2015-2016 Annual Financial Statements

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, 2016 and all information contained in these statements rests with the management of the Military Police Complaints Commission of Canada (MPCC). 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 MPCC’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the MPCC’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 MPCC; 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 MPCC 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 2011-12 by the Office of the Comptroller General of Canada (OCG) on the transactions in 2010-11. The Audit Report and related Management Action Plan are posted on the MPCC’s web site (http://www.mpcc-cppm.gc.ca/05/1300/2012-07-31-eng.aspx).

The financial statements of the MPCC have not been audited.

[Original signed]
________________________
Hilary McCormack,
Chairperson

[Original signed by]
____________________________
Elsy Chakkalakal,
Acting Chief Financial Officer

Ottawa, Canada
August 23, 2016

Military Police Complaints Commission of Canada
Statement of Financial Position (Unaudited)
As at March 31

(in dollars)
  2016 2015
Liabilities
Accounts payable and accrued liabilities (note 4) $714,339 $384,521
Vacation pay and compensatory leave 85,148 78,408
Employee future benefits (note 5) - -
Total liabilities 799,487 462,929
Financial assets
Due from the Consolidated Revenue Fund 621,570 256,251
Accounts receivable and advances (note 6) 92,770 129,031
Total financial assets 714,340 385,282
Departmental net debt 85,147 77,647
Non-financial assets
Tangible capital assets (note 7) 1,314,986 201,784
Total non-financial assets 1,314,986 201,784
Departmental net financial position $1,229,839 $124,137

Contractual obligations (note 8)

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

[Original signed by]
________________________
Hilary McCormack,
Chairperson

[Original signed by]
____________________________
Elsy Chakkalakal,
Acting Chief Financial Officer

Ottawa, Canada
August 23, 2016


Military Police Complaints Commission of Canada
Statement of Operations and Departmental Net Financial Position (Unaudited)
For the year ended March 31

(in dollars)
  2016
Planned Results
2016 2015
Expenses
Complaints Resolution $2,446,690 $2,053,523 $2,842,975
Internal Services 2,558,421 2,430,616 2,134,292
Net cost of operations before government funding and transfers 5,005,111 4,484,139 4,977,267
Government funding and transfers
Net cash provided by Government - 5,038,732 5,103,782
Services provided without charge by other government departments (note 9) - 185,790 156,864
Transfer of the transition payments for implementing salary payments in arrears (note 10) - - (57,833)
Change in due from the Consolidated Revenue Fund - 365,319 (138,437)
Net cost of operations after government fundingand transfers - (1,105,702) (87,109)
Departmental net financial position - Beginning of year - 124,137 37,028
Departmental net financial position - End of year - $1,229,839 $124,137

Segmented information (note 11)

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

Military Police Complaints Commission of Canada
Statement of Change in Departmental Net Debt (Unaudited)
For the year ended March 31

(in dollars)
  2016 2015
Net cost of operations after government funding and transfers ($1,105,702) ($87,109)
Change due to tangible capital assets
Acquisition of tangible capital assets 1,203,183 106,640
Adjustment of tangible capital assets (28,710) 5,780
Amortization of tangible capital assets (61,271) (31,304)
Total change due to tangible capital assets 1,113,202 81,116
Net increase (decrease) in departmental net debt 7,500 (5,993)
Departmental net debt - Beginning of year 77,647 83,640
Departmental net debt - End of year $85,147 $77,647

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

Military Police Complaints Commission of Canada
Statement of Cash Flows (Unaudited)
For the year ended March 31

(in dollars)
  2016 2015
Operating Activities
Net cost of operations before government funding and transfers $4,484,139 $4,977,267
Non-cash items:
Services provided without charge by other government departments (note 9) (185,790) (156,864)
Amortization of tangible capital assets (61,271) (31,304)
Adjustment of tangible capital assets (28,710) 5,780
Transition payments for implementing salary payments in arrears (note 10) - 57,833
Variations in Statement of Financial Position
Increase (decrease) in accounts receivable and advances (36,261) 95,936
Decrease (increase) in accounts payable and accrued liabilities (329,818) 42,638
Decrease (increase) in vacation pay and compensatory leave (6,740) 5,856
Decrease (increase) in employee future benefits - -
Cash used in operating activities 3,835,549 4,997,142
Capital investing Activities
Acquisition of tangible capital assets 1,203,183 106,640
Cash used in capital investing activities 1,203,183 106,640
Net Cash Provided by Government of Canada $5,038,732 $5,103,782

