Audited Financial Statements 2008-2009

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Office of the Privacy Commissioner of Canada


Statement of Management Responsibility

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2009 and all information contained in these statements rests with the management of the Office of the Privacy Commissioner of Canada. These financial statements have been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

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 Office’s financial transactions. Financial information submitted to the Public Accounts of Canada and included in the Office’s Departmental Performance Report is consistent with these financial statements.

Management maintains a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable, that the Office’s assets are safeguarded and that transactions are in accordance with the Financial Administration Act, are executed in accordance with prescribed regulations, within Parliamentary authorities, and are properly recorded to maintain accountability of Government funds. Management also seeks to ensure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility, and by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the Office.

The financial statements of the Office of the Privacy Commissioner of Canada have been audited by the Auditor General of Canada, the independent auditor for the Government of Canada.

(Original signed by)

Jennifer Stoddart
Privacy Commissioner of Canada

(Original signed by)

Tom Pulcine, CMA
Director General, Corporate Services and
Chief Financial Officer

Ottawa, Canada
July 17, 2009


Auditor’s Report

To the Speaker of the House of Commons and the Speaker of the Senate

I have audited the statement of financial position of the Office of the Privacy Commissioner of Canada as at 31 March 2009 and the statements of operations, equity of Canada and cash flow for the year then ended. These financial statements are the responsibility of the Office’s management. My responsibility is to express an opinion on these financial statements based on my audit.

I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In my opinion, these financial statements present fairly, in all material respects, the financial position of the Office as at 31 March 2009 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.

Further, in my opinion, the transactions of the Office that have come to my notice during my audit of the financial statements have, in all significant respects, been in accordance with the Financial Administration Act and regulations and the Privacy Act.

(Original signed by)

Sheila Fraser, FCA
Auditor General of Canada

Ottawa, Canada
17 July 2009


Statement of Financial Position

OFFICE OF THE PRIVACY COMMISSIONER OF CANADA

As at March 31 2009 2008
(in thousands of dollars)     (Restated,
see Note 3)
 

Assets

 
Financial assets
  Due from the Consolidated Revenue Fund 3,079   1,364
  Accounts receivable and advances (Note 5) 554   701
 
  Total financial assets 3,633   2,065
 
 
Non-financial assets
  Prepaid expenses 157   57
  Tangible capital assets (Note 6) 1,469   1,161
 
  Total non-financial assets 1,626   1,218
 
TOTAL 5,259   3,283
 
 

Liabilities and Equity of Canada

Liabilities
  Accounts payable and accrued liabilities 2,700   1,700
  Accrued employee salaries 863   363
  Vacation pay and compensatory leave 561   464
  Employee severance benefits (Note 7) 2,986   1,517
 
  Total liabilities 7,110   4,044
 
Equity of Canada (Note 10) (1,851)   (761)
 
TOTAL 5,259   3,283
 
Contractual obligations (Note 8)
 
The accompanying notes form an integral part of these financial statements.

(Original signed by)

Jennifer Stoddart
Privacy Commissioner of Canada

(Original signed by)

Tom Pulcine, CMA
Director General, Corporate Services and
Chief Financial Officer

Ottawa, Canada
July 17, 2009


Statement of Operations

OFFICE OF THE PRIVACY COMMISSIONER OF CANADA

For the year ended March 31 2009 2008
(in thousands of dollars)   (Restated,
see Note 3)
Expenses Compliance Public
Outreach
Research &
policy
development
Total Total
Operating expenses
  Salaries and employee benefits 8,670 3,283 2,927 14,880 10,962
  Professional and special services 3,580 1,099 943 5,622 3,831
  Accommodation 722 312 267 1,301 988
  Transportation and communications 364 282 317 963 909
  Amortization 222 96 82 400 370
  Information 32 540 63 635 412
  Repairs and maintenance 318 137 118 573 274
  Utilities, materials and supplies 86 32 31 149 126
  Rentals 51 19 13 83 64
  Equipment 351 157 130 638 193
  Other 55 24 22 101 4
 
  Total operating expenses 14,451 5,981 4,913 25,345 18,133
 
Contributions - - 358 358 451
 
Adjustment to prior years' expenses (99) (43) (87) (229) -
 
 
Net cost of operations 14,352 5,938 5,184 25,474 18,584
 
The accompanying notes form an integral part of these financial statements.

Statement of Equity of Canada

OFFICE OF THE PRIVACY COMMISSIONER OF CANADA

For the year ended March 31 2009 2008
(in thousands of dollars)     (Restated,
see Note 3)
Equity of Canada, beginning of the year (761)   (729)
  Change in accounting policy (Note 3) -   (245)
 
Equity of Canada, beginning of the year, restated (761)   (974)
  Net cost of operations (25,474)   (18,584)
  Net cash provided by Government (Note 4 (c)) 20,337   17,029
  Change in Due from Consolidated Revenue Fund 1,715   61
  Services received without charge from other government departments (Note 9) 2,332   1,707
Equity of Canada, end of the year (1,851)   (761)
The accompanying notes form an integral part of these financial statements.

