PPSC Future-Oriented Financial Statements 2012-2013

Office of the Director of Public Prosecutions

Future-Oriented Financial Statement for Years Ending March 31, 2012 and March 31, 2013

Statement of Management Responsibility

Responsibility for the compilation, content, and presentation of the accompanying future-oriented financial statements for years ending March 31, 2012 and 2013 rests with 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 the future-oriented financial statements 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 statements will vary from the information presented.

Lucie Bourcier
Chief Financial Officer

Brian Saunders
Director of Public Prosecution Service

Ottawa, Ontario

Future-oriented Statement of Financial Position
For the Year Ending March 31
(in thousands of dollars)
  Forecasted Results
2011–2012		   Planned
2012–2013
Equity of Canada (17,480)   (19,217)
Assets
Financial assets
Due from CRF 11,547   12,497
Receivables and advances (note 6) 6,104   6,105
Total financial assets 17,651   18,602
       
Non-Financial Assets
Tangible Capital assets (note 8) 5,182   5,600
  22,833   24,202
       
Liabilities
Accounts payable and accrued liabilities (note 7) 17,950   18,900
Vacation pay and compensatory leave 5,300   5,900
Employee severance benefits (note 9) 17,063   18,619
Total liabilities 40,313   43,419
       

Forecasted results includes actual amounts from April 1, 2011 to February 29, 2012.
The accompanying notes form an integral part of these future-oriented financial statements.

Future-oriented Statement of Operations
For the Year Ending March 31
(in thousands of dollars)
  Forecasted Results
2011–2012		   Planned
2012–2013
Net Cost of Operations 177,575   186,690
Expenses 
Drug, Criminal Code and terrorism prosecution program 128,317   131,410
       
Regulatory offences and economic crime prosecution program 34,995   36,657
       
Internal Services 31,107   35,584
Total expenses 194,419   203,652
       
Revenues 
Drug, Criminal Code and terrorism prosecution program 482   500
       
Regulatory offences and economic crime prosecution program 15,362   15,362
       
Internal Services 1,000   1,100
Total Revenues 16,844   16,962
       

Forecasted results includes actual amounts from April 1, 2011 to February 29, 2012.
The accompanying notes form an integral part of these future-oriented financial 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: Communications Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Material Services; Acquisition Services; Internal Audit; Ministerial and External Relations; Strategic Planning and Performance Management; 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 were followed.
  5. The resources provided will enable the PPSC to deliver the expected results specified in the Report on Plans and Priorities.
  6. There are certain assumptions that PPSC made regarding a forecast of the cumulative severance liquidation payments.
    1. All expired and expiring contracts will be ratified within 12 months of expiry, and will include provisions to eliminate accumulation of severance for voluntary termination and to offer immediate payouts of severance already accumulated;
    2. Payouts of accumulated severance will start within 3 months of signing of the agreement and occur evenly over the following 6 months (9 months following signing);
    3. 75% of those eligible will opt for an immediate cash-out.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results for the remainder of 2011–2012 and the planned results for 2012–2013, 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, including Vote Netted Revenue. 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. Amount due to/from 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 the Office is entitled to draw from the CRF without further appropriations to discharge its liabilities.
  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
2011–2012		   Planned
2012–2013
Forecast authorities available  190,138   184,295
Authorities requested
Vote 35 171,801   165,505
Statutory amounts 18,337   18,790
       

Forecast authorities requested for the year ending March 31, 2013 are the planned spending amounts presented in the 2012–13 Report on Plans and Priorities. Estimated authorities requested for the year ending March 31 2012 include amounts presented in the 2011–12 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
2011–2012		   Planned
2012–2013
Forecast authorities available 190,138   184,295
Net cost of operations 177,575   186,690
       
Adjustments for items affecting net cost of operations but not affecting authorities:
       
