Future-Oriented Financial Statements 2013-2014

Statement of Management Responsibility

Department 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 January 9, 2013 and reflect the plans described in the 2013-2014 Report on Plans and Priorities.

Management has established a Departmental Audit Committee which is mandated to review the departmental financial statements and identify any material concerns relating to all significant accounting estimates and judgements therein.

François Guimont
Deputy Minister
Ottawa, Canada

Gary Robertson
Chief Financial Officer
Assistant Deputy Minister
Corporate Management Branch
Ottawa, Canada

Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to January 9, 2013.
Contingent liabilities (note 11)
Contractual obligations (note 12)
The accompanying notes form an integral part of these future-oriented financial statements

François Guimont
Deputy Minister
Ottawa, Canada

Gary Robertson
Chief Financial Officer
Assistant Deputy Minister
Corporate Management Branch
Ottawa, Canada

Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to January 9, 2013
Segmented information (note 15)
The accompanying notes form an integral part of these future-oriented financial statements.

Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to January 9, 2013
The accompanying notes form an integral part of these future-oriented financial statements.

Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to January 9, 2013
The accompanying notes form an integral part of these future-oriented financial statements

Notes to the Future-oriented Financial Statements (unaudited)
For the Year Ended March 31, 2014

1. Authority and objectives

The Department of Public Safety and Emergency Preparedness Canada (PSEPC) was created in 2003 to ensure coordination across all federal departments and agencies responsible for national security and the safety of Canadians. The Department operates under the Department of Public Safety and Emergency Preparedness Act (2005, c.10) that received Royal assent on March 23, 2005.

PSEPC contributes to the public safety of Canadians through the promotion and maintenance of a just, peaceful and safe society; it has five main core activities:

• Countering Crime: Collaborates with regions and communities to build crime prevention programs that are specific and appropriate to them. It provides communities with tools, knowledge and support to implement prevention programs;
• Emergency Management: Addresses all-hazards through the development of an integrated emergency management system, legislation and national strategies, training and standards to protect Canada and Canadians;
• Internal Services: Supports the work of all other programs activities and provides key corporate services;
• National Security: Develops and coordinates policy to define and advance Canada's national security objectives; and
• Border Strategies: Provides federal policy leadership and coordination on a variety of border issues to ensure that security objectives are achieved in a manner that facilitates the flow of legitimate trade and travel, and contributes to the effective management of the Canada-US border agenda.
  

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 2013-2014 Report on Plans and Priorities.

The main assumptions are as follows:

1. The Department's activities will remain substantially the same as in 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 the likely outcome of actual situations; and
4. Estimated year end information for 2012-13 is used as the opening position for the 2013-14 forecasts.

These assumptions are adopted as at January 9, 2013.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results for the remainder of 2012-13 and for 2013-14, 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, PSEPC has made estimates and assumptions concerning the future. These estimates and judgments may differ from the subsequent actual results. Estimates and judgment 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 could lead to material differences between the Future-oriented Statements of Operations and Departmental Net Financial Position and historical statements of operations include:

1. The timing and amounts of acquisition and disposals of property, equipment may affect gains/losses and amortization expense; and/or
2. 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, PSEPC will not be updating the forecasts for any changes to appropriations or forecast financial information made after January 9, 2013. Variances will be explained in the Departmental Performance Report.

4. Summary of Significant Accounting Policies

These future-oriented financial statements have been prepared using the Government's accounting policies stated below, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

