PPSC Financial Statements 2010-2011

Office of the Director of Public Prosecutions

Financial Statements

Management Responsibility for Financial Statements

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2011 and all information contained in these statements rests with management of the Office of the Director of Public Prosecutions. These financial statements have been prepared by management in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management’s best estimates and judgment and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the Office's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada and included in the Office's Departmental Performance Report is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training, and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the department/agency.

The financial statements of the Office have not been audited.

 

__________________________
Brian Saunders
Director of Public Prosecutions

 

__________________________
Lucie Bourcier
Chief Financial Officer

Ottawa, Canada

__________________________
Date

Statement of Financial Position (unaudited)

As at March 31
In thousands of dollars

Assets
  2011 2010
(Restated Note 11)
Financial assets
Due from Consolidated Revenue Fund (Note 2c) 12,351 16,390
Receivables and advances (Note 5) 6,722 4,603
Total financial assets 19,073 20,993
Non-financial assets
Tangible capital assets (Note 6) 5,304 5,602
Total non-financial assets 5,304 5,602
Total 24,377 26,595

Liabilities and Equity of Canada
  2011 2010
(Restated Note 11)
Liabilities
Accounts payable and accrued liabilities (Note 7) 18,987 21,936
Vacation pay and compensatory leave 4,414 3,561
Employee severance benefits (Note 8) 16,411 15,496
Total liabilities 39,812 40,993
Equity of Canada (15,435) (14,398)
Total 24,377 26,595

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

 

__________________________
Brian Saunders
Director of Public Prosecutions

 

__________________________
Lucie Bourcier
Chief Financial Officer

Ottawa, Canada

__________________________
Date

Statement of Operations (unaudited)

For the year ended March 31
In thousands of dollars

  2011 2010
(Restated)
Expenses (Note 4)
Drug, Criminal Code and terrorism prosecution program 114,389 115,526
Regulatory offences and economic crime prosecution program 31,191 30,510
Internal services 27,969 27,988
Total expenses 173,549 174,024
Revenues (Note 4)
Regulatory offences and economic crime prosecution program 16,677 12,794
Drug, Criminal Code and terrorism prosecution program 386 363
Total revenues 17,063 13,157
Net cost of operations 156,486 160,867

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

Statement of Equity of Canada (unaudited)

For the year ended March 31
In thousands of dollars

  2011 2010
(Restated Note 11)
Equity of Canada, beginning of year (14,398) (11,995)
Net cost of operations (156,486) (160,867)
Net cash provided by government 143,770 142,826
Change in due from the Consolidated Revenue Fund (4,039) 1,253
Services provided without charge by other government departments (Note 10) 15,718 14,385
Equity of Canada, end of year (15,435) (14,398)

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

Statement of Cash Flow (unaudited)

For the year ended March 31
In thousands of dollars

  2011 2010
Operating activities
Net cost of operations 156,486 160,867
Non-cash items
Amortization of tangible capital assets (Note 6) (1,614) (1,666)
Services provided without charge by other government departments (Note 10) (15,718) (14,385)
Variations in Statement of Financial Position
Increase (decrease) in accounts receivable and advances 2,119 (927)
Decrease (increase) in liabilities 1,181 (2,441)
Cash used by operating activities 142,454 141,448
Capital investment activities
Acquisitions of tangible capital assets (Note 6) 1,316 1,379
Cash used by capital investment activities 1,316 1,379
Net cash provided by Government of Canada 143,770 142,826

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

Notes to the Financial Statements (unaudited) - March 31

1. Authority and objectives

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

The Office 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; Material Services; Internal Audit; Procurement 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. Summary of significant accounting policies

These 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:

(a) Parliamentary authorities

The Office is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Office do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting.

(b) Net cash provided by Government

The Office operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Office is deposited to the CRF and all cash disbursements made by the Office 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 Government.

(c) 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.

(d) Revenues

  • Revenues derived from the provision of legal services are recognized in the year the services are rendered.
  • Fines, forfeitures and court costs are recognized upon receipt of payment by the Office.

(e) Expenses

  • Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
  • Expenses related to the provision of advisory and prosecution functions are limited to those costs borne and settled directly by the Office. These functions may or may not be recovered as revenue from government departments 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.
  • Services provided without charge by other government departments for accommodation, the employer’s contribution to the health and dental insurance plans are recorded as operating expenses at their estimated cost.

(f) Employee future benefits

  1. Pension benefits

    Eligible employees participate in the Public Service Pension Plan, a multi-employer pension plan administered by the Government. The Office's contributions to the Plan are charged to expenses in the year incurred and represent the Office's total obligation to the Plan. Current legislation does not require the Office to make 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.

(g) Receivables

Accounts receivables are stated at the lower of cost and net recoverable value; a valuation allowance is recorded for receivables where recovery is considered uncertain.

(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 financial statements.

(i) 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. The Office does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections.

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 than Amortization period
Informatics hardware $1,000 3 to 5 years
Informatics software $10,000 3 to 5 years
Furniture and furnishings $1,000 10 years
Motor vehicles $10,000 5 years
Leasehold improvements $10,000 Lesser of useful life or term of the lease

(j) Measurement uncertainty

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are contingent liabilities, the liability for employee severance benefits and the useful life of tangible capital assets. 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. Parliamentary Authorities

The Office receives most of its funding through annual Parliamentary authorities. 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 Office 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) Reconciliation of net cost of operations to current year authorities used

In thousands of dollars
  2011 2010
Net cost of operations 156,486 160,867
Adjustments for items affecting net cost of operations but not affecting authorities
Add (Less)
Services provided without charge by other government departments (Note 10) (15,718) (14,385)
Amortization of tangible capital assets (Note 6) (1,614) (1,666)
Employee severance benefits (915) (1,630)
Vacation pay and compensatory leave (853) (467)
Revenue not available for spending 1,560 1,026
Employee benefits plan (EBP) 1,929 1,510
Adjustment on contingent liabilities 1,000 0
Refunds and reversals of previous year expenses 3,145 334
  (11,466) (15,278)
Adjustments for items not affecting net cost of operations but affecting authorities
Add
Acquisitions of tangible capital assets (Note 6) 1,316 1,379
Current year authorities used 146,336 146,968

(b) Appropriations provided and used

In thousands of dollars
  2011 2010
Vote 35 - program expenditures 158,747 167,046
Statutory amounts 14,146 14,372
  172,893 181,418
Less
Voted authorities lapsed (26,557) (34,450)
Current year authorities used 146,336 146,968

4. Segmented information

Presentation by segment is based on the Office'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 2. The following table presents the expenses incurred and revenues generated for the main program activities, by major object of expenses and by major type of revenues. The segment results for the period are as follows:

In thousands of dollars
  Drug, Criminal Code and terrorism prosecution program Regulatory offenses and economic crime prosecution program Internal services 2011 Total 2010 Total
Operating Expenses
Salaries and employee benefits 74,062 20,199 17,954 112,215 111,504
Professional and special services 26,821 7,315 6,502 40,638 39,381
Accommodation 6,584 1,796 1,596 9,976 9,746
Travel and relocation 4,199 1,145 1,018 6,362 5,816
Utilities, materials and supplies 1,245 340 302 1,887 2,245
Amortization of tangible capital assets 1,065 291 258 1,614 1,666
Communications 1,210 330 293 1,833 1,470
Information 583 159 141 884 892
Repairs and maintenance 430 117 104 651 777
Other (1,985) (541) (481) (3,007) 279
Rentals 147 40 36 223 248
Claims and ex-gratia payments 28   246 274 0
Total expenses 114,389 31,191 27,969 173,549 174,024
Revenues
Prosecution Services   15,503   15,503 12,131
Fines and forfeitures 10 1,174   1,184 663
Rent from residential housing provided to employees 356     356 352
Other 20     20 11
Total revenues 386 16,677 - 17,063 13,157
Net cost of operation 114,003 14,514 27,969 156,486 160,867

5. Receivables and Advances

In thousands of dollars
  2011 2010
Federal government departments and agencies (include GST) 6,633 4,538
External parties 87 61
Standing advances held by employees for petty cash 3 4
Total receivables 6,722 4,603

6. Tangible capital assets

In thousands of dollars
Capital asset class Opening balance Acquisitions Disposals and transfers Closing balance
Informatics hardware 2,520 568 0 3,088
Informatics software 795 436 0 1,231
Furniture and furnishings 2,391 233 0 2,624
Motor vehicles 106 19 56 69
Leasehold improvements 7,035 60 0 7,095
Total tangible capital assets 12,847 1,316 56 14,107

Accumulated amortization
(In thousands of dollars)
Capital asset class Opening balance Current Year amortization Disposals and transfers Closing balance
Informatics hardware 1,324 416 0 1,740
Informatics software 218 276 0 494
Furniture and furnishings 556 234 0 790
Motor vehicles 51 16 56 11
Leasehold improvements 5,096 673 0 5,769
Total tangible capital assets 7,245 1,614 56 8,803

In thousands of dollars
Capital asset class 2011 Net
book value		 2010 Net
book value
Informatics hardware 1,348 1,196
Informatics software 737 577
Furniture and furnishings 1,834 1,835
Motor vehicles 58 55
Leasehold improvements 1,325 1,939
Total tangible capital assets 5,304 5,602

7. Accounts payable and accrued liabilities

In thousands of dollars
  2011 2010
Federal government departments and agencies
Accounts payable 941 814
External parties
Accounts payable 17,750 20,115
Accrued salaries 296 0
Accrued provision for contingent liabilities 0 1,000
Other liabilities 0 7
  18,046 21,122
Total accounts payable and accrued liabilities 18,987 21,936

8. Employee benefits

(a) Pension benefits

The Office's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government. 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/Quebec Pension Plans benefits and they are indexed to inflation.

Both the employees and the Office contribute to the cost of the Plan. The 2010-11 expense amounts to $9,931 compared to $10,372 in 2009-10 which represents approximately 1.9 times the contributions by employees.

The Office'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 Office provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, measured as at March 31, is as follows:

In thousands of dollars
  2011 2010
Accrued benefit obligation, beginning of year 15,496 13,866
Expense for the year 1,478 1,948
Benefits paid during the year (563) (318)
Accrued benefit obligation, end of year 16,411 15,496

9. Contingent liabilities

Claims and litigation

Claims have been made against the Office in the normal course of operations. These claims include items with pleading amounts and other for which no amount is specified. Based on Office's assessment, legal proceedings for claims estimated at $8,515,000 compared to $10,025,000 in 2009-2010 were pending at March 31, 2011. Some of these potential liabilities 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 in the financial statements. No provision for contingent liabilities was establish in 2010-2011 since no current claims againts PPSC are likely to occur. The provision was established at $1,000,000 in 2009-2010.

10. Related party transactions

The Office is related as a result of common ownership to all Government departments, agencies, and Crown Corporations. The Office enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the Office received and provided common services which were obtained without charge from other Government departments as disclosed below.

a) Common services provided without charge by other government departments

During the year the Office received services without charge from certain common service organizations, related to accommodation, legal services and the employer's contribution to the health and dental insurance plans. These services provided without charge have been recorded in the Office's Statement of Operations as follows:

In thousands of dollars
  2011 2010
Accommodation provided by Public Works and Government Services Canada 9,022 8,647
Employer’s contributions to the health and dental insurance plans paid by Treasury Board Secretariat 6,696 5,738
Total 15,718 14,385

The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as the payroll and cheque issuance services provided by Public Works and Government Services are not included in the Office's Statement of Operations.

b) Common services provided without charge to other government departments

During the year, the Office provided services without charge to other government departments, related to the provision of legal services, in the amount of $8,424,085 ($7,682,899 in 2009-2010).

c) Other transactions with related parties

In thousands of dollars
  2011 2010
Expenses - Other Government departments and agencies 23,471 23,953
Revenues - Other Government departments and agencies 16,384 12,320

11. Adoption of new accounting policies

During the year, the Office adopted the revised Treasury Board accounting policy TBAS 1.2: Departmental and Agency Financial Statements which is effective for the Office for the 2010-11 fiscal year. The major change in the accounting policies of the Office required by the adoption of the revised TBAS 1.2 is the recording of amounts due from the Consolidated Revenue Fund as an asset on the Statement of Financial Position.

The adoption of the new Treasury Board accounting policies have been accounted for retroactively with the following impact on the comparatives for 2009-10:

In thousands of dollars
  2010 as previously stated Effect of changes 2010 restated
Statement of Financial Position :
Assets 10,205 16,390 26,595
Equity of Canada (30,788) 16,390 (14,398)

12. Comparative information

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