Annual Financial Statements 2011-12

Statement of Management Responsibility

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2012 and all information contained in these statements rests with the management of the Military Police Complaints Commission (Complaints Commission). 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 Complaints Commission's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Complaints Commission'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 Complaints Commission; 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-ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

The Complaints Commission is subject to periodic Core Control Audits performed by the Office of the Comptroller General and uses the results of such audits to comply with the Treasury Board Policy on Internal Control.

A Core Control Audit was performed in fiscal year 2011-12 by the Office of the Comptroller General of Canada (OCG). The audit report and the related Management Action Plan are posted on the departmental web site at (hyperlinks to the audit report and Management Action Plan).

The financial statements of the Complaints Commission have not been audited.

(Original signed by)
Glenn Stannard
Chairman

(Original signed by)
Sylvain Roy 
Chief Financial Officer

Ottawa, Canada
Date :

Statement of Financial Position (Unaudited)

At March 31 (in dollars)
  2012 2011
Restated
(note 10)
Liabilities
Accounts payable and accrued liabilities (note 4) 727,702 771,636
Vacation pay and compensatory leave 55,580 41,003
Employee future benefits (note 5) 239,376 254,341
Total net liabilities 1,022,658 1,066,980
Financial assets
Due from the Consolidated Revenue Fund 681,468 $659,136
Accounts receivable and advances (note 6) 74,524 97,843
Total net financial assets 755,992 756,979
Commission net debt 266,666 310,001
Non-financial assets
Tangible capital assets (note 7) 120,878 142,844
Total non-financial assets 120,878 142,844
Departmental net financial position ($145,788) ($167,157)

Contractual obligations (note 8)

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

(Original signed by)
Glenn Stannard
Chairman

(Original signed by)
Sylvain Roy 
Chief Financial Officer

Ottawa, Canada
Date :

Statement of Operations and Departmental Net Financial Position (Unaudited)

For the Year Ended March 31 (in dollars)
  2012
Planned
Results
2012 2011
Restated
(note 11)
Expenses
Complaints Resolution Program $2,788,450 $2,829,970 $2,409,481
Internal Services 1,892,977 2,137,404 2,200,087
Total expenses 4,681,427 4,967,374 4,609,568
       
Net cost of operations before government funding 4,681,427 4,967,374 4,609,568
       
Government funding
Net cash provided by Government 4,373,010 4,829,821 4,447,921
Change in due from the Consolidated Revenue Fund 19,774 22,332 (40,085)
Services provided without charge by other government departments (note 9) 140,014 136,590 140,014
       
Net cost of operations after government funding 148,629 (21,369) 61,718
       
Departmental net financial position - Beginning of year (167,157) (167,157) (105,439)
       
Departmental net financial position - End of year ($18,528) (145,788) (167,157)

Segmented information (note 10)

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

Statement of Change in Departmental Net Debt (Unaudited)

For the year ended March 31 (in dollars)
  2012
Planned
Results
2012 2011
Net cost of operations after government funding $148,629 ($21,369) $61,718
       
Change due to tangible capital assets
Acquisition of tangible capital assets 18,442 18,442 15,960
Amortization of tangible capital assets (50,914) (40,408) (53,866)
Total change due to tangible capital assets (32,472) (21,966) (37,906)
       
Net increase (decrease) in departmental net debt 116,157 (43,335) 23,812
       
Departmental net debt - Beginning of year 310,001 310,001 286,189
       
Departmental net debt - End of year $426,158 $266,666 $310,001

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

Statement of Cash Flows (Unaudited)

For the year ended March 31 (in dollars)
  2012 2011
Restated
(note 11)
Operating Activities
Net cost of operations $4,967,374 $4,609,568
Non-cash items:
Services provided without charge by other government departments (note 9) (136,590) (140,014)
Amortization of tangible capital assets (40,408) (53,866)
Variations in Statement of Financial Position
Decrease (increase) in accounts receivable and advances (23,319) 43,780
Decrease (increase) in liabilities 43,934 (18,851)
(Increase) in vacation pay (14,577) (14,453)
Decrease in employee future benefits 14,965 18,575
Cash used in operating activities 4,811,379 4,444,738
Capital investment activities    
Acquisitions of tangible capital assets 18,442 3,183
Cash used by capital investment activities 18,442 3,183
Net cash provided by Government of Canada $4,829,821 $4,447,921

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

Notes to the Financial Statements (unaudited)
For the year ended March 31, 2012

1. Authority and Objectives

The Military Police Complaints Commission (Complaints Commission) is a quasi-judicial agency, which reports to Parliament through the Minister of National Defence. It is a civilian body, external and independent of the Department of National Defence (DND) and the Canadian Forces (CF). The Complaints Commission was established in the fall of 1999 under Part IV of the National Defence Act (Sections 250.1 to 250.53). Its mandate is to monitor and review complaints about the conduct of the military police in performance of their policing duties or functions and to deal with complaints of interference in military police investigations.