1. Parliamentary authorities: PSEPC is financed by the Government of Canada through Parliamentary authorities. The cash accounting basis is used to recognize transactions affecting parliamentary authorities. The future-oriented financial statements are based on accrual accounting. Consequently, items presented in the Future-oriented Statements of Operations and Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a reconciliation between these basis of reporting.
2. Net Cash provided by Government: PSEPC 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/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 Department is entitled to draw from the CRF without further authorities to discharge its liabilities.
4. Revenues: Revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place. Revenues that are non-respendable are not available to discharge the Department's liabilities. While the Deputy Minister is expected to maintain accounting control, he or she has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of the PSEPC 's gross revenues.
5. Expenses: are recorded on an accrual basis.
   1. Transfer payments: are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program.  In situations where payments do not form part of an existing program, transfer payments are recorded as expenses 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.  Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.
   2. Vacation pay and compensatory: leave are accrued as the benefits are earned by employees under their respective terms of employment.
   3. Services provided without charge by other government departments: for accommodation, employer contributions to the health and dental insurance plans, legal services and workers' compensation 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. The Department's contributions to the Plan are charged to expenses in the year incurred and represent the total Departmental obligation to the Plan. 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:  Employees entitled to severance benefits under labor contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. 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. Accounts receivable: Accounts receivable are stated at the lower of cost and net recoverable value; a valuation allowance is established for receivables where recovery is considered uncertain.
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 Note 11 to the future-oriented financial statements.
   1. Tangible capital assets: All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. The Department 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:

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.

5. Parliamentary authorities

PSEPC receives its funding through annual Parliamentary authorities. Items recognized in the Future-oriented Statements of Operations and Departmental Net Financial Position and the Future-oriented Statement of Financial Position in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, PSEPC 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:

Forecast authorities requested for the year ending March 31, 2014 are the planned spending amounts presented in the 2013-14 Report on Plans and Priorities.  Estimated authorities requested for the year ending March 31, 2013 include amounts presented in the 2012-13 Main Estimates and Supplementary Estimates (A) and (B) and estimates of amounts to be allocated at year-end from Treasury Board central votes but exclude the transfer of funds for the Consolidation of Pay Services Project.

6. Accounts payables and accrued liabilities

7. Accounts receivable and advances

8. Tangible capital assets

9. Employee future benefits

(a) Pension benefits

PSEPC'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.

Both the employees and the Department contribute to the cost of the Plan. The forecast expenses are $10,750,000 each year in both 2012-13 and 2013-14, representing approximately 1.8 times the contributions of employees.

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.

(b) Severance benefits

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

As part of collective agreement negotiations with certain employee groups, and changes to conditions of employment for executives and certain non-represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.

10. Disaster Financial Assistance Arrangements (DFAA)

In the event of a natural disaster in Canada, the federal government provides financial assistance to provincial and territorial governments through the Disaster Financial Assistance Arrangements program to help meet the basic costs of response and recovery when such expenditures exceed what an individual province or territory could reasonably be expected to bear on its own. The current outstanding liabilities of $1,019M in 2012-13 ($919M in 2013-14) is the estimated cost to PSEPC of 65 natural disaster events for which the Federal Government has agreed to share the costs and final payments have not yet been made.

Currently, 16 other events for a total of $285M have been identified, but not yet approved by Order-in-Council. This amount is not included in the estimate of the DFAA's liabilities.

11. Contingent liabilities - claims and litigation

Claims have been made against the Department in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. The Department has recorded an allowance for claims and litigations where it is likely that there will be a future payment and a reasonable estimate of the loss can be made. Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amount to approximately $1.75M as at March 31, 2014.

12. Contractual Obligations

The nature of the Department's activities can result in some large multi-year contracts and obligations whereby the Department will be obligated to make future payments in order to carry out its transfer payment programs or when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

13. 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. In addition, the Department has agreements with Correctional Services Canada and with Royal Canadian Mounted Police related to the provision of finance and human resources information system services. During the year, the Department received 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 Department received services without charge from certain common service organizations related to accommodation, legal services, 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 and Departmental Net Financial Position as follows:

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 services organization so that one department performs services for all other departments and agencies without charge. The costs of these services, such as 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 Future-oriented Statement of Operations and Departmental Net Financial Position.


(b) Other transactions with related parties

Expenses and revenues disclosed in (b) exclude common services provided without charge, which are already disclosed in (a).

14. Transfer payments

The following table presents details of transfer payments as follows:

15. Segmented information

Presentation by segment is based on the Department'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 revenue 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:

Date modified:

2018-01-31