Financial Statements (unaudited) 2015–2016

ISSN: 2818-0151

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 Civilian Review and Complaints Commission for the RCMP (CRCC). 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 CRCC's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada and included in the CRCC'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 CRCC 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 CRCC is subject to periodic Core Control Audits performed by the Office of the Comptroller General (OCG) and uses the results of such audits to comply with the Treasury Board Policy on Internal Control.

A Core Control Audit was completed in 2011–2012 by the OCG. The Audit Report and related Management Action Plan are posted on the CRCC's website at: http://www.crcc-ccetp.gc.ca/en/core-control-audit-commission-public-complaints-against-rcmp.

The financial statements of the CRCC have not been audited.

_____________________
Ian McPhail, Q.C.
Chairperson
Ottawa, Canada
September 1, 2016

_____________________
Tim Cogan
Chief Financial Officer
Ottawa, Canada
September 1, 2016


Statement of Financial Position (unaudited)

As at March 31
(in dollars)

  2016 2015

The accompanying notes form an integral part of these financial statements

Liabilities    
Accounts payable and accrued liabilities (Note 4) $1,081,999 $791,802
Vacation pay and compensatory leave 250,902 296,991
Employee future benefits (Note 5) 421,630 378,080
Total Liabilities 1,754,531 1,466,873
Financial assets    
Due from Consolidated Revenue Fund 1,065,021 630,783
Accounts receivable and advances (Note 6) 60,848 189,584
Total financial assets 1,125,869 820,367
Departmental Net Debt 628,662 646,506
Non-financial assets    
Tangible capital assets (Note 7) 393,205 464,828
Total non-financial assets 393,205 464,828
Departmental net financial position $(235,457) $(181,678)

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

_____________________
Ian McPhail, Q.C.
Chairperson
Ottawa, Canada
September 1, 2016

_____________________
Tim Cogan
Chief Financial Officer
Ottawa, Canada
September 1, 2016


Statement of Operations and Departmental Net Financial Position (unaudited)

For the Year Ended March 31
(in dollars)

  2016
Planned Results
2016 2015
Expenses      
Civilian Review of RCMP members' conduct $6,957,328 $7,428,445 $6,709,150
Internal Services 4,354,081 3,630,415 3,985,594
Total expenses 11,311,409 11,058,860 10,694,744
Revenues      
Miscellaneous revenues 10,000 7,485 18,525
Revenues earned on behalf of government (10,000) (7,485) (18,525)
Total revenues - - -
Net cost of operations before government funding and transfers 11,311,409 11,058,860 10,694,744
Government funding and transfers      
Net cash provided by government   9,245,420 9,402,804
Change in due from the Consolidated Revenue Fund   434,238 (37,544)
Services provided without charge by other government departments (Note 8)   1,325,423 1,258,079
Transfer of the transition payments for implementing salary payments in arrears   0 (195,419)
Net cost of operations after government funding and transfers   53,779 266,824
Departmental net financial position – Beginning of Year   (181,678) 85,146
Departmental net financial position – End of Year   $(235,678) $(181,678)

Segmented information (Note 9)

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)

  2016 2015
Net cost of operations after government funding and transfers $53,779 $266,824
Change due to tangible capital assets    
Acquisition of tangible capital assets 119,761 170,509
Amortization of tangible capital assets (191,384) (211,225)
Total change due to tangible capital assets (71,623) (40,716)
Net increase (decrease) in departmental net debt (17,844) 226,108
Departmental net debt beginning of year 646,506 420,398
Departmental net debt end of year 628,662 $646,506

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

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 $11,058,860 $10,694,744
Non-cash items    
Amortization of tangible capital assets (Note 8) (191,384) (211,225)
Services provided without charge by other government departments (1,325,423) (1,258,079)
Transition payments for implementing salary payments in arrears (Note 9) 0 195,419
Variations in statement of financial position 0 195,419
Increase (decrease) in accounts receivable and advances (128,736) 89,437
Decrease (increase) in accounts payable and accrued liabilities (290,197) (102,429)
Decrease (increase) in vacation pay and compensatory leave 46,089 (62,464)
Decrease (increase) in employee future benefits (43,550) (113,108)
Cash used in operating activities 9,125,659 9,232,295
Capital investing activities    
Acquisitions of tangible capital assets (Note 7) 119,761 170,509
Cash used in capital investing activities 119,761 170,509
Net cash provided by Government of Canada $9,245,420 $9,402,804

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 Civilian Review and Complaints Commission for the RCMP (CRCC) is a federal agency reporting to Parliament that receives and reviews public complaints about the conduct of members of the RCMP in the performance of any duty or function under the Royal Canadian Mounted Police Act (RCMP Act). The CRCC is entirely separate from and independent of the RCMP.

