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Financial Statement Discussion and Analysis
Fiscal year 2012-13


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INTRODUCTION

This Financial Statement Discussion and Analysis (FSD&A) should be read in conjunction with the Financial Statements of the Courts Administration Service (CAS) for the fiscal year ended March 31, 2013. These Financial Statements have been prepared using the Government's accounting policies, which are based on Canadian public sector accounting standards. The FSD&A has been prepared following the Public Sector Statement of Recommended Practice (SORP-1).

Responsibility for the preparation of the FSD&A rests with the management of CAS. The purpose of the FSD&A is to enhance the users’ understanding of the organization’s financial position and results of operations while demonstrating its accountability for its resources. Additional information on the organization’s performance is available in the Departmental Performance Report.

Following this introduction, the FSD&A consists of three sections:

  • Overview

  • Highlights (financial and non-financial)

  • Discussion and Analysis

Please note that all financial information presented herein is denominated in Canadian dollars, unless otherwise indicated.

Special note regarding forward-looking statements

The words “estimate”, “will”, “intend”, “should”, “anticipate”, and similar expressions are intended to identify forward-looking statements that reflect assumptions and expectations of CAS, based on its experience and perceptions of trends and current conditions. Although CAS believes the expectations reflected in such forward-looking statements are reasonable, they may prove to be inaccurate; consequently actual results could differ materially from expectations set out in this FSD&A. In particular, the risk factors described in this report could cause actual results or events to differ materially from those contemplated in forward-looking statements.

OVERVIEW

CAS was established in 2003 by the Courts Administration Service Act, S.C. 2002, c. 8. CAS’ role is to provide effective and efficient registry, judicial and internal services to the Federal Court of Appeal, the Federal Court, the Court Martial Appeal Court of Canada and the Tax Court of Canada (“the Courts”). The Chief Administrator of CAS serves as Deputy Head.

CAS was created to ensure the effective and efficient provision of administrative support to the four federal courts; to enhance judicial independence by placing administrative services at arm’s length from the Government and affirming the roles of the chief justices and judges in the management of the Courts; and to enhance accountability for the use of public money in support of court administration. This in turn ensures timely and fair access to the judicial system, which is essential to constitutional governance.

CAS’ budget is allocated through authorities approved by Parliament. CAS has one voted authority for program expenditures and statutory authorities for contributions to employee benefit plans, spending of proceeds from the disposal of surplus Crown assets, and refunds of amounts credited to revenues in previous years.

Authorities provided to CAS 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 Financial Position and in the Statement of Operations and Departmental Net Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 of the Financial Statements provides a reconciliation between the bases of reporting.

The Financial Statements of CAS are not audited.

HIGHLIGHTS

Parliamentary Authorities

The parliamentary authorities available for use by CAS include funding received through the Main Estimates, Supplementary Estimates, Transfers, Adjustments and Warrants. These authorities decreased by $7,416 thousand, from $78,677 thousand in 2011-12 to $71,261 thousand in 2012-13. This is the net result of several factors.

Parliamentary authorities chart

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The decrease in authorities is partly the result of the one-time funding of $2,755 thousand received in 2011-12 to address information technology rust-out, to construct a data centre and to relocate CAS corporate functions to the designated Federal Judicial Building in the National Capital Region (NCR). This funding is being repaid over a period of five years, with an annual reduction in authorities of $551 thousand commencing in 2012-13.

Furthermore, there was a decrease of $5,894 thousand in the transfer from Treasury Board for paylist requirements. This transfer includes severance pay and termination benefits, vacation credits payable upon termination of employment, and parental benefits. The majority of the 2011-12 paylist requirements request (86% or $5,211 thousand) was for payments to employees who exercised the option to receive immediate payment for previously earned and accumulated severance pay. In contrast, such payments represented only a relatively small portion of the 2012-13 paylist requirements (12% or $107 thousand).

