PPSC Future-Oriented Financial Statements 2011-2012

Office of the Director of Public Prosecutions

Future-Oriented Financial Statement for Years Ending March 31, 2011 and March 31, 2012

Statement of Management Responsibility

Responsibility for the compilation, content, and presentation of the accompanying future-oriented financial information for years ending March 31, 2011 and 2012 rests with the senior management. The future-oriented financial information has been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

Management is responsible for the integrity and objectivity of the information contained in future-oriented financial information and for the process of developing assumptions. Assumptions and estimates are based upon information available and known to management at the time of development, reflect current business and economic conditions, and assume a continuation of current governmental priorities and consistency in departmental mandate and strategic objectives. At the time of preparation of the future-oriented statement of operations, management believes the estimates and assumptions to be reasonable. However, as with all such assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.

The actual results achieved for the fiscal years covered in the accompanying future-oriented financial information will vary from the information presented.

_________________________
Lucie Bourcier
Chief Financial Officer

_________________________
Brian Saunders
Director of Public Prosecution Service

Ottawa, Ontario
May 16, 2011

 

Future-oriented Statement of Operations

For the Year Ending March 31
(in thousands of dollars)

  Forecasted
Results
2010-2011		 Planned
2011-2012
Expenses
Drug, Criminal Code and terrorism prosecution program 113 421 123 793
Regulatory offences and economic crime prosecution program 30 933 33 762
Internal Services 27 496 30 010
Total expenses 171 850 187 565
 
Revenues
Drug, Criminal Code and terrorism prosecution program 363 363
Regulatory offences and economic crime prosecution program 12 005 14 405
Total Revenues 12 368 14 768
 
Net Cost of Operations 159 482 172 797

Forecasted results includes actual amounts from April 1, 2010 to December 31, 2010.

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

 

Future-oriented Statement of Financial Position

For the Year Ending March 31
(in thousands of dollars)

  Forecasted
Results
2010-2011		 Planned
2011-2012
Assets
Financial assets
Receivables (note 6) 4 700 4 700
Advances (note 6) 4 5
Total financial assets 4 704 4 705
Non-Financial Assets
Tangible Capital assets (note 8) 5 000 5 500
Total assets 9 704 10 205
 
Liabilities
Accounts payable and accrued liabilities (note 7) 21 000 21 000
Vacation pay and compensatory leave 4 061 4 261
Employee severance benefits 15 483 16 257
Total liabilities 40 544 41 518
 
Equity of Canada (30 840) (31 313)

Forecasted results includes actual amounts from April 1, 2010 to December 31, 2010.

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

 

Notes to Future-oriented Financial Statements

1. Authority and Objectives

On December 12, 2006, the Office of the Director of Public Prosecutions also, known as the Public Prosecution Service of Canada (PPSC), was created by the Director of Public Prosecutions Act which is Part 3 of the Federal Accountability Act. The PPSC took over the duties of the former Federal Prosecution Service within the Department of Justice.

The PPSC has three (3) program activities:

  1. Drug, Criminal Code and terrorism prosecution program

    This program supports the protection of society against crime through the provision of legal advice and litigation support during police investigations, and the prosecution of: all drug offences under the Controlled Drugs and Substances Act and any related organized crime offences throughout Canada, except in Quebec and New Brunswick, where the Office of the Director of Public Prosecutions prosecutes such offences only where charges are laid by the Royal Canadian Mounted Police; proceeds of crime offences; pursuant to understandings with the provinces, Criminal Code offences where they are related to drug charges; all Criminal Code offences in the three territories; terrorism offences; and war crimes and crimes against humanity offences. This program activity also involves the promotion of federal/provincial/territorial cooperation on criminal justice issues of mutual concern.
  2. Regulatory offences and economic crime prosecution program

    This program supports the protection of society against crime through the provision of legal advice and litigation support to federal investigative agencies, and the prosecution of: offences under federal statutes aimed at protecting the environment and natural resources as well as the country’s economic and social health (e.g., Fisheries Act, Income Tax Act, Copyright Act, Canada Elections Act, Canadian Environmental Protection Act, Competition Act, Customs Act, Excise Act, and the Excise Tax Act); offences involving fraud against the government; capital market fraud offences; and any organized crime offences related to the foregoing offences. This program also includes the recovery of outstanding federal fines and the promotion of federal/provincial/territorial cooperation on criminal justice issues of mutual concern.
  3. 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 groups are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Material Services; Acquisition Services; and Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

2. Assumptions

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

The main assumptions are as follows:

  1. The PPSC's activities will remain substantially the same as in the previous year.
  2. On the basis of government policies, government priorities, and external environment existing at the time the future-oriented financial information was prepared.
  3. The general historical pattern is expected to continue.
  4. The requirements of Treasury Board Accounting Policies which are based on Canadian generally accepted accounting principles for the public sector was followed.
  5. The resources provided will enable the PPSC to deliver the expected results specified in the Report on Plans and Priorities.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results for the remainder of 2010-2011 and the planned results for 2011-2012, the actual results for both years are likely to vary.

