OCOL - Future-Oriented Financial Statements

Future-Oriented Financial Statements

Office of the Commissioner of Official Languages

STATEMENT OF MANAGEMENT RESPONSIBILITY

Management 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 February 15, 2012, and reflect the plans described in the Report on Plans and Priorities.

________________________________	________________________________
Graham Fraser Commissioner of Official Languages	Lise Cloutier Chief Financial Officer Assistant Commissioner Corporate Management

Ottawa, Canada
March 22, 2012

FUTURE-ORIENTED STATEMENT OF OPERATIONS (UNAUDITED)

For the year ending March 31
(in dollars)
	Estimated Results 2012	Planned Results 2013
Operating Expenses
Protection of Linguistic Rights	8,168,866	8,028,471
Promotion of Linguistic Duality	7,812,384	8,154,190
Internal Services	8,840,405	8,331,849

NET COST OF OPERATIONS	24,821,655	24,514,510

Information for the year ending March 31, 2012 includes actual amounts from April 1, 2011 to February 15, 2012.

Segmented information (Note 12)

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

FUTURE-ORIENTED STATEMENT OF FINANCIAL POSITION (UNAUDITED)

As at March 31
(in dollars)
	Estimated Results 2012	Planned Results 2013
ASSETS
Financial assets
Due from the Consolidated Revenue Fund	1,565,320	1,577,316
Accounts receivable and advances	53,700	53,700
Total financial assets	1,619,020	1,631,016
Non-financial assets
Prepaid expenses	800	-
Tangible capital assets (Note 6)	723,758	398,069
Total non-financial assets	724,558	398,069

	2,343,578	2,029,085
LIABILITIES AND EQUITY OF CANADA
Liabilities
Accounts payable and accrued liabilities (Note 7)	1,741,685	1,754,403
Vacation pay and compensatory leave	748,837	710,940
Employee future benefits (Note 8)	1,592,507	878,773
Total Liabilities	4,083,029	3,344,116
Equity of Canada	(1,739,451)	(1,315,031)

	2,343,578	2,029,085

Information for the year ending March 31, 2012 includes actual amounts from April 1, 2011 to February 15, 2012.

Contingent liabilities (Note 10)

Contractual obligations (Note 11)

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

FUTURE-ORIENTED STATEMENT OF EQUITY OF CANADA (UNAUDITED)

As at March 31
(in dollars)
	Estimated Results 2012	Planned Results 2013
Equity of Canada, beginning of year	(2,531,726)	(1,739,451)
Net cost of operations	(24,821,655)	(24,514,510)
Net cash provided by Government	22,475,541	21,913,042
Change in due from the Consolidated Revenue Fund	133,945	11,996
Services provided without charge from other government departments (Note 9)	3,004,444	3,013,892

EQUITY OF CANADA, END OF YEAR	(1,739,451)	(1,315,031)

Information for the year ending March 31, 2012 includes actual amounts from April 1, 2011 to February 15, 2012.

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

FUTURE-ORIENTED STATEMENT OF CASH FLOWS (UNAUDITED)

For the year ending March 31
(in dollars)
	Estimated Results 2012	Planned Results 2013
OPERATING ACTIVITIES
Net cost of operations	24,821,655	24,514,510
Non-cash items:
Amortization of tangible capital assets (Note 6)	(623,561)	(459,726)
Services provided without charge by other government departments (Note 9)	(3,004,444)	(3,013,892)
Variations in Statement of Financial Position:
Decrease in accounts receivable and advances	(42,969)	-
Increase (decrease) in prepaid expenses	(6,908)	800
Increase in accounts payable and accrued liabilities	(187,992)	(12,718)
Decrease (increase) in vacation pay and compensatory leave	(34,118)	37,897
Decrease in employee future benefits	1,519,678	713,734
Cash used in operating activities	22,441,341	21,779,005
CAPITAL INVESTING ACTIVITIES
Acquisitions of tangible capital assets (Note 6)	34,200	134,037
Cash used in capital investing activities	34,200	134,037


NET CASH PROVIDED BY GOVERNMENT OF CANADA	22,475,541	21,913,042

Information for the year ending March 31, 2012 includes actual amounts from April 1, 2011 to February 15, 2012.

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

NOTES TO THE FUTURE-ORIENTED FINANCIAL STATEMENTS (UNAUDITED)

1. Authority and Objectives

The mandate of the Commissioner of Official Languages is to oversee the full implementation of the Official Languages Act, protect the language rights of Canadians, and promote linguistic duality and bilingualism in Canada.