The above decreases were partly offset by a $402 thousand increase in program integrity funding for existing judicial appointments and for certain essential security measures for the Courts. In addition, the operating budget carry-forward transfer received in 2012-13 was $1,213 thousand greater than that in 2011-12. This increase was attributable to delays in supply chain deliveries that impacted the data centre project.

Additionally, funding for changes to the Immigration and Refugee Protection Act, Division 9 was renewed and received through Supplementary Estimates B. The renewed funding was $457 thousand more than the funding received in 2011-12. However, the funding was subsequently reduced by $404 thousand in Supplementary Estimates B, the amount required of CAS by the Deficit Reduction Action Plan measures announced in Budget 2012.

There were also various other minor increases in authorities totaling $116 thousand.

Financial Highlights

CAS’ net cost of operations before government funding and transfers amounted in 2012-13 to $93,398 thousand, a decrease of 4% compared to $97,187 thousand in 2011‑12. The $3,789 thousand variance represents a decrease in expenses of $3,792 thousand and a decrease in revenues of $3 thousand. These figures are net of expenses incurred and revenues earned on behalf of government. Total expense decreases were mainly in salaries and employee benefits and accommodations. The departmental net financial position of CAS was $542 thousand in 2012-13, compared to ($608) thousand in 2011‑12.

Statement of Financial Position

Liabilities: CAS’ total liabilities as at March 31, 2013 were $15,115 thousand ($16,946 thousand as at March 31, 2012).

  • Accounts payable and accrued liabilities: The balance as at March 31, 2013 was $3,160 thousand ($4,900 thousand as at March 31, 2012). The decrease of $1,740 thousand is mainly due to decreases in accounts payable to external parties and other government departments and agencies.
  • Vacation pay and compensatory leave: The balance as at March 31, 2013 was $2,047 thousand ($2,158 thousand as at March 31, 2012). Vacation pay and compensatory leave decreased slightly over the previous year due to an increase in the utilization of vacation leave.
  • Deposit accounts: The balance as at March 31, 2013 was $6,776 thousand ($6,529 thousand as at March 31, 2012). Because they reflect many separate decisions of the Courts, deposits cannot be projected and the balance in the deposit accounts can vary significantly from year to year.
  • Employee future benefits: The balance as at March 31, 2013 was $3,132 thousand ($3,359 thousand as at March 31, 2012). In 2011-12, significant changes were made to the employee severance pay program and these changes have resulted in a decrease in employee future benefits over the past two years.

Assets: Total assets signify the ability of CAS to provide future services to the Courts and thereby to ensure access to justice for Canadians. CAS’ total gross assets as at March 31, 2013 were $17,735 thousand ($17,952 thousand as at March 31, 2012).

  • Gross financial assets: The balance as at March 31, 2013 was $9,882 thousand ($11,436 thousand as at March 31, 2012). This decrease of $1,554 thousand is mainly due to a decrease in the amount due from the Consolidated Revenue Fund (CRF). This amount represents the net amount of cash that CAS is entitled to withdraw from the CRF without generating additional charges against its authorities.
  • Financial assets held on behalf of Government: The balance as at March 31, 2013 was $2,078 thousand ($1,614 thousand as at March 31, 2012). These assets consist primarily of accounts receivable from another governmental organization; an example is the allocation to Human Resources and Skills Development Canada (HRSDC) of the costs of administering Employment Insurance (EI) cases in the Courts.
  • Net financial assets: The balance as at March 31, 2013 was $7,804 thousand ($9,822 thousand as at March 31, 2012). This amount represents gross financial assets less financial assets held on behalf of the Government.
  • Non-financial assets: The balance as at March 31, 2013 was $7,853 thousand ($6,516 thousand as at March 31, 2012). Non-financial assets consist of the tangible capital assets that are essential for the successful delivery of services required by the Courts. Computer hardware and software (including assets under construction) totalled 44% of non-financial assets in 2012-13, while leasehold improvements accounted for 53%. Combined, these categories currently account for 97% of CAS’ tangible capital assets.

Re-investment in capital assets is crucial for maintaining secure modern facilities, updating technological infrastructure and information systems, and maintaining a reliable fleet of vehicles. In terms of the acquisition of tangible capital assets, CAS spent $2,233 thousand in 2012-13 ($2,623 thousand in 2011-12). Of this amount, $471 thousand (21%) related to computer hardware, $529 thousand (24%) related to computer software and $1,216 thousand (54%) related to leasehold improvements. The latter largely reflected construction costs for the data centre. Other acquisitions of $17 thousand were for furniture and fixtures.

Departmental Net Debt: CAS’ departmental net debt (total liabilities less total net financial assets) was $7,311 thousand as at March 31, 2013 ($7,124 thousand as at March 31, 2012). The net debt indicator provides a measure of the future authorities required to pay for past transactions and events. The fluctuations in departmental net debt are presented in the Statement of Change in Departmental Net Debt.

Departmental Net Financial Position: CAS’ departmental net financial position (total non-financial assets less departmental net debt) was $542 thousand as at March 31, 2013 (($608) thousand as at March 31, 2012). The change is mainly due to a decrease in total liabilities and an increase in tangible capital assets. CAS’ departmental net financial position represents the net resources (financial and non-financial) that will be used to provide future services to the Courts and thereby to benefit Canadians.

Statement of Operations and Departmental Net Financial Position

Expenses: CAS’ total expenses were $93,402 thousand in 2012-13 ($97,194 thousand in 2011-12). The largest components in the decrease of $3,792 thousand (4%) were decreases of $1,271 thousand in salaries and employee benefits and $1,084 thousand in accommodations.

 Salaries  and employee benefits

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  • Salaries and employee benefits: Salary and employee benefit expenses were $52,289 thousand in 2012-13 ($53,560 thousand in 2011-12 and $51,758 thousand in 2010-11). The $1,271 thousand (2%) decrease compared to 2011-12 is primarily due to changes in the severance pay program that resulted in a peak in salaries and employee benefits in 2011-12. The $531 thousand (1%) increase compared to 2010-11 is a result of wage increases in newly-signed collective bargaining agreements. Over half of CAS’ total expenses consist of salaries and employee benefits.
  • Operating: Operating expenses were $41,113 thousand in 2012-13 ($43,634 thousand in 2011-12 and $41,167 thousand in 2010-11). The $2,521 thousand (6%) decrease compared to 2011-12 is attributable to decreases of $1,084 thousand in accommodations, $674 thousand in professional and special services, $679 thousand in machinery and equipment, and other minor variances totalling $84 thousand. The variances are primarily explained by the relocation of the corporate functions to the Federal Judicial Building in the NCR and the construction of the new data centre.

Revenues: CASgross revenues were $5,611 thousand in 2012-13 ($4,395 thousand in 2011-12 and $7,977 thousand in 2010-11). Gross revenues consist largely of revenues earned on behalf of Government. Such revenues are non-respendable, meaning that they cannot be used by CAS, and are deposited directly into the CRF.

Revenues earned on behalf of Government were $5,608 thousand in 2012-13 ($4,388 thousand in 2011-12 and $7,974 thousand in 2010-11). One major source of such revenues is fines and filing fees collected pursuant to the legislation and rules governing the Courts. Another major source of revenue earned on behalf of Government consists of the allocation to HRSDC for the costs associated with the administration of EI cases in the Courts. Other revenues are generated by charges for photocopies of court documents and other miscellaneous revenues.

Net revenues were $4 thousand in 2012-13 ($7 thousand in 2011-12 and $3 thousand in 2010-11). This item consists of a small amount of respendable revenue from the sale of Crown assets.

Gross Revenues

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Non-Financial Highlights

During 2012-13, CAS took major steps to review its strategic approach and priorities for the next five years. It improved governance, risk management and investment planning, while strengthening decision-making and enhancing internal controls. These efforts to strengthen the overall management framework will ensure better organizational control and utilization of human and financial resources.

Within the context of its five-year plan, CAS reconfirmed its overall strategies and priorities to address key challenges. The approach emphasized the need to deliver fully on the organization’s mandate to support the federal courts, to enhance security measures and services, to provide a robust, reliable and secure information management / information technology (IM/IT) infrastructure and to modernize judicial support systems.

Particular attention was given to meeting the specific needs of the judiciary and of the Registry services that support them. Additional resources were allocated to address the increasing workload and for developing electronic systems to facilitate court business. In this regard, priority was given to the development of the E-filing application, the Digital Audio Recording System (DARS) and the On-line Law Clerk Application system.

Other important priorities that were identified involve dealing with the long-term financial viability of the organization, establishing a work environment that addresses employee needs, and reviewing and implementing a new organizational structure and governance model that better responds to the specific needs of each court.

In terms of the operational priorities of the past year, highlights included the upgrading of the IM/IT infrastructure to meet the growing needs of the Courts and their support systems, the completion of the relocation and consolidation of CAS’ corporate functions to enhance efficiency and security, and development of new initiatives and programs for court security.

As part of the work to strengthen governance and promote cooperation and transparency, the CAS Chief Justices’ Steering Committee was implemented to provide direction to the Chief Administrator with respect to CAS priorities, risks, budget allocation, and other significant matters affecting the conduct of the Courts. It is supported by three National Judges’ Advisory Committees that involve the judiciary in the key areas of security, IM/IT and accommodations.

Investment planning was another area in which an improved governance structure was completed. This helped ensure that investment decisions fully support the priorities of the organization and the needs of the Courts. The investment planning process is designed to enable CAS to identify priorities, allocate funding and monitor investments in assets, acquired services and projects. It is critically important in a time of limited resources and growing demands. The first five-year CAS Investment Plan, covering 2012-13 through 2016-17, was approved in 2012-13 by the Secretary of the Treasury Board of Canada.

An essential element in developing and implementing the Investment Plan is the Project Management Framework that was created during 2011-12. The Framework applies to all investment projects. It is designed to ensure that projects make efficient use of available resources and that their outcomes remain focused on the specific requirements previously established. The CAS Project Management Office ensures that projects are properly managed within the Framework.

In the area of financial management, CAS continued to make made good progress in 2012-13 in meeting government requirements pursuant to the Treasury Board Policy on Internal Control, as can be seen in the annex to CAS’ Financial Statements, where a detailed action plan is presented. The elements of the plan identified for 2012-13 were successfully completed. CAS also took the necessary steps to implement important new directives, such as the Treasury Board Directive on Travel, Hospitality, Conferences and Event Expenditures.

Integrated risk management continued to evolve at CAS, to the point where all levels of risk are now being identified and managed to ensure that the organization delivers on its mandate and achieves its intended results.

During the year, CAS successfully implemented the main requirements of the Government’s Deficit Reduction Action Plan as announced in Budget 2012.

DISCUSSION AND ANALYSIS

Risks and Uncertainties

Funding

During 2012-13, the financial situation of CAS remained difficult and continued to be an important source of risk to the organization’s ability to fulfill its mandate.

For some years, CAS had lacked the permanent funding necessary to enable the organization to fully meet its commitments and address major program integrity issues. Budget 2011 addressed part of this need, providing CAS with approximately $3 million per year for program integrity measures. Meanwhile, however, Government cost containment measures froze appropriations, requiring departments to absorb the cost of negotiated salary increases, an important consideration given the large proportion of the CAS budget devoted to salaries.

A loan in the amount of $2,750 thousand was provided by Treasury Board in 2011-12 that enabled CAS to address information technology rust-out, to construct a data centre and to relocate CAS corporate functions to the designated Federal Judicial Building in the NCR. However, CAS must repay this loan over the five-year period starting in 2012‑13. This represents an important annual funding pressure through 2016-17.

Funding restraints have severely limited the resources available for strategic projects needed to address critical risk areas and allow the organization to become more effective and efficient in its delivery of services to the judiciary and Canadians. CAS will continue to work with the Central Agencies to identify solutions to this longstanding problem.

Risk Management

Given the challenges of managing financial and other pressures, CAS continued to review its risk assessment and risk management capacity.

Court management is a responsibility of the judiciary and imposes requirements that are beyond CAS control. A majority of the non-salary operating expenses incurred by CAS are contracted costs for services supporting the judicial process and court hearings. These include translation, court reporters, transcripts, and security services, and are mostly driven by the number, type and duration of hearings conducted in any given year. A risk management strategy to monitor these costs and manage their fluctuation and related impacts on other key areas was reviewed and updated.

Another example where CAS made progress in developing new approaches to risk was the provision of security services for the Courts and their users. This area remains a key priority, and consequently the limited resources available must be applied efficiently and effectively to anticipate and avoid security risks, as well as to deal with those that do materialize.

Likewise, maintaining an efficient and secure IM/IT infrastructure to support the operations of the Courts and CAS and to protect the integrity of court information was another area where tangible progress was made in overcoming rust-out and addressing risks and problems. Much further work in this area will be needed in coming years to support the growing needs of the Courts and registries.

Financial Analysis

The following analysis explains the main items appearing on the financial statements, as well as significant variances and financial trends.

Liabilities

Accounts payable and accrued liabilities: CAS’ accounts payable and accrued liabilities balance as at March 31, 2013 was $3,160 thousand ($4,900 thousand as at March 31, 2012). The decrease of $1,740 thousand is as a result of:

  • A decrease of $1,101 thousand in accounts payable to external parties due to the timing of large purchases from external suppliers for various leasehold improvement projects that were ongoing at March 31st, 2012;
  • A decrease of $627 thousand in accounts payable to other government departments and agencies due to the timing of interdepartmental settlements with Public Works and Government Services Canada for various leasehold improvement projects that were ongoing at March 31st, 2012 and a decrease in the year-end billing in 2012-13 for Translation services; and
  • A decrease of $12 thousand in accrued liabilities.

Accounts payable and  accrued liabilities 

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Vacation pay and compensatory leave: CAS’ vacation pay and compensatory leave balance as at March 31, 2013 was $2,047 thousand ($2,158 thousand as at March 31, 2012). The slight decrease of $111 thousand is due to the department-wide effort to increase the utilization of vacation leave.

Employee future benefits: CAS’ employee future benefits balance as at March 31, 2013 was $3,132 thousand ($3,359 thousand as at March 31, 2012). This amount represents an allowance for severance benefits payable to employees. In 2011-12, significant changes were made to the employee severance pay program. The decrease of $227 thousand is a result of the continued impact of these changes. However, the impact of the changes has significantly decreased compared to 2011-12.

Deposit accounts: CAS’ deposit accounts balance as at March 31, 2013 was $6,776 thousand ($6,529 thousand as at March 31, 2012). CAS maintains two Specified Purpose Accounts (SPAs), one for deposits by litigants appearing before the Federal Court of Appeal or the Federal Court, and the other for those appearing before the Tax Court of Canada. These two accounts were established pursuant to Section 21.1 of the Financial Administration Act under Order in Council P.C. 1970 4/2 and Order in Council P.C. 1970-300, respectively. Pursuant to an order of the Court, amounts are held in trust and eventually released with accrued interest. Because payments into or out of the accounts are determined by the Courts, depending on the particular case, the balance is unpredictable and may vary significantly from year to year.

Vacation pay and compensatory leave

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Assets

Financial Assets

Due from the Consolidated Revenue Fund (CRF): CAS’ due from the CRF balance was $7,459 thousand as at March 31, 2013 ($9,447 thousand as at March 31, 2012). The decrease of $1,988 thousand reflects a $1,649 thousand decrease in accounts payable and accrued liabilities (net of taxes), a $587 thousand increase in accounts receivable from other government departments and agencies, a $247 thousand increase in the deposit accounts, and a $1 thousand increase resulting from other minor variances. This account represents the net amount of cash that CAS is entitled to withdraw from the CRF in order to discharge its liabilities without generating any additional charges against its authorities in the year of the withdrawal. This includes expenses incurred but not yet paid and amounts received by CAS that can be paid out in future years, offset by accounts receivable from other government departments and agencies.

Accounts receivable and advances: CAS’ gross accounts receivable and advances balance was $2,423 thousand as at March 31, 2013 ($1,989 thousand as at March 31, 2012). Gross accounts receivable are offset by accounts receivable held on behalf of Government. These receivables are not available to discharge the department’s liabilities (i.e., they represent receivables from non-respendable revenues). The Deputy Head is required to maintain accounting controls over these balances even though he has no authority regarding their disposition. CAS’ net accounts receivable and employee advances balance was $345 thousand as at March 31, 2013 ($375 thousand as at March 31, 2012).

  • Accounts receivable from other government departments and agencies: The balance was $2,391 thousand as at March 31, 2013 ($1,973 thousand as at March 31, 2012). The increase of $418 thousand represents a $464 thousand increase in the amount allocated to the Employment Insurance Operating Account, offset by minor variances totalling $46 thousand.
  • Accounts receivable from external parties: The balance was $29 thousand as at March 31, 2013 ($23 thousand as at March 31, 2012). The external parties involved include litigants and members of the general public being charged for photocopies, as well as employees due to salary overpayments and other adjustments. Over the past several years, CAS has been diligently reviewing and pursing outstanding accounts receivables, resulting in a decrease in the allowance for doubtful accounts to $5 thousand as at March 31, 2013 ($16 thousand as at March 31, 2012).
  • Accounts receivable held on behalf of Government: The balance was $2,078 thousand as at March 31, 2013 ($1,614 thousand as at March 31, 2012). The $464 thousand increase reflects a $418 thousand increase in the amount allocated to Employment Insurance Operating Account, offset by various minor amounts totalling $46 thousand.
Non-financial Assets

Tangible capital assets: CAS’ net book value of tangible capital assets was $7,853 thousand as at March 31, 2013 ($6,516 thousand as at March 31, 2012). The increase of $1,337 thousand reflects acquisitions of $2,233 thousand, offset by amortization of $674 thousand, and adjustments, disposals and write-offs totalling $222 thousand.

CAS’ tangible capital asset acquisitions during 2012-13 of $2,233 thousand ($2,623 thousand in 2011-12) resulted primarily from important capital projects that were completed in 2012-13. Tangible capital assets acquisitions in 2012-13 were as follows:

  • Data centre project: Leasehold improvements of $1,173 thousand, computer hardware of $462 thousand, and computer software of $82 thousand;
  • Mailroom project: Leasehold improvements of $31 thousand;
  • Construction improvements projects at 200 Kent Street: Leasehold improvements of $12 thousand;
  • Judicial and Registry support systems projects (for development of the E-filing application, DARS and On-line Law Clerk Application system): Computer software of $432 thousand and computer hardware of $9 thousand;
  • IT rust-out projects: Computer software of $15 thousand; and
  • Other minor capital asset acquisitions: Furniture and fixtures of $17 thousand.

Tangible Capital Assets Acquisitions

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Expenses

CAS’ total expenses were $93,402 thousand in 2012-13 ($97,194 thousand in 2011-12). The largest components in the decrease of $3,792 thousand (4%) were decreases of $1,271 thousand in salaries and employee benefits and $1,084 thousand in accommodations. The two largest categories of expense are: salaries and employee benefits (56% of total expenses in 2012-13, 55% in 2011-12); and accommodations (28% of total expenses in both 2012-13 and in 2011‑12).

Total Expenses

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Salaries and employee benefits: Salaries and employee benefits expense was $52,289 thousand in 2012-13 ($53,560 thousand in 2011-12). Salaries and employee benefits expense includes such costs as gross salaries and wages, overtime pay, retroactive salary adjustments, employee entitlements and allowances, severance pay, and pension and medical benefits.

The $1,271 thousand decrease (2%) was made up of the following components:

  • A decrease of $654 thousand due to changes to the severance pay program. The accrued benefit obligation related to severance benefits continued to decrease as the benefits paid out to employees exceed benefits accrued during the fiscal year (i.e., there are fewer employees earning severance benefits in 2012-13 compared to in 2011-12);
  • A decrease of $431 thousand due to a reduction in the allowance for vacation pay due to a department-wide effort to increase the utilization of vacation leave;
  • A decrease of $331 thousand due to a decrease in the CAS’ portion of contributions to employee health and dental plans; and
  • Offset by an increase of $145 thousand due to other minor variances.

Accommodations: Accommodations expense was $25,835 thousand in 2012-13 ($26,919 thousand in 2011-12). This amount represents the value of accommodation services, including rent, provided without charge by PWGSC, a common service organization providing accommodation services to the government. The decrease of $1,084 thousand (4%) is principally due to additional costs being incurred in 2011-12 during relocation of staff to the designated Federal Judicial Building in the NCR, when rent was still being paid on the previous building at 434 Queen.

Professional and special services: Professional and special services expense was $7,911 thousand in 2012-13 ($8,585 thousand in 2011-12). The decrease of $674 thousand (8%) is composed of a $246 thousand decrease in management consulting costs related to the construction of the new data centre, a $200 thousand decrease in court related service contract costs (e.g., court ushers, court reporting, court registrars and transcripts), a $141 thousand decrease in legal costs, a $125 thousand decrease in protection services, offset by a $38 thousand increase resulting from other minor variances.

Transportation and telecommunications: Transportation and telecommunications expense was $2,434 thousand in 2012-13 ($2,559 thousand in 2011-12). The decrease of $125 thousand (5%) resulted primarily from a reduction in travel costs by $98 thousand due to a better use of videoconferencing, budget reduction, the relocation of CAS’ corporate functions to the designated Federal Judicial Building in the NCR, and other minor decreases totalling $27 thousand.

Materials and supplies: Material and supplies expense was $1,736 thousand in 2012-13 ($2,064 thousand in 2011-12). Material and supplies expense includes legal books, publications and subscriptions (except electronic subscriptions), as well as stationery and supplies. The decrease of $328 thousand (16%) is primarily due to changes to the Government-wide Chart of Accounts effective for fiscal year 2012-13 that led to electronic subscription costs being coded under the Information expense instead of the Materials and supplies expense. This change resulted in a decrease in Materials and supplies expenses of $191 thousand. In addition, there was a reduction in stationary and supplies costs by $104 thousand as a result of implementing greening initiatives, and other minor decreases of $33 thousand.

Rentals: Rentals expense was $1,405 thousand in 2012-13 ($1,023 thousand in 2011-12). The increase of $382 thousand (37%) is primarily due to changes to the Government-wide Chart of Accounts effective for fiscal year 2012-13 that led to rental of informatics equipment costs being coded under the Rentals expense instead of the Repairs and maintenance expense. This change resulted in an increase of $354 thousand. In addition, there were other minor increases totalling $28 thousand.

Amortization of tangible capital assets: Amortization expense was $674 thousand in 2012-13 ($621 thousand in 2011-12). Tangible capital assets are expected to yield benefits over several years. Consequently, their cost is amortized on a straight-line basis over the estimated useful life of each asset class. The increase of $53 thousand (9%) reflects the commencement of amortization of leasehold improvements and computer hardware that were put in use in 2012-13.

Information: Information expense was $417 thousand in 2012-13 ($131 thousand in 2011-12). The $286 thousand increase (218%) is primarily due to changes to the Government-wide Chart of Accounts effective for fiscal year 2012-13 that led to electronic subscription costs being coded under the Information expense instead of the Materials and supplies expense. This change resulted in an increase in Information expenses of $191 thousand. In addition, there was an increase in printing services of $109 thousand, offset by other minor decreases of $14 thousand.

Machinery and equipment: Machinery and equipment expense was $303 thousand in 2012-13 ($982 thousand in 2011-12). This expense category covers items with a unit cost of less than $5 thousand and includes informatics equipment, office equipment, furniture and parts, and motor vehicle parts. The decrease of $679 thousand (69%) is due to significant computer hardware and software procurement in 2011-12 in support of the construction of the data centre.

Repairs and Maintenance: Repair and maintenance expense was $245 thousand in 2012-13 ($747 thousand in 2011-12), a decrease of $502 thousand (67%). Of this decrease, $354 thousand related to changes to the Government-wide Chart of Accounts effective for fiscal year 2012-13, which led to rental of informatics equipment costs being coded under the Rentals expense instead of Repairs and maintenance. In addition, non-capital costs related to leasehold improvement projects decreased by $180 thousand, as a result of the one-time consolidation of corporate functions in the TDM Building in 2011‑12. These decreases were offset by other minor increases of $32 thousand.

Miscellaneous: Miscellaneous expense was $153 thousand in 2012-13 ($3 thousand in 2011‑12). This item includes losses on the disposal and write-down of tangible capital assets, interest on overdue supplier accounts, losses on foreign currency transactions, adjustments to the prior year’s payables at year-end (PAYE), and expenses incurred on behalf of Government. The latter relates to bad debts on Accounts Receivable held on behalf of Government. The write-down of tangible capital assets is the largest single contributor to this increase.

Revenues

CAS’ gross revenues were $5,611 thousand in 2012-13 ($4,395 thousand in 2011-12). CAS’ revenues fluctuate widely from year-to-year and consist almost entirely of revenues earned on behalf of Government. Such revenues are non-respendable by CAS and are deposited directly into the CRF. In 2012-13, these non-respendable revenues totalled $5,607 thousand ($4,388 thousand in 2011-12).

CAS’ net revenues were $4 thousand in 2012-13 ($7 thousand for 2011-12). This small item consists of revenues from Crown assets disposal, which are respendable.

EI Operating Account cost recoveries: EI Operating Account cost recoveries were $2,041 thousand in 2012-13 ($1,576 thousand in 2011-12). At the end of each fiscal year, CAS determines the cost associated with the administration of EI cases and allocates it to HRSDC, the department responsible for the EI account. Accordingly, HRSDC reports an expense in its financial statements and CAS reports an equivalent revenue item. This accounting exercise is intended to reflect the total cost of running the federal government's EI program and is strictly internal to the government.

Filing fees: Filing fees revenue was $1,901 thousand in 2012-13 ($1,644 thousand in 2011‑12). Filing fees are charged to register court documents pursuant to the legislation and Rules governing the Courts.

Fines: Fines revenue was $1,574 thousand in 2012-13 ($1,066 thousand in 2011-12). As noted previously, these fines are imposed by the Courts. Consequently, the total amount of fines revenue may vary significantly from year to year and cannot be predicted.

Miscellaneous: Miscellaneous revenue was $95 thousand in 2012-13 ($109 thousand in 2011-12). Miscellaneous revenue is composed of photocopy revenue, gains on disposals of crown assets, and other miscellaneous revenues.

Gross Revenues

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