2012-2013 Departmental Financial Statements
Office of the Commissioner for Federal Judicial Affairs Canada
Statement of Management Responsibility
Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2013, and all information contained in these statements rests with the management of the Office of the Commissioner for Federal Judicial Affairs Canada (FJA). These financial statements have been prepared by management using the Government's accounting policies, which are based on Canadian public sector accounting standards.
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 department's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in FJA'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 (ICFR) 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 Office of the Commissioner for Federal Judicial Affairs Canada and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.
The system of ICFR is designed to mitigate risks to a reasonable level based on an on-going process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.
The Office of the Commissioner for Federal Judicial Affairs Canada will be subject to periodic Core Control Audits performed by the Office of the Comptroller General and will use the results of such audits to adhere to the Treasury Board Policy on Internal Control.
In the interim, the Office of the Commissioner for Federal Judicial Affairs Canada has undertaken a risk-based assessment of the system of ICFR for the year ended March 31, 2013, in accordance with the Treasury Board Policy on Internal Control, and the results and action plan are summarized in the annex.
The financial statements of the Office of the Commissioner for Federal Judicial Affairs Canada have not been audited.
(the original version was signed by)
William A. Brooks
Commissioner
Ottawa, Canada
August 30, 2013
(the original version was signed by)
Nicole Sayed
Chief Financial Officer
Ottawa, Canada
August 30, 2013
Financial Tables
| 2013 | 2012 | ||
|---|---|---|---|
| Liabilities | |||
| Accounts payable and accrued liabilities (Note 4) | $ 2,912,800 | $ 1,801,912 | |
| Vacation pay and compensatory leave | 312,638 | 308,472 | |
| Judges' Supplementary Retirement Benefits Account (Note 5) | 185,085,805 | 176,414,877 | |
| Employee future benefits (Note 6b) | 456,505 | 604,911 | |
| Total Liabilities | 188,767,748 | 179,130,172 | |
| Financial assets | |||
| Due from Consolidated Revenue Fund | 4,559,931 | 3,517,331 | |
| Accounts receivable and advances (Note 7) | 1,605,333 | 1,261,416 | |
| Total financial assets | 6,165,264 | 4,778,747 | |
| Departmental net debt | 182,602,484 | 174,351,425 | |
| Non-financial assets | |||
| Prepaid expenses | 528,097 | 236,625 | |
| Tangible capital assets (Note 8) | 149,559 | 196,148 | |
| Total non-financial assets | 677,656 | 432,773 | |
| Departmental net financial position | $ 173,918,652 | $ 173,918,652 | |
The accompanying notes form an integral part of these financial statements.
| 2013 Planned Results |
2013 | 2012 | |
|---|---|---|---|
| Expenses | |||
| Payments Pursuant to the Judges’ Act | $ 465,205,819 | $ 473,957,152 | $ 459,992,645 |
| Federal Judicial Affairs | 9,037,000 | 9,691,331 | 9,651,282 |
| Canadian Judicial Council | 1,947,000 | 1,987,037 | 2,246,799 |
| Internal Services | 874,817 | 917,130 | 920,190 |
| Total expenses | 477,064,636 | 486,552,650 | 472,810,916 |
| Revenues | |||
| Pension contribution credited to revenue | 17,200,000 | 13,876,400 | 13,627,964 |
| User charges | 275,000 | 165,033 | 209,409 |
| Total revenues | 17,475,000 | 14,041,433 | 13,837,373 |
| Net cost of operations before government funding | 459,589,636 | 472,511,217 | 458,973,543 |
| Government funding | |||
| Net cash provided by Government | 448,208,000 | 461,783,515 | 448,770,845 |
| Change in due from Consolidated Revenue Fund | 16,000 | 1,042,600 | (756,893) |
| Services provided without charge by other government departments (Note 9a) | 1,707,107 | 1,678 927 | 1,732,147 |
| Net cost of operations after government funding | 9,658,529 | 8,006,175 | 9,227,444 |
| Departmental net financial position – Beginning of year | 173,998,106 | 173,918,652 | 164,691,209 |
| Departmental net financial position – End of year | $ 183,656,635 | $ 181,924,828 | $ 173,918,652 |
Segmented information (Note 10).
