Future-oriented Financial Statements

Statement of Management Responsibility

Departmental 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 10, 2011 and reflect the plans described in the Report on Plans and Priorities. The future-oriented 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.

Daniel Schnob
Chief Financial Officer

Myles J. Kirvan
Deputy Minister of Justice and Deputy Attorney General of Canada

Ottawa, Canada
February 10, 2011


 


Future-oriented Statement Of Operations
For the year ending March 31
(in thousands of dollars)
2011 2012
   
Expenses (Note 6)
Services to government 477,526 513,836
Justice policies, laws and programs 480,435 475,516
The Office of the Federal Ombudsman for Victims of Crime 1,451 0
Internal Services 179,109 169,303
Total expenses 1,138,521 1,158,655
Revenues    
Services to government 298,270 314,798
Justice policies, laws and programs 9,156 9,156
Internal Services 19,102 20,000
Total revenues 326,528 343,954
Net Cost of Operations 811,993 814,701

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

Notes to the Future-oriented Financial Statements

1. Authority and objectives

The Department of Justice was created by an Act of Parliament in 1868 to be responsible for the legal affairs of the Government of Canada and to provide legal services to individual departments and agencies. The Department’s work reflects the duties of its Minister’s dual role as Attorney General of Canada and as Minister of Justice. The Department is established under the authority of Schedule I to the Financial Administration Act and is funded through annual appropriations.

The department conducts its two priorities along four program activities:

  1. A fair, relevant and accessible justice system that reflects Canadian values

    Justice policies, laws and programs

    Under Canada's federal system, the administration of justice is an area of shared jurisdiction between the federal government and the provinces. Through this program activity, the Department fulfils its constitutional responsibility to ensure a bilingual and bijural national legal framework for the administration of justice by developing policies and laws and testing innovative approaches to strengthen the framework within the following domains: criminal law, youth criminal justice, sentencing, marriage and divorce, access to justice and Aboriginal justice. Through this program activity, the Department also provides significant ongoing funding to provinces and territories in support of their constitutional responsibility for the day to day administration of justice.

    The Office of the Federal Ombudsman for Victims of Crime

    This program activity raises awareness of the needs and concerns of victims in areas of federal responsibility, provides an independent resource that addresses complaints of victims about compliance with the provisions of the Corrections and Conditional Release Act that apply to victims of offenders under federal supervision, and assists victims to access existing federal programs and services.

  2. A federal government that is supported by effective and responsive legal services

    Services to government

    As a common service provider, the Department of Justice provides an integrated suite of legal advisory, litigation and legislative services to departments and agencies to help them meet their policy and programming priorities and advance the overall objectives of the Government. Through this program activity, the Department also provides legal services to the Justice Portfolio and supports the Minister as legal advisor to the Cabinet on complex, whole of government issues.

  3. The following program activity supports all strategic outcomes within this organization

    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; Materiel 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. Significant assumptions

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

The main assumptions are as follows:

  1. The department's activities will remain substantially the same as for the previous year.
  2. Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.
  3. Allowances for uncollectibility are based on historical experience. The general historical pattern is expected to continue.
  4. Estimated year end information for 2010-11 is used as the opening position for the 2011-12 forecasts.

These assumptions are adopted as at February 10, 2011.

3. Variations and changes to the forecast financial information

While every attempt has been made to accurately forecast final results for the remainder of 2010-11 and for 2011-12, 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 Justice Canada has made estimates and assumptions concerning the future. These estimates and judgements may differ from the subsequent actual results. Estimates and judgements 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:

  1. The timing and amounts of acquisitions and disposals of property, plant and equipment may affect gains/losses and amortization expense.
  2. Economic conditions may affect both the amount of revenue earned and the collectability of receivables.
  3. Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.

Once the Report on Plans and Priorities is presented, Justice Canada 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

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

  3. Revenues

    • Revenues are derived from the provision of advisory, litigation and legislative services provided by Department of Justice's law practitioners and they are recognized in the year the services are rendered. These revenues are based on legal services rates approved annually by Treasury Board in accordance with the Common Services Policy, for non-appropriated mandatory legal services to Government departments and agencies as well as legal services to Crown corporations and non-federal and international organizations.
    • Service and administration fees revenues under the Family Law programs are recognized based upon the services provided in the year, such as upon validation of the garnishment application or upon issuance of the divorce clearance certificate. The fees prescribed by Family Orders and Agreements Enforcement Assistance Act are to cover the administrative costs of processing each garnishee summons served on the Minister.
    • Fines, forfeitures and awarded court costs are recognized upon receipt of payment by the Department. Fines and forfeitures include two groups of payments: those provided for under the Criminal Code (s.734 through s.737) and those provided for under the Contraventions Act. Fines and forfeitures are in effect penalties for illegal actions, rather than fees.


