Annual Financial Statements 2012-13

Statement of Management Responsibility Including Internal Control Over Financial Reporting

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 Military Police Complaints Commission (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 Commission's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the 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 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 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 2010-11 by the Office of the Comptroller General of Canada (OCG). The Audit Report and related Management Action Plan are posted on the Commission’s web site.

The financial statements of the Commission have not been audited.


[Original signed by]
________________________
Glenn Stannard, Chairperson
Signed in Ottawa, Canada
October 4th, 2013 


[Original signed by]
____________________________
Sylvain Roy, Chief Financial Officer
Signed in Ottawa, Canada
October 4th, 2013

Statement of Financial Position (Unaudited)

As at March 31
(in dollars)
  2013 2012
Liabilities
Accounts payable and accrued liabilities (note 4) $246,059 $727,702
Vacation pay and compensatory leave 61,804 55,580
Employee future benefits (note 5) 138,764 239,376
Total liabilities 446,627 1,022,658
Financial assets
Due from the Consolidated Revenue Fund 230,348 681,468
Accounts receivable and advances (note 6) 26,089 74,524
Total financial assets 256,437 755,992
Departmental net debt 190,190 266,666
Non-financial assets
Tangible capital assets (note 7) 71,428 120,878
Total non-financial assets 71,428 120,878
Departmental net financial position $(118,762) $(145,788)

Contractual obligations (note 8)

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


[Original signed by]
________________________
Glenn Stannard, Chairperson
Signed in Ottawa, Canada
October 4th, 2013 


[Original signed by]
____________________________
Sylvain Roy, Chief Financial Officer
Signed in Ottawa, Canada
October 4th, 2013

Statement of Operations and Departmental Net Financial Position (Unaudited)

For the year ended March 31
(in dollars)
  2013 Planned Results 2013 2012
Expenses
Complaints Resolution Program $3,270,867 $3,201,733 $2,829,970
Internal Services 1,446,956 2,169,723 2,137,404
Net cost of operations before government funding 4,717,823 5,371,456 4,967,374
Government funding
Net cash provided by Government 4,550,859 5,675,562 4,829,821
Services provided without charge by other government departments (note 9) 146,025 174,040 136,590
Change in due from the Consolidated Revenue Fund 20,367 (451,120) 22,332
Net cost of operations after government funding 572 (27,026) (21,369)
Departmental net financial position - Beginning of year (315,786) (145,788) (167,157)
Departmental net financial position - End of year $(316,358) $(118,762) $(145,788)

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)
  2013 Planned Results 2013 2012
Net cost of operations after government funding $572 $(27,026) $(21,369)
Change due to tangible capital assets
Acquisition of tangible capital assets 95,000 8,765 18,442
Amortization of tangible capital assets (60,213) (58,215) (40,408)
Total change due to tangible capital assets 34,787 (49,450) (21,966)
Net decrease in Departmental net debt 35,359 (76,476) (43,335)
Departmental net debt - Beginning of year 426,158 266,666 310,001
Departmental net debt - End of year $461,517 $190,190 $266,666

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

Statement of Cash Flow (Unaudited)

For the year ended March 31
(in dollars)
  2013 2012
Operating Activities
Net cost of operations before government funding $5,371,456 $4,967,374
Non-cash items:
Services provided without charge by other government departments (note 9) (174,040) (136,590)
Amortization of tangible capital assets (58,215) (40,408)
Variations in Statement of Financial Position
Decrease in accounts receivable and advances (48,434) (23,319)
Decrease in accounts payable and accrued liabilities 481,643 43,934
Increase in vacation pay and compensatory leave (6,224) (14,577)
Decrease in future employee benefits 100,612 14,965
Cash used in operating activities 5,666,797 4,811,379
Capital investing Activities
Acquisition of tangible capital assets 8,765 18,442
Cash used by capital investing activities 8,765 18,442
Net Cash Provided by Government of Canada $5,675,562 $4,829,821

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

Notes to the Financial Statements (Unaudited)
For the year ended March 31

1. Authority and Objectives

The Military Police Complaints Commission (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 Armed Forces (CAF). The 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 (MP) in performance of their policing duties or functions and to deal with complaints of interference in MP investigations.

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

The Commission is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the 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 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 2012-13 Report on Plans and Priorities.

(b) Net Cash Provided by Government

The Commission operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Commission is deposited to the CRF, and all cash disbursements made by the 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 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 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 by other government departments for employer contributions to the health and dental insurance plans are recorded as operating expenses at their estimated cost.