The accompanying notes form an integral part of these financial statements.
| 2013 Planned Results |
2013 | 2012 | |
|---|---|---|---|
| Net cost of operations after government funding |
$9,658,688 | $8,006,175 | $9,227,444 |
| Change due to tangible capital assets | |||
| Acquisition of tangible capital assets | 50,000 | 61,363 | 41,846 |
| Amortization of tangible capital assets | (95,828) | (107,951) | (125,599) |
| Total change due to tangible capital assets | (45,828) | (46,588) | (83,753) |
| Change due to prepaid expenses | 26,000 | 291,472 | (174,233) |
| Net increase (decrease) in departmental net debt | 9,638,701 | 8,251,059 | 8,969,458 |
| Departmental net debt – Beginning of year | 174,465,449 | 174,351,425 | 165,381,967 |
| Departmental net debt – End of year | $ 184,104,150 | $ 182,602,484 | $ 174,351,425 |
The accompanying notes form an integral part of these financial statements.
| 2013 | 2012 | |
|---|---|---|
| Operating activities | ||
| Net cost of operations before government funding | $ 472,511,217 | $ 458,973,543 |
| Non-cash items: | ||
| Amortization of tangible capital assets (Note 8) | (107,951) | (125,599) |
| Services provided without charge by other government departments (Note 9a) | (1,678,927) | (1,732,147) |
| Variations in Statement of Financial Position: | ||
| Increase (decrease) in accounts receivables and advances | 343,916 | 69,999 |
| Increase (decrease) in prepaid expenses | 291,472 | (174,233) |
| Decrease (increase) in liabilities | (1,110,888) | 599,049 |
| Decrease (increase) in vacation pay and compensatory | (4,166) | 697 |
| Decrease (increase) in future employee benefits | 148,407 | 566,376 |
| Decrease (increase) in Judges' Supplementary Benefits Accounts | (8,670,928) | (9,448,686) |
| Cash used by operating activities | 461,722,152 | 448,728,999 |
| Capital investing activities | ||
| Acquisition of tangible capital assets (Note 8) | 61,363 | 41,846 |
| Net cash provided by Government of Canada | $ 461,783,515 | $ 448,770,845 |
The accompanying notes form an integral part of these financial statements.
Office of the Commissioner for Federal Judicial Affairs Canada
Notes to the Financial Statements (unaudited)
Year ended March 31, 2012
1. Authority and Objectives
The Office of the Commissioner for Federal Judicial Affairs (FJA) Canada was created in 1978 under the authority of the Judges Act to safeguard the independence of the Judiciary and to put federally appointed judges at arm's length from the administration of the Department of Justice. It exists to promote better administration of justice and focuses its efforts on providing a sound support role to the federal judiciary.
It administers three distinct and separate components that are funded from three very distinct sources. Statutory funding is allocated for the judges' salaries, allowances and annuities, and surviving beneficiaries' benefits. Vote authorities are provided in two separate votes to support the administrative activities of the Office of the Commissioner and the administrative activities of the Canadian Judicial Council.
The administration of the Office of the Commissioner is structured to reflect the distinctiveness of its role in supporting federal judicial activities. Under the Program Activity Architecture, the organization is broken down into three program activities: Payments Pursuant to the Judges Act; Canadian Judicial Council; and Federal Judicial Affairs (FJA).
These activities strive to meet our priorities of: developing organizational capacity; building a strong, integrated team; improving service delivery; enhancing communications; and managing information.
2. Summary of Significant Accounting Policies
These 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:
(a) Parliamentary authorities - - FJA is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to FJA 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 Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between these bases of reporting. The planned results amounts in the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Net Debt are the amounts reported in the future-oriented financial statements included in the 2012-13 Reports on Plans and Priorities.
(b) Net Cash Provided by Government -FJA operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by FJA is deposited to the CRF and all cash disbursements made by departments are paid from the CRF. The net cash provided by the Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the Government.
(c) 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 FJA is entitled to draw from the CRF without further authorities to discharge its liabilities.
(d) Revenues - Revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.
(e) Expenses - Expenses are recorded on an accrual basis:
- Vacation pay and compensatory leave are accrued as the benefits are earned by the employees under their respective terms of employment.
- Services provided without charge by other government departments for accommodation and the employer’s contribution to the health and dental insurance plans are recorded as operating expenses at their estimated costs.
(f) Employee and federally appointed judges’ future benefits
- Pension benefits: Eligible employees participate in the Public Service Pension Plan (PSSA), a multi-employer pension plan administered by the Government. FJA's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. FJA'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.
- Severance benefits: Employees entitled to severance benefits under labour 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.
- Federally appointed judges’ pension benefits: Eligible federally appointed judges and their survivors are entitled to fully indexed annuities providing that the judges meet minimum age and service requirements. The main benefits paid from this plan are recorded on a pay-as-you-go basis. They are included in the Statement of Operations and Departmental Net Financial Position as a component of salaries and benefits, and the judges' contributions are credited to revenue. Contributions made by FJA and the judges pertaining to the portion of the plan that relates to indexation of benefits is recorded in a Supplementary Retirement Benefits Account, which is presented in the Statement of Financial Position. FJA's contribution towards indexation is expensed at the time it is accrued in accordance with the Supplementary Retirement Benefits Act. The actuarial liability associated with the judges' pension plan is recorded in the financial statements of the Government of Canada, the ultimate sponsor of the plan.
