Optional Services Revolving Fund

Public Accounts of Canada 2012 Volume III - Top of the page Navigation

STATEMENT OF MANAGEMENT RESPONSIBILITY

We have prepared the accompanying financial statements of the Optional Services Revolving Fund as required by and in accordance with the policy of Treasury Board on revolving funds and the reporting requirements of the Receiver General for Canada. These financial statements were prepared in accordance with the significant accounting policies set out in Note 2 of the statements, on a basis consistent with that of the preceding year.

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

Management develops and disseminates financial management and accounting policies and issues specific directives which maintain standards of financial management, accounting and reporting. Management maintains systems of financial management and internal control which give due consideration to costs, benefits and risks. They are designed to provide reasonable assurance that transactions are properly authorized by Parliament, are executed in accordance with prescribed regulations, and are properly recorded to maintain accountability of government funds and safeguard the assets under the Fund's administration. Management also seeks to assure the objectivity and integrity of data in its financial statements by the 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 its regulations, policies, standards and managerial authorities are understood throughout the organization.

With the exception of the Statement of Authority Used and the Reconciliation of Unused Authority, management has presented the financial statements to external auditors who have audited them and have provided an independent opinion which is appended to these financial statements. The Statement of Authority Provided and the Reconciliation of Unused Authority were not audited as it is not required by Treasury Board policy.

Approved by:

ALEX LAKRONI
Chief Financial Officer,
Public Works and Government Services Canada

TOM RING
Assistant Deputy Minister,
Acquisitions Branch
Public Works and Government Services Canada

May 28, 2012

STATEMENT OF AUTHORITY PROVIDED (USED) (UNAUDITED) FOR THE YEAR ENDED AS AT MARCH 31

Table Summary

The table presents on a comparative basis the statement of authority provided (used) (unaudited). It consists of five columns: item descriptions, current year with two columns - estimates and actual, and previous year with two columns - estimates and actual. Sub-totals are displayed at operating source (use) of funds and totals are displayed at authority provided (used).

(in thousands of dollars)
  2012 2011
Estimates Actual Estimates Actual
Net results   568   510
Items not requiring use of funds   (2,585)   1,199
Operating source (use) of funds   (2,017)   1,709
Items requiring use of funds        
Net other assets and liabilities (2,016) 1   (2)
Authority provided (used) (2,016) (2,016)   1,707

RECONCILIATION OF UNUSED AUTHORITY (UNAUDITED) AS AT MARCH 31

Table Summary

The table presents on a comparative basis the reconciliation of unused authority (unaudited). It consists of three columns: item descriptions, current year and previous year. Sub-totals are displayed at net authority used end of year and totals are displayed at the unused authority carried forward.

(in thousands of dollars)
  2012 2011
Accumulated net charge against the Fund's authority1 15,201 14,250
PAYE charges against the appropriation account after March 31 (11,896) (9,369)
Amounts credited to the appropriation account after March 31 580 1,020
Net authority provided, end of year 3,885 5,901
Authority limit (Note 1) 35,000 35,000
Unused authority carried forward 38,885 40,901

INDEPENDENT AUDITORS' REPORT

TO THE DEPUTY CHIEF OVERSIGHT OFFICER, OFFICE OF AUDIT AND EVALUATION, PUBLIC WORKS AND GOVERNMENT SERVICES CANADA

We have audited the accompanying financial statements of the Optional Services Revolving Fund, which comprise the statement of financial position as at March 31, 2012, and the statements of operations and net liabilities, and cash flow for the year then ended and a summary of significant accounting policies and other explanatory information.

Management is responsible for the preparation and fair presentation of these financial statements in accordance with section 6.4 of the Treasury Board of Canada's Policy on Special Revenue Spending Authorities and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Optional Services Revolving Fund as at March 31, 2012 and the results of its operations and net liabilities and its cash flow for the year then ended in accordance with section 6.4 of the Treasury Board of Canada's Policy on Special Revenue Spending Authorities.

Without modifying our opinion, we draw attention to Note 2 to the financial statements, which describes the basis of accounting. The financial statements are prepared to assist the Optional Services Revolving Fund to comply with section 6.4 of the Treasury Board of Canada Policy on Special Revenue Spending Authorities referred to above. As a result, the financial statements may not be suitable for another purpose. Our auditors' report is intended solely for the information and use of the Optional Services Revolving Fund and the Treasury Board of Canada and should not be used by parties other than the Optional Services Revolving Fund and the Treasury Board of Canada.

Ernst & Young LLP
Chartered Accountants,
Licensed Public Accountants

Ottawa, Canada
May 29, 2012

STATEMENT OF FINANCIAL POSITION AS AT MARCH 31

Table Summary

The table presents on a comparative basis the statement of financial position. It consists of three columns: item descriptions, current year and previous year. Item descriptions are grouped in two: the asset and the liabilities and net liabilities, both displaying totals. Current item descriptions are grouped together for assets and for liabilities with sub-totals for current liabilities. Sub-totals are displayed for long term liabilities.

(in thousands of dollars)
  2012 2011
ASSETS    
Current    
Cash in transit   2
Accounts receivable    
Government of Canada 580 1,020
Outside parties 3,861 1,457
Other assets (note 3) 36 55
4,477 2,534
LIABILITIES AND NET LIABILITIES    
Current    
Accounts payable and accrued liabilities    
Government of Canada 33 60
Outside parties 10,327 7,896
Other liabilities (note 4) 109 137
10,469 8,093
Long-term    
Allowance for employee termination benefits 433 483
10,902 8,576
NET LIABILITIES (note 5) (6,425) (6,042)
4,477 2,534
Contractual obligations (note 6).
The accompanying notes are an integral part of the financial statements.

STATEMENT OF OPERATIONS AND NET LIABILITIES FOR THE YEAR ENDED AS AT MARCH 31

Table Summary

The table presents on a comparative basis the statement of operations and net liabilities. It consists of three columns: item descriptions, current year and previous year. Item descriptions for revenues and for operating expenses are grouped together, each displaying sub-totals. Sub-totals for revenues, net of direct costs are displayed at gross margin and sub-totals for gross margin, net of operating expenses are displayed at net results. Totals are displayed at net liabilities end of year.

(in thousands of dollars)
  2012 2011
Revenues    
Vaccine program recoveries 91,067 70,717
Traffic management recoveries 11,910 12,803
Communication, printing and audio-visual recoveries 2,971 3,822
Benchmarking program   16
105,948 87,358
Direct costs 101,069 81,242
Gross margin 4,879 6,116
Operating expenses    
Salaries and employee benefits 2,494 3,286
Employee termination benefits 6 (203)
Professional and special services 856 1,460
Corporate and administrative services 568 641
Occupancy costs 319 363
Transportation and telecommunications 43 19
Other expenses 25 40
4,311 5,606
Net results 568 510
Net liabilities, beginning of year (6,042) (6,500)
Net financial resources provided and change in the accumulated net charge against the Fund's authority account, during the year (951) (52)
Net liabilities, end of year (6,425) (6,042)

STATEMENT OF CASH FLOW FOR THE YEAR ENDED AS AT MARCH 31

Table Summary

The table presents on a comparative basis the statement of cash flow. It consists of three columns: item descriptions, current year and previous year. Sub-totals are displayed at net financial resources provided by operating activities and change in the accumulated net charge against the Fund's authority account during the year. Totals are displayed at accumulated net charge against the Fund's authority account end of year.

(in thousands of dollars)
  2012 2011
Operating activities    
Net results 568 510
Item not affecting use of cash    
Provision for employee termination benefits 6 (203)
574 307
Changes in working capital (note 7) 433 (136)
Payments on provision for employee termination benefits (56) (119)
Net financial resources provided by operating activities and change in the accumulated net charge against the Fund's authority account, during the year 951 52
Accumulated net charge against the Fund's authority account, beginning of year 14,250 14,198
Accumulated net charge against the Fund's authority account, end of year 15,201 14,250
The accompanying notes are an integral part of the financial statements.

NOTES TO THE FINANCIAL STATEMENTS

  1. Authority and purpose

    The Optional Services Revolving Fund ("the Fund") provides specialized services to client departments, such as communication procurement services, travel management services and central removal services.  The Fund also procures vaccines and drugs on behalf of provinces and territories.  The Fund was established under Appropriation Act No. 4, 1991-92 which was repealed in 1996 and replaced by section 5.5 of the Revolving Funds Act.

    The Fund has a continuing non-lapsing authority from Parliament to make payments out of the Consolidated Revenue Fund for the purposes of working capital, capital acquisitions and the temporary financing of accumulated operating deficits, the total of which is not to exceed $35,000,000 at any time.

    For fiscal year 2012, the Fund received authorization from the Treasury Board to access its net authority provided for a total amount of up to $2,015,634 to cover its operating deficit.

  2. Significant accounting policies

    The financial statements have been prepared in accordance with Treasury Board accounting policies and the reporting requirements of the Receiver General for Canada, which are consistent with Canadian generally accepted accounting principles for the public sector. The basis of accounting used in these financial statements differs from Canadian generally accepted accounting principles for the public sector because the employee termination benefits liability is based on management's estimate of this liability rather than based on actuarial valuations.