Statement of Cash Flow

OFFICE OF THE PRIVACY COMMISSIONER OF CANADA

For the year ended March 31 2009 2008
(in thousands of dollars)     (Restated,
see Note 3)

Operating activities

 
Net cost of operations 25,474   18,584
 
Non-cash items:
Amortization of tangible capital assets (400)   (370)
Services received without charge (Note 9) (2,332)   (1,707)
 
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances (147)   9
Increase in prepaid expenses 100   40
Increase in liabilities (3,066)   (116)
 
Cash used by operating activities 19,629   16,440

Capital investment activities

 
Acquisition of tangible capital assets 708   589
Net cash provided by Government of Canada 20,337   17,029
The accompanying notes form an integral part of these financial statements.

Notes to the Financial Statements

OFFICE OF THE PRIVACY COMMISSIONER OF CANADA

1. Authority and objectives

The Office of the Privacy Commissioner of Canada (the Office), was created under the Privacy Act, which came into force on July 1, 1983. The Privacy Commissioner is an independent officer of Parliament appointed by the Governor-in-Council following approval of her nomination by resolution of the Senate and the House of Commons. The Office is listed under Schedule I.1 of the Financial Administration Act and is funded through annual appropriations. The Commissioner is accountable for, and reports directly to Parliament on the results achieved.

The objectives of the Office of the Privacy Commissioner of Canada are:

  • investigating complaints and conducting audits;
  • publishing information about personal information-handling practices in the public and private sectors;
  • conducting research into privacy issues; and
  • promoting awareness and understanding of privacy issues by the Canadian public.

2. Summary of significant accounting policies

These financial statements have been prepared in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

Significant accounting policies are as follows:

(a) Due from the Consolidated Revenue Fund
Due from the Consolidated Revenue Fund (CRF) represents the amount of cash that the Office is entitled to draw from the Consolidated Revenue Fund without further appropriations, in order to discharge its liabilities.

(b) Parliamentary appropriations
The Office of the Privacy Commissioner of Canada is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to the Office do not parallel financial reporting according to generally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the statement of operations and the statement of financial position are not necessarily the same as those provided through appropriations from Parliament. Note 4 provides a high-level reconciliation between the bases of reporting.

(c) Net cash provided by Government
The Office operates within the Consolidated Revenue Fund, which is administered by the Receiver General for Canada. All cash received by the Office is deposited to the CRF and all cash disbursements made by the Office 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 federal government.

(d) Expenses
Expenses are recorded on the accrual basis:

  • Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement.
  • Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
  • Services received without charge from other government departments are recorded as operating expenses at their estimated cost.

(e) Employee future benefits

  1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer pension plan administered by the Government of Canada. The Office’s contributions to the Plan are charged to expenses in the year incurred and represent the total obligation of the Office to the Plan. Current legislation does not require the Office to make contributions for any actuarial deficiencies of the Plan.
  2. 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.

(f) Accounts receivable
Accounts receivable are stated at amounts expected to be ultimately realized. A provision is made for receivables where recovery is considered uncertain.

(g) Tangible capital assets
All tangible capital assets and leasehold improvements having an initial cost of $2,500 or more are recorded at their acquisition cost.

The 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 3 years
Informatics hardware 3 years
Computer software 3 years
Other equipment 10 years
Leasehold improvements Lesser of useful life or term of the lease

(h) Measurement uncertainty
The preparation of these financial statements in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, 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 severance 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. Change in accounting policy

In 2008-09, the Office changed its accounting for capital assets. The Office has adopted a policy of capitalizing individual acquisitions having a cost of $2,500 or more. This represents a change, as in prior years, the Office capitalized collections of individual items with a combined invoice value of $2,500 or more. Management believes that this new policy provides more useful information. As a result, certain items previously recorded as capital assets no longer meet policy requirements.

This change was applied retrospectively. Consequently, the comparative financial statements presented for the year ended March 31, 2008 have been restated. The effect of the change is presented in the table below:

(in thousands of dollars) As previously
stated
Effect of the
adjustment
Revised
amount
Statement of Operations
  Amortization 467 (97) 370
  Equipment 53 140 193
  Total operating expenses 18,090 43 18,133
  Net cost of operations 18,541 43 18,584
 
Statement of Financial Position
  Tangible capital assets 1,449 (288) 1,161
  Total Assets 3,571 (288) 3,283
  Equity of Canada (473) (288) (761)
  Total Liabilities and Equity of Canada 3,571 (288) 3,283

4. Parliamentary appropriations

The Office receives most of its funding through annual Parliamentary appropriations. Items recognized in the statement of operations and the statement of financial position in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, the Office 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 appropriations used:

(in thousands of dollars) 2009 2008
      (Restated,
see Note 3)
 
Net cost of operations 25,474   18,584
 
Adjustments for items affecting net cost of operations but not affecting appropriations:      
Add (Less):      
  Services received without charge (2,332)   (1,707)
  Amortization on tangible capital assets (400)   (370)
  Previous years' accounts payable 99   78
  Vacation pay and compensatory leave (97)   (82)
  Employee severance benefits (1,469)   (53)
  Other 54   51
 