In preparing these financial statements, the PPSC has made estimates and assumptions concerning the future. These estimates and judgments may differ from the subsequent actual results. Estimates and judgments 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.

Once the Report on Plans and Priorities is presented, the PPSC 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 stated below, which are based on Canadian generally accepted accounting principles for the public sector. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian generally accepted accounting principles.

Significant accounting policies are as follows:

  1. Parliamentary appropriations – The PPSC is financed by the Government of Canada through Parliamentary appropriations. The cash accounting basis is used to recognize transactions affecting Parliamentary appropriations. The future-oriented financial statements are based on accrual accounting. Consequently, items presented in the Future-oriented Statement of Operations are not necessarily the same as those provided through appropriations from Parliament. Note 5 provides a reconciliation between the bases of reporting.
  2. Net cash provided by Government – The PPSC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received is deposited to the CRF and all cash disbursements are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.
  3. Change in net position in the Consolidated Revenue Fund – The change in net position in the CRF is the difference between the net cash provided by Government and appropriations used in a year, excluding the amount of non-respendable revenue recorded. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.
  4. Revenues – are presented on an accrual basis:
    1. Revenues derived from the provision of legal services are recognized in the year the services are rendered.
    2. Fines, forfeitures and court costs are recognized upon receipt of payment by the PPSC.
  5. Expenses – are presented on an accrual basis:
    1. Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
    2. Expenses related to the provision of advisory and prosecution functions are limited to those costs borne and settled directly by the PPSC. These functions may or may not be recovered as revenue from the government department and agencies. The costs of the provision of advisory and prosecution services which are paid directly by government departments and agencies to outside suppliers such as legal agents, are not included in the expenses.
    3. Services provided without charge by other government departments for accommodation, the employer’s contribution to the health and dental insurance plans, and workers' compensation coverage are recorded as operating expenses at their estimated cost.
  6. Employee future benefits
    1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer plan administered by the Government of Canada. The PPSC's contributions to the Plan are charged to expenses in the year incurred and represent the PPSC's total obligation to the Plan. Current legislation does not require contributions for any actuarial deficiencies of the Plan.
    2. Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.
  7. Receivables are stated at amounts expected to be ultimately realized; a provision is made for receivables where recovery is considered uncertain.
  8. Tangible capital assets – All tangible capital assets and leasehold improvements having an initial cost of $1,000 or more are recorded at their acquisition cost.

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

Asset class Acquisition cost equal or greater Amortization period
Furniture and furnishings $1 000 10 years
Motor Vehicles $10 000 5 years
Informatics Hardware $1 000 3-5 years
Informatics Software $10 000 3-5 years
Leasehold improvements $10 000 Lesser of the remaining term of the lease or useful life of the improvement

5. Parliamentary Appropriations

The PPSC receives most of its funding through expenditure authorities provided by Parliament. Items recognized in the statement of operations and the statement of financial position in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, the PPSC 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 thousands of dollars)

  Forecasted
2010-2011		 Planned
2011-2012
Authorities requested
Vote 35 161 248 161 955
Statutory amounts 16 017 18 937
Forecast authorities available 177 265 180 892

Forecast authorities requested for the year ending March 31, 2012 are the planned spending amounts presented in the 2011-12 Report on Plans and Priorities. Estimated authorities requested for the year ending March 31 2011 include amounts presented in the 2010-11 Main Estimates and Supplementary Estimates (A) and (B), planned for presentation in Supplementary Estimates (C) and estimates of amounts to be allocated at year-end from Treasury Board central votes.