Section 56 of the Official Languages Act (1) states that it is the duty of the Commissioner to take all actions and measures within the authority of the Commissioner with a view to ensuring recognition of the status of each of the official languages and compliance with the spirit and intent of this Act in the administration of the affairs of federal institutions, including any of their activities relating to the advancement of English and French in Canadian society.

Under the Act, therefore, the Commissioner is required to take every measure within his power to ensure that the three main objectives of the Official Languages Act are met:

the equality of the status and use of English and French in Parliament, the Government of Canada, the federal administration and the institutions subject to the Act;
the development of official language minority communities in Canada; and
the advancement of the equality of English and French in Canadian society.

The Commissioner of Official Languages is appointed by commission under the Great Seal, after approval by resolution of the House of Commons and the Senate, for a seven-year term. The Commissioner of Official Languages reports directly to Parliament.

2. Methodology and Significant Assumptions

The future-oriented financial statements have been prepared on the basis of the government priorities and the plans of OCOL as described in the Report on Plans and Priorities.

The main assumptions are as follows:

OCOL's activities will remain substantially the same as for the previous year;
Expenses, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue;
Estimated year end information for 2011-12 is used as the opening position for the 2012-13 planned results.

These assumptions are adopted as at February 15, 2012.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to 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 Office of the Commissioner of Official Languages has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions 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 financial statements and the historical financial statements include:

The timing and amounts of acquisitions and disposals of equipment may affect gains/losses and amortization expense.
Further changes to the operating budget through new initiatives or technical adjustments later in the year.

Once the Report on Plans and Priorities is presented, the Office of the Commissioner of Official Languages 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 Significant Accounting Policies

The future-oriented financial statements have been prepared in accordance with the Treasury Board accounting policies in effect for the 2011-2012 fiscal year. These accounting policies, stated below, 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 authorities
OCOL is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to OCOL do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items presented in the Future-oriented Statement of Operations and the Future-oriented Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a reconciliation between the bases of reporting.

(b) Net Cash Provided by Government
OCOL operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by OCOL is deposited to the CRF and all cash disbursements made by OCOL are paid from the CRF. Net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the Government.

(c) Due from/to the 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 OCOL is entitled to draw from the CRF without further parliamentary expenditure authorities to discharge its liabilities.

(d) Accounts receivable
Accounts receivable are stated at the lower of cost and net recoverable value. A valuation allowance is established for receivables where recovery is considered uncertain.

(e) Tangible capital assets
All tangible capital assets and leasehold improvements having an initial cost of $1,000 or more are recorded at their acquisition costs. OCOL does not capitalize intangibles.

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

Asset Class

Amortization Period

Machinery and equipment

5 years

Informatics hardware

4 years

Furniture

5 years

Informatics software

3 years

Motor vehicles

7 years

Leasehold improvements

Lesser of the remaining term of the lease or the useful life of the improvement

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

i. 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.

ii. Services provided without charge by other government departments
Services provided without charge by other government departments for accommodation, the employer's contribution to the health and dental insurance plans, audit and payroll services are recorded as operating expenses at their estimated cost.

iii. Workers' compensation benefits
The Government of Canada sponsors workers’ compensation benefits available across Canada. OCOL is charged for its share of the annual benefit payments incurred under this Plan. These amounts represent OCOL’s contribution to the Plan and they are recorded by OCOL as an expense in the period incurred.

(g) Employee future benefits

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

ii. Severance benefits
Employees are entitled to severance benefits, as provided for under labour contracts and conditions of employment. The cost of these benefits is 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.

(h) Contingent liabilities
Contingent liabilities are potential liabilities which 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 recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the future-oriented financial statements.

Asset Class	Amortization Period

Machinery and equipment	5 years
Informatics hardware	4 years
Furniture	5 years
Informatics software	3 years
Motor vehicles	7 years
Leasehold improvements	Lesser of the remaining term of the lease or the useful life of the improvement

5. Parliamentary Authorities

OCOL receives its funding through annual Parliamentary authorities. Items recognized in the Future-oriented Statements of Operations and Financial Position in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, OCOL 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:

(a) Authorities requested

(in dollars)
	Estimated 2012	Planned 2013
Authorities requested
Vote 20	21,006,242	19,675,303
Statutory amounts	2,301,139	2,250,457
Forecasted authorities available	23,307,381	21,925,760

Authorities presented reflect current forecasts of statutory items, approved initiatives included and expected to be included in Estimates documents and, when reasonable estimates can be made, estimates of amounts to be allocated from Treasury Board central votes.

