Audited Financial Statements 2010-2011

This page has been archived on the Web

Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.

Office of the Privacy Commissioner of Canada


Statement of Management Responsibility Including Internal Control over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2011 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 is also responsible for maintaining an effective system of internal control over financial reporting designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training, and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the Office; and through conducting an annual assessment of the effectiveness of the system of internal control over financial reporting.

An assessment for the year ended March 31, 2011 was completed in accordance with the Policy on Internal Control and the results and action plans are summarized in the annex.

The system of internal control over financial reporting is designed to mitigate risks to a reasonable level based on an on-going process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

The effectiveness and adequacy of the Office's system of internal control was reviewed by the Internal Audit Committee, which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting, and which recommends the financial statements to the Commissioner.

The Office of the Auditor General, the independent auditor for the Government of Canada has expressed an opinion on the fair presentation of the financial statements of the Office of the Privacy Commissioner of Canada which does not include an audit opinion on the annual assessment of the effectiveness of the Office's internal controls over financial reporting.

(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
August 2, 2011


Independent Auditor’s Report

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

Report on the Financial Statements

I have audited the accompanying financial statements of the Office of the Privacy Commissioner of Canada, which comprise the statement of financial position as at 31 March 2011, and the statement of operations, statement of equity of Canada and statement of cash flow for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

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 comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimatesmade by management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

In my opinion, the financial statements present fairly, in all material respects, the financial position of the Office of the Privacy Commissioner of Canada as at 31 March 2011, and the results of its operations and its cash flows for the year then ended in accordance with Canadian public sector accounting standards.

Report on Other Legal and Regulatory Requirements

In my opinion, the transactions of the Office of the Privacy Commissioner of Canada 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)

John Wiersema, FCA
Interim Auditor General of Canada

2 August 2011
Ottawa, Canada


Statement of Financial Position

OFFICE OF THE PRIVACY COMMISSIONER OF CANADA

As at March 31
(in thousands of dollars)
2011 2010
Assets
Financial assets
Due from the Consolidated Revenue Fund 3,004 1,709
Accounts receivable and advances (Note 4) 619 234
Total financial assets 3,623 1,943
 
Non-financial assets
Prepaid expenses 124 112
Tangible capital assets (Note 5) 1,674 1,356
Total non-financial assets 1,798 1,468
 
TOTAL 5,421 3,411
 
Liabilities and Equity of Canada
Liabilities
Accounts payable and accrued liabilities 3,392 1,727
Accrued employee salaries 285 164
Vacation pay and compensatory leave 508 590
Employee severance benefits (Note 6) 2,650 2,683
Other liabilities - 8
Total liabilities 6,835 5,172
Equity of Canada (Note 9) (1,414) (1,761)
TOTAL 5,421 3,411
Contractual obligations (Note 7)
The accompanying notes form an integral part of these financial statements.

Approved by:

(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
August 2, 2011


Statement of Operations

OFFICE OF THE PRIVACY COMMISSIONER OF CANADA

For the year ended March 31
(in thousands of dollars)
2011 2010
Compliance $11,131 $10,539
Research & Policy Development 3,721 4,369
Public Outreach 3,612 3,517
Internal Services 6,348 6,383
Net cost of operations 24,812 24,808
 
Segmented information (note 11)
 
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)
2011 2010
Equity of Canada, beginning of the year (1,761) (1,851)
Net cost of operations (24,812) (24,808)
Net cash provided by Government (Note 3 (c)) 21,359 23,748
Change in Due from Consolidated Revenue Fund 1,295 (1,370)
Services received without charge from other government departments (Note 8) 2,505 2,520
Equity of Canada, end of the year (1,414) (1,761)
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
(in thousands of dollars)
2011 2010
Operating activities
Net cost of operations 24,812 24,808
Non-cash items:
Amortization of tangible capital assets (454) (475)
Services received without charge (Note 8) (2,505) (2,520)
Loss on disposal of tangible capital assets (95) (13)
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances 385 (320)
Increase (decrease) in prepaid expenses 12 (45)
Decrease (increase) in liabilities (1,663) 1,938
Cash used in operating activities 20,492 23,373
Capital activities
Acquisition of tangible capital assets 867 375
Cash used in capital investing activities 867 375
Net cash provided by Government of Canada 21,359 23,748
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 Program Activities of the Office of the Privacy Commissioner of Canada are:

  • Program Activity 1 - Compliance activities: The Office is responsible for investigating privacy-related complaints and responding to inquiries from individuals and organizations. Through audits and reviews, the Office also assesses how well organizations are complying with requirements set out in the two federal privacy laws, and provides recommendations on Privacy Impact Assessments (PIAs) pursuant to Treasury Board Secretariat policy. This activity is supported by a legal team that provides specialized legal advice and litigation support, and a research team with senior technical and risk-assessment support.
  • Program Activity 2 - Research and Policy Development: The Office serves as a centre of expertise on emerging privacy issues in Canada and abroad by researching trends and technological developments, monitoring legislative and regulatory initiatives, providing legal, policy and technical analyses on key issues, and developing policy positions that advance the protection of privacy rights. An important part of the work involves supporting the Commissioner and senior officials in providing advice to Parliament on potential privacy implications of proposed legislation, government programs, and private-sector initiatives.
  • Program Activity 3 - Public Outreach: The Office delivers public education and communications activities, including speaking engagements and special events, media relations, and the production and dissemination of promotional and educational material. Through public outreach activities, individuals have access to information about privacy and personal data protection that enable them to protect themselves and exercise their rights. The activities also allow organizations to understand their obligations under federal privacy legislation.
  • Program Activity 4 - Internal Services: Internal Services are groups of related activities and resources that support the needs of programs and other corporate obligations of an organization. As a small entity, the Office's internal services include two sub-activities: governance and management support, and resource management services (which also incorporate asset management services). Given the specific mandate of the Office, communications services are not included in Internal Services but rather form part of Program