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

(in thousands of dollars)

  Forecasted
2010-2011		 Planned
2011-2012
Net cost of operations 159 482 172 797
 
Adjustments for items affecting net cost of operations but not affecting authorities:
Services provided without charge by other government departments (14 750) (15 500)
Amortization of tangible capital assets (2 102) (1 800)
Revenue not available for spending 1 026 1 026
Employee severance Benefits (13) 774
Increase in vacation pay and compensatory leave (500) (200)
Increase in employee future benefits 1 590 1 925
Refunds of previous years’ expenditures 3 500 300
Adjustment in contingent liabilities 1 000  
Other 1 427 7 043
  (8 822) (6 432)
 
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets 1 500 1 500
 
Forecast current year lapse (eg. Frozen allotments) 25 105 13 027
 
Forecast authorities available 177 265 180 892

6. Accounts receivable and advances

(in thousands of dollars)

  Forecasted Results
2010-2011		 Planned
2011-2012
Receivables from other government departments and agencies 4 700 4 700
Advances 4 5
Total receivables 4 704 4 705

7. Accounts payable and accrued liabilities

(in thousands of dollars)

  Forecasted Results
2010-2011		 Planned
2011-2012
Accounts payable to other government departments and agencies 1 000 1 000
Accounts payable to external parties 17 900 17 600
Accrued liabilities 2 100 2 400
  21 000 21 000

8. Tangible Capital Assets

Cost (in thousands of dollars)
Capital asset class Opening balance Acquisitions Disposals and write-offs Closing balance
Informatics hardware 2 520 770 0 3 290
Informatics software 795 400 0 1 195
Furniture and furnishings 2 391 260 0 2 651
Motor vehicles 106 50 0 156
Leasehold improvements 7 035 20 0 7 055
Total 12 847 1 500 0 14 347

Accumulated Amortization (in thousands of dollars)
Capital asset class Opening balance Amortization Disposals and write-offs Closing balance
Informatics hardware 1 324 540 0 1 864
Informatics software 218 90 0 308
Furniture and furnishings 556 250 0 806
Motor vehicles 51 22 0 73
Leasehold improvements 5 096 1 200 0 6 296
Total 7 245 2 102 0 9 347

Net Book Value (in thousands of dollars)
Capital asset class 2010-2011 2011-2012
Informatics hardware 1 426 1 500
Informatics software 887 1 000
Furniture and furnishings 1 845 2 000
Motor vehicles 83 100
Leasehold improvements 759 900
Total tangible capital assets 5 000 5 500

9. Employee Benefits

(a) Pension benefits:

The PPSC'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 are indexed to inflation.

Both the employees and the PPSC contribute to the cost of the Plan. The PPSC's planned expenses are 11,2M in 2010-11 and 11,8M in 2011-12, which represents approximately 1.9 times the contributions of employees.

The PPSC's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

(b) Severance benefits:

The PPSC provides severance benefits to its eligible employees based on years of service and final salary. Severance benefits are not pre-funded. Benefits will be paid from future appropriations. Information about the severance benefits, estimated as at the date of these statements, is as follows:

(in thousands of dollars)

  Forecasted
Results
2010-2011		 Planned
2011-2012
Accrued benefit obligation, beginning of year 15 496 15 483
Expense for the year 487 1 274
Expected benefits payments during the year (500) (500)
Accrued benefit obligation, end of year 15 483 16 257

10. Segmented information

(in thousands of dollars)

  2010-2011 2011-2012
  Total Drug, Criminal Code and terrorism prosecution program Regulatory offenses and economic crime prosecution program Internal services Total
Operating Expenses
Salaries and employee benefits 110 500 80 850 22 050 19 600 122 500
Professional and special services 38 000 26 697 7 281 6 472 40 450
Accommodation 9 700 6 930 1 890 1 680 10 500
Travel and relocation 5 800 3 960 1 080 960 6 000
Utilities, materials and supplies 2 200 1 584 432 384 2 400
Amortization of tangible capital assets 1 750 1 188 324 288 1 800
Communications 1 400 990 270 240 1 500
Information 895 591 161 143 895
Repairs and maintenance 780 541 148 131 820
Other 280 198 54 48 300
Rentals 250 198 54 48 300
Claims and ex-gratia payments 295     100 100
Total Expenses 171 850 123 727 33 744 30 094 187 565
Revenues
Legal Services 11 342 0 13 742 0 13 742
Fines and forfeitures 663 0 663 0 663
Rent from residential housing provided to employee 352 352 0 0 352
Miscellaneous 11 11 0 0 11
Total Revenues 12 368 363 14 405 0 14 768
Net Cost of Operations 159 482 123 364 19 339 30 094 172 797