Courts Administration Service
Symbol of the Government of Canada
CAS Home > Departmental Performance Reports > Financial Statements 2011-2012 -Archive

Financial Statements 2011-2012


Warning This Web page has been archived on the Web.

Archived Content

Information identified as archived on the Web is for reference, research or recordkeeping purposes. It has not been altered or updated after the date of archiving. Web pages that are archived on the Web are not subject to the Government of Canada Web Standards. As per the Communications Policy of the Government of Canada, you can request alternate formats by contacting us.

Financial Statements (Unaudited)

For the year ended March 31, 2012

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 Courts Administration Service. 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 Courts Administration Service's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Courts Administration Service'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 Courts Administration Service 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.

A risk-based assessment of the system of ICFR for the year ended March 31, 2012 was completed in accordance with the Treasury Board Policy on Internal Control and the results and action plans are summarized in the annex.

The effectiveness and adequacy of the Courts Administration Service's system of internal control is reviewed by the work of the Chief Audit Executive, who conducts periodic audits of different areas of the Courts Administration Service's operations, and by the Departmental Audit Committee, which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting, and which recommends the financial statements to the Deputy Head of the Courts Administration Service.

____________________
Daniel Gosselin, FCPA, FCA
Deputy Head
Chief Administrator

(Ottawa, Canada)
(August 30, 2012)

____________________
Francine Côté, CPA, CA, CISA
Chief Financial Officer
Deputy Chief Administrator, Corporate Services



Statement of Financial Position (Unaudited)

As at March 31

(in thousands of dollars)

  2012 Restated
(Note 12)
2010
LIABILITIES
Accounts payable and accrued liabilities (Note 4) 4,900 3,247
Vacation pay and compensatory leave 2,158 1,820
Deposit accounts (Note 5) 6,529 5,949
Employee future benefits (Note 6) 3,359 8,681
TOTAL LIABILITIES 16,946 19,697
 
ASSETS
Financial assets
Due from the Consolidated Revenue Fund 9,447 7,640
Accounts receivable and employee advances (Note 7) 1,989 1,590
Total gross financial assets 11,436 9,230
Financial assets held on behalf of Government
Accounts receivable and employee advances (Note 7) (1,614) (1,286)
Total net financial assets 9,822 7,944
 
Departmental net debt 7,124 11,753
 
Non-financial assets
Prepaid expenses - 4
Tangible capital assets (Note 8) 6,516 4,519
Total non-financial assets 6,516 4,523
 
DEPARTMENTAL NET FINANCIAL POSITION (608) (7,230)

Contingent liabilities (Note 9)

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

____________________
Daniel Gosselin, FCPA, FCA
Deputy Head
Chief Administrator

(Ottawa, Canada)
(August 30, 2012)

____________________
Francine Côté, CPA, CA, CISA
Chief Financial Officer
Deputy Chief Administrator, Corporate Services




Statement of Operations and Departmental Net Financial Position (Unaudited)

For the Year Ended March 31

(in thousands of dollars)

  Planned results
2012
2012 Restated
(Note 12)2011
EXPENSES
Judicial services 40,734 42,105 40,104
Registry services 34,461 32,921 32,744
Internal services 20,703 22,182 20,079
Expenses incurred on behalf of Government - (14) (2)
TOTAL EXPENSES 95,898 97,194 92,925
REVENUES
Fines 5,177 1,066 5,060
Filing fees 1,423 1,644 1,484
Employment Insurance Operating Account cost recoveries (Note 2(d)) 1,995 1,576 1,233
Miscellaneous 212 109 200
Revenues earned on behalf of Government (8,807) (4,388) (7,974)
TOTAL REVENUES - 7 3
NET COST OF OPERATIONS BEFORE GOVERNMENT FUNDING AND TRANSFERS 95,898 97,187 92,922
GOVERNMENT FUNDING AND TRANSFERS
Net cash provided by Government   71,021 66,719
Change in due from Consolidated Revenue Fund   1,807 (2,863)
Services provided without charge by other government departments (Note 10)   30,981 28,550
NET COST OF OPERATIONS AFTER GOVERNMENT FUNDING AND TRANSFERS   (6,622) 516
DEPARTMENTAL NET FINANCIAL POSITION - BEGINNING OF YEAR   (7,230) (6,714)
DEPARTMENTAL NET FINANCIAL POSITION - END OF YEAR   (608) (7,230)

Segmented information (Note 11)

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 thousands of dollars)

  2012 2011
Net cost of operations after government funding and transfers (6,622) 516
Change due to tangible capital assets
Acquisition of tangible capital assets 2,623 643
Amortization of tangible capital assets (621) (670)
Proceeds from disposal of tangible capital assets (4) (2)
Net (loss) or gain on disposal of tangible capital assets including adjustments (11) (71)
Total change due to tangible capital assets 1,997 (100)
Change due to prepaid expenses (4) 4
Net increase (decrease) in departmental net debt (4,629) 420
Departmental net debt - Beginning of year 11,753 11,333
Departmental net debt - End of year 7,124 11,753

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



Statement of Cash Flow (Unaudited)

For the Year Ended March 31

(in thousands of dollars)

  2012 Restated (Note 12) 2011
OPERATING ACTIVITIES
Net cost of operations before government funding and transfers 97,187 92,922
Non-cash items
Amortization of tangible capital assets (Note 8) (621) (670)
Services provided without charge by other government departments (Note 10) (30,981) (28,550)
Gain (Loss) on disposal and write-down of tangible capital assets (1) (71)
Variations in Statement of Financial Position
Increase (decrease) in accounts receivable and employee advances 71 208
Increase (decrease) in prepaid expenses (4) 4
(Increase) decrease in accounts payable and accrued liabilities (1,653) 1,594
(Increase) decrease in vacation pay and compensatory leave (338) 63
(Increase) decrease in deposit accounts (580) 1,434
(Increase) decrease in employee future benefits 5,322 (856)
Cash used in operating activities 68,402 66,078
 
CAPITAL INVESTING ACTIVITIES
Acquisitions of tangible capital assets (Note 8) 2,623 643
Proceeds from disposal of tangible capital assets (4) (2)
Cash used in capital investing activities 2,619 641
 
Net cash provided by Government of Canada 71,021 66,719

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



Notes to the Financial Statements (Unaudited)

For the year ended March 31

1. Authority and objectives

The Courts Administration Service, which was established on July 2, 2003 by the Courts Administration Service Act, S.C. 2002, c.8, is responsible for providing administrative services to the Federal Court of Appeal, the Federal Court, the Court Martial Appeal Court of Canada and the Tax Court of Canada (here after referred to as the "the Courts").>/p>

These services permit individuals, companies, organizations and the Government of Canada to submit disputes and other matters to the Courts, and enable the Courts to hear and resolve the cases before them fairly, without delay and as efficiently as possible.

The Courts Administration Service has three program activities: to provide Registry Services, to provide Judicial Services and to provide Internal Services.

Registry Services processes legal documents and applications for judicial review under the jurisdiction of the Federal Court of Appeal, the Federal Court, the Court Martial Appeal Court of Canada and the Tax Court of Canada. It also ensures the proper court records management and adequate operation of the litigation and court access process.

Judicial Services provides direct support to all the Justices through the efforts of judicial assistants, law clerks, jurilinguists, chauffeurs, court attendants, and library personnel. The services provided include research, documentation, revision, translation, and linguistic and terminological advice, the object of which is to assist the judges in preparing their judgments and reasons for judgment.

Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These groups are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Materiel Services; Acquisition Services; and Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.



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 Courts Administration Service is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Courts Administration Service 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 2011-12 Report on Plans and Priorities. The future-oriented financial statements for 2011-12 have been restated to reflect the revenue net of non-respendable amounts. This restatement resulted in a $8,807,000 increase in net costs of operations before government funding and transfers. In addition, the future-oriented financial statements have also been reclassified to conform to the current year presentation.

(b) Net cash provided by Government
The Courts Administration Service operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Courts Administration Service is deposited to the CRF, and all cash disbursements made by the Courts Administration Service 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 Consolidation Revenue Fund (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 Courts Administration Service is entitled to draw from the CRF without further authorities to discharge its liabilities.

(d) Revenues

  • Revenues consist primarily of filing fees, fines and sales of copies of filed documentation, including copies of judgments and orders. All such revenue is non-respendable, meaning it cannot be spent by the Courts Administration Service and is deposited to the CRF.
  • All revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.
  • Employment Insurance (EI) Operating Account cost recoveries: At the end of each fiscal year, the Courts Administration Service determines the cost associated with the administration of Employment Insurance cases. The total cost allocated by the Courts Administration Service for handling EI cases are expended against Human Resources and Skills Development Canada (HRSDC), the department responsible for the EI Operating account. As such, HRSDC would show an expense and the Courts Administration Service would show an equivalent, non respendable revenue item. The purpose of this accounting exercise is to reflect more accurately the total cost of running the EI program and it is strictly internal to the Government.
  • Revenues that are non-respendable are not available to discharge the Courts Administration Service's liabilities. While the Deputy Head (DH) 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 and are therefore presented as a 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, employer contributions to the health and dental insurance plans and workers' compensation 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. The Courts Administration Service's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The Courts Administration Service'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, 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
Accounts receivable are stated at the lower of cost and net recoverable value. A valuation allowance is recorded for accounts receivable where recovery is considered uncertain.

(h) Contingent liabilities
Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or if an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

(i) Tangible capital assets
All tangible capital assets and leasehold improvements having an initial cost of $5,000 or more are recorded at their acquisition cost. The Courts Administration Service 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
Machinery and equipment 10 years
Computer hardware 3 years
Computer software 4 years
Furniture and fixtures 10 years
Vehicles 10 years
Leasehold improvements Over term of lease

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.

(j) 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 contingent liabilities, 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 Courts Administration Service 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 Courts Administration Service 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 thousands of dollars)

  2012 Restated (Note 12) 2011
Net cost of operations before government funding and transfers 97,187 92,922
Adjustments for items affecting net cost of operations but not affecting authorities:
Services provided without charge by other government departments (30,981) (28,550)
Amortization of tangible capital assets (621) (670)
Decrease (increase) in vacation pay and compensatory leave (338) 63
Decrease (increase) in employee future benefits 5,322 (856)
Gain (Loss) on disposal and write-down of tangible capital assets (1) (71)
Refund of previous year expenditures 28> 41
Adjustments of previous years payables at year-end (PAYE) 14 114
Other (4) 2
Total items affecting net cost of operations but not affecting authorities (26,581) (29,927)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets 2,623 643
Variation in advances (2) 2
Variation in prepaid expenses (4) 4
Total items not affecting net cost of operations but affecting authorities 2,617 649
Current year authorities used 73,223 63,644

(b) Authorities provided and used

(in thousands of dollars)

  2012 2011
Authorities provided:
Vote 30 - Program expenditures 71,519 58,034
Statutory authorities 7,158 6,869
Less:
Lapsed authorities (5,446) (1,255)
Authorities available for future years (8) (4)
Current year authorities used 73,223 63,644


4. Accounts payable and accrued liabilities

The following table presents details of the Courts Administration Service's accounts payable and accrued liabilities:

(in thousands of dollars)

  2012 2011
Accounts payable - Other government departments and agencies 982 1,089
Accounts payable - External parties 2,948 1,567
  3,930 2,656
Accrued liabilities 970 591
  4,900 3,247


5. Deposit accounts

The Courts Administration Service maintains two deposit accounts on behalf of litigants before the Courts. Pursuant to an order of the Court, the deposit accounts will record funds paid into the Federal Court of Appeal, Federal Court and Tax Court of Canada. These amounts are held as payments and eventually released, pending judgment of the Courts. The underlying differences of these two accounts are the calculation of interest as described below.

Calculation of Interest:
Deposit Account for the Federal Court of Appeal and Federal Court: Pursuant to the Order in Council P.C. 1970 4/2, the account earns interest semi-annually at a rate that is equal to nine-tenths of the monthly average of tender rates for three-month Treasury bills and is calculated on the minimum monthly balance.

Deposit Account for the Tax Court of Canada: Pursuant to the Order in Council P.C. 1970-300, the account earns interest semi-annually at a rate that is equal to ninety percent of the average of the weekly three-month Treasury bills and is calculated on a daily basis.

(in thousands of dollars)

  2012 2011
Balance, beginning of year 5,949 7,383
Receipts and other credits 4,885 1,585
Disbursements and other charges (4,305) (3,019)
Balance, end of the year 6,529 5,949


6. Employee future benefits

(a) Pension benefits
The Courts Administration Service's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plans benefits and they are indexed to inflation.

Both the employees and the Courts Administration Service contribute to the cost of the Plan. The 2011-12 expense amounts to $5,138,002 ($4,815,441 in 2010-11), which represents approximately 1.8 times (1.9 times in 2010-11) the contributions by employees.

The Courts Administration Service'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, as the Plan's sponsor.

(b) Severance benefits
The Courts Administration Service 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 thousands of dollars)

  2012 2011
Accrued benefit obligation, beginning of year 8,681 7,825
Expense for the year 819 1,571
Benefits paid during the year (6,141) (715)
Accrued benefit obligation, end of year 3,359 8,681

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.



7. Accounts receivable and advances

The following table presents details of the Courts Administration Service's accounts receivable and advances balances:

(in thousands of dollars)

  2012 Restated (Note 12) 2011
Receivables - Other government departments and agencies 1,973 1,531
Receivables - External parties 23 49
Employee advances 9 11
  2,005 1,591
Allowance for doubtful accounts on receivables from external parties (16) (1)
Gross accounts receivables 1,989 1,590
Accounts receivable held on behalf of Government (1,614) (1,286)
Net accounts receivables 375 304


8. Tangible capital assets

Cost

(in thousands of dollars)

  2011 Acquisitions Adjust-ments (1) Disposals and Write-offs 2012
Machinery and equipment 674 40 - - 714
Computer hardware 2,665 1,220 - - 3,885
Computer software 1,118 320 - - 1,438
Furniture and fixtures 776 6 - - 782
Vehicles 401 28 - (25) 404
Leasehold improvements 2,693 174 - (8) 2,859
Assets under construction - Computer software 347 200 - - 547
Assets under construction - Leasehold improvements - 635 - - 635
  8,674 2,623 - (33) 11,264

Accumulated amortization

(in thousands of dollars)

  2011 Acquisitions Adjust-ments (1) Disposals and Write-offs 2012
Machinery and equipment 600 25 - - 625
Computer hardware 2,330 254 - - 2,584
Computer software 194 125 - - 319
Furniture and fixtures 701 48 - - 749
Vehicles 201 34 - (24) 211
Leasehold improvements 129 135 - (4) 260
  4,155 621 - (28) 4,748

Net book value

(in thousands of dollars)

  2011       2012
Machinery and equipment 74       89
Computer hardware 335       1,301
Computer software 924       1,119
Furniture and fixtures 75       33
Vehicles 200       193
Leasehold improvements 2,564       2,599
Assets under construction - Computer software 347       547
Assets under construction - Leasehold improvements -       635
  4,519       6,516

(1) Adjustments include assets under construction that were transferred to the other categories upon completion of the assets.



9. Contingent liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown.

Claims and litigation
Claims have been made against the Courts Administration Service in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amount to approximately $40,000 ($0 in 2010-11) at March 31, 2012.



10. Related party transactions

The Courts Administration Service is related as a result of common ownership to all government departments, agencies, and Crown corporations. The Courts Administration Service enters into transactions with these entities in the normal course of business and on normal trade terms.

a) Common services provided without charge by other government departments
During the year, the Courts Administration Service received services without charge from certain common service organizations, related to accommodation, the employer's contribution to the health and dental insurance plans and workers' compensation coverage. These services provided without charge have been recorded in the Courts Administration Service's Statement of Operations and Departmental Net Financial Position as follows:

(in thousands of dollars)

  2012 2011
Accommodation (1) 26,919 25,153
Employer's contribution to the health and dental insurance plans 4,023 3,346
Workers' compensation 39 51
Total 30,981 28,550

(1) Accommodation costs include the space of the court rooms, the offices of the Members of the Court, the discovery rooms, etc…

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 the payroll and cheque issuance services provided by Public Works and Government Services Canada are not included in the Courts Administration Service's Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties

(in thousands of dollars)

  2012 2011
Revenues - Other government departments and agencies 1,814 1,492
Expenses - Other government departments and agencies 11,798 10,924

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



11. Segmented information

Presentation by segment is based on the Courts Administration Service'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 and revenues generated for the main program activities, by major object of expense and by major type of revenue. The segment results for the period are as follows:

(in thousands of dollars)

