Future-Oriented Financial Statements for the year ended March 31, 2014

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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 January 15, 2013 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 public sector accounting standards.

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
January 28, 2013

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Future Oriented Statement of Operations and Net Financial Position (Unaudited)
Office of the Privacy Commissioner of Canada

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

Estimated Results 2013	Forecast 2014
Expenses
Compliance	12,193	12,825
Public Outreach	3,446	3,626
Research & Policy Development	5,006	5,238
Internal Services	6,361	8,426
Net Cost of Operations	27,006	30,115
Government funding
Net cash provided by Government	24,892	28,723
Change in due from the Consolidated Revenue Fund	(235)	266
Services provided without charge from other government departments (Note 8)	2,896	2,896
Total - Government funding	27,553	31,885
Annual surplus (cost of operations) after government funding	547	1,770
Net Financial Position, Beginning of Year	(903)	(356)
Net Financial Position, End of Year	(356)	1,414

Segmented information (Note 10)

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

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

At March 31
(in thousands of dollars)

	Estimated Results 2013	Forecast 2014
Liabilities
Accounts payable and accrued liabilities	2,090	3,078
Accrued employee salaries	1,002	352
Vacation pay and compensatory leave	715	717
Employee severance benefits (Note 7)	1,151	1,189
Total Liabilities	4,958	5,336
Financial assets
Due from Consolidated Revenue Fund	2,359	2,625
Accounts receivable and advances	502	463
Total financial assets	2,861	3,088
NET DEBT	2,097	2,248
Non-financial assets
Tangible capital assets (Note 6)	1,741	3,662
Total non-financial assets	1,741	3,662
Net Financial Position	(356)	1,414

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

Office of the Privacy Commissioner of Canada
Future Oriented Statement of Change in Net Debt (Unaudited)

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

	Estimated Results 2013	Forecast 2014
Cost of operations after government funding	547	1,770
Change due to tangible capital assets
Acquisitions of tangible capital assets (Note 6)	561	1,989
Amortization of tangible capital assets	41	(407)
Write-off and Write-down of capital assets	236	339
Total change due to tangible capital assets	838	1,921
Net decrease (increase) in net debt	291	(151)
Net Debt, Beginning of year	(2,388)	(2,097)
Net Debt, End of Year	(2,097)	(2,248)

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

Future Oriented Statement of Cash Flow (Unaudited)
Future Oriented Statement of Change in Net Debt (Unaudited)

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

Estimated Results 2013	Forecast 2014
Operating Activities
Net cost of operations	27,006	30,115
Non-cash items:
Amortization of tangible capital assets	(525)	(932)
Services provided without charge from other government departments (Note 8)	(2,896)	(2,896)
Variations in Statement of Financial Position:
Increase(decrease) in accounts receivable and advances	98	(39)
Change in other assets	(83)	0
Decrease (increase) in liabilities	428	(378)
Cash used in operating activities	24,028	25,870
Capital Investment Activities
Net acquisitions of tangible capital assets (Note 6)	864	2,853
Cash used in capital investment activities	864	2,853
Net Cash Provided by Government of Canada	24,892	28,723

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, conducting audits and pursuing court action under the Privacy Act and Personnal Information Protection and Electronic Documents Act (PIPEDA);
• publicly reporting on the personal information-handling practices of public- and private-sector organizations;
• supporting, undertaking and publishing research into privacy issues; and
• promoting public awareness and understanding of privacy issues.

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) Over the next 18 months, the OPC will see its operations move from downtown Ottawa to Gatineau. The Ottawa office currently houses 95 percent of OPC's employees. The move provides the opportunity to trade up to a new building boasting the latest technology as well as being environmentally certified. Additionnal funding will be received and used for the move only.
• (b) Notwithstanding the move, the Office's activities will remain substantially the same as for the previous year.
• (c) 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.
• (d) Year end information from the 2011-12 financial statements is used as the opening position for the 2012-2013 estimated results
• (e) Estimated year end information for 2012-2013 is used as the opening position for the 2013-2014 forecasts.

