total expenses	2,968,687	2,959,400	2,784,834
Revenues
Internal support services	6,709	6,808	6,674
Parking fees – Government-wide	4,702	3,355	4,787
Recovery of pension administration costs	8,393	4,518	4,725
Other	41	1,012	50
Gross revenues	19,845	15,693	16,236
Revenues earned on behalf of government	(6,154)	(5,212)	(5,711)
Total net revenues	13,691	10,481	10,525
Net cost from continuing operations	2,954,996	2,948,919	2,774,309
Transferred operations (Note 12)
Expenses	0	112	1,220
Net cost of transferred operations	0	112	1,220
Net cost of operations before government funding and transfers	2,954,996	2,949,031	2,775,529
Government funding and transfers
Net cash provided by government	2,942,126	2,912,605	2,707,235
Change in due from Consolidated Revenue Fund	(256)	(39,910)	51,319
Services provided without charge by other government departments ( Note 11)	22,407	23,100	23,658
Transfer of assets and liabilities from (to) other government departments ( Note 8 and Note 12)	0	(2,046)	21
Total government funding and transfers	2,964,277	2,893,749	2,782,233
Net cost of operations after government funding and transfers	(9,281)	55,282	(6,704)
Departmental net financial position – Beginning of year	(65,213)	(23,759)	(30,463)
Departmental net financial position – End of year	(55,932)	(79,041)	(23,759)

Treasury Board of Canada Secretariat
Statement of Change in Departmental Net Debt (Unaudited)
for the Year Ended March 31
(in thousands of dollars)

	2014 Planned Results	2014	2013
Table Notes The accompanying notes form an integral part of these financial statements. Planned results were presented in the 2013–14 future-oriented financial statements and included in the Secretariat’s 2013–14 Report on Plans and Priorities (RPP), based on plans as at February 28, 2013 (see also Note 2a).
Net cost of operations after government funding and transfers	(9,281)	55,282	(6,704)
Change due to tangible capital assets
Acquisition of tangible capital assets	30	7,955	2,411
Acquisition of leased tangible capital assets	0	97	0
Amortization of tangible capital assets	(2,922)	(1,034)	(965)
Proceeds from disposal of tangible capital assets	(10)	0	0
Gain (loss) on writeoff of tangible capital assets	10	(209)	(8,375)
Transfer from (to) other government departments	0	(2,046)	21
Total change due to tangible capital assets	(2,892)	4,763	(6,908)
Change due to prepaid expenses	3	(5)	(45)
Net increase (decrease) in departmental net debt	(12,170)	60,040	(13,657)
Departmental net debt – Beginning of year	68,254	31,865	45,522
Departmental net debt – End of year	56,084	91,905	31,865

Treasury Board of Canada Secretariat
Statement of Cash Flows (Unaudited)
for the Year Ended March 31
( in thousands of dollars)

	2014	2013
Table Note The accompanying notes form an integral part of these financial statements.
Operating activities
Net cost of operations before government funding and transfers	2,949,031	2,775,529
Non-cash items:
Amortization of tangible capital assets	(1,034)	(965)
Loss on writeoff of tangible capital assets	(209)	(8,375)
Services provided without charge by other government departments ( Note 11)	(23,100)	(23,658)
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances	37,513	(30,339)
Decrease in prepaid expenses	(5)	(45)
Increase in accounts payable and accrued liabilities	(72,997)	(7,376)
Increase in lease obligation for tangible capital assets	(73)	0
Decrease in vacation pay and compensatory leave	110	807
Decrease (increase) in employee future benefits	15,317	(754)
Cash used in operating activities	2,904,553	2,704,824
Capital investing activities
Acquisitions of tangible capital assets	7,955	2,411
Acquisition of leased tangible capital assets	97	0
Cash used in capital investing activities	8,052	2,411
Net cash provided by the Government of Canada	2,912,605	2,707,235

1. Authority and Objectives

Under the broad authority of sections 5 to 13 of the Financial Administration Act, the Secretariat supports the Treasury Board as a committee of ministers in its role as the general manager and employer of the core public administration. The Secretariat is headed by a Secretary, who reports to the President of the Treasury Board.