(g) Accounts and loans receivables are stated at the lower of cost and net recoverable value. A valuation allowance is record for receivables where recovery is considered uncertain.
(h) Tangible capital assets - All tangible capital assets and leasehold improvements having an initial cost of $5,000 or more are recorded at their acquisition cost. FJA 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 | Amortization Period |
|---|---|
| Machinery and Equipment | 5 to 10 years |
| Informatics Hardware | 3 years |
| Software | 3 years |
| Furniture | 10 years |
(i) Measurement of 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 the liability for employee future 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, are recorded in the financial statements in the year they become known.
3. Parliamentary Authorities
FJA receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Departmental Net Financial Position and the Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, FJA 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 dollars)
| 2013 | 2012 | |
|---|---|---|
| Net cost of operations before government funding | 472,511,217 | 458,973,544 |
| Adjustment for items affecting net cost of operations but not affecting authorities: | ||
| Services provided without charge by other government departments (Note 9a) |
(1,678,927) | (1,732,147) |
| Decrease (increase) in employee future benefits | 148,407 | 566,376 |
| Amortization of tangible capital assets (Note 8) | (107,951) | (125,599) |
| Decrease (increase) in vacation pay and compensatory leave | (4,166) | 697 |
| Judges’ pension contributions | 13,876,400 | 13,627,964 |
| Refund of prior years’ expenditures | 4,785 | 4,705 |
| Total items affecting net cost of operations but not affecting authorities |
12,238,548 | 12,341,996 |
| Adjustments for items not affecting net cost of operations but affecting authorities: | ||
| Acquisitions of tangible capital assets | 61,363 | 41,846 |
| Decrease (increase) in prepaid expenses | 291,472 | (174,233) |
| Total items not affecting net cost of operations but affecting authorities |
352,835 | (132,387) |
| Current year authorities used | 485,102,600 | 471,183,153 |
(b) Authorities provided and used
| 2013 | 2012 | |
|---|---|---|
| Authorities provided: | ||
| Vote 20 - Operating expenditures - FJA | 8,942,753 | 9,346,666 |
| Vote 25 - Operating expenditures - CJC | 1,589,923 | 1,754,600 |
| Statutory amounts | 475,115,523 | 460,747,451 |
| Less: | ||
| Lapsed: Operating | (545,599) | (665,564) |
| Current year authorities used | 485,102,600 | 471,183,153 |
4. Accounts payable and accrued liabilities
The following table presents details of FJA’s accounts payable and accrued liabilities:
| 2013 | 2012 | |
|---|---|---|
| Accounts payable - Other government departments and agencies | 166,888 | 249,790 |
| Accounts payable - External parties | 2,714,412 | 1,512,572 |
| Total accounts payable | 2,881,300 | 1,762,362 |
| Accrued liabilities | 31,500 | 39,550 |
| Total accounts payable and accrued liabilities | 2,912,800 | 1,801,912 |
5. Judges’ Supplementary Retirement Benefits Account
| 2013 | 2012 | |
|---|---|---|
| Liability, beginning of year | 176,414,877 | 166,966,191 |
| Contributions | 6,335,552 | 6,226,572 |
| Interest | 2,335,376 | 3,222,114 |
| Liability, end of year | 185,085,805 | 176,414,877 |
The pension plan for federally appointed judges provides fully indexed annuities to judges and to all eligible survivors providing they meet minimum age and service requirements. Unlike other pension plans, the judges' plan lacks an explicit accrual rate for benefits. Instead the full benefit amount is generally payable when the member has completed 15 years of pensionable service and the total of the member's age and years of service totals 80. Judges who elect Supernumerary Status or judges who qualify for retirement make required contributions of 1% of salary. All other judges make contributions of 7% of salary.
The main benefits from this plan are expensed on a pay-as-you-go basis. However, by virtue of the Supplementary Retirement Benefits Act, for the portion of the plan that relates to indexation of benefits, the 1% portion of salary contributed by the judges is recorded in a Supplementary Retirement Benefits Account, along with a matching contribution of 1% recorded by FJA. In addition, interest is accrued on the outstanding balance of the Account. The actuarial liability associated with the judges' pension plan is recorded in the financial statements of the Government of Canada.
6. Employee future benefits
(a) Pension benefits
FJA'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/Québec Pension Plans' benefits and they are indexed to inflation.
Both the employees and FJA contribute to the cost of the Plan. The 2012-13 expense amounts to $641,388 ($678,924 in 2011-12), which represents approximately 1.7 times (1.8 in 2011-12) the contributions by employees.