  Judicial Services Registry Services Internal Services 2012 Restated (Note 12) 2011
EXPENSES
Salaries and employee benefits 16,201 23,738 13,621 53,560 51,758
Accommodations (Note 10) 20,411 5,098 1,410 26,919 25,153
Professional and special services 3,149 2,965 2,471 8,585 7,952
Transportation and telecommunications 497 321 1,741 2,559 2,536
Materials and supplies 1,604 187 273 2,064 2,137
Rentals 94 108 821 1,023 937
Machinery and equipment 53 256 673 982 1,062
Repairs and maintenance 36 21 690 747 628
Amortization of tangible capital assets 39 153 429 621 670
Information 14 64 53 131 107
Miscellaneous 7 10 - 17 (13)
Expenses incurred on behalf of Government (3) (4) (7) (14) (2)
TOTAL EXPENSES 42,102 32,917 22,175 97,194 92,925
REVENUES
Fines - 1,066 - 1,066 5,060
Filing fees - 1,644 - 1,644 1,484
Employment Insurance Operating Account cost recoveries (Note 2(d)) 678 461 437 1,576 1,233
Miscellaneous 5 97 7 109 200
Revenues earned on behalf of Government (683) (3,268) (437) (4,388) (7,974)
TOTAL REVENUES - - 7 7 3
Net cost of operations before government funding and transfers 42,102 32,917 22,168 97,187 92,922


12. 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 Courts Administration Service'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 Courts Administration Service now presents a Statement of Change in Net Debt and no longer presents a Statement of Equity.

Revenue, expenses and related accounts receivable are now presented net of non-respendable amounts in the Statement of Operations and Departmental Net Financial Position and Statement of Financial Position. The effect of this change was to increase the net cost of operations before government funding and transfers by $4,374,000 for 2012 ($7,972,000 for 2011) and decrease total financial assets by $1,614,000 for 2012 ($1,286,000 for 2011).

Government funding and transfers, 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 and transfers.” In previous years, the Courts Administration Service 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 and transfers by $103,809,000 for 2012 ($92,406,000 for 2011).

(in thousands of dollars)

  2011 As previously stated Effect
of the
change
2011 Restated
Statement of Financial Position
Assets held on behalf of Government - (1,286) (1,286)
Departmental net financial position (5,944) (1,286) (7,230)
Statement of Operations and Departmental Net Financial Position
Revenues 7,977 (7,974) 3
Expenses 92,927 (2) 92,925
Government funding and transfers
Net cash provided by Government - 66,719 66,719
Change in due from Consolidated Revenue Fund - (2,863) (2,863)
Services provided without charge by other government departments - 28,550 28,550


13. Comparative information

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




Annex to the Statement of Management Responsibility including Internal Control over Financial Reporting

Fiscal year 2011-12

Note to the Reader

With the new Treasury Board Policy on Internal Control, effective April 1, 2009, organizations are now required to demonstrate the measures they are taking to maintain effective system of internal control over financial reporting (ICFR).

As part of this policy, organizations are expected to conduct annual assessments of their system of ICFR, establish action plan(s) to address any necessary adjustments, and to attach to their Statement of Management Responsibility in their annual financial statements a summary of their assessment results and action plan.

Effective systems of ICFR aim to achieve reliable financial statements and to provide assurances that:

  • Transactions are appropriately authorized

  • Financial records are properly maintained

  • Assets are safeguarded from risks such as waste, abuse, loss, fraud and mismanagement

  • Applicable laws, regulations and policies are followed

It is important to note that the system of ICFR is not designed to eliminate all risks, rather to mitigate risk to a reasonable level with controls that are balanced with and proportionate to the risks they aim to mitigate.

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 the effectiveness of associated key controls, and adjust as required, as well as to monitor its performance in support of continuous improvement. As a result, the scope, pace and status of those organizational assessments of the effectiveness of their system of ICFR reporting will vary from one organization to the other based on risks and taking into account their unique circumstances.

This annex is unaudited.

Table of Contents

  1. INTRODUCTION
  2. CONTROL ENVIRONMENT OF CAS RELATIVE TO ICFR
  3. ASSESSMENT OF CAS’ SYSTEM OF ICFR
  4. ASSESSMENT OF CAS’ RESULTS
  5. CAS’ ACTION PLAN

  

1    Introduction

This unaudited document is attached to Courts Administration Service’s (CAS) Statement of Management Responsibility Including Internal Control over Financial Reporting for the fiscal-year 2011-12. As required by the new Treasury Board Policy on Internal Control, effective April 1st 2009, for the first time, this document provides summary information on the measures taken by CAS to maintain an effective system of internal control over financial reporting (ICFR). In particular, it provides summary information on the assessments conducted by CAS as at March 31, 2012, including progress, results and related action plans along with some financial highlights pertinent to understanding the control environment unique to the organization.

1.1  Authority, Mandate and Program Activities

Courts Administration Service was established on July 2nd, 2003 by the Courts Administration Service Act. It is responsible for providing administration services to the Federal Court of Appeal, the Federal Court, the Court Martial Appeal Court of Canada and the Tax Court of Canada. It is funded directly by Parliament. These services permit individuals, companies, organizations and the Government of Canada to submit disputes and other matters to the courts, and enable the Courts to hear and resolve the cases before them fairly, without delay and as efficiently as possible. It has three program activities:

  • To provide Registry services;

  • To provide Judicial services; and

  • To provide Internal services.

Further details regarding CAS’ priorities, strategic outcome and program activity architecture are available in the Departmental Performance Report http://cas-cdc-www02.cas-satj.gc.ca/portal/page/portal/CAS/DPR-RMR_eng and the Report on Plans and Priorities http://cas-cdc-www02.cas-satj.gc.ca/portal/page/portal/CAS/RPP_eng.

1.2  Financial highlights

The listing below provides key financial information for fiscal year 2011-2012. More information can be found in CAS’ Financial Statements (http://cas-cdc-www02.cas-satj.gc.ca/portal/page/portal/CAS/DPR-RMR_eng)

  • Total expenses were $97,194. Salaries and employee benefits was the largest expense, accounting for 55.1% or $53,560.

  • Total net financial assets of $9,822 and total non-financial assets of $6,516 (60.1% and 39.9% respectively) account for the organization’s total net assets of $16,338.

  • Total liabilities were $16,946. Deposit Accounts represent the majority of liabilities (38.5%), followed by accounts payable and accrued liabilities (28.9%).

  • Net cash provided by the Government of Canada totalled $71,021.

1.3  Service arrangements relevant to financial statements

CAS relies on other organizations for the processing of certain transactions that are recorded in its financial statements as follows:

  • Public Works and Government Services Canada (PWGSC) centrally administers the payments of salaries through its payroll system and the procurement of goods and services, as per the Department’s Delegation of Authority.

  • The Treasury Board Secretariat (TBS) provides CAS with information used to calculate various accruals and allowances, such as the accrued severance liability.

  • CAS relies on figures from other departments for services received without charge such as accommodation from PWGSC, employer’s portion of Workers’ Compensation benefits from Human Resources and Skills Development Canada, and the employer’s share of insurance premiums from TBS.

1.4  Material changes in fiscal-year 2011-12

The following significant changes, relevant to the financial statements occurred during 2011/12:

CAS formed an independent Audit Committee with two external members in June of 2011.

In the fourth quarter, CAS appointed a contractual Chief Audit Executive to oversee the internal audit function.

2    Control Environment of CAS relative to ICFR

CAS recognizes the importance of setting the tone from the top to help ensure that staff at all levels understand their roles in maintaining effective systems of ICFR and is well equipped to exercise these responsibilities effectively. CAS’ focus is to ensure that risks are well managed through a responsive and risk-based control environment that enables continuous improvement and innovation.

2.1  Key positions, roles and responsibilities

Below are CAS’ key positions and committees with responsibilities for maintaining and reviewing the effectiveness of its system of ICFR.

Key Position / Committee Roles and Responsibilities

Chief Administrator

  • The Chief Administrator is the Deputy Head, and as Accounting Officer, assumes overall responsibility and leadership for the measures taken to maintain an effective system of internal control.
  • Has the supervision over and direction of CAS’ work and staff. This includes the powers necessary for the overall effective and efficient management and administration of all court services.
  • Chairs the independent Audit Committee and the Executive Committee

Executive Committee

  • Acts as governance and human resources committee.
  • Acts as expenditure review board

Deputy Chief Administrator - Corporate Services and Chief Financial Officer

  • Acts as the CFO, reports directly to the Chief Administrator and provides leadership for the coordination, coherence and focus on the design and maintenance of an effective and integrated system of ICFR, including its annual assessment.

Deputy Chief Administrator - Judicial and Registry Services

  • The Deputy Chief Administrator of Judicial and Registry Services, in charge of program delivery, is responsible for maintaining and reviewing effectiveness of the system of ICFR falling within her portfolio.

Chief Audit Executive (CAE)

  • Reports directly to the Chief Administrator and will provide assurance through periodic internal audits, which are instrumental to the maintenance of an effective system of ICFR.

Departmental Audit Committee (DAC)

  • An advisory committee that provides objective views on the organization’s risk management, control and governance frameworks. This committee was established in June 2011.
  • Comprised of the Chief Administrator, and two independent members who are not part of the federal public service.
  • Reviews CAS’ unaudited Financial Statements and system of internal control, including the assessment and action plans relating to the system of ICFR.

2.2  Key measures taken by CAS

CAS’ control environment also includes a series of measures to equip its staff to manage risks well through raising awareness, providing appropriate knowledge and tools as well as developing skills. Key measures include:

  • CAS staff formally acknowledges they have read and will comply with the Public Service code of values and ethics in their letter of offer. All senior CAS Managers were required to complete a Values and Ethics course during 2011-12. CAS has a designated Senior Officer for Disclosure and a process in place for the disclosure of wrongdoing in the workplace;

  • A training program and communications in core areas of financial management;

  • Delegation of financial signing authorities matrix is clearly communicated and available to staff;

  • An up-to-date corporate risk profile including financial management and oversight risks as well as risk ownership and mitigation strategies;

  • An Information Management/Information Technology (IMIT) strategic plan;

  • Clear guidelines on authorities and compliance with S. 32, S. 34 and S. 33 of the Financial Administration Act; and

  • Documentation of main financial transaction business processes and related key risk and control points to support the management and oversight of its system of ICFR.

  

3    Assessment of CAS’ system of ICFR

3.1  Assessment baseline

In 2004, the Government of Canada commenced an initiative aimed at preparing organizations for control-based audits of their financial statements, thus placing reliance on well-functioning internal controls. In 2009, the Treasury Board approved the Policy on Internal Control (PIC).  The Office of the Comptroller General is taking a tiered approach in implementing this Policy. CAS is a part of the third wave of organizations implementing the PIC.

To satisfy the requirements of the Policy on Internal Control, departments are required to maintain an effective system of ICFR with the objectives to provide reasonable assurance that:

  • Transactions are appropriately authorized:

  • Financial records are properly maintained;

  • Assets are safeguarded; and

  • Applicable laws, regulations and policies are complied with.

Over time, this includes assessment of design and operating effectiveness of the system of ICFR and an on-going monitoring program leading to continuous improvement of the organizational system of ICFR.

Design effectiveness means to ensure that key control points are identified, documented, in place and that they are aligned with the risks (i.e. controls are balanced with and proportionate to the risks they aim to mitigate) and that any remediation is addressed. This includes the mapping of key processes and IT systems to the main accounts as applicable.

Operating effectiveness means that the application of key controls has been tested over a defined period and that any required remediation is addressed.

Ongoing monitoring program means that a systematic integrated approach to monitoring is in place, including periodic risk-based assessments and timely remediation.

Such testing covers all organizational control levels which include corporate or entity, IT general controls and business process controls.

3.2  Assessment method at CAS

CAS has adopted an eight step process to facilitate a common and objective view of the robustness of controls across the organization, based on guidance provided by the Office of the Comptroller General to organizations implementing the Policy on Internal Control

Image of Assessment method
[text version]

CAS will undertake measures to assess its system of ICFR, with a focus on the following control levels:

Control Level Scope

Entity Level Controls

  • Control Environment
  • Risk Management
  • Information and communication
  • Monitoring

Information Technology General Controls

  • Access Management
  • Quality Assurance and Testing
  • Change Management
  • Disaster Recovery

Business Process Controls

  • Procure to pay (key)
  • Pay administration (key)
  • Deposit accounts (key)
  • Financial statements (period end/year end)
  • Tangible Capital Assets
  • Travel
  • Hospitality

During 2011-12, CAS undertook a risk assessment and scoping exercise.  This included the following:

  • Began gathering information pertaining to processes, risks and controls relevant to ICFR, including appropriate policies and procedures;

  • Performed a decomposition of the organization’s Financial Statements which resulted in the identification of three key accounts and the significant business processes that produce the financial information in these accounts.  The Procure to Pay, Pay Administration and Deposit Accounts processes were determined to be key for initial review in assessing the internal controls over financial reporting at CAS.