2. Summary of Significant Accounting Policies

The 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

The Complaints Commission is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Complaints Commission 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 the 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 the bases of reporting. The planned results amounts in the Statement of Operations and Departmental Net Financial Position are the amounts reported in the future-oriented financial statements included in the 2011-12 Report on Plans and Priorities.

(b) Net Cash Provided by Government

The Complaints Commission operates within the Consolidated Revenue Fund (CRF) which is administered by the Receiver General for Canada. All cash received by the Complaints Commission is deposited to the CRF and all cash disbursements made by the Complaints Commission 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.

(c) Due from or to the Consolidated Revenue Fund

Amounts due from or 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 Complaints Commission is entitled to draw from the CRF without further authorities to discharge its liabilities.

(d) Expenses - Expenses are recorded on the accrual basis

Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.

Services provided without charge from other government departments and agencies are recorded as operating expenses at their estimated cost.

(e) Employee Future Benefits

  1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer plan administered by the Government of Canada. The Complaints Commission's contributions to the Plan are charged to expenses in the year incurred and represent its total obligation to the Plan. The Complaints Commission'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 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.

(f) Accounts Receivable

Accounts receivable are stated at the lower of cost and net recoverable value; a valuation allowance is recorded for receivables where recovery is considered uncertain.

(g) Tangible Capital Assets

All tangible capital assets having an initial cost of $3,000 or more are recorded at their acquisition cost. The Tribunal does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value. 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
Informatics hardware 3 years
Software 3 years
Equipment 3 - 5 years
Leasehold improvements 10 years

(h) Measurement 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, they are recorded in the financial statements in the year they become known.

3. Parliamentary Authorities

The Complaints Commission receives 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, the Complaints Commission 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) 2012 2011
Net cost of operations before government funding $4,967,374 $4,609,568
Adjustments for items affecting net cost of operations but not affecting authorities
Services provided without charge (136,590) (140,014)
Amortization of tangible capital assets (40,408) (53,866)
Change in employee future benefits 14,965 18,575
Revenue not available for spending 27 66
Change in vacation pay and compensatory leave (14,577) (14,453)
Refunds of prior year's expenditures 113,686 32
Total items affecting net cost of operations but not affecting authorities 4,904,478 4,419,908
Adjustments for items not affecting net cost of operations but affecting authorities
Acquisition of tangible capital assets $18,442 3,183
Current year authorities used $4,922,920 $4,423,091

(b) Authorities Provided and Used

(in dollars) 2012 2011
Vote 20 - Operating expenditures $3,208,939 $4,388,419
Supplementary Votes $2,299,803 $2,081,900
Transfer from Treasury Board Votes for program expenditures 270,374 290,802
  5,779,116 6,761,121
Statutory amounts 256,069 240,599
  6,035,185 7,001,720
Less:
Authorities available for future years (27) (66)
Lapsed: Operating (1,112,238) (2,578,563)
Current year authorities used $4,922,920 $4,423,091

4. Accounts Payable and Accrued Liabilities

The following table presents details of accounts payable and accrued liabilities

(in dollars) 2012 2011
Total accounts payable and accrued liabilities $727,702 $771,636
Accounts payable - Other government departments and agencies $30,570 $575,757
Accounts payable - external suppliers 628,013 40,768
Total accounts payable 658,583 616,525
Accrued liabilities 69,119 155,111

5. Employee Future Benefits

(a) Pension benefits

The Complaint Commission'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/Quebec Pension Plans benefits and they are indexed to inflation.

Both the employees and the Complaints Commission contribute to the cost of the Plan. The 2011-12 expense amounts to $184,046 ($168,854 in 2010-11), which represents approximately 1.8 times (1.9 times in 2010-11) the contributions by employees.

The Complaints Commission'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 Complaints Commission 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 valued of benefits earned to date to 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.