  4. Expenses

    Expenses are presented on an accrual basis:

    • Grants are recognized in the year in which the conditions for payment are met. In the case of grants which do not form part of an existing program, the expense is recognized when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements.
    • Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement.
    • 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 legal services are limited to those costs borne and settled directly by the Department. The cost of legal services which are paid directly by client departments to outside suppliers such as legal agents, are not included in the expenses of the Department.
    • 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 reported as operating expenses at their estimated cost.


  5. Employee future benefits

    1. Pension benefits:

      Eligible employees participate in the Public Service Pension Plan, a multiemployer plan administered by the Government of Canada. The Department's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Current legislation does not require the Department 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.

  6. Receivables

    Receivables are stated at amounts expected to be ultimately realized; an allowance for doubtful accounts is made for receivables where recovery is considered uncertain. The allowance for doubtful accounts represents management's best estimate of probable losses in receivables. The allowance is determined based on an analysis of historic loss experience and an assessment of current conditions. The allowance is increased for losses and reduced by amounts written-off.

    Under the Family Orders and Agreements Enforcement Assistance Act, remission order PC 1994-269, outstanding receivables are written-off once the garnishee application has terminated. The application terminates when the five-year life of the garnishment summons has expired or when the province or territory has requested that the application be cancelled.

  7. 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. No estimate is made for the contingent liability for these future-oriented financial statements.

  8. Tangible capital assets

    All tangible capital assets and leasehold improvements are recorded at their cost and amortized over their estimated useful life on a straight-line basis as follows:

    Asset class Acquisition cost
    equal or greater
    than    		 Amortization
    period
    Office and other equipment $10,000 5 to 8 years
    Telecommunications equipment $10,000 4 to 5 years
    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 remaining term
    of the lease
    Work in progress In accordance
    with asset class    		 Once in service, in
    accordance with
    asset class

5. Parliamentary appropriations

The Department receives most of its funding through expenditure authorities provided by Parliament. Items recognized in the statement of operations in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, the Department 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 table:

Reconciliation of net cost of operations to requested authorities
(in thousands of dollars)
2011 2012
   
Net cost of operations 811,993 814,701
Adjustments for items affecting net cost
of operations but not affecting appropriations
Amortization of tangible capital assets (Note 7) (12,115) (12,160)
Employee severance benefits (2,783) (698)
Revenue not available for spending 9,156 9,156
Employee benefits recovered 40,390 44,798
Bad debt expense (4,499) (4,499)
Services provided without charge by other government departments (Note 9) (92,156) (93,715)
Total (62,007) (57,118)
Adjustments for items not affecting net
cost of operations but affecting appropriations		    
Reversal of accrual for unratified collective agreements 12,274 0
Acquisitions of tangible capital assets 14,146 14,600
Total 26,420 14,600
Forecasted authorities available 776,406 772,183

6. Expenses

(in thousands of dollars)
2011 2012
Operating    
Salaries and employee benefits 603,683 603,428
Accommodation 48,663 50,996
Professional and special services 43,839 56,507
Travel and relocation 12,914 14,855
Amortization of tangible capital assets 12,115 12,159
Other expenses 8,877 12,260
Communications 8,194 9,425
Utilities, materials and supplies 5,540 6,427
Bad debts 4,499 4,499
Total operating expenses 748,324 770,556
Transfer payments 390,197 388,099
Total expenses 1,138,521 1,158,655

7. Tangible capital assets

(in thousands of dollars)
2011 2012
Opening balance 40,282 42,313
Acquisition of tangible capital assets 14,146 14,600
less: Current year amortization (12,115) (12,160)
Net book value 42,313 44,753

8. Employee future benefits

  1. Pension benefits

    The department'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.

    The department'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.

  2. Severance benefits

    The department 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 appropriations.

9. Related party transactions

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

During the year the department is forecasted to receive without charge from other departments, accommodation, workers’ compensation coverage and the employer's contribution to the health and dental insurance plans. These services without charge have been recognized in the department's future-oriented Statement of Operations as follows:

(in thousands of dollars)
2011 2012
Accommodation provided by Public Works and Government Services Canada 46,663 48,996
Employer's contributions to the health and dental insurance plans paid by Treasury Board Secretariat 45,415 44,641
Workers’ compensation coverage provided by Human Resources and Skills Development Canada 78 78
Total 92,156 93,715

The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge. The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General, are not included as an expense in the department's Statement of Operations.