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RPP 2011-12 Future-oriented Financial Statements


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Future-oriented Statement of Operations (Unaudited)
For the years ending March 31, 2011 and March 31, 2012

Statement of Management Responsibility

Responsibility for the compilation, content, and presentation of the accompanying future-oriented financial information for the years ending March 31, 2011 and March 31, 2012 rests with departmental management. The future-oriented financial information has been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector. The future-oriented financial information is submitted for Part III of Estimates (Report on Plans and Priorities), and will be used in the department’s Departmental Performance Report to compare with actual results.

Management is responsible for the integrity and objectivity of the information contained in future-oriented financial information and for the process of developing assumptions. Assumptions and estimates are based upon information available and known to management at the time of development, reflect current business and economic conditions, and assume a continuation of current governmental priorities and consistency in departmental mandate and strategic objectives. Much of the future-oriented financial information is based on these assumptions, best estimates, and judgement and gives due consideration to materiality. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. However, as with all such assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.

The actual results achieved for the fiscal years covered in the accompanying future-oriented financial information will vary from the information presented and the variations may be material.

 

The original was signed by

_________________________                      _____________________________
Suzanne Labbé                                                    Francine Côté CA, CISA
A/Chief Administrator                      Deputy Chief Administrator, Corporate Services 
                                                                   Chief Financial Officer (CFO)

 

Date Signed:  January 7, 2011
Ottawa, Ontario

 

Courts Administration Service
Future-oriented Statement of Operations (Unaudited)
For the Years Ending March 31
(in thousands of dollars)

Future-oriented Statement of Operations

[D]

Information for the year ending March 31, 2011 includes actual amounts from April 1, 2010 to November 30, 2010.

Segmented information (Note 8)

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

 

Courts Administration Service

Notes to the Future-oriented Financial Statements (Unaudited)
(in thousands of dollars)

1.         Authority and Objectives

The Courts Administration Service (CAS), which was established on July 2, 2003 by the Courts Administration Service Act, S.C. 2002, c.8, is responsible for providing 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 role of the Courts Administration Service is to provide administrative services to four courts of law: the Federal Court of Appeal, the Federal Court, the Court Martial Appeal Court of Canada and the Tax Court of Canada. 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 and 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 and court attendants, and library personnel. The services provided include research, documentation, revision, editing, and linguistic and terminological advice, the object of which is to assist the judges in preparing their judgements and reasons for judgement.
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 those activities and resources that apply across an organization but also play a key role as Court enablers whereby services are driven by operational requirements.

2.         Significant assumptions

These future-oriented financial statements have been prepared on the basis of the government priorities and the plans of the department as described in the Report on Plans and Priorities.

The main assumptions are as follows:

  • The department's activities will remain substantially the same as for the previous year.
  • Expenses and revenues (excluding Fine Revenue), including the determination of amounts internal and external to the government, are based on historical experience and professional judgement. The general historical pattern is expected to continue.
  • CAS will estimate fine revenue for 2010‑11 based on payments made and court documents issued to date. Fine revenue for 2011‑12 will be forecasted based on a 3 year average. Given their nature, actual amounts collected from fines from year to year could vary considerably from these estimates.
  • The Public Service Alliance of Canada (PSAC) collective agreement ratified on December 2, 2010 included an optional severance pay cash out for PSAC members.  At this time, management does not have sufficient information to estimate the monetary impact of this new provision.  As a result, there will likely be a variance between forecasted and actual severance pay liability and benefits paid in 2011‑12.
  • Bill C-11 amends the Federal Courts Act to increase the number of Federal Court judges. Actual use of Bill C-11 funding for 2010‑11 and 2011‑12 will be entirely dependant on the timing of judicial appointments.

These assumptions are adopted as at January 7, 2011.

3.         Variations and Changes to the Forecast Financial Information

In preparing these future-oriented financial statements, the Courts Administration Service has made estimates and assumptions concerning the future. These estimates and judgements may differ from the subsequent actual results. Estimates and judgements are continually evaluated and are based on historical experience, as well as other factors, including expectations of future events that are believed to be reasonable under the circumstances.

While the assumptions used to forecast final results for the remainder of 2010‑11 and for 2011‑12, are reasonable, actual results achieved for both years are likely to vary from the forecast information presented, and such variation could be material.

Factors that could lead to material differences between the future-oriented financial statements and the actual financial statements include:

  1. The timing and amounts of acquisitions and disposals of property, plant and equipment may affect gains/losses and amortization expense. 
  2. Further changes to the operating budget through additional new initiatives or technical adjustments.

Once the Report on Plans and Priorities is presented, Courts Administration Service will not be updating the forecasts for any changes to authorities or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

4.         Summary of Significant Accounting Policies

The future-oriented financial statements have been prepared in accordance with Treasury Board accounting policies stated below, which are based on Canadian generally accepted accounting principles for the public sector. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian generally accepted accounting principles.

            Significant accounting policies are as follows:

(a)        Parliamentary authorities – The Courts Administration Service is financed by the Government of Canada through Parliamentary authorities. The cash accounting basis is used to recognize transactions affecting Parliamentary authorities. The future-oriented financial statements are based on accrual accounting. Consequently, items presented in the Future-oriented Statement of Operations are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a high-level reconciliation between the bases of reporting.

(b)        Revenues – Revenues are presented on the accrual basis:

  • Revenues consist primarily of filing fees, fines and sales of copies of filed documentation, including copies of judgements and/or orders. All such revenue is non-respendable, meaning it cannot be spent by the Courts Administration Service and is deposited to the Consolidated Revenue Fund (CRF). 
  • All revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.
  • Employment Insurance (EI) Account of Canada:  At the end of each fiscal year, CAS determines the cost associated with the administration of Employment Insurance cases. The total cost allocated by CAS for handling EI cases are expended against Human Resources and Skills Development Canada (HRSDC), the department responsible for the EI account. As such, HRSDC would show an EI expense and the Courts Administration Service would show an equivalent, non‑respendable revenue item. The purpose of this accounting exercise is to more accurately reflect the total cost of running the federal government's EI program and it is strictly internal to the government.   

(c)        Expenses – Expenses are presented on the accrual basis:

  • Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
  • Services provided without charge by other government departments for accommodation, the employer’s contribution to the health and dental insurance plans, legal services and workers’ compensation are recorded as operating expenses at their estimated cost.

(d)        Employee future benefits

  • Pension benefits:  Eligible employees participate in the Public Service Pension Plan (Public Service Superannuation Act), a multi-employer plan administered by the Government of Canada. 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. Current legislation does not require the Courts Administration Service to make contributions for any actuarial deficiencies of the Plan.      
  • Severance benefits:  Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. 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.  The PSAC collective agreement ratified on December 2, 2010 included an optional severance pay cash out for members. As a result, there will likely be a variance between forecasted and actual severance pay liability and benefits paid in 2011‑12.

(e)        Contingent Liabilities – Contingent liabilities are potential liabilities which 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 an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the future-oriented financial statements.

(f)         Foreign currency transactions – Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in a foreign currency are translated using exchange rates in effect on March 31st.

(g)        Tangible Capital assets – All tangible capital assets having an initial cost of $5,000 or more are recorded at their acquisition cost. 

Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the assets as follows:

Asset Class

Amortization period

Machinery & Equipment

10 years

Informatics Hardware

3 years

Informatics Software

4 years

Furniture & Fixtures

10 years

Motor Vehicles

10 years

Leasehold Improvements

Lesser of the remaining term of lease or useful life of the improvement

Work in progress

Once in service, in accordance with asset type

(h)        Measurement uncertainty – The preparation of the future-oriented financial information requires management to make estimates and assumptions that affect the reported amounts of all the revenues and expenses reported in the future-oriented financial statements. Assumptions are based upon information available and known to management at the time of development, reflect current business and economic conditions, and assume a continuation of current governmental priorities and consistency in departmental mandate and strategic objectives. At the time of preparation of these future-oriented financial statements, management believes the estimates and assumptions to be reasonable.  Nonetheless, as with all such estimates and assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.

5.         Parliamentary Authorities

The Courts Administration Services receives most of its funding through annual Parliamentary authorities. Items recognized in the statement of operations 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)        Authorities requested
Forcast authorities available

[D]

Estimated authorities requested for the year ending March 31, 2011 include amounts presented in the 2010‑11 Main Estimates and Supplementary Estimates (A) and (B), planned for presentation in Supplementary Estimates (C) and estimates of amounts to be allocated at year-end from Treasury Board central votes. Forecast authorities requested for the year ending March 31, 2012 are the planned spending amounts presented in the 2011‑12 Report on Plans and Priorities.

(b)        Reconciliation of net cost of operations to requested authorities

Reconciliation of net cost of operations

[D]

6.         Employee 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 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 Courts Administration Service contribute to the cost of the Plan. The forecast expenses are $4,730 in 2010‑11 and $5,017 in 2011‑12, representing approximately 1.9 times the contributions of 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 of Canada, 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 final salary. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, estimated as at March 31, is as follows:

Severance benefits

[D]

7.         Related party transactions

The Courts Administration Service is related as a result of common ownership to all Government of Canada 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.  During the year, the Courts Administration Service received services which were obtained without charge from other Government departments as disclosed below.   

(a)        Common services provided without charge by other government departments

During the year the Courts Administration Service department is forecasted to receive without charge from other departments, accommodations, legal fees, workers’ compensation and the employer’s contribution to the health and dental insurance plan. These services provided without charge have been recognized in the Courts Administration Service’s future-oriented Statement of Operations as follows:

Common services provided  without charge by other government departments

[D]

**Note:  Accommodation costs coded under the Judicial activities include:  the space of the court rooms, the Judges’ offices, 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 as an expense in the Courts Administration Service’s future-oriented Statement of Operations.

(b)        Other transactions with related parties
Other transactions with related parties

[D]

Included in Revenues – Other Government departments and agencies is the Employment Insurance account Cost Recoveries account, which represents $1,679 in 2010‑11 and $1,995 in 2011‑12 (Note 4(b)).

8.         Segmented information

Presentation by segment is based on the Courts Administration Service’s program activity architecture. The presentation is based on the same accounting policies as described in the Summary of significant accounting policies in Note 4. The following table presents the expenses incurred and revenues generated for the program activities, by major types of expenses and revenues. The segmented results for the period are as follows:

Net Cost of Operations

[D]