The mandate of the CRCC is set out in Part VII of the RCMP Act and can be summarized as follows:

  • To receive complaints from the public about the conduct of RCMP members;
  • To conduct reviews when complainants are not satisfied with the RCMP's handling of their complaints;
  • To hold hearings and carry out investigations; and
  • To report findings and make recommendations.

The CRCC's mandate also includes authorities to conduct joint complaint investigations, reviews and hearings with other law enforcement review bodies, and conduct reviews of specified activities. The CRCC is directed to provide enhanced reporting to provinces which contract for RCMP services, undertake research, conduct outreach efforts, and provide independent observers to investigations of serious incidents involving RCMP members.

The CRCC has two programs, Civilian review of RCMP members' conduct in the performance of their duties and 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 CRCC is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the CRCC does 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, the Departmental Net Financial Position are the amounts reported in the future‑oriented financial statements included in the 2015–2016 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 CRCC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the CRCC is deposited to the CRF and all cash disbursements made by the CRCC are paid from the CRF. The net cash provided by the Government is the difference between all cash receipts and all cash disbursements, including transactions between departments of the Government.

(c) Amount due from/to CRF

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 CRCC is entitled to draw from the CRF without further authorities to discharge its liabilities.

(d) Revenues

Revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

Revenues that are non-respendable are not available to discharge the CRCC's liabilities. While the Chairperson is expected to maintain accounting control, he has no authority regarding the disposition of non-respendable revenues. As a result, non‑respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of the entity's gross revenues

(e) 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 accommodation and employer contributions to the health and dental insurance plans are recorded as operating expenses at their estimated cost.

(f) Employee future benefits

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

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.

(g) Accounts receivable and advances

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

(h) Tangible capital assets

All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. The CRCC does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian reserves and museum collections. 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
Computer hardware 4 Years
Computer software 3-5 Years
Leasehold improvements Lesser of the remaining term of the lease or useful life of improvement
Other equipment, including furniture 5 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.

(i) 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 CRCC 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 CRCC 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:

  2016
(in dollars)
2015
(in dollars)
Net cost of operations before government funding and transfers $11,058,860 $10,696,744
Adjustments for items affecting net cost of operations but not affecting authorities:    
Amortization of tangible capital assets (191,384) (211,225)
Services provided without charge by other government departments (1,325,423) (1,258,079)
Decrease (increase) in vacation pay and compensatory leave 46,089 (62,464)
Decrease (increase) in employee future benefits (43,550) (113,108)
Refund of prior year expenditures 0 63,461
Adjustments to previous years' payables at year-end 53,710 120,714
Total items affecting net cost of operations but not affecting authorities (1,460,558) (1,460,701)
Adjustments for items not affecting net cost of operations but affecting authorities:    
Acquisitions of tangible capital assets (Note 7) 119,761 170,509
Transition payments for implementing salary payments in arrears 0 195,419
Total items not affecting net cost of operations but affecting authorities 119,761 365,928
Current year authorities used 9,718,063 9,599,971

(b) Authorities provided and used:

  2016
(in dollars)
2015
(in dollars)
Authorities provided:    
Program expenditures - Vote 65 9,484,985 9,294,310
Statutory amounts 981,751 881,039
  10,466,736 10,175,349
Less:    
Lapsed: Program expenditures (748,673) (575,378)
Current year authorities used $9,718,063 $9,599,971

4. Accounts payable and accrued liabilities

The following table presents details of the CRCC's accounts payable and accrued liabilities:

  2016
(in dollars)
2015
(in dollars)
Accounts payable to other government departments and agencies $21,113 $45,511
Accounts payable to external parties 718,209 445,813
Total accounts payable 739,322 491,324
Accrued liabilities 342,677 300,478
Total accounts payable and accrued liabilities $1,081,999 $791,802

5. Employee future benefits

(a) Pension benefits

The CRCC'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 Plans benefits and they are indexed to inflation.