These assumptions are adopted as at January 15, 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 2012-2013 and for 2013-2014, 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 of 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:

• (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 of 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 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) 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:

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 or 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.

(g) Measurement uncertainty
The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses reported. 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 Appropriations

The Office receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and 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, 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 2013	Forecast 2014
Authorities requested
Vote 45	22,402	26,630
Statutory amounts: Contributions to employee benefit plans	2,474	2,471
Forecast authorities available	24,876	29,101

Forecast authorities requested for the year ending March 31, 2014 are the planned spending amounts presented in the 2013-2014 Report on Plans and Priorities. Estimated authorities requested for the year ending March 31, 2013 include amounts presented in the 2012-2013 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

2,853

(in thousands of dollars)

	Estimated Results 2013	Forecast 2014
Net cost of operations	27,006	30,115
Adjustments for items affecting net cost of operations but not affecting appropriations:
Add (less):
Amortization of tangible capital assets (Note 6)	(525)	(932)
Decrease (increase) in employee severance benefits	587	(37)
Increase in vacation pay and compensatory leave	(160)	(2)
Services provided without charge by other government departments (Note 8)	(2,896)	(2,896)
Subtotal	(2,994)	(3,867)
Adjustment for items not affecting net cost of operations, but affecting appropriations:
Add (less):
Acquisitions of tangible capital assets (Note 6)
Subtotal	864	(2,853)
Forecast authorities available	24,876	29,101

6. Tangible capital assets

(in thousands of dollars)

	Estimated Results 2013	Forecast 2014
Opening balance	1,402	1,741
Acquisition of tangible capital assets	864	2,853
Less: Current year amortization	(525)	(932)
Net Book Value	1,741	3,662

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 2013	Forecast 2014
Accrued benefit obligation, beginning of year	1,737	1,151
Expense for the year	(586)	38
Accrued benefit obligation, end of year	1,151	1,189

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.

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 2013	Forecast 2014
Accommodation provided by Public Works and Government Services Canada	1,559	1,559
Contribution covering employer's share of employees' insurance premiums and expenditures paid by Treasury Board Secretariat	1,206	1,206
Payroll services provided by Public Works and Government Services Canada	20	20
Audit services provided by the Office of the Auditor General of Canada		111
Total	2,896	2,896

9. Segmented information

(in thousands of dollars)

	Estimated Results 2013	Compliance	Public Outreach	Research & Policy Development	Internal Services	Forecast 2014
Operating Expenses:
Salaries and employee benefits	18,145	8,759	2,476	3,237	4,570	19,042
Professional and special services	3,905	1,840	520	680	1,089	4,129
Accommodation	1,559	717	203	265	374	1,559
Transportation and telecommunications	771	335	95	124	175	729
Repair and maintenance	158	179	51	66	93	389
Acquisition of equipment	110	182	51	67	1,700	2,000
Information	390	218	62	80	114	474
Amortization	525	429	121	158	224	932
Utilities, materials and supplies	276	84	24	31	44	183
Rentals	658	79	22	29	41	171
Other	9	3	1	1	2	7
Total operating expenses	26,506	12,825	3,626	4,738	8,426	29,615
Contributions	500	-	-	500	-	500
Total operating expenses	27,006	12,825	3,626	5,238	8,426	30,115

10. Accounting changes

During 2011, amendments were made to TreasuryBoard Accounting Standards 1.2 - Departmental and Agency Financial Statements to improve financial reporting by government departments and agencies. The amendments are effective for financial reporting of fiscal years ending Marc 31, 2012 and later. The significant change to the Office's future-oriented financial statements are listed below.

Net debt (calculated as liabilities less financial assets) is now presented in the Statement of Financial Position. Accompanying this change, the Office now presents a Statement of Change in Net Debt and no longer presents a Statement of Equity.

Government funding, as well as the credit related to services provided without charge by other government departments, are now recognized in the Statement of Operations and Net Financial Position.