Audited Financial Statements 2009-2010

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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, 2010 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.

Management is also supported and assisted by a program of internal audit services. The Office has an Internal Audit Committee. The responsibilities of the Committee are to provide the Commissioner with independent, objective advice, guidance and deliberation on the adequacy of the Office's control and accountability processes.

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 9, 2010


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 2010 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 2010 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
9 July 2010


Statement of Financial Position

OFFICE OF THE PRIVACY COMMISSIONER OF CANADA

As at March 31
(in thousands of dollars)
2010 2009
Assets
Financial assets
Due from the Consolidated Revenue Fund 1,709 3,079
Accounts receivable and advances (Note 4) 234 554
Total financial assets 1,943 3,633
 
Non-financial assets
Prepaid expenses 112 157
Tangible capital assets (Note 5) 1,356 1,469
Total non-financial assets 1,468 1,626
 
TOTAL 3,411 5,259
 
Liabilities and Equity of Canada
Liabilities
Accounts payable and accrued liabilities 1,727 1,727
Accrued employee salaries 164 863
Vacation pay and compensatory leave 590 561
Employee severance benefits (Note 6) 2,683 2,986
Other liabilities 8 -
Total liabilities 5,172 7,110
 
Equity of Canada (Note 8) (1,761) (1,851)
 
TOTAL 3,411 5,259
 
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 9, 2010


Statement of Operations

OFFICE OF THE PRIVACY COMMISSIONER OF CANADA

For the year ended March 31
(in thousands of dollars)
2010 2009
Expenses Compliance Public
Outreach
Research &
policy
development
Internal
Services
Total Total
 
Operating expenses
Salaries and employee benefits 6,502 2,256 2,606 3,709 15,073 14,744
Professional and special services 2,524 411 659 1,345 4,939 5,579
Accommodation 614 215 249 286 1,364 1,301
Transportation and communications 224 183 194 193 794 963
Repairs and maintenance 223 2 2 425 652 573
Information 2 348 111 27 488 635
Amortization 256 52 49 118 475 400
Equipment 173 35 38 92 338 638
Utilities, materials and supplies 23 8 14 102 147 149
Rentals (2) 7 6 72 83 83
Other - - 12 14 26 101
 
Total operating expenses 10,539 3,517 3,940 6,383 24,379 25,166
 
Contributions - - 429 - 429 308
 
Net cost of operations 10,539 3,517 4,369 6,383 24,808 25,474
 
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
(in thousands of dollars)
2010 2009
 
Equity of Canada, beginning of the year (1,851) (761)
Net cost of operations (24,808) (25,474)
Net cash provided by Government (Note 3 (c)) 23,748 20,337
Change in Due from Consolidated Revenue Fund (1,370) 1,715
Services received without charge from other government departments (Note 7) 2,520 2,332
Equity of Canada, end of the year (1,761) (1,851)
 
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
(in thousands of dollars)
2010 2009
 
Operating activities
 
Net cost of operations 24,808 25,474
 
Non-cash items:
Amortization of tangible capital assets (475) (400)
Services received without charge (Note 7) (2,520) (2,332)
Loss on disposal of tangible capital assets (13) -
 
Variations in Statement of Financial Position:
Decrease in accounts receivable and advances (320) (147)
Increase (decrease) in prepaid expenses (45) 100
Decrease (increase) in liabilities 1,938 (3,066)
Cash used by operating activities 23,373 19,629
 
Capital investment activities
 
Acquisition of tangible capital assets 375 708
 
Net cash provided by Government of Canada 23,748 20,337
 
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 3 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 Office does not capitalize intangible assets.

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

(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 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. 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) 2010 2009
Net cost of operations 24,808 25,474
 
Adjustments for items affecting net cost of operations but not affecting appropriations:
Add (Less):
Services received without charge (2,520) (2,332)
Amortization on tangible capital assets (475) (400)
Previous years' accounts payable 100 99
Vacation pay and compensatory leave (29) (97)
Employee severance benefits 303 (1,469)
Other 123 54
  22,310 21,329
Adjustments for items not affecting net cost of operations but affecting appropriations:
Add (Less):
Acquisition of tangible capital assets 375 708
Change in prepaid expenses (45) 100
  330 808
 
Current year appropriations used 22,640 22,137

(b) Appropriations provided and used:

(in thousands of dollars) 2010 2009
Vote 45 - Program expenditures 21,691 20,703
Statutory contributions to employee benefit plans 2,119 1,664
  23,810 22,367
Lapsed Appropriations: Operating (1,170) (230)
Current year appropriations used 22,640 22,137

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

(in thousands of dollars) 2010 2009
Net cash provided by Government 23,748 20,337
Variation in accounts receivable and advances 320 147
Variation in accounts payable and accrued liabilities (973) 1,000
Variation in accrued employee salaries (699) 500
Other adjustments 244 153
Current year appropriations used 22,640 22,137

4. Accounts receivable and advances

The following table presents details of accounts receivable and advances:

(in thousands of dollars) 2010 2009
Receivables from other Federal Government departments and agencies 154 465
Receivables from external parties 79 88
Employee advances 1 1
  234 554

5. Tangible capital assets

Cost
(in thousands of dollars)
Opening Balance Acquisitions Disposals Closing
Balance
Machinery and equipment 4 - - 4
Informatics hardware 1,430 220 (13) 1,637
Computer software 469 27 (230) 266
Other equipment 1,131 128 (93) 1,166
Leasehold improvements 262 - - 262
  3,296 375 (336) 3,335
Accumulated
amortization
(in thousands of dollars)
Opening
Balance
Amortization Disposals Closing
Balance
Machinery and equipment 1 2 - 3
Informatics hardware 844 275 (10) 1,109
Computer software 381 48 (230) 199
Other equipment 472 110 (83) 499
Leasehold improvements 129 40 - 169
  1,827 475 (323) 1,979
Net book value
(in thousands of dollars)
Opening
Balance
Closing
Balance
Machinery and equipment 3 1
Informatics hardware 586 528
Computer software 88 67
Other equipment 659 667
Leasehold improvements 133 93
Net book value 1,469 1,356
Amortization expense for the year ended March 31, 2010 was $475,000 ($400,000 in 2009).

6. 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 2009-10 expense amounts to $1,530,256 ($1,201,214 in 2008-09), which represents approximately 1.9 times (2.0 in 2008-09) 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) 2010 2009
Accrued benefit obligation, beginning of year 2,986 1,517
Expense for the year (193) 1,625
Benefits paid during the year (110) (156)
Accrued benefit obligation, end of year 2,683 2,986

7. 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 $4,559,988 ($5,347,659 in 2009) from transactions with other government departments, agencies and Crown corporations. These expenses include services received without charge in the amount of $2,519,813 ($2,332,172 in 2009), 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) 2010 2009
Accommodations provided by Public Works and Government Services Canada 1,364 1,299
Contributions covering employer's share of employees' insurance premiums and expenditures paid by Treasury Board Secretariat 1,019 915
Payroll services provided by Public Works and Government Services Canada 9 6
Audit services provided by the Office of the Auditor General of Canada 128 112
  2,520 2,332

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

(in thousands of dollars) 2010 2009
Accounts receivable with other government departments and agencies 154 465
Accounts payable to other government departments and agencies 66 215

8. 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.

9. Comparative information

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

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