Services provided without charge by other government departments (16,000)   (17,000)
Amortization of tangible capital assets (2,100)   (2,200)
Revenue not available for spending 1,482   1,600
Employee severance Benefits (652)   (1,556)
Increase in vacation pay and compensatory leave (886)   (900)
Increase in employee future benefits 1,900   2,000
Refunds of previous years' expenditures 100   100
  (16,156)   (17,956)
       
Adjustments for items not affecting net cost of operations but affecting authorities:
       
Acquisitions of tangible capital assets 1,978   2,300
       
       
Forecast current year lapse (eg. Frozen allotments) 26,741   13,261

6. Accounts receivable and advances

(in thousands of dollars)
  Forecasted Results
2011–2012		   Planned
2012–2013
Total receivables 6,104   6,105
Receivables from other government departments and agencies 6,000   6,000
External parties 100   100
Advances 4   5

7. Accounts payable and accrued liabilities

(in thousands of dollars)
  Forecasted
Results
2011–2012		   Planned
2012–2013
Total payables 17,950   18,900
Accounts payable to other government departments and agencies 950   900
Accounts payable to external parties 16,000   17,000
Accrued liabilities 1,000   1,000

8. Tangible Capital Assets

(in thousands of dollars)
  Cost
Capital asset class Opening balance Acqui-
sitions		 Disposals and write-offs Closing balance
Total  14,107 1,978 7,527 8,558
Informatics hardware 3,088 299 1,221 2,166
Informatics software 1,231 34 222 1,043
Furniture and furnishings 2,624 210 402 2,432
Motor vehicles  69 48   117
Leasehold improvements 7,095 1,387 5,682 2,800


(in thousands of dollars)
  Accumulated Amortization
Capital asset class Opening balance Amorti-
zation		 Disposals and write-offs Closing balance
Total  8,803 2,098 7,526 3,376
Informatics hardware 1,740 519 1221 1,038
Informatics software 494 308 221 581
Furniture and furnishings 790 347 403 734
Motor vehicles  11 22   33
Leasehold improvements 5,769 902 5,681 990


(in thousands of dollars)
  Net Book Value
Capital asset class 2011–2012   2012–2013
Total tangible capital assets 5,182   5,600
Informatics hardware 1,128   1,300
Informatics software 462   570
Furniture and furnishings 1,698   1,792
Motor vehicles  84   75
Leasehold improvements 1,810   1,863

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 13,0M in 2011–12 and 13,5M in 2012–13, 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
2011–2012		   Planned
2012–2013
Accrued benefit obligation, end of year 17,063   18,619
Accrued benefit obligation, beginning of year 16,411   17,063
Expense for the year 4,652   7,556
Expected benefits payments during the year (4,000)   (6,000)

10. Segmented information

(in thousands of dollars)
  2011–2012 2012–2013
Total Drug, Criminal Code and terrorism prosecution program Regulatory offenses and economic crime prosecution program Internal services Total
Net Cost of Operations 177,575 130,910 21,295 34,484 186,690
Operating Expenses
Salaries and employee benefits 125,759 84,435 23,846 21,196 129,477
Professional and special services 42,000 28,380 7,740 8,380 44,500
Accommodation 11,000 7,260 1,980 3,260 12,500
Travel and relocation 6,500 4,620 1,260 1,120 7,000
Utilities, materials and supplies 2,000 1,320 360 320 2,000
Amortization of tangible capital assets 2,100 1,452 396 352 2,200
Communications 1,900 1,452 396 352 2,200
Information 900 594 162 144 900
Machinery and equipment 325 330 90 80 500
Repairs and maintenance 800 561 153 136 850
Other 858 792 216 192 1,200
Rentals  275 215 59 52 325
Claims and ex-gratia payments 2 - - - -
Total Expenses 194,419 131,410 36,657 35,584 203,652
Revenues
Legal Services 15,362 - 15,362 - 15,362
Fines and forfeitures 1,000 - - 1,100 1,100
Rent from residential housing provided to employee 400 420 - - 420
Miscellaneous  82 80 - - 80
Total Revenues 16,844 500 15,362 1,100 16,962