(in dollars) 2012 2011
Accrued benefit obligation, beginning of the year $254,341 $272,916
Expense for the year 95,648 (18,575)
Benefits paid during the year 110,613 -
Accrued benefit obligation, end of the year $239,376 $254,341

6. Accounts Receivable and Advances

The following table presents details of accounts receivable and advances

(in dollars) 2012 2011
Total $74,524 $97,843
Receivables from other government departments and agencies $74,024 $97,498
Petty cash advance 500 345

7. Tangible Capital Assets

Capital Asset Class Cost (in dollars)
Opening Balance Acquisitions Disposals and write-offs Closing Balance
Total $694,665 $18,442 - $713,107
Informatics hardware $329,897 - - $329,897
Software 35,132 18,442 - 53,574
Equipment 193,442 - - 193,442
Leasehold improvements 136,194 - - 136,194

Capital Asset Class Accumulated Amortization
Opening Balance Amortization Disposals and write-offs Closing Balance
Total $551,821 $40,408 - $592,229
Informatics hardware $309,985 $13,339 - $323,324
Software 25,579 7,915 - 33,494
Equipment 178,591 5,535 - 184,126
Leasehold improvements 37,666 13,619 - 51,285

Capital Asset Class Net Book Value
2011 2010
Total $120,878 $142,844
Informatics hardware $6,573 $19,912
Software 20,080 9,553
Equipment 9,316 14,851
Leasehold improvements 84,909 98,528

Amortization expense for the year ended March 31, 2012 is $40,408 (2011 was $53,866).

8. Contractual Obligations

The nature of the Complaints Commission's activities can result in some large multi-year contracts and obligations whereby the Commission will be obligated to make future payments when the goods and services are received. The significant contractual obligation that can be reasonably estimated is summarized as follows:

Fiscal Period Amount (in dollars)
Occupancy instrument
2012–2013 $326,706
2013–2014 $344,005
2014–2015 $344,005
2015–2016 $344,005
2016–2017 $344,005
2017–2018 (expires May 31, 2017) $57,334

9. Related Party Transactions

The Complaints Commission is related as a result of common ownership to all government of departments, agencies and Crown Corporations. The Complaints Commission enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, the Complaints Commission has an agreement with Public Works and Government Services related to the provision of financial and human resource services. During the year, the Complaints Commission received common services which were obtained without charge from other Government departments and agencies as disclosed below.

(a) Common Services Provided Without Charge by Other Government Departments

During the year, the Complaints Commission received services without charge from certain common service organizations, related to the employer's contribution to the health and dental insurance plans. These services provided without charge have been recorded in the Complaints Commission's Statement of Operations and Departmental Net Financial Position as follows:

(in dollars) 2012 2011
Employer's contribution to the health and dental insurance plans $136,590 $140,014

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 cost of these services, such as the payroll and cheque issuance services provided by Public Works and Government Services Canada are not included in the Complaints Commission's Statement of Operations and Departmental Net Financial Position.

(b) Other Transactions with Related Parties

(in dollars) 2012 2011
Expenses - other government departments and agencies $854,219 $859,506

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

10. Segmented Information

Presentation by segment is based on the Complaints Commission'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 for the main program activities, by major object of expenses. The segment results for the period are as follows:

  Complaints Resolution Program Internal Services Total (in dollars)
2012 2011
Restated
(note 11)
Operating expenses
Salaries and employee benefitss $939,682 $910,471 $1,850,153 $1,816,484
Accommodation - 247,644 247,644 240,209
Professional and special services 1,623,805 803,161 2,426,966 1,996,470
Transportation and telecommunications 156,517 60,765 217,282 184,940
Printing and publishing 48,693 7,101 55,794 8,166
Utilities, material and supplies 50,636 57,586 108,222 287,641
Rentals 10,637 4,854 15,491 15,427
Amortization of tangible capital assets - 40,408 40,408 53,866
Other - 5,414 5,414 6,365
Total operating expenses $2,829,970 $2,137,404 $4,967,374 $4,609,568
Net cost of operations before government funding $2,829,970 $2,137,404 $4,967,374 $4,609,568

11. Accounting Changes

During 2011, amendments were made to Treasury Board Accounting Standard 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 March 31, 2012, and later. The significant changes to the Complaint Commission's financial statements are described below. These changes have been applied retroactively, and comparative information for 2010 - 11 has been restated.

Net debt (calculated as liabilities less financial assets) is now presented in the Statement of Financial Position. Accompanying this change, the Complaints Commission 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 Departmental Net Financial Position below "Net cost of operations before government funding." In previous years, the Complaints Commission recognized these transactions directly in the Statement of Equity of Canada. The effect of this change was to decrease the "Net cost of operations after government funding by $4,988,743 for 2012 ($4,547,850 for 2011)

(in dollars) 2011
As previously stated
Effect of change 2011
Restated
Statement of Operations and Departmental Net Financial Position
Government funding
Net cash provided by government - 4,447,921 4,447,921
Change in due from Consolidated Revenue Fund - (40,085) (40,085)
Services provided without charge by other government departments - 140,014 140,014
Date modified: