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RPP 2012-13 Future-oriented Financial Statements


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Statement of Management Responsibility

Responsibility for the compilation, content, and presentation of the accompanying future-oriented financial information for the years ending March 31, 2012 and March 31, 2013 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 Courts Administration Service’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.

____________________
Daniel Gosselin, FCA
Chief Administrator

Ottawa, Ontario
May 8, 2012
_______________________
Francine Côté, CA, CISA
Chief Financial Officer

 

 

 

 

2011-12 Estimated Results and 2012-13 Planned Results Narrative

Future-oriented Statement of Financial Position (Unaudited)

As at March 31

(in thousands of dollars)

  Estimated Results
2012
Planned Results
2013
ASSETS
Financial assets
Due from the Consolidated Revenue Fund 8,030 7,655
Accounts receivable and employee advances (Note 6) 1,426 1,426
Total financial assets 9,456 9,081
Non-financial assets
Tangible capital assets (Note 7) 5,892 6,628
Total non-financial assets 5,892 6,628
Total Assets 15,348 15,709
LIABILITIES
Accounts payable and accrued liabilities (Note 8) 3,875 3,875
Vacation pay and compensatory leave 1,842 1,864
Deposit accounts (Note 9) 5,575 5,201
Employee future benefits (Note 10) 3,205 2,417
Total liabilities 14,497 13,357
EQUITY OF CANADA 851 2,352
Total Liabilities and Equity of Canada 15,348 15,709

Information for the year ending March 31, 2012 includes actual amounts from April 1, 2011 to December 31, 2011.

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

____________________
Daniel Gosselin, FCA
Chief Administrator

Ottawa, Ontario
May 8, 2012
_______________________
Francine Côté, CA, CISA
Chief Financial Officer

 

 

 

 

Future-oriented Statement of Operations (Unaudited)

For the year ending March 31

(in thousands of dollars)

  Estimated
Results
2012
Planned Results
2013
EXPENSES
Judicial Services 42,009 43,343
Registry Services 34,048 32,441
Internal Services 23,381 21,156
Total Expenses 99,438 96,940
REVENUES
Judicial Services 461 454
Registry Services 2,925 7,455
Internal Services 389 385
Total Revenues 3,775 8,294
Net cost of operations 95,663 88,646

Information for the year ending March 31, 2012 includes actual amounts from April 1, 2011 to December 31, 2011.

Segmented information (Note 12)

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


Future-oriented Statement of Equity of Canada (Unaudited)

For the year ending March 31

(in thousands of dollars)

  Estimated
Results 2012
Planned Results 2013
Equity of Canada, beginning of year (5,943) 851
Net cost of operations (95,663) (88,646)
Net cash provided by Government 71,232 60,226
Change in due from the Consolidated Revenue Fund 389 (375)
Services provided without charge by other government departments (Note 11) 30,836 30,296
Equity of Canada, end of year 851 2,352

Information for the year ending March 31, 2012 includes actual amounts from April 1, 2011 to December 31, 2011.

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

Future-oriented Statement of Cash Flow (Unaudited)

For the year ending March 31

(in thousands of dollars)

  Estimated
Results 2012
Planned Results 2013
OPERATING ACTIVITIES
Net cost of operations 95,663 88,646
Non-cash items:
Amortization of tangible capital assets (Note 7) (590) (1,183)
Services provided without charge by other government departments (Note 11) (30,836) (30,296)
Loss on disposal and write-down of tangible capital assets (5) -
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and employee advances (164) -
Increase (decrease) in prepaid expenses (4) -
(Increase) decrease in accounts payable and accrued liabilities (628) -
(Increase) decrease in vacation pay and compensatory leave (22) (22)
(Increase) decrease in deposit accounts 374 374
(Increase) decrease in employee future benefits 5,476 788
Cash used in operating activities 69,264 58,307
CAPITAL INVESTING ACTIVITIES
Acquisitions of tangible capital assets (Note 7) 1,968 1,919
Cash used in capital investing activities 1,968 1,919
Net cash provided by Government of Canada 71,232 60,226

Information for the year ending March 31, 2012 includes actual amounts from April 1, 2011 to December 31, 2011.

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

Notes to the Future-oriented Financial Statements (Unaudited)

For the year ending March 31

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 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"). 

