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 March 31, 2012 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.

 

Future-oriented Statement Of Financial Position
As at March 31
(in thousands of dollars)

	2012	2013
Assets
Financial assets
Due from the Consolidated Revenue Fund	441,913	423,582
Accounts receivable	23,789	24,631
Total financial assets	465,702	448,213
Non-financial assets
Tangible capital assets (Note 7)	47,577	55,108
Total	513,279	503,321
Liabilities and Equity of Canada
Liabilities
Accounts payable and accrued liabilities	83,839	80,269
Family Law account	4,962	4,962
Transfer payments payable	381,863	367,944
Vacation pay and compensatory leave	19,157	18,732
Employee severance benefits (Note 8)	66,517	65,042
Total liabilities	556,338	536,949
Deficit of Canada	(43,059)	(33,628)
Total	513,279	503,321

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to December 31, 2011.

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)

	2012	2013
Expenses (Note 6)
Legal Services to Government Program	481,808	516,039
Stewardship of the Canadian Legal Framework	476,961	455,709
The Office of the Federal Ombudsman for Victims of Crime	1,513	1,405
Internal Services	177,507	178,264
Total expenses	1,137,789	1,151,417
Revenues
Legal Services to Government Program	312,545	319,755
Stewardship of the Canadian Legal Framework	9,087	9,087
Internal Services	39,845	43,740
Total revenues	361,477	372,582
Net Cost of Operations	776,312	778,835

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to December 31, 2011.

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

Future-oriented Statement Of Equity Of Canada
For the year ending March 31
(in thousands of dollars)

	2012	2013
Deficit of Canada, beginning of year	(78,742)	(43,059)
Net cost of operations	(776,312)	(778,835)
Change in due from the Consolidated Revenue Fund	17,495	(18,331)
Net cash provided by Government	697,774	709,879
Services provided without charge from other government departments (Note 9)	96,726	96,718
Deficit of Canada, End of Year	(43,059)	(33,628)

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to December 31, 2011.

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

Future-oriented Statement of Cash Flow
As at March 31
(in thousands of dollars)

	2012	2013
Operating Activities
Net cost of operations	776,312	778,835
Non-cash items
Amortization of tangible capital assets (Note 7)	(13,061)	(13,491)
Services provided without charge by other government departments (Note 9)	(96,726)	(96,718)
Variations in Future-Oriented Statement of Financial Position
(Decrease) increase in accounts receivables	(699)	842
(Decrease) in other assets	(70)	0
Decrease in liabilities	15,296	19,389
Cash used in operating activities	681,052	688,857
Capital Investing Activities
Acquisitions of tangible capital assets (Note 7)	16,722	21,022
Cash used in capital investing activities	16,722	21,022
Net Cash Provided By Government	697,774	709,879

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to December 31, 2011.

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

   Stewardship of the Canadian Legal Framework

   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 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. This program activity also includes significant ongoing funding to provinces and territories in support of their responsibility for the day to day administration of justice.

   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 high quality legal services

   Legal Services to Government Program

   The Department of Justice provides an integrated suite of high quality legal advisory, litigation and legislative services to the Minister of Justice and to all federal departments and agencies to support them in meeting the Government's policy and programming priorities and to advance the overall objectives of the government. Services are provided through: a network of departmental legal services units co-located with client departments and agencies; specialized legal capacities within national headquarters; and, a network of regional offices and sub-offices providing legal advisory and litigation services to federal departments and agencies across the country.

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. Methodology and 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 but are subject to changes from items included in budget 2012.
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 but is subject to change from items included in budget 2012.
3. Allowances for uncollectibility are based on historical experience. The general historical pattern is expected to continue.
4. 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 March 31, 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 future-oriented financial statements Justice Canada 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:

1. The timing and amounts of acquisitions and disposals of property, plant and equipment may affect gains/losses and amortization expense.
2. Implementation of new collective agreements and severance payments.
3. Economic conditions may affect both the amount of revenue earned and the collectability of receivables.
4. 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 in effect for the 2011-12 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:

1. Parliamentary authorities

   The Department is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the department 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 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.

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. Amounts due from the Consolidated Revenue Fund (CRF)

   The amounts 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 Department is entitled to draw from the CRF without further parliamentary expenditure authorities to discharge its liabilities.

4. 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.
   
   
   

5. Expenses

   Expenses are recorded 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 future-oriented 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, provided that the transfer is authorized and a reasonable estimate can be made.
   • 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.
   
   
   

6. Employee future benefits

   1. Pension benefits

      Eligible employees participate in the Public Service Pension Plan, a multiemployer plan administered by the Government. 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.

7. Receivables

   Receivables are stated at the lower of cost and net recoverable value; 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.

8. 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.

9. 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

   Assets under construction are recorded in the applicable capital asset class in the year that they become available for use and are not amortized until they become available for use.

10. Measurement uncertainty

    The preparation of these future-oriented financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the futureoriented financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. Actual results could significantly differ from those estimated.

5. Parliamentary authorities

The Department receives most of its funding through expenditure authorities provided by Parliament. Items recognized in the Future-oriented Statement of Operations and the Financial Position 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)

	2012	2013
Net cost of operations	776,312	778,835
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (Note 7)	(13,061)	(13,491)
Employee severance benefits	25,000	1,473
Accrual for unratified collective agreements	(4,706)	0
Revenue not available for spending	9,087	9,087
Employee benefits recovered	44,447	44,654
Bad debt expense	(4,941)	(4,941)
Services provided without charge by other government departments (Note 9)	(96,726)	(96,718)
Total	(40,900)	(59,936)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets	16,722	21,022
Total	16,722	21,022
Forecasted authorities available	752,134	739,921

6. Expenses

(in thousands of dollars)

	2012	2013
Operating
Salaries and employee benefits	614,729	619,960
Accommodation	48,874	53,973
Professional and special services	40,989	53,958
Amortization of tangible capital assets	13,061	13,491
Travel and relocation	10,992	12,602
Other expenses	9,009	8,888
Communications	7,550	8,655
Bad debts	4,941	4,941
Utilities, materials and supplies	4,894	6,150
Total operating expenses	755,039	782,618
Transfer payments	382,750	368,799
Total expenses	1,137,789	1,151,417

7. Tangible capital assets

(in thousands of dollars)

	2012	2013
Opening balance	43,916	47,577
Acquisition of tangible capital assets	16,722	21,022
less: Current year amortization	(13,061)	(13,491)
Net book value	47,577	55,108

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. 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/Qu?bec 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 authorities.

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 receives services without charge from certain common service organizations, related to accommodation, the employer's contribution to the health and dental insurance plans and workers' compensation coverage. These services provided without charge have been recorded in the department's Future-oriented Statement of Operations as follows:

(in thousands of dollars)

	2012	2013
Accommodation provided by Public Works and Government Services Canada	46,874	47,974
Employer's contributions to the health and dental insurance plans paid by Treasury Board Secretariat	49,782	48,678
Workers' compensation coverage provided by Human Resources and Skills Development Canada	70	66
Total	96,726	96,718

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 Canada and audit services provided by the Office of the Auditor General are not included in the Department's Futureoriented Statement of Operations.