Both the employees and the CRCC 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 $676,721 ($602,278 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 times in 2014-2015) the employee contributions.

The CRCC'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 CRCC 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 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. Information about the severance benefits, measured as at March 31, is as follows:

  2016
(in dollars)
2015
(in dollars)
Accrued benefit obligation, beginning of year $378,080 $$264,972
Expense for the year 251,812 249,906
Benefits paid during the year (208,262) (136,798)
Accrued benefit obligation, end of year $421,630 $378,080

6. Accounts receivable and advances

The following table presents details of accounts receivable and advances:

  2016
(in dollars)
2015
Restated
(Note 10)
(in dollars)
Receivables – Other government departments and agencies $43,876 $178,295
Receivables – External parties 15,672 10,489
Employee advances 1,300 800
Net accounts receivable 60,848 189,584

7. Tangible capital assets
(in dollars)

Cost (in dollars)
Capital asset class Opening balance
Acquisitions Adjustments Closing balance
Computer hardware $230,346 $119,761 - $350,107
Computer software 15,569 0 - 15,569
Other equipment including furniture 181,061 - - 181,061
Leasehold improvements 813,110 - - 813,110
Total $1,240,086 $119,761 - $1,359,847
Accumulated Amortization (in dollars)
Capital asset class Opening balance Amortization Disposals & write-offs Closing balance
Computer hardware $72,364 $34,130 - $106,494
Computer software 15,569 - - 15,569
Other equipment including furniture 153,692 11,621 - 165,313
Leasehold improvements 533,633 146,633 - 679,266
Total $775,258 $191,384 - $966,642
Net book value (in dollars)
Capital asset class 2016 2015
Computer hardware $243,613 $157,982
Computer software - -
Other equipment including furniture 15,748 27,369
Leasehold improvements 133,844 279,477
Total $393,205 $464,828

8. Related party transactions

The CRCC is related as a result of common ownership to all government departments, agencies, and Crown corporations. The CRCC enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, the CRCC has an agreement with Public Safety Canada related to the provision of finance, human resources, and security services. During the year, the CRCC received common services which were obtained without charge from other government departments as disclosed below.

  2016
(in dollars)
2015
(in dollars)
Accommodation $766,810 $777,934
Employer's contribution to the health and dental insurance plans 558,613 480,145
Total $1,325,423 $1,258,079

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 costs of these services, such as payroll and cheque issuance services provided by Public Services and Procurement Canada and audit services provided by the Office of the Auditor General, are not included in the CRCC's Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties

  2016
(in dollars)
2015
(in dollars)
Accounts receivable – Other government departments and agencies $43,876 $178,295
Accounts payable – Other government departments and agencies 21,113 45,511
Expenses – Other government departments and agencies $1,228,119 $413,176

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

9. Segmented information

Presentation by segment is based on the CRCC’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 and revenue generated for the main programs, by major object of expenses and by major type of revenues. The segment results for the period are as follows:

Expenses
Operating expenses Civilian review of RCMP members' conduct
2016
(in dollars)
Internal services
2016
(in dollars)
Total
2016
(in dollars)
Total
2015
(in dollars)
Salaries and employee benefits $5,322,028 $2,620,450 $7,942,478 $7,272,344
Professional and special services 766,759 374,158 1,140,917 1,361,627
Accommodation 518,130 274,515 792,645 798,070
Travel and relocation 279,446 1,916 281,362 358,543
Repairs 227,273 5,513 232,786 157,077
Equipment 112,774 104,156 216,930 309,740
Amortization 57,794 133,590 191,384 211,225
Communication 45,510 55,815 101,325 92,701
Utilities, material and supplies 47,431 41,844 89,275 72,546
Information 21,795 13,253 35,048 25,619
Equipment rentals 29,491 5,205 34,696 35,252
Other 14 - 14 -
Total operating expenses 7,428,445 3,630,415 11,058,860 10,694,744
Revenues
  Civilian review of RCMP members' conduct
2016
(in dollars)
Internal services
2016
(in dollars)
Total
2016
Total
2015
(in dollars)
Miscellaneous revenues - 7,485 4,485 18,525
Revenue earned on behalf of government - (7,485) (7,485) (18,525)
Total revenues  - -   -
Net cost of operations before government funding and transfers $7,428,445 $3,630,415 $11,058,860 $10,694,744
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