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

Notes to the Financial Statements (Unaudited)
For the year ended March 31, 2016

1. Authority and Objectives

The Military Police Complaints Commission of Canada(MPCC) 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 MPCC 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. The MPCC carries out its mandate through its one program, Complaints Resolution, with the support of Internal Services.

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 MPCC is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the MPCC 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 "Expenses" and "Revenue" sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-oriented Statement of Operations included in the 2015-16 Report on Plans and Priorities. Planned results are not presented in the "Government funding and transfers" section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2015-16 Report on Plans and Priorities.

(b) Net Cash Provided by Government

The MPCC operates within the Consolidated Revenue Fund (CRF) which is administered by the Receiver General for Canada. All cash received by the MPCC is deposited to the CRF and all cash disbursements made by the MPCC 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 to or from 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 MPCC 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 and agencies 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 MPCC’s contributions to the Plan are charged to expenses in the year incurred and represent its total obligation to the Plan. The MPCC’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 MPCC 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:

Tangible Capital Assets
Asset Class Amortization Period
Informatics hardware 3 years
Software 3 years
Equipment 3-5 years
Leasehold improvements 10 years

Assets under construction are recorded in the applicable capital asset class in the year that they become available for use and are not amortized until they become available for use.

(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 MPCC 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 MPCC 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)
  2016 2015
Net cost of operations before government funding and transfers $4,484,139 $4,977,267
Adjustments for items affecting net cost of operations but not affecting authorities
Services provided without charge by other government departments (185,790) (156,864)
Amortization of tangible capital assets (61,271) (31,304)
Decrease (increase) in employee future benefits - -
Decrease (increase) in vacation pay and compensatory leave (6,740) 5,856
Adjustment of tangible capital asset (28,710) 5,780
Adjustment of previous year’s payables at year-end 2,065 -
Other non-appropriated expenditures 363 (6,435)
Total items affecting net cost of operations but not affecting authorities 4,204,056 4,794,300
Adjustments for items not affecting net cost of operations but affecting authorities
Transition payments for implementing salary payments in arrears (note 10) - 57,833
Prepaid expenses - 6,500
Acquisition of tangible capital assets 1,203,183 106,640
Current year authorities used $5,407,239 $4,965,273
(b) Authorities Provided and Used (in dollars)
  2016 2015
Authorities provided
Vote 1 - Operating expenditures $5,414,346 $7,740,533
Statutory amounts 375,364 346,272
Sub-total: 5,789,710 8,086,805
Less: lapsed operating (382,471) (3,121,532)
Current year authorities used $5,407,239 $4,965,273

4. Accounts Payable and Accrued Liabilities

The following table presents details of the MPCC’s accounts payable and accrued liabilities:

Accounts Payable and Accrued Liabilities (in dollars)
  2016 2015
Accounts payable - Other government departments and agencies $375,069 $10,652
Accounts payable - External parties 101,279 182,963
Total accounts payable 476,348 193,615
Accrued liabilities 237,991 190,906
Total accounts payable and accrued liabilities $714,339 $384,521

5. Employee Future Benefits

(a) Pension benefits

The MPCC’s employees participate in the Public Service Pension Plan (the "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 Plan benefits and they are indexed to inflation.

Both the employees and the MPCC contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Economic Action Plan 2012, employee contributors have been divided into two groups - Group 1 relates to existing plan members as of December 31, 2012 and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.

The 2015-2016 expense amounts to $258,738 ($236,711 in 2014-2015). For Group 1 members, the expense represents approximately 1.25 times (1.41 times in 2014-2015) the employee contributions and, for Group 2 members, approximately 1.24 times (1.39 in 2014-2015) the employee contributions.