(e) Employee Future Benefits

i. Pension Benefits

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

ii. 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 and Advances

Accounts receivable and advances 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 Commission 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 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 Commission 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, the 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) 2013 2012
Net cost of operations before government funding $5,371,456 $4,967,374
Adjustments for items affecting net cost of operations but not affecting authorities:
Services provided without charge by other government departments (174,040) (136,590)
Amortization of tangible capital assets (58,215) (40,408)
Decrease in employee future benefits 135,888 14,965
Revenue not available for spending 318 27
Increase in vacation pay and compensatory leave (6,224) (14,577)
Refunds of prior year's expenditures 23,542 113,686
Total items affecting net cost of operations but not affecting authorities 5,292,724 4,904,478
Adjustments for items not affecting net cost of operations but affecting authorities
Acquisition of tangible capital assets 8,765 18,442
Current year authorities used $5,301,489 $4,922,920

(b) Authorities Provided and Used

(in dollars) 2013 2012
Authorities provided
Vote 25 - Operating expenditures $4,271,363 $3,208,939
Supplementary Votes 4,015,226 2,299,803
Transfer from Treasury Board Votes for program expenditures 228,204 270,374
  8,514,793 5,779,116
Statutory amounts 305,593 256,069
  8,820,386 6,035,185
Less: authorities available for future years (4) (27)
Less: lapsed operating (3,518,893) (1,112,238)
Current year authorities used $5,301,489 $4,922,920

4. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities are measured at cost, the majority of which are due within six months of year-end. The following table presents details of the Commission's accounts payable and accrued liabilities:

(in dollars) 2013 2012
Accounts payable - Other government departments and agencies $5,894 $30,570
Accounts payable - external suppliers 142,953 628,013
Total accounts payable 148,847 658,583
Accrued liabilities 97,212 69,119
Total accounts payable and accrued liabilities $246,059 $727,702

5. Employee Future Benefits

(a) Pension benefits

The 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 are indexed to inflation.

Both the employees and the Commission contribute to the cost of the Plan. The 2012-13 expense amounts to $218,171 ($184,046 in 2011-12), which represents approximately 1.7 times (1.8 times in 2011-12) the contributions by employees.

The 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 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:

(in dollars) 2013 2012
Accrued benefit obligation, beginning of the year $239,376 $254,341
Expense for the year $(78,520) 95,648
Benefits paid during the year (22,092) (110,613)
Accrued benefit obligation, end of the year $138,764 $239,376

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 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.

6. Accounts Receivable and Advances

The following table presents details of accounts receivable and advances balances:

(in dollars) 2013 2012
Receivables from other government departments and agencies $25,589 $74,024
Petty cash advance 500 500
Total accounts receivable and advances $26,089 $74,524

7. Tangible Capital Assets

Capital Asset Class Cost (in dollars)
Opening Balance Acquisitions Disposals and write-offs Closing Balance
Informatics hardware $329,897 $3,960 $ - $333,857
Software 53,574 - - 53,574
Equipment 193,442 - - 193,442
Leasehold improvements 136,194 4,805 - 140,999
Total $713,107 $8,765 $ - $721,872

  Accumulated Amortization
Opening Balance Amortization Disposals and write-offs Closing Balance
Informatics hardware $323,324 $31,890 $ - $355,214
Software 33,494 6,596 - 40,090
Equipment 184,126 5,629 - 189,755
Leasehold improvements 51,285 14,100 - 65,385
Total $592,229 $58,215 $ - $650,444

  Net Book Value
2013 2012
Informatics hardware $(21,357) $6,573
Software 13,484 20,080
Equipment 3,687 9,316
Leasehold improvements 75,614 84,909
Total $71,428 $120,878

8. Contractual Obligations

The nature of the 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 most significant commitment relates to an operating lease for its accommodation. Contractual obligations that can be reasonably estimated are summarized as follows:

  2013-14 2014-15 2015-16 2016-17 2017-18 Total
Operating leases $344,055 $344,055 $344,055 $344,055 $57,344 $1,433,564

The occupancy instrument governing the rental of Commission space expires May 31, 2017.

9. Related Party Transactions

The Commission is related as a result of common ownership to all government departments, agencies and Crown Corporations. The Commission enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the 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 Commission received services without charge from a common service organization related to the employer's contribution to the health and dental insurance plans. These services provided without charge have been recorded in the Commission's Statement of Operations and Departmental Net Financial Position as follows:

(in dollars) 2013 2012
Employer's contribution to the health and dental insurance plans $174,040 $136,590

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 Commission's Statement of Operations and Departmental Net Financial Position.

(b) Other Transactions with Related Parties

(in dollars) 2013 2012
Expenses - Other government departments and agencies $1,032,549 $854,219

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

10. Segmented Information

Starting April 1, 2012, "Program Activity Architecture" will be referred to as "Program Alignment Architecture" and "Program Activities" will be referred to as "Programs." 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 programs, by major object of expenses. The segment results for the period are as follows:

  Complaints
Resolution
Internal Services Total (in dollars)
2013 2012
Operating expenses
Salaries and employee benefits $1,264,577 $1,034,654 $2,299,231 $1,850,153
Professional and special services 1,629,832 594,059 2,223,891 2,426,966
Accommodation and other rentals 57,618 366,947 424,565 263,135
Transportation and telecommunication 183,887 66,453 250,340 217,282
Office expenses and equipment 51,747 37,526 89,273 108,222
Amortization of tangible capital assets - 58,215 58,215 40,408
Communication, printing and publishing 14,072 9,895 23,967 55,794
Repairs - 1,974 1,974 5,414
Net cost of operations before government funding $3,201,733 $2,169,723 $5,371,456 $4,967,374

11. Restatement of Comparative Information

Comparative figures have been reclassified to conform to the current year's presentation.

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