(b) Reconciliation of net cost of operations to requested authorities

(in dollars)
	Estimated 2012	Planned 2013
Net cost of operations	24,821,655	24,514,510
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (Note 6)	(623,561)	(459,726)
Decrease in employee future benefits	1,519,678	713,734
Decrease (increase) in vacation pay and compensatory leave	(34,120)	37,897
Services provided without charge by other government departments (Note 9)	(3,004,444)	(3,013,892)

	(2,142,447)	(2,721,987)
Adjustments for items not affecting net cost of operations but affecting authorities:
Decrease in prepaid expenses	(6,908)	(800)
Acquisitions of tangible capital assets (Note 6)	34,200	134,037

	27,292	133,237
	22,706,500	21,925,760
Forecast current year lapse	600,881	-
Forecast authorities available	23,307,381	21,925,760

6. Tangible Capital Assets

(in dollars)
	Estimated Results 2012	Planned Results 2013
Opening balance	1,313,119	723,758
Acquisitions of tangible capital assets	34,200	134,037
Less: Current year amortization	(623,561)	(459,726)

Net Book Value	723,758	398,069

7. Accounts Payable and Accrued Liabilities

(in dollars)
	Estimated Results 2012	Planned Results 2013
External parties
Accounts payable and accrued liabilities	1,098,409	1,104,686
Accrued salaries	448,000	448,000
Other government departments and agencies
Accounts payable	195,276	201,717

	1,741,685	1,754,403

8. Employee Future Benefits

(a) Pension benefits
OCOL's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plans benefits and they are indexed to inflation.

Both the employees and OCOL contribute to the cost of the Plan. The forecast expenses are $1,654,519 in 2011-12 and $1,618,079 in 2012-13, representing approximately 1.9 times the contributions of employees.

OCOL'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
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 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 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, estimated as at the date of these statements, is as follows:

(in dollars)
	Estimated Results 2012	Planned Results 2013
Accrued benefit obligation, beginning of year	3,112,185	1,592,507
Expense for the year	362,915	-
Expense benefits payments during the year	(1,882,593)	(713,734)

Accrued benefit obligation, end of year	1,592,507	878,773

9. Related Party Transactions

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

(a) Common services provided without charge by other government departments
During the year, OCOL is forecasted to receive services without charge from certain common service organizations related to accommodation, the employer's contribution to the health and dental insurance plans, audit and payroll services. These services provided without charge have been recognized in OCOL's Future-oriented Statement of Operations as follows:

(in dollars)
	Estimated Results 2012	Planned Results 2013
Accommodation	1,775,377	1,775,377
Employer's contributions to the health and dental insurance plans	1,128,567	1,138,015
Audit services	91,000	91,000
Payroll services	9,500	9,500

Total	3,004,444	3,013,892

(b) Other transactions with related parties

(in dollars)
	Estimated Results 2012	Planned Results 2013
Accounts receivable with other government departments and agencies	50,000	50,000
Accounts payable to other government departments and agencies	195,276	201,717
Expenses - Other government departments	850,000	850,000

10. Contingent Liabilities

In the normal course of its operations, OCOL may become involved in various legal actions. Some of these legal actions may result in actual liabilities when one or more future events occur. To the extent that the future event is likely to occur, and a reasonable estimate of the loss can be made, a liability is accrued and an expense recorded. No contingent liabilities are recognized in OCOL's future-oriented financial statements.

11. Contractual Obligations

OCOL has multi-years contracts and obligations arising in the normal course of its activities. These obligations include equipment rental, service contracts, as well as an obligation related to workers’ compensation death benefits.

Significant contractual obligations that can be reasonably estimated are summarized as follows:


Fiscal Year
2014	125,582
2015	83,272
2016	81,541
2017	79,765
Total	370,160

12. Segmented Information

Presentation by segment is based on OCOL'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 forecasted expenses incurred for the main program activities, by major object of expenses. The segment results for the period are as follows:

(in dollars)
	2012	Protection of Linguistic Rights	Promotion of Linguistic Duality	Internal Services	2013
Operating Expenses
Salaries and employee benefits	17,104,001	6,144,877	5,322,479	4,669,906	16,137,262
Accommodation	1,775,377	621,382	621,382	532,613	1,775,377
Rentals	164,520	113,309	131,700	74,700	319,709
Professional and special services	3,416,989	632,043	1,158,961	1,830,895	3,621,899
Amortization of tangible capital assets	623,561	160,904	160,904	137,918	459,726
Transportation and communications	841,000	206,414	447,969	408,771	1,063,154
Repair and maintenance	401,529	9,977	29,818	401,469	441,264
Acquisition of small equipment	72,800	7,229	44,910	163,825	215,964
Material and supplies	172,960	77,267	39,439	96,872	213,578
Information	245,918	53,685	195,512	11,380	260,577
Other	3,000	1,384	1,116	3,500	6,000

Net Cost of Operations	24,821,655	8,028,471	8,154,190	8,331,849	24,514,510