The MPCC’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 MPCC 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. 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.

Outstanding Severance Benefits Obligations (in dollars)
2016 2015
Accrued benefit obligation, beginning of the year - -
Expense for the year - -
Benefits paid during the year - -
Accrued benefit obligation, end of the year - -

6. Accounts Receivable and Advances

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

Accounts Receivable and Advances Balances (in dollars)
  2016 2015
Receivables from other government departments and agencies $92,770 $128,531
Petty cash advance 0 500
Total accounts receivable and advances $92,770 $129,031

7. Tangible Capital Assets

Cost (in dollars)
Capital Asset Class Opening Balance Acquisitions AdjustmentsNote 1 Closing Balance
Informatics hardware $463,505 $- $- $463,505
Software 53,574 40,444 - 94,018
Equipment 208,686 230,512 - 439,198
Leasehold improvements 140,999 932,227 - 1,073,226
Assets under construction 28,710 - (28,710) -
Total $895,474 $1,203,183 ($28,710) $2,069,947

Accumulated Amortization (in dollars)
  Opening Balance Amortization Closing Balance
Informatics hardware $352,405 $43,875 $396,280
Software 53,574 - 53,574
Equipment 193,391 3,296 196,687
Leasehold improvements 94,320 14,100 108,420
Assets under construction - - -
Total $693,690 $61,271 $754,961
Net Book Value (in dollars)
  2016 2015
Informatics hardware $67,225 $111,100
Software 40,444 -
Equipment 242,511 15,295
Leasehold improvements 964,806 46,679
Assets under construction - 28,710
Total $1,314,986 $201,784

8. Contractual Obligations

The nature of the MPCC’s activities can result in some large multi-year contracts and obligations whereby the MPCC 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:

Contractual Obligations (in dollars)
  2016-17 2017-18 Total
Operating leases $344,005 $57,334 $401,339

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

9. Related Party Transactions

The MPCC is related as a result of common ownership to all government departments, agencies and Crown Corporations. The MPCC enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the MPCC 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 MPCC 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 MPCC's Statement of Operations and Departmental Net Financial Position as follows:

Services provided without charge (in dollars)
  2016 2015
Employer's contribution to the health and dental insurance plans $185,790 $156,864

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 Services and Procurement Canada are not included in the MPCC's Statement of Operations and Departmental Net Financial Position.

(b) Other Transactions with Related Parties (in dollars)
  2016 2015
Accounts receivable - Other government departments and agencies $92,770 $128,531
Accounts payable - Other government departments and agencies 375,069 10,652
Expenses - Other government departments and agencies $1,620,074 $1,032,620

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

10. Transfer of the transition payments for implementing salary payments in arrears

The Government of Canada implemented salary payments in arrears in 2014-15. As a result, a one-time payment was issued to employees and will be recovered from them in the future. The transition to salary payments in arrears forms part of the transformation initiative that replaces the pay system and also streamlines and modernizes the pay processes. This change to the pay system had no impact on the expenses of the MPCC. However, it did result in the use of additional spending authorities by the MPCC. Prior to year-end, the transition payments for implementing salary payments in arrears were transferred to a central account administered by Public Services and Procurement Canada, who is responsible for the administration of the Government pay system.

11. Segmented Information

Presentation by segment is based on MPCC’s Program Alignment 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 programs, by major object of expenses. The segment results for the period are as follows:

Operating Expenses (in dollars)
  Complaints
Resolution
Internal Services Total
2016 2015
Salaries and employee benefits $1,498,012 $1,493,948 $2,991,960 $2,678,301
Professional and special services 450,863 334,935 785,798 1,609,298
Accommodation and other rentals 2,712 411,056 413,768 372,379
Transportation and telecommunication 47,348 71,254 118,602 163,402
Office expenses and equipment 37,299 19,787 57,086 62,840
Communication, printing and publishing 17,289 38,114 55,403 58,744
Amortization of tangible capital assets - 61,272 61,272 31,304
Repair and maintenance - 250 250 999
Net cost of operations before government funding $2,053,523 $2,430,616 $4,484,139 $4,977,267

12. Comparative Information

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

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