Future-Oriented Financial Statements for the year ended March 31, 2012

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Statement of Management Responsibility

 

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 2, 2011 and reflect the plans described in the Report on Plans and Priorities. The future-oriented financial information has been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

Management is responsible for the information contained in the future-oriented financial information and for the process of developing assumptions. Assumptions and estimates are based upon information available and known to management at the time of development, reflect current business and economic conditions, and assume a continuation of current governmental priorities and consistency with the mandate and strategic objectives of the Office of the Privacy Commissioner. Much of the future-oriented financial information is based on the assumptions, best estimates, and judgment and gives due consideration to materiality. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. However, as with all such assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.

The actual results achieved for the fiscal years covered in the accompanying future-oriented financial information will vary from the information presented and the variations may be material.

Ottawa, Canada
June 16, 2011

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Future Oriented Statement of Operations (Unaudited)
Office of the Privacy Commissioner of Canada

For the year ended March 31
(in thousands of dollars)

	Estimated Results 2011	Forecast 2012
Operating Expenses
Compliance	11,045	12,031
Public Outreach	3,530	3,818
Research & Policy Development	4,284	4,316
Internal Services	7,171	7,645
Net Cost of Operations	26,030	27,810

Segmented information (Note 10)

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

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Notes to the Future Oriented Financial Statements (Unaudited)
Office of the Privacy Commissioner of Canada

1. Authority and Objectives

The Office of the Privacy Commissioner of Canada (the Office), was created under the Privacy Act, which came into force on July 1, 1983. The Privacy Commissioner is an independent officer of Parliament appointed by the Governor-in-Council following approval of her nomination by resolution of the Senate and the House of Commons. The Office is listed under Schedule I.1 of the Financial Administration Act and is funded through annual appropriations. The Commissioner is accountable for, and reports directly to Parliament on the results achieved.

The objectives of the Office of the Privacy Commissioner of Canada are:

• investigating complaints and conducting audits;
• publishing information about personal information-handling practices in the public and private sectors;
• conducting research into privacy issues; and
• promoting awareness and understanding of privacy issues by the Canadian public.

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:

• (a) The Office's activities will remain substantially the same as for the previous year.
• (b) Expenses, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.
• (c) 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 2, 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 the Office of the Privacy Commissioner 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:

• (a) The timing and amounts of acquisitions and disposals of property, plant and equipment may affect gains/losses and amortization expense.
• (b) 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, the Office of the Privacy Commissioner 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:

(a) Due from/to the CRF
Due from the CRF represents amounts of cash that the Office is entitled to draw from the Consolidated Revenue Fund, without further appropriations, in order to discharge its liabilities.

(b) Parliamentary appropriations
The Office 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 and the Future-oriented Statement of Financial Position are not necessarily the same as those provided through appropriations from Parliament. Note 5 provides a reconciliation between the bases of reporting.

(c) 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. Net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.

(d) Accounts receivables
Accounts receivable are stated at amounts expected to be ultimately realized. A provision is made for receivables where recovery is considered uncertain.

(e) Tangible capital assets
The Office records as capital assets all expenses providing multi year benefits and having an initial cost of $2,500 or more. The Office does not capitalize intangibles.

Amortization of capital assets is done on a straight-line basis over the estimated useful life of the capital asset as follows:

Tangible capital assets

Asset Class	Amortization Period
Machinery and equipment	3 years
Informatics hardware	3 years
Computer software	3 years
Other equipment	10 years
Leasehold improvements	Lesser of useful life or remaining term of the lease

(f) Employee future benefits

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

Severance benefits
Employees are entitled to severance benefits, as provided for under labour contracts and conditions of employment. The cost of these benefits is 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.