The mission of the Secretariat is to ensure that the rigorous stewardship of public resources achieves results for Canadians.

The core business of the Secretariat is currently organized into the following key programs:

a) Government-Wide Funds and Public Service Employer Payments

The Government-Wide Funds and Public Service Employer Payments program accounts for funds that are held centrally to supplement other appropriations from which allocations are made to, or payments and receipts are made on behalf of, other federal organizations. These funds supplement the standard appropriations process and meet certain responsibilities of the Treasury Board as the employer of the core public administration, including employer obligations under the public service pension and benefits plans.

b) Management Frameworks

In support of Treasury Board’s role as management board, the Secretariat provides the framework for the management of government operations. It does so by developing specific policies, regulations, directives and guidelines that, once approved by the Treasury Board, provide the parameters within which deputy heads manage their departments. The Secretariat also helps build understanding and capacity by reaching out to the different communities within departments and agencies (e.g., finance, human resources) that support deputy heads in implementing Treasury Board policies.

c) People Management

The People Management program supports Treasury Board activities in its role as the employer of the core public administration. The program’s primary objectives are to lead people management and promote leadership excellence, to support human resources infrastructure, and to ensure the appropriate degree of consistency in people management across the public service. In certain instances, activities extend beyond the core public administration to separate agencies, members of the Royal Canadian Mounted Police and the Canadian Forces, students and appropriation-dependent Crown corporations.

d) Expenditure Management

The Expenditure Management program helps align resources to achieve government priorities in a way that maximizes value for money and provides a whole-of-government perspective on matters related to direct program spending. Working with all federal organizations that are subject to budget appropriation, the Secretariat undertakes the review, analysis and challenge of plans and proposals that involve departmental spending, expenditure forecasting and strategies, expenditure management of total compensation, and results-based management.

e) Financial Management

The Financial Management program provides oversight and direction to federal organizations to improve the stewardship of taxpayers’ dollars and government assets.

The program works to strengthen financial management, internal audit, management of real property and materiel, investment planning, project management and procurement across the federal public service. This is accomplished by providing direction to departments; demonstrating leadership; developing and maintaining policies, guidance and practices; nurturing sustainable and professional communities (e.g., finance, procurement, audit); and helping to improve government operations.

f) Internal Services

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. These include support functions such as communications, financial and human resources management, real property, information technology, legal services and procurement.

Internal Services include only those activities and resources that apply across an organization and do not include those provided for a specific program.

2. Summary of Significant Accounting Policies

These financial statements have been prepared using the government’s accounting policies, which are based on Canadian public sector accounting standards. The presentation and results using the accounting policies stated below do not result in any significant differences from Canadian public sector accounting standards.

The significant accounting policies are as follows:

a) Parliamentary authorities

The Secretariat is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the Secretariat 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 Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament.

Note 3 provides a reconciliation between the bases of reporting. The amounts under Planned Results in the Statement of Operations and Departmental Net Financial Position and the Statement of Change in Departmental Net Debt are the amounts reported in the future-oriented financial statements included in the 2013–14 Report on Plans and Priorities.

b) Net cash provided by government

The Secretariat operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Secretariat is deposited to the CRF, and all cash disbursements made by the Secretariat 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 government departments.

c) Amounts due from/to the Consolidated Revenue Fund (CRF)

Amounts due from or to the Consolidated Revenue Fund (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 Secretariat is entitled to draw from the CRF without further authorities to discharge its liabilities.

d) Revenues

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

Revenues that are non-respendable are not available to discharge the Secretariat’s liabilities. While the Secretary is expected to maintain accounting control, he or she has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and, therefore, are presented as a reduction of the entity’s gross revenues.

e) Expenses

Expenses are recorded on an accrual basis:

• Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. Transfer payments that become repayable as a result of the realization of conditions specified in the contribution agreement are recorded as a reduction to transfer payment expenses and are set up as a receivable.
• 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 legal services are recorded as operating expenses at their estimated cost.

f) Government-wide employee benefits

(i) Pension and other employee benefits

Eligible public service employees participate in the Public Service Pension Plan (the Plan), a defined benefit pension plan sponsored by the Government of Canada. In support of the Treasury Board’s role as employer for the public service, the Secretariat funds employer contributions to the Plan for all departments and agencies, including additional contributions in respect of any actuarial deficits, via statutory authorities.

Starting with the year 2012–13, and based on the March 31, 2011, triennial actuarial valuation of the Plan tabled in Parliament on June 21, 2012, an annual adjustment of $435 million will be made to the Pension Fund for a period of 13 years ending in 2025. This amount, along with an annual adjustment of $8 million for Retirement Compensation Arrangement Account No. 2, comprises the $443 million that has been expensed in the Secretariat’s financial statements (refer to Note 13b).

Employer contributions to the Plan are expensed in the year incurred, and the Secretariat recovers a portion of the employer contributions from other departments and agencies.

Eligible employees of the Secretariat also participate in the Plan. The Secretariat’s financial reporting responsibility in respect of its own employees’ participation in the Plan is limited to its employer contributions.

The Government of Canada also sponsors a variety of other employee benefit plans that the Secretariat is responsible for administering and/or funding through its centrally managed funds. Benefit payments for these plans are recognized as expenses in the Secretariat’s financial statements when they become due, and no accruals are recorded for future benefits. A portion of these benefits is also recovered from other departments and agencies. This accounting treatment corresponds to the funding provided to the Secretariat through parliamentary appropriations.

For all pension and other employee future benefits, the actuarial liabilities and related disclosures as well as actuarial surpluses or deficiencies for the whole of government are recognized in the financial statements of the Government of Canada. It is the government as the plans’ sponsor that ultimately bears the actuarial and investment risks inherent to these defined benefit plans.

(ii) Severance benefits

Certain employee groups 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 of Canada as a whole.

As a result 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 to collect the full or remaining value of benefits on termination from the public service. As a result, the obligation related to these employee groups has ceased to accumulate.

g) Accounts receivable and advances

Accounts receivable and advances are stated at the lower of cost or net recoverable value. A valuation allowance has been recorded for receivables where recovery is considered uncertain.

h) 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 fail to occur and a reasonable estimate of the loss can be made, an estimated liability is accrued, and an expense is recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

i) 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 Secretariat does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value.

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
Computer hardware	3 years
Computer software	3 to 10 years
Machinery and equipment	3 to 10 years
Motor vehicles	3 years
Assets under construction	Once in service, in accordance with asset type
Leasehold improvements	Lesser of the remaining term of the lease or useful life of the improvement
Leased tangible capital assets	Over the lease term

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.

j) Measurement uncertainty

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of the assets, liabilities, revenues and expenses in the financial statements. At the time of the preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are contingent liabilities, the liability for employee future benefits, and the useful life of tangible capital assets. The actual results could significantly differ from the estimated results. Management’s estimates are reviewed periodically; as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3. Parliamentary Authorities

The Secretariat receives most of its funding through expenditure authorities provided by Parliament. Items recognized in the Statement of Operations and Departmental Net Financial Position and the Statement of Financial Position one year may be funded through the parliamentary authorities of prior, current or future years. Accordingly, the Secretariat’s net results of operations for the year on a government funding basis differ from its net results of operations on an accrual accounting basis. The differences are reconciled in the following tables:

a) Reconciliation of net cost of operations to current year authorities used

($ thousands)

	2014	2013
Net cost of operations before government funding and transfers	2,949,031	2,775,529
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets	(1,034)	(965)
Loss on writeoff of tangible capital assets	(209)	(8,375)
Services provided without charge by other government departments	(23,100)	(23,658)
Decrease in vacation pay and compensatory leave	110	807
Decrease (increase) in employee future benefits	15,108	(284)
Refund of prior years’ expenditures	19,668	12,698
Decrease (increase) in accrued liabilities	(74,600)	7,795
Other	109	(4,779)
Subtotal	(63,948)	(16,761)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets	7,955	2,411
Acquisition of leased tangible capital assets	24	0
Decrease (increase) in advances	(541)	847
Subtotal	7,438	3,258
Current year authorities used	2,892,521	2,762,026

b) Authorities provided and used

($ thousands)

	2014	2013
Authorities provided
Vote 1 — Program expenditures	246,328	255,132
Vote 5 — Government contingencies	749,999	750,000
Vote 10 — Government-wide initiatives	2,093	2,093
Vote 20 — Public service insurance	2,268,180	2,277,220
Vote 25 — Operating budget carry-forward	173,454	0
Vote 30 — Pay list requirements	487,699	26,193
Vote 33 — Capital budget carry-forward	0	219,656
Subtotal	3,927,753	3,530,294
Statutory authorities:
Contributions to employee benefit plans	28,996	29,698
Unallocated employer contributions made under the Public Service Superannuation Act, other retirement acts, and the Employment Insurance Act	443,000	443,000
Payments for the pay equity settlement pursuant to section 30 of the Crown Liability and Proceedings Act	84	22
President of the Treasury Board – Salary and car allowance	79	78
Payments under the Public Service Pension Adjustment Act	4	1
Spending of proceeds from the disposal of surplus Crown assets	3	1
Subtotal	472,166	472,800
Total authorities provided	4,399,919	4,003,094
Less:
Lapsed or transferred authorities:
Vote 1 — Program expenditures	(12,104)	(23,255)
Vote 5 — Government contingencies	(749,999)	(750,000)
Vote 10 — Government-wide initiatives	(2,093)	(2,093)
Vote 20 — Public service insurance	(82,047)	(219,870)
Vote 25 — Operating budget carry-forward	(173,454)	0
Vote 30 — Pay list requirements	(487,699)	(26,193)
Vote 33 — Capital budget carry-forward	0	(219,656)
Spending of proceeds from the disposal of surplus Crown assets	(2)	(1)
Subtotal	(1,507,398)	(1,241,068)
Current year authorities used	2,892,521	2,762,026

4. Accounts Payable and Accrued Liabilities

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

($ thousands)

	2014	2013
Accounts payable to other government departments and agencies	312,988	307,476
Accounts payable to external parties	19,100	13,636
Subtotal	332,088	321,112
Accrued liabilities	186,419	124,398
Total accounts payable and accrued liabilities	518,507	445,510

5. Employee Future Benefits

a) Pension benefits

The Secretariat’s employees participate in the Public Service Pension Plan (the 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 per cent per year of pensionable service times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plan benefits and are indexed to inflation.

Both the employees and the Secretariat contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Economic Action Plan (EAP) 2012, employee contributors have been divided into two groups:

1. Group 1 relates to existing plan members as of December 31, 2012; and
2. Group 2 relates to members joining the Plan as of January 1, 2013.

Each group has a distinct contribution rate. The 2013–14 employer expense amounts to $20.3 million ($21.2 million in 2012–13). For Group 1 members, this expense represents approximately 1.6 times (1.7 times in 2012–13) the employee contributions; for Group 2 members, it represents approximately 1.5 times (1.6 times in 2012–13) the employee contributions.

Employee contribution rates for both groups are gradually being increased to allow the employee-employer cost-sharing ratio to reach 50:50 by 2017–18.

b) Severance benefits

The Secretariat provides severance benefits to certain employee occupational groups 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 year ended March 31, is as follows (see also Note 2f (ii)):

($ thousands)

	2014	2013
Accrued benefit obligation – Beginning of year	25,131	24,377
Expense for the year	(2,673)	8,038
Benefits paid during the year	(12,644)	(7,284)
Accrued benefit obligation – End of year	9,814	25,131

6. Lease Obligation for Tangible Capital Assets

The Secretariat has entered into a new capital lease agreement related to computer hardware with a cost of $96,750 and accumulated amortization of $8,062 as at March 31, 2014. The obligation for the upcoming year (2014–15) is $72,663, which represents the total future minimum lease payments.

7. Accounts Receivable and Advances

The following table presents details of the Secretariat’s accounts receivable and advance balances:

($ thousands)

	2014	2013
Receivables – Other government departments and agencies	207,869	169,301
Receivables – External parties	1,201	1,994
Advances to employees	11	17
Subtotal accounts receivable and advances	209,081	171,312
Less allowance for doubtful accounts on external receivables	(92)	0
Gross accounts receivable and advances	208,989	171,312
Accounts receivable held on behalf of government	(511)	(347)
Net accounts receivable and advances	208,478	170,965

The bulk of receivables from other government departments and agencies are related to receivables established at year-end as a result of employee benefit plans.

8. Tangible Capital Assets

The following table presents the details of tangible capital assets:

($ thousands)

	Cost				Accumulated amortization				Net book value
Capital asset class	Opening balance	Acquisi-tions	Adjust-ments	Closing balance	Opening balance	Amorti-zation	Adjust-ments	Closing balance	2014	2013
Table Note The adjustments column includes assets under construction that were put into use during the reporting period; a retirement of machinery and equipment; and an adjustment to computer software for the transfer of workplace technology device software to Shared Services Canada.
Assets under construction	660	7,571	(660)	7,571	0	0	0	0	7,571	660
Machinery and equipment	869	0	(49)	820	141	88	(49)	180	640	728
Motor vehicles	122	24	0	146	102	19	0	121	25	20
Leasehold improvements	1,952	0	0	1,952	1,952	0	0	1,952	0	0
Leased computer hardware	0	97	0	97	0	8	0	8	89	0
Computer hardware	10	53	0	63	10	0	0	10	53	0
Computer software	7,794	307	(1,600)	6,501	1,132	919	(5)	2,046	4,455	6,662
Total	11,407	8,052	(2,309)	17,150	3,337	1,034	(54)	4,317	12,833	8,070

9. Contractual Obligations

The nature of the Secretariat’s activities can result in some large multi-year contracts and obligations whereby the Secretariat is obligated to make future payments when the services or goods are received. Significant contractual obligations that can be reasonably estimated are summarized in the following table:

($ thousands)

	2015	2016	2017	Total
Public service health and dental care plans	32,097	33,375	20,899	86,371
Other professional services	2,847	19	0	2,866
Management consulting	582	48	0	630
Computer services	892	0	0	892
Translation services	2,410	0	0	2,410
Rentals and leases	1,268	924	840	3,032
Total	40,096	34,366	21,739	96,201

10. Contingent Liabilities

Claims and litigations

Claims have been made against the Secretariat in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. Claims for which the outcome is not determinable and a reasonable estimate can be made by management amount to approximately $210 million ($295 million in 2012–13) as at March 31, 2014.

Some of these potential liabilities 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 that a reasonable estimate of the loss can be made, an estimated liability is accrued, and an expense is recorded in the financial statements. No accrual for the above contingent liabilities has been made in these financial statements.

11. Related-Party Transactions

The Secretariat is related, as a result of common ownership, to all Government of Canada departments, agencies and Crown corporations. The Secretariat enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, the Secretariat has the responsibility to administer and fund on behalf of other government departments the employer’s contribution to health, dental and other employee insurance plans and payroll benefits through its centrally managed funds (refer to note 11b below).

During the year, the Secretariat received and provided common services as disclosed in the next sections.

a) Common services provided without charge by other government departments

The Secretariat received accommodation and legal services from certain common service organizations. These services were provided without charge and have been recorded in the department’s Statement of Operations and Departmental Net Financial Position as follows:

($ thousands)

	2014	2013
Accommodation	19,639	19,905
Legal services	3,461	3,753
Total	23,100	23,658

In order to achieve efficiency and cost-effectiveness and to deliver programs economically to the public, the government has centralized some of its administrative activities. 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 cost of these services, such as the payroll and cheque issuance services provided by Public Works and Government Services Canada and the email, network and data centre services and the workplace technology devices provided by Shared Services Canada, are not included in the Secretariat’s Statement of Operations and Departmental Net Financial Position.

b) Common services provided without charge to other government departments

The Secretariat provided services without charge to other government departments for the provision of the employer’s contribution to health, dental and other employee insurance plans and payroll benefits in the amount of $1.6 billion in 2013–14 (compared with $1.7 billion in 2012–13).

c) Other transactions with related parties

($ thousands)

	2014	2013
Expenses – Other government departments and agencies	23,575	23,263
Revenues – Other government departments and agencies	11,324	11,407

Expenses and revenues disclosed in (c) exclude common services provided without charge, which have already been disclosed in (a) and (b). The expenses are related to various goods and services and to salary transactions with other departments and agencies. The revenues are mainly related to internal support services and the recovery of public service pension administration costs.

12. Transfers From (to) Other Government Departments

Effective April 03, 2013, Shared Services Canada was given the mandate to provide services for the acquisition and provision of hardware and software for workplace technology devices (formerly known as end-user devices). The Secretariat transferred to Shared Services Canada the control and supervision of the portion of its administration costs and functions for this mandate, including stewardship responsibility of the assets related to these functions.

The impact of transfers from (to) other government departments in the financial statements is as follows:

($ thousands)

	2014	2013
Assets
Tangible capital asset transfer (from) to other government departments
To Shared Services Canada (net book value) ( Note 8)	(2,046)	0
From Transport Canada	0	21
Total assets transferred to other government departments	(2,046)	21
Adjustment to the departmental net financial position	(2,046)	21

Expenses related to the transferred operations are showed on a separate line in the Statement of Operations and Departmental Net financial Position.

13. Segmented Information

a) Main programs

Presentation by segment is based on the Secretariat’s program alignment architecture. This presentation is based on the same accounting policies described in the summary of significant accounting policies in Note 2. The following table presents the expenses incurred and revenues generated for the main programs, by major category of expenses and revenues.

($ thousands)

	GF & PSEP	MF	PM	EM	FM	IS	2014 Total	2013
Legend: GF & PSEP – Government-Wide Funds and Public Service Employer Payments EM – Expenditure Management MF – Management Framework FM – Financial Management PM – People Management IS – Internal Services
Transfer payments
Industry	0	55	2	0	200	0	257	265
Total transfer payments	0	55	2	0	200	0	257	265
Operating expenses
Government-wide funds and public service employer payments	2,610,909	0	0	0	0	0	2,610,909	2,492,654
Salary and employee benefits	0	43,549	43,106	30,307	23,792	54,932	195,686	200,715
Professional and special services	0	9,802	10,688	2,867	5,172	15,436	43,965	47,621
Accommodation	0	3,928	4,321	2,749	1,964	6,677	19,639	19,906
Transport and telecommunications	0	359	584	79	175	634	1,831	2,527
Machinery, equipment, parts and tools	0	154	159	84	55	1,540	1,992	2,682
Repair and maintenance	0	12	54	0	2	440	508	1,235
Utilities, materiel and supplies	0	59	170	36	36	317	618	856
Information	0	22	78	29	40	266	435	382
Rentals	0	1,036	246	67	104	1,716	3,169	2,290
Amortization	0	0	418	249	102	265	1,034	965
Other subsidies and expenses	0	38	79,130	23	17	149	79,357	12,736
Total operating expenses	2,610,909	58,959	138,954	36,490	31,459	82,372	2,959,143	2,784,569
Total expenses	2,610,909	59,014	138,956	36,490	31,659	82,372	2,959,400	2,784,834
Revenues
Internal support services	0	0	0	0	0	6,808	6,808	6,674
Parking fees and other revenues	4,360	0	847	0	0	7	5,214	5,714
Recovery of pension administration costs	0	0	3,671	0	0	0	3,671	3,848
Revenues earned on behalf of government	(4,360)	0	(847)	0	0	(5)	(5,212)	(5,711)
Total net revenues	0	0	3,671	0	0	6,810	10,481	10,525
Net cost from continuing operations	2,610,909	59,014	135,285	36,490	31,659	75,562	2,948,919	2,774,309