FJA'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
FJA 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, is 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.
| 2013 | 2012 | |
|---|---|---|
| Accrued benefit obligation, beginning of year | 604,911 | 1,171,287 |
| Expense for the year | - | 22,358 |
| Benefits paid during the year | (148,406) | (588,734) |
| Accrued benefit obligation, end of year | 465,505 | 604,911 |
7. Accounts receivable and advances
The following table presents details of FJA’s accounts receivable and advances:
| 2013 | 2012 | |
|---|---|---|
| Receivables - Other government departments and agencies | 1,057,482 | 122,837 |
| Receivables - External parties | 18,345 | 21,221 |
| Advances | 529,506 | 1,117,358 |
| Total accounts receivable and advances | 1,605,333 | 1,261,416 |
8. Tangible capital assets
View the Tangible Capital Assets Table
9. Related party transactions
FJA is related as a result of common ownership to all Government departments, agencies, and Crown Corporations. FJA enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, FJA 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, FJA received services without charge from certain common service organizations related to accommodation and employer's contribution to the health and dental insurance plans. These services provided without charge have been recorded in FJA's Statement of Operations and Departmental Net Financial Position as follows:
| 2013 | 2012 | |
|---|---|---|
| Accommodation | 1,228,486 | 1,196,855 |
| Employer's contribution to health and dental insurance plans | 450,441 | 535,292 |
| Total | 1,678,927 | 1,732,147 |
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 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 FJA's Statement of Operations and Departmental Net Financial Position.
(b) Other transactions with related parties
| 2013 | 2012 | |
|---|---|---|
| Accounts receivable with other government departments and agencies (Note 7) | 1,057,482 | 122,837 |
| Accounts payable to other government departments and agencies (Note 4) | 166,888 | 249,790 |
| Expenses – Other Government departments and agencies | 1,082,126 | 1,215,577 |
| Revenues – Other Government departments and agencies | 160,248 | 209,409 |
Expenses and revenues disclosed in (b) exclude common services provided without charge, which is already disclosed in (a).
10. Segmented information
Presentation by segment is based on FJA’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:
Annex to the Statement of Management Responsibility
Including Internal Control Over Financial Reporting
for Fiscal Year 2012-2013 (unaudited)
- Introduction
In support of an effective system of internal control, the Office of the Commissioner for Federal Judicial Affairs Canada (FJA) annually assesses the performance of its financial controls to ensure that:
- financial arrangements or contracts are entered into only when sufficient funding is available;
- payments for goods and services are made only when the goods or services are received or the conditions of contracts or other arrangements have been satisfied; and
- payments have been properly authorized.
Over time, this includes assessment of the design and operating effectiveness of the system of ICFR which will ensure the ongoing monitoring and continuous improvement of its departmental system of ICFR.
Design effectiveness testing (DET) ensures that key control points are identified, documented and in place, and that they are aligned with the risks they aim to mitigate, and that any required remediation is addressed in a timely manner.
Operating effectiveness testing (OET) means that the application of key controls has been tested over a defined period and that any required remediation is addressed in a timely manner.
- Assessment results during fiscal year 2012-2013
- Design effectiveness of key controls
FJA has conducted in-depth design effectiveness testing on the following: Entity Level Controls (ELCs), Salary Administration in pursuant to the Judges' Act, and Pension Administration in pursuant to the Judges' Act. FJA identified those controls that were effectively designed and those that required improvement, and have begun implementation of the corrections which will continue into 2013-14.
- Operating effectiveness of key controls
FJA has conducted in-depth operating effectiveness testing on the following: Entity Level Controls (ELCs), Salary Administration in pursuant to the Judges' Act, and Pension Administration in pursuant to the Judges' Act. As with the DET, FJA identified those controls that were effectively designed and those that required improvement, and have began implementation of the corrections which will continue into 2013-14.
- Design effectiveness of key controls
- Action Plan for future years
Efforts in fiscal year 2012-13 focused on areas where the materiality threshold is significant. In the next fiscal year 2013-14, FJA plans to review the design and operating effectiveness of the following:
- Judges' Supplementary Retirement Benefit Account (SRBA)
- Expense claims processing pursuant to the Judges' Act
- Government Acquisition Cards
- Managing the delegation of Financial Signing Authorities
For the fiscal year 2014-15, FJA plans to review the design and operating effectiveness of the following:
- Procure to Payment
- Revenues to Receivables
- Information Technology General Controls
- Planning and Budgeting
For the fiscal year 2015-16, FJA plans to review the design and operating effectiveness of the following:
- Salary Administration of FJA employees
- Accommodations
- Capital Acquisitions
- Interdepartmental Settlements
- Date modified: