Real Property Services Revolving Fund

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Statement of Management Responsibility

We have prepared the accompanying financial statements of the Real Property Services Revolving Fund as required by and in accordance with the policy of the Treasury Board on Special Revenue Spending Authorities 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 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 Provided (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 (Used) 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

Pierre-Marc Mongeau
Assistant Deputy Minister,
Real Property Branch
Public Works and Government Services Canada

May 27, 2014

Statement of Authority provided (Used) (Unaudited) for the year ended 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).

	2014		2013
	Estimates	Actual	Estimates	Actual
Net results		12,628		6,981
Items not requiring use of funds		(negative 9,128)		3,259
Operating source of funds		3,500		10,240
Allocation for employee severance benefits	(negative 6,147)
Net other assets and liabilities	(negative 10,000)	837	(negative 13,240)	(negative 5,575)
Authority provided (used)	(negative 16,147)	4,337	(negative 13,240)	4,665

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 provided end of year and totals are displayed at the unused authority carried forward.

	2014	2013
Accumulated net charge against the Fund's authorityLink to footnote 1	182,006	182,400
Payables at year‑end charges against the appropriation account after March 31	(negative 278,004)	(negative 297,297)
Amounts credited to the appropriation account after March 31	142,181	153,503
Authority provided, end of year	46,183	38,606
Allocation from Treasury Board for paid employee severance benefits (Note 1)	6,147	3,240
Net authority provided, end of year	52,330	41,846
Authority limit (Note 1)	150,000	150,000
Unused authority carried forward	202,330	191,846

Independent Auditors' Report

To the Deputy Minister
Public Works and Government Services Canada

We have audited the accompanying financial statements of the Real Property Services Revolving Fund, which comprise the statement of financial position as at March 31, 2013, 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. These financial statements have been prepared by management of the Real Property Services Revolving Fund to comply with Section 6.4 of the Treasury Board of Canada's Policy on Special Revenue Spending Authorities.

Management's responsibility for the financial statements

Management is responsible for the preparation 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.

Auditors' responsibility

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 from 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.

Opinion

In our opinion, the financial statements of the Real Property Services Revolving Fund as at and for the year ended March 31, 2014 are prepared, in all material respects, in accordance with Section 6.4 of the Treasury Board of Canada's Policy on Special Revenue Spending Authorities.

Basis of accounting and restrictions on use

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 Real Property Services Revolving Fund to comply with Section 6.4 of the Treasury Board of Canada's Policy on Special Revenue Spending Authorities. 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 Real Property Services Revolving Fund and the Treasury Board of Canada and should not be used by parties other than the Real Property Services Revolving Fund and the Treasury Board of Canada.

Ernst & Young LLP
Chartered Accountants,
Licensed Public Accountants

Ottawa, Canada
May 29, 2014

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 assets 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.

	2014	2013
Assets
Current
Cash in transit	4	3
Accounts receivable (Note 3)	148,923	162,986
Other assets (Note 4)	20,505	16,333
Total	169,432	179,322
Liabilities and net liabilities
Current
Accounts payable and accrued liabilities (Note 5)	280,364	293,196
Vacation pay and compensatory leave	11,065	11,302
Contingent liabilities (Note 6)		500
Other liabilities (Note 7)	421	2,273
Subtotal	291,850	307,271
Long term
Employee severance benefits (Note 8)	20,861	28,352
Total	312,711	335,623
Net liabilities (Note 9)	(negative 143,279)	(negative 156,301)
Total	169,432	179,322

Contractual obligations (Note 10).
The accompanying notes form an integral part of the financial statements.

Statement of Operations and Net Liabilities for the year ended 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 gross revenues and operating expenses are group together, both displaying sub‑totals. Sub‑totals for gross revenues, net of cost of sales are displayed at net revenues. Sub‑totals for net revenues, net of operating expenses are displayed at net results. Totals are displayed at net liabilities end of year.

	2014	2013
Gross revenue
Recoverable disbursements	1,101,109	1,134,898
Payroll recoveries	224,208	246,766
Labour	87,446	83,407
Project fees	66,307	69,554
Other revenue	978	198
Subtotal	1,480,048	1,534,823
Cost of sales	(negative 1,102,424)	(negative 1,135,640)
Net revenue	377,624	399,183
Operating expenses
Salaries and employee benefits	223,378	229,100
Real Property indirect activities	77,930	88,757
Corporate and administrative services	46,604	53,200
Occupancy costs	14,186	16,090
Employee severance benefits	2,480	3,259
Other expenses	323	1,682
Professional and special services	95	114
Total	364,996	392,202
Net results	12,628	6,981
Net liabilities, beginning of year	(negative 156,301)	(negative 158,541)
Net financial resources used (provided) and change in the accumulated net charge against the Fund's authority, during the year	394	(negative 4,741)
Net liabilities, end of year	(negative 143,279)	(negative 156,301)

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

Statement of Cash Flows for the year ended March 31

Table Summary

The table presents on a comparative basis the statement of Cash Flows. It consists of three columns: item descriptions, current year and previous year. Item descriptions are grouped together for the operating activities displaying sub‑totals. Sub‑totals are displayed at net financial resources provided 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.

	2014	2013
Operating activities
Net results	12,628	6,981
Non‑cash items:
Provision for employee severance benefits	2,480	3,259
Total	15,108	10,240
Variations in statement of financial position:
(Increase) decrease in cash in transit	(negative 1)	1
Decrease in accounts receivable	14,063	16,903
(Increase) in other assets	(negative 4,172)	(negative 321)
(Decrease) in accounts payable and accrued liabilities	(negative 12,832)	(negative 17,143)
(Decrease) increase in vacation pay and compensatory leave	(negative 237)	1,786
(Decrease) increase in contingent liabilities	(negative 500)	87
(Decrease) increase in other liabilities	(negative 1,852)	351
Subtotal	(negative 5,531)	1,664
Payments on provision for employee severance benefits	(negative 9,971)	(negative 7,163)
Total	(negative 15,502)	(negative 5,499)
Net financial resources provided (used) by operating activities and change in the accumulated net charge against the Fund's authority, during the year	(negative 394)	4,741
Accumulated net charge against the Fund's authority, beginning of year	182,400	177,659
Accumulated net charge against the Fund's authority, end of year	182,006	182,400

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

Notes to the financial statements for the year ended March 31, 2014

1. Authority and purpose

The Real Property Services Revolving Fund (the "Fund") provides, on a fee-for-service basis, optional real property services to other Government of Canada custodian departments and to other departments and agencies requesting services over and above those provided under the Federal Accommodation and Holdings Service Line program. More specifically, the Fund looks after architectural and engineering activities, property management, holdings and divestitures, and support services.

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 $150,000,000 at any time.

For fiscal year 2014, the Fund received authorization from the Treasury Board to access its unused authority for a total amount of up to $10,000,000 to temporarily fund transitory cash elements at year-end (fiscal year 2013: $10,000,000). The Fund did not use any of this authority during the year.

The Treasury Board agreed, as per existing policies and regulations, to cover a portion of employee severance benefits paid by the Fund in fiscal year 2014. The Fund received a non‑reimbursable amount of $6,147,078 (fiscal year 2013: $3,240,205).

2. Significant accounting policies

The financial statements have been prepared in accordance with the Treasury Board accounting policies and the reporting requirements of the Receiver General for Canada. The financial statements are not presented on a basis consistent with Canadian public sector accounting standards as:

• The liabilities for vacation pay and employee severance benefits are based on management's estimate rather than actuarial valuations;
• No liability is recorded for sick leave;
• The statement of financial position does not segregate non‑financial assets; and
• The net debt indicator and statement of change in net debt are not presented in the financial statements.

The significant accounting policies are as follows:

a. Accounts receivable

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

b. Revenue

Revenue is earned on professional and technical services performed and the recover of disbursements made on behalf of government departments, agencies, and outside parties are recognized when costs are incurred by the Fund.

c. Expenses

Expenses for real property indirect activities, corporate and administrative services, and occupancy costs are based on the budgeted direct service delivery personnel costs. These costs are determined in the budget exercise for the Professional and Technical Services program as well as for the Federal Accommodation (FA) and Federal Holdings (FH) programs of Public Works and Government Services Canada. In the case of service delivery to the FA and FH programs, charges are adjusted to reflect the actual volume of service delivery achieved at year end.

d. Employee future benefits

i. Pension benefits

Eligible employees participate in the Public Service Pension Plan (the "Plan"), a multiemployer pension plan administered by the Government. The Fund's contributions to the Plan are charged to expenses in the year incurred and represent the total Fund obligation to the Plan. The Fund'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.

ii. Severance benefits

Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. The obligation relating to the benefits earned by employees is calculated using information derived from management's estimate of the liability. The liability for benefits is recorded in the accounts as the benefits accrue to employees.

iii. Vacation pay and compensatory leave

Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.

e. Financial instruments

The fair value of the financial instruments approximates costs unless otherwise specified. The Fund's financial instruments consist of cash in transit, accounts receivable, other assets, accounts payable and accrued liabilities. It is management's opinion that the Fund is not exposed to significant interest, currency or credit risks rising from these financial instruments.

f. Measurement uncertainty

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses reported in the financial statements. At the time of preparation of these financial statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are the allowance for doubtful accounts on external receivables and allowance for contingent liabilities. 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. Accounts receivable

Table Summary

The table presents the accounts receivable on a comparative basis. It consists of three columns: item descriptions, current year and previous year. Totals are displayed on the last line.

	2014	2013
Other government departments and agencies	142,181	153,503
External parties	6,773	9,549
Less: allowance for doubtful accounts from external parties	(negative 31)	(negative 66)
Total	148,923	162,986

4. Other assets

Table Summary

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

	2014	2013
Goods and Services Tax refundable advances	19,122	16,305
Prepaid expenses	1,376	21
Other advances	7	7
Total	20,505	16,333

5. Accounts payable and accrued liabilities

Table Summary

The table presents on a comparative basis the accounts payable and accrued liabilities. It consists of three columns: item descriptions, current year and previous year. Totals are displayed on the last line.

	2014	2013
External parties and accrued liabilities	277,115	288,679
Other government departments and agencies	3,249	4,517
Total	280,364	293,196

6. Contingent liabilities

Claims have been made against the Fund in the normal course of operations. These claims include items with determined amounts and others for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. The Fund has not recorded an allowance this fiscal year (fiscal year 2013: $500,000) for claims and litigations where it is likely that there will be a future payment and a reasonable estimate of the loss can be made. Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amount to approximately $337,000 at March 31, 2014 (fiscal year 2013: $450,000).

7. Other liabilities

Table Summary

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

	2014	2013
Contractor's security deposits	419	1,126
Professional liability fund	2	4
Provision for unsigned collective agreements		1,143
Total	421	2,273

8. Employee severance benefits

The Fund provides severance benefits to its employees based on eligibility, years of service and salary at termination of employment. These severance benefits are not pre‑funded. Benefits will be paid by future authorities.

Commencing in 2012, as part 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. 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. These changes have been reflected in the calculation of the outstanding severance benefit obligation. Information about the severance benefits, measured as at March 31, is as follows:

Table Summary

The table presents the employee severance benefits on a comparative basis. It consists of three columns: item descriptions, current year and previous year. The totals net of expenses for the year are displayed at accrued benefit obligation end of year.

	2014	2013
Accrued benefit obligation, beginning of year	28,352	32,256
Benefits paid during the year:
Retirements and departures from the Public Service	(negative 2,641)	(negative 3,318)
Employees who opted to cash out their accumulated balances as per new collective agreements	(negative 7,330)	(negative 3,845)
Subtotal	(negative 9,971)	(negative 7,163)
Expenses for the year	2,480	3,259
Accrued benefit obligation, end of year	20,861	28,352

9. 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 represents the cumulative receipts and disbursements over the life 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 closing balance and accumulated net charge against the Fund's authority closing balance. Totals are displayed at net liabilities end of year.

	2014	2013
Accumulated surplus
Opening balance	26,099	19,118
Net results	12,628	6,981
Closing balance	38,727	26,099
Accumulated net charge against the Fund's authority
Opening balance	(negative 182,400)	(negative 177,659)
Change during the year	394	(negative 4,741)
Closing balance	(negative 182,006)	(negative 182,400)
Net liabilities, end of year	(negative 143,279)	(negative 156,301)

10. Contractual obligations

The nature of the Fund's activities can result in some large multi‑year contracts and obligations whereby the Fund will be obligated to make future payments when the services/goods are received. Estimated future payments are as follows:

Table Summary

The table presents the contractual obligations and consists of two columns. The left hand column lists the years, and the right hand column lists the estimated future payments. Totals are displayed on the last line.

2015	302,531
2016	28,571
2017	10,603
2018	6,963
2019 and thereafter	10,520
Total	359,188

11. Comparative figures

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

12. 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.

Public Accounts of Canada 2014 Volume III - Bottom of the page Navigation

• Passport Canada Revolving Fund
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• Table of Contents - Section 1
• Translation Bureau Revolving Fund
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