Subsequent to the risk assessment and scoping exercise, CAS documented the significant business processes with the identification and documentation of key risk and control points.

CAS will next undertake the following steps:

  • Continue to gather information pertaining to processes, risks and controls relevant to ICFR, including appropriate policies and procedures;

  • Document the other processes with the identification and documentation of key risk and control points;

  • Perform design testing e.g. conduct a walk-through of the documented processes and assess the alignment of controls to risks;

  • Perform operational testing on the documented processes based upon the information gleaned from documentation and design testing;

  • Implement remediation plans as required; and

  • Develop and implement a monitoring approach and methodology.

4    ASSESSMENT OF CAS’ RESULTS

The following summarizes the key assessment results from the documentation, design and operational effectiveness testing completed by CAS as at March 31, 2012.

4.1  Documentation of Control Activities

CAS is in the process of assessing existing documentation as it relates to Entity Level Controls, IT General Controls and Business Process Controls.

Control Level Documentation Requirements

Entity Level Controls

  • In progress

IT General Controls

  • In progress

Business Process Controls

  • Documentation for Procure to Pay, Payroll/Salaries and Deposit Accounts completed
  • Financial statement process for period end and year end, Tangible Capital Assets, Travel and Hospitality documentation not yet commenced.

4.2  Evaluation of Design Effectiveness of the Key Controls

The evaluation of design effectiveness has not yet commenced and therefore no assessment results are available at this stage.

When undertaking the evaluation of design effectiveness of the Business Process Controls, CAS will identify and validate key controls with process owners, and assess alignment of each key control with risk.

4.3  Evaluation of Operational Effectiveness of the Key Controls

The evaluation of operational effectiveness has not commenced and therefore no assessment results are available at this stage.

When conducting the evaluation of operational effectiveness of key controls, CAS will implement a risk-based testing approach and methodology that will identify key controls to be tested over a defined period of time, including the selection of a sample, the test period and the method and frequency of testing. Operational effectiveness for Entity Level Controls, IT General Controls, Business Process Controls and Financial Reporting Controls will not commence until the associated remediation of design effectiveness have been implemented and a sufficient time has passed to allow the controls to function for a period of the financial year.

4.4  Ongoing monitoring program

CAS will continue to ensure that controls are effective over time and seek opportunities to strengthen its entity level controls, taking into account the initial assessment as well as results from annual assessments and audits. This will involve developing and implementing a well-integrated monitoring program to raise awareness and understanding of the organization’s system of ICFR at all levels of the organization, equip staff with the knowledge, skills and tools needed to maintain a robust ICFR, and continue to assess the status of ICFR on an ongoing basis.

5    CAS’ Action Plan

5.1  Progress as of March 31, 2012

During 2011-2012, CAS began to document its key controls.  Below is a summary of the main progress made by the organization as at 31st March 2012:

  • Gathered information pertaining to processes, risks and controls relevant to ICFR within CAS; including appropriate policies and procedures, recent audits, evaluations, results from the completion of the Corporate Risk Profile and MAF assessments.

  • Established a risk assessment process for ICFR and a control framework for the organization.

  • Completed a risk assessment of the financial statements of CAS to identify significant accounts and high risk business processes.

  • Began the identification of Entity Level controls and related documentation.

  • Began the identification of IT General Controls and related documentation.

  • Completed and validated the documentation of three key business processes, and identified controls.

5.2  Action plan

Building on progress to date, CAS has developed a multi-year plan to fully implement the requirements of the Policy on Internal Control. The organization is positioned to complete the main assessment of its system of ICFR and implement ongoing monitoring in 2015/16. The work below outlines work to be performed under ICFR until 2015/16.

CASICFR Action Plan

Table of Courts Administration Service's internal control over financial reporting action plan
[text version]