    The significant accounting policies are as follows:

    1. Use of estimates

      The preparation of financial statements in accordance with the reporting requirements for Revolving Funds described by the Receiver General for Canada requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant item where estimates are used is the liability for employee termination benefits. Actual results could significantly differ from these estimates. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

    2. Accounts receivable

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

    3. Revenues

      Recoveries from the vaccine program are recognized using a blended rate established by fixed price contracts and based on the proportion of total goods delivered at year end. Any losses on the fixed price contracts are recognized during the period in which they are identified.

      Revenues earned on communication, printing and audio-visual services are recognized using the completed contract method.

      Traffic management recoveries consist of travel commissions, and central removal services. Travel commissions and central removal services recoveries are recognized based on service utilization.

    4. Pension plan

      Employees of the Fund are covered by the Public Service Superannuation Act and the Supplementary Retirement Benefits Act. The Government of Canada's portion of the pension cost is included in the employee benefits charge assessed against the Fund. The actual payment of the pension is made from the Public Service Superannuation and Supplementary Retirement Benefits Accounts.

    5. Employee termination benefits, vacation pay and time-off in lieu

      Termination benefits accrue to employees over their years of service with the Government of Canada as provided for under collective agreements, and the estimated costs of these benefits are recorded in the accounts as they are earned by the employees. Ratified changes to employee termination benefits have resulted in the elimination of the accumulation of employee termination benefits for certain employee groups. Eligible employees may now opt for immediate payout of their accumulated severance pay, thereby decreasing the allowance for employee termination benefits.

      The liability for vacation pay and compensatory leave is calculated at the salary levels in effect at the end of the year for all unused vacation pay and time-off in lieu benefits accruing to employees.

      Employees are permitted to accumulate unused sick leave which they can only use in the event of an illness. Accumulated unused sick leave upon employee termination is not payable to the employee.

  3. Other assets
    Table Summary

    The table presents on a comparative basis other assets. It consists of three columns: item descriptions, current year and previous year. The last line presents the totals.

    (in thousands of dollars)
      2012 2011
    Goods and Services Tax refundable advances 35 52
    Employee advances 1 3
    36 55
  4. Other liabilities
    Table Summary

    The table presents on a comparative basis other liabilities. It consists of three columns: item descriptions, current year and previous year. The last line presents the totals.

    (in thousands of dollars)
      2012 2011
    Vacation pay and compensatory leave 109 136
    Garnished Salaries   1
    109 137
  5. Net liabilities

    The accumulated surplus is the accumulation of each fiscal year's surplus, net of deficits, since the inception of the Fund. The accumulated net charge against the Fund's authority is the non-lapsing authority amount that has been used since the inception of the Fund.

    Table Summary

    The table presents on a comparative basis the net liabilities. It consists of three columns: item descriptions, current year and previous year. Sub-totals are displayed at accumulated surplus end of year and totals are displayed at net liabilities end of year.

    (in thousands of dollars)
      2012 2011
    Accumulated surplus, beginning of year 8,208 7,698
    Net results 568 510
    Accumulated surplus, end of year 8,776 8,208
    Accumulated net charge against the Fund's authority account, end of year (15,201) (14,250)
    Net liabilities, end of year (6,425) (6,042)
  6. Contractual obligations

    The Fund leases its premises under occupancy instruments. An occupancy instrument is a formal agreement between the Fund and Public Works and Government Services Canada recording the terms and conditions that govern the provision and occupancy of the accommodation. The Fund is also engaged in contractual obligations for communication services. Estimated future payments are as follows:

    Table Summary

    The table presents total annual contractual obligations for 2013 to 2017. The last line presents the totals for those years.

    (in thousands of dollars)
    Year ending March 31  
    2013 14,822
    2014 103
    2015 21
    2016 21
    2017 18
    14,985
  7. Changes in working capital
    Table Summary

    The table presents on a comparative basis changes in working capital. It consists of four columns: item descriptions, current year, previous year and changes. The changes column displays the difference between current year and previous year and displays the total changes at the end of the column.

    (in thousands of dollars)
      2012 2011 Changes
    Current assets 4,477 2,534 (1,943)
    Current liabilities 10,469 8,093 2,376
        433
  8. Comparative figures

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

  9. Related party transactions

    Through common ownership, the Fund is related to all Government of Canada departments, agencies, and Crown corporations. The Fund enters into transactions with these entities in the normal course of business and on normal trade terms.

Footnotes

Footnote 1

Debit balance in the accumulated net charge against the Fund's authority.

Return to footnote1 referrer

Public Accounts of Canada 2012 Volume III - Bottom of the page Navigation