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, editing, 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. Methodology and significant assumptions

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

The main assumptions are as follows:

  1. The Courts Administration Service's activities will remain substantially the same as for the previous year.
  2. Assets, liabilities, 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.
  3. CAS will estimate fine revenue for 2011-12 based on payments made and court documents issued to date. Fine revenue for 2012-13 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.
  4. The Public Service Alliance of Canada (PSAC) collective agreement ratified on December 2, 2010 included an optional severance pay cash out for PSAC members. It is expected that all other expired and expiring collective agreements will include provisions to eliminate accumulation of severance for voluntary termination and to offer immediate payouts of severance already accumulated. The forecast of cumulative severance liquidation payments was based on the assumptions that payouts of accumulated severance will start within 3 months of signing of the agreement and occur evenly over the following 6 months and that 75% of those eligible will opt for an immediate cash-out.
  5. Bill C-11 amends the Federal Courts Act to increase the number of Federal Court judges. Actual use of Bill C-11 funding for 2011-12 and 2012-13 will be entirely dependant on the timing of judicial appointments.
  6. Estimated year end information for 2011-12 is used as the opening position for the 2012-13 planned results.
  7. Following guidance from the Treasury Board Secretariat, information on deficit reduction action plan measures are not included in these future-oriented financial statements.

These assumptions are adopted as at March 8, 2012.

3. Variations and changes to the forecast financial information

While every attempt has been made to forecast final results for the remainder of 2011-12 and for 2012-13, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing these future-oriented financial statements, the Courts Administration Service has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions 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.

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.
  3. Implementation of new collective agreements.
  4. The timing and amounts of fine revenue.
  5. The timing and monetary impact of the Deficit Reduction Action Plan.

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

These future-oriented financial statements have been prepared in accordance with the Treasury Board accounting policies in effect for the 2011-12 fiscal year. These accounting policies, stated below, 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. 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 Future-oriented Statement of Operations and the Future-oriented Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a reconciliation between the bases of reporting.

(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 the CRF
Amounts due from the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that the Courts Administration Service is entitled to draw from the CRF without further parliamentary expenditure authorities to discharge its liabilities.

(d) Revenues
Revenues are recorded on an accrual basis:
  • 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 occurred that gave rise to the revenues.
  • Employment Insurance (EI) Operating Account: 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 more accurately reflect the total cost of running the federal government's EI program and it is strictly internal to the government. 
(e) Expenses
Expenses are recorded on an 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, legal services, the employer's contribution to the health and dental insurance plans and workers' compensation coverage 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 represents the total 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.
(g) Accounts receivables
Accounts receivables are stated at the lower of cost and net recoverable value; a valuation allowance is recorded for receivables where recovery is considered uncertain.

(h) 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 at year-end. Gains and losses resulting from foreign currency transactions are included in Registry Services and Internal Services expenses and Registry Services revenues on the future-oriented statement of operations with the exception of the foreign exchange gain or loss relating to a long-term foreign currency denominated monetary item which is recognized in the future-oriented financial statements, deferred and amortized to revenue / expense over the remaining life of the monetary item.

(i) Tangible capital assets
All tangible capital assets 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 assets as follows:

Asset class Amortization Period
Machinery and equipment 10 years
Computer hardware 3 years
Computer software 4 years
Furniture and fixtures 10 years
Motor 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.

5. Parliamentary authorities

The Courts Administration Service receives its funding through annual Parliamentary authorities. Items recognized in the Future-oriented Statements of Operations and 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)

  Estimated
Results 2012
Planned Results 2013
Net cost of operations 95,663 88,646
Adjustments for items affecting net cost of operations but not affecting authorities:
Add (Less):
Services provided without charge by other government departments (30,836) (30,296)
Amortization of tangible capital assets (590) (1,183)
Decrease (increase) in vacation pay and compensatory leave (22) (22)
Decrease (increase) in employee future benefits 5,476 788
Loss on disposal and write-down of tangible capital assets (5) -
Revenue not available for spending 3,775 8,294
Refund of previous year expenditures 16 -
  (22,186) (22,419)
Adjustments for items not affecting net cost of operations but affecting authorities:
Add (Less):
Acquisition of tangible capital assets 1,968 1,919
Variation in advances 1 -
Variation in prepaid expenses (4) -
  1,965 1,919
Current year authorities used 75,442 68,146

(b) Authorities provided and used

(in thousands of dollars)

  Estimated
Results 2012
Planned Results 2013
Authorities provided:
Vote 30 - Program expenditures 71,483 60,681
Statutory authorities 8,364 7,465
Less:
Lapsed authorities (4,405) -
Current year authorities used 75,442 68,146

Estimated authorities requested for the year ending March 31, 2012 include amounts presented in the 2011-12 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, 2013 are the planned spending amounts presented in the 2012-13 Report on Plans and Priorities.