b) Government-wide funds and public service employer payments

The Government of Canada sponsors defined benefit pension plans covering most of its employees. The Secretariat also funds payments to, or in respect of, the following:

• Employer’s share of contributions to the Public Service Death Benefit Account;
• Employer’s share of Canada/Québec Pension Plan contributions and Employment Insurance premiums;
• Employer’s share of health, disability, and life insurance premiums and related Québec sales tax;
• Employer’s share of the Québec Parental Insurance Plan premium;
• Claims and related costs under the Public Service Dental Care Plan and the Pensioners’ Dental Services Plan;
• Provincial payroll taxes in respect of employees who work in the provinces of Quebec, Ontario, Manitoba and Newfoundland and Labrador. The payroll tax is levied on employers in each province to help fund their respective health plans; and
• Returns to certain employees of their share of the Employment Insurance premium reduction.

Generally, Public Service Pension Plan contributions, Public Service Death Benefit Account contributions, Canada/Québec Pension Plan contributions and Employment Insurance premiums are recovered from all departments, agencies and revolving funds based on salaries and wages incurred. Contributions to health care plans are recovered from certain departments, agencies and all revolving funds based on a percentage of salaries and wages incurred.

The following table presents a breakdown by major category.

($ thousands)

	2014	2013
Public Service Pension Plan and Retirement Compensation Arrangement contributions (statutory)	2,640,277	2,608,360
Public Service Health Care Plan premiums (Vote 20)	978,370	965,314
Canada/Québec Pension Plan contributions (statutory)	625,957	670,212
Provincial payroll taxes (Vote 20)	535,927	521,468
Group disability and life insurance premiums (Vote 20)	560,342	507,371
Employment Insurance premiums (statutory)	288,217	299,992
Public Service Dental Care Plan claims (Vote 20)	265,284	268,845
Pensioners’ Dental Services Plan claims (Vote 20)	158,872	142,796
Provincial health insurance plan premiums (Vote 20)	37,836	35,187
Québec Parental Insurance Plan premiums (Vote 20)	35,616	35,801
Public Service Death Benefit Account contributions (statutory)	14,409	12,669
Public Service Pension Plan and Retirement Compensation Arrangement contributions in respect of actuarial deficits (statutory)	443,000	443,000
Other expenses (Voted and statutory)	7,906	7,033
Total expenses	6,592,013	6,518,048
Recoveries
Employer’s contributions to government employee benefit plans recovered from government departments and agencies (statutory)	3,568,860	3,591,233
Employer’s contributions to government employee insurance plans recovered from government departments, agencies and other organizations (Vote 20)	153,588	184,418
Employees’ and pensioners’ contributions to the Public Service Health Care Plan recovered from government departments and other organizations (Vote 20)	181,005	176,067
Pensioners’ contributions to the Pensioners’ Dental Services Plan (Vote 20)	77,651	73,676
Total recoveries	3,981,104	4,025,394
Net expenses	2,610,909	2,492,654

14. Subsequent Event

An action was commenced in the Federal Court of Canada on June 6, 2008, challenging the reduction of former RCMP members’ long-term disability payments under their RCMP insurance policy by the amount of their Pension Act disability benefit. The parties reached an agreement that was endorsed by the Federal Court of Canada on August 5, 2014. As a result, the full amount of the settlement has been recorded as an accrued liability in these financial statements.

15. Comparative Information

Comparative figures have been reclassified to conform to the current year’s presentation.