  21,329   16,501
 
Adjustments for items not affecting net cost of operations but affecting appropriations:      
Add (Less):      
  Acquisition of tangible capital assets 708   589
  Change in prepaid expenses 100   40
 
  808   629
Current year appropriations used 22,137   17,130

(b) Appropriations provided and used:

(in thousands of dollars) 2009   2008
 
  Vote 45 - Program expenditures 20,703   17,503
  Statutory contributions to employee benefit plans 1,664   1,453
 
  22,367   18,956
  Lapsed Appropriations: Operating (230)   (1,826)
 
Current year appropriations used 22,137   17,130

(c) Reconciliation of net cash provided by Government to current year appropriations used:

(in thousands of dollars) 2009   2008
 
Net cash provided by Government 20,337   17,029
Variation in accounts receivable and advances 147   (9)
Variation in accounts payable and accrued liabilities 1,000   (96)
Variation in accrued employee salaries 500   77
Other adjustments 153   129
 
Current year appropriations used 22,137   17,130

5. Accounts receivable and advances

The following table presents details of accounts receivable and advances:

(in thousands of dollars) 2009   2008
 
Receivables from other Federal Government departments and agencies 465   693
Receivables from external parties 88   7
Employee advances 1   1
 
  554   701

6. Tangible capital assets

Cost

Opening Balance Acquisitions Disposals Closing Balance
(in thousands of dollars) (Restated, see
Note 3)
     
Machinery and equipment - 4 - 4
Informatics hardware 1,652 326 (548) 1,430
Computer software 418 78 (27) 469
Other equipment 831 300 - 1,131
Leasehold improvements 262 - - 262
 
  3,163 708 (575) 3,296

Accumulated amortization

Opening Balance Amortization Disposals Closing Balance
(in thousands of dollars) (Restated, see
Note 3)
     
Machinery and equipment - 1 - 1
Informatics hardware 1,156 236 (548) 844
Computer software 372 36 (27) 381
Other equipment 390 82 - 472
Leasehold improvements 84 45 - 129
 
  2,002 400 (575) 1,827

Net book value

Opening Balance Closing Balance
(in thousands of dollars) (Restated, see
Note 3)
     
Machinery and equipment -     3
Informatics hardware 496     586
Computer software 46     88
Other equipment 441     659
Leasehold improvements 178     133
 
Net book value 1,161     1,469

Amortization expense for the year ended March 31, 2009 was $400,000 ($370,000 in 2008).

7. Employee Benefits

(a) Pension benefits
The Office’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/Québec Pension Plans benefits and they are indexed to inflation.

Both the employees and the Office contribute to the cost of the Plan. The 2008-09 expense amounts to $1,201,214 ($1,059,315 in 2007-08), which represents approximately 2.0 times (2.1 in 2007-08) the contributions by employees.

The Office’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 Office 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 appropriations. Information about the severance benefits, measured as at March 31, is as follows:

(in thousands of dollars) 2009   2008
 
Accrued benefit obligation, beginning of year 1,517   1,464
Expense for the year 1,625   282
Benefits paid during the year (156)   (229)
 
Accrued benefit obligation, end of year 2,986   1,517

8. Contractual obligations

The nature of the Office's activities can result in some large multi-year contracts and obligations whereby the Office will be obligated to make future payments when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

(in thousands of dollars) 2009-10 2010-11 2011-12 2012-13 2013-14
 
  844 13 5 - -
 

9. Related party transactions

The Office is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The Office enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the Office expensed $5,347,659 ($4,996,533 in 2008) from transactions with other government departments, agencies and Crown corporations. These expenses include services received without charge in the amount of $2,332,172 ($1,706,775 in 2008), as presented in part (a).

(a) Services received without charge:
During the year, the Office received without charge from other departments, accommodation, the employer’s contribution to the health and dental insurance plans, payroll services, and audit services. These services without charge have been recognized in the Office’s Statement of Operations as follows:

(in thousands of dollars) 2009   2008
 
Accommodations provided by Public Works and Government Services Canada 1,299   980
Contributions covering employer’s share of employees’ insurance premiums and expenditures paid by Treasury Board Secretariat 915   611
Payroll services provided by Public Works and Government Services Canada 6   4
Audit services provided by the Office of the Auditor General of Canada 112   112
 
  2,332   1,707

(b) Payables and receivables outstanding at year-end with related parties:

(in thousands of dollars) 2009   2008
 
Accounts receivable with other government departments and agencies 465   693
Accounts payable to other government departments and agencies 215   429

10. Equity of Canada

The Equity of Canada, which is currently in a deficit position, represents liabilities incurred by the Office, net of capital tangible assets and prepaid expenses, which have not yet been funded through appropriations. Significant components of this amount are employee severance benefits and vacation pay liabilities. These amounts are expected to be funded by appropriations in future years as they are paid.

11. Comparative information

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

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