6. Accounts receivable and employee advances

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

(in thousands of dollars)

  Estimated
Results 2012
Planned Results 2013
Receivables from other government departments and agencies 1,386 1,386
Receivables from external parties 29 29
Employee advances 12 12
  1,427 1,427
Allowance for doubtful accounts on receivables from external parties (1) (1)
  1,426 1,426

7. Tangible capital assets

Cost

(in thousands of dollars)

  Opening
Balance
Acquisitions Transfers,
Ajustments,
Disposals
and
Write-Offs
Closing
Balance
Machinery and equipment 693 240 - 933
Computer hardware 3,884 481 - 4,365
Computer software 1,240 313 - 1,553
Furniture and fixtures 776 - - 776
Motor vehicles 428 30 - 458
Assets under construction - Computer software 347 - - 347
Assets under construction - Leasehold improvements 211 - -211 -
Leasehold improvements 3,054 855 211 4,120
  10,633 1,919 - 12,552

Accumulated amortization

(in thousands of dollars)

  Opening
Balance
Acquisitions Transfers,
Ajustments,
Disposals
and
Write-Offs
Closing
Balance
Machinery and equipment 624 37 - 661
Computer hardware 2,579 736 - 3,315
Computer software 312 187 - 499
Furniture and fixtures 746 30 - 776
Motor vehicles 233 37 - 270
Leasehold improvements 247 156 - 403
  4,741 1,183 - 5,924

Net book value

(in thousands of dollars)

  2012 2013
Machinery and equipment 69 272
Computer hardware 1,305 1,050
Computer software 928 1,054
Furniture and fixtures 30 -
Motor vehicles 195 188
Assets under construction - Computer software 347 347
Assets under construction - Leasehold improvements 211 -
Leasehold improvements 2,807 3,717
  5,892 6,628

Disposals of assets under construction represent assets that were put into use in the year and have been transferred to the other capital asset classes as applicable.

Forecasted amortization expense for the year ending March 31, 2012 is $590,449 (2012-13 is $1,183,017).

8. Accounts payable and accrued liabilities

The following table presents details of accounts payable and accrued liabilities:

(in thousands of dollars)

  Estimated
Results 2012
Planned Results 2013
Accounts payable to other government departments and agencies 1,229 1,229
Accounts payable to external parties 1,577 1,577
  2,806 2,806
Accrued liabilities 1,069 1,069
  3,875 3,875

9. 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 & 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)

  Estimated
Results 2012
Planned Results 2013
Balance, beginning of year 5,949 5,575
Receipts and other credits 3,746 3,746
Disbursements and other charges (4,120) (4,120)
Balance, end of the year 5,575 5,201

10. 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 forecasted expense amounts to $6,013,659 ($5,367,036 in 2012-13), which represents approximately 1.9 times (1.9 times in 2012-13) 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 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, measured as at March 31, is as follows:

(in thousands of dollars)

  Estimated
Results 2012
Planned Results 2013
Accrued benefit obligation, beginning of year 8,681 3,205
Expense for the year 644 285
Benefits paid during the year (6,120) (1,073)
Accrued benefit obligation, end of year 3,205 2,417

11. 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, legal services, 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 as follows:

(in thousands of dollars)

  Estimated
Results 2012
Planned Results 2013
Accommodation (1) 26,918 26,616
Employer's contribution to the health and dental insurance plans 3,874 3,634
Workers' compensation 44 46
Legal services - -
  30,836 30,296

(1)  Note:  Accommodation costs coded under the Judicial activities include the space of the courtrooms, the Judges chambers, 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.

(b) Other transactions with related parties

(in thousands of dollars)

  Estimated
Results 2012
Planned Results 2013
Revenues - Other government departments and agencies 1,378 1,597
Expenses - Other government departments and agencies 11,100 10,858

12. 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 Note 2. Summary of significant accounting policies. The following table presents the expenses incurred and revenues generated for the main program activities, by major object of expenses and by major type of revenues. The segment results for the period are as follows:

(in thousands of dollars)

  Estimated
Results
2012
Judicial
Services
2013
Registry
Services
2013
Internal
Services
2013
Planned Results
2013
EXPENSES
Salaries and employee benefits 54,647 16,907 22,869 13,353 53,129
Accommodations (Note 11) 26,918 20,228 5,057 1,331 26,616
Professional and special services 9,285 3,437 3,441 1,903 8,781
Transportation and telecommunications 2,601 524 462 1,505 2,491
Materials and supplies 2,083 1,872 158 258 2,288
Machinery and equipment 993 91 75 709 875
Rentals 1,026 141 124 521 786
Amortization of tangible capital assets 590 41 146 996 1,183
Repairs and maintenance 1,100 53 27 538 618
Information 129 34 74 27 135
Miscellaneous 66 15 8 15 38
Total expenses 99,438 43,343 32,441 21,156 96,940
REVENUES
Fines 1,012 -   5,524 -   5,524
Employment Insurance Operating Account cost recoveries (Note 4(d)) 1,233 454 394 385 1,233
Filing fees 1,436 -   1,446 -   1,446
Photocopies 91 -   91 -   91
Miscellaneous revenues 3 -   -   -   -  
Total revenues 3,775 454 7,455 385 8,294
Net cost of operations 95,663 42,889 24,986 20,771 88,646