5. Parliamentary Appropriations

The Office receives most of its funding through expenditure authorities provided by Parliament. 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) Authorities requested

(in thousands of dollars)

	Estimated Results 2011	Forecast 2012
Authorities requested
20,94922,128
Statutory amounts: Contributions to employee benefit plans	2,291	2,530
Forecast authorities available	23,240	24,658

Forecast authorities requested for the year ending March 31, 2012 are the planned spending amounts presented in the 2011-2012 Report on Plans and Priorities. Estimated authorities requested for the year ending March 31, 2011 include amounts presented in the 2010-2011 Main Estimates and Supplementary Estimates (A) and (B), planned for presentation in Supplementary Estimates (C) and estimates of amounts to be allocated at year-end from Treasury Board central votes.

(b) Reconciliation of net cost of operations to requested authorities

(in thousands of dollars)

	Estimated Results 2011	Forecast 2012
Net cost of operations	26,030	27,810
Adjustments for items affecting net cost of operations but not affecting appropriations:
Add (less):
Amortization of tangible capital assets (Note 6)	(449)	(499)
Increase in employee severance benefits	(302)	(402)
Increase in vacation pay and compensatory leave	(68)	(80)
Services provided without charge by other government departments (Note 8)	(2,521)	(2,521)
Subtotal	(3,340)	(3,502)
Adjustments for items not affecting net cost of operations but affecting appropriations:
Add (less):
Acquisitions of tangible capital assets (Note 6)	550	350
Forecast authorities available	23,240	24,658

6. Tangible capital assets

(in thousands of dollars)

	Estimated Result 2011	Forecast 2012
Opening balance	1,356	1,457
Acquisition of tangible capital assets	550	350
Less: Current year amortization	(449)	(499)
Net Book Value	1,457	1,308

7. Employee Future Benefits

(a) Pension benefits:
The Office'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 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 appropriations. Information about the severance benefits, estimated as at the date of these statements, is as follows:

(in thousands of dollars)

	Estimated Results 2011	Forecast 2012
Accrued benefit obligation, beginning of year	2,683	2,985
Expense for the year	302	402
Accrued benefit obligation, end of year	2,985	3,387

8. Related party transactions

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

(a) Common services provided without charge by other government departments
During the year the Office is forecasted to receive without charge from other departments, accommodation, the employer's contribution to the health and dental insurance plans, payroll services and audit services. These services without charge have been recognized in the Office's future-oriented Statement of Operations as follows:

(in thousands of dollars)

	Estimated Results 2011	Forecast 2012
Accommodation provided by Public Works and Government Services Canada	1,364	1,364
Contribution covering employer's share of employees' insurance premiums and expenditures paid by Treasury Board Secretariat	1,019	1,019
Payroll services provided by Public Works and Government Services Canada	9	9
Audit services provided by the Office of the Auditor General of Canada	129	129
Total	2,521	2,521

9. Equity of Canada

The Equity of Canada, which is currently in a deficit position, represents liabilities incurred by the Office, net of tangible capital assets and prepaid expenses, which have not yet been funded through appropriations. Significant components of this amount are employee severance benefits and vacation pay liabilities. These amounts are expected to be funded by appropriations in future years as they are paid.

10. Segmented information

(in thousands of dollars)

	Estimated Results 2011	Compliance	Public Outreach	Research & Policy Development	Internal Services	Forecast 2012
Operating Expenses:
Salaries and employee benefits	16,512	8,179	2,602	2,602	5,205	18,588
Professional and special services	4,860	1,761	560	560	1,121	4,002
Accommodation	1,364	600	191	191	382	1,364
Transportation and telecommunications	953	469	149	149	298	1,065
Repair and maintenance	357	234	74	74	149	531
Acquisition of equipment	497	192	82	85	149	508
Information	352	209	66	66	133	474
Amortization	449	265	55	50	130	500
Utilities, materials and supplies	110	78	25	25	50	178
Rentals	77	43	14	14	27	98
Other	-	1	-	-	1	2
Total operating expenses	25,531	12,031	3,818	3,816	7,645	27,310
Contributions	500	-	-	500	-	500
Total operatinge expenses	26,031	12,031	3,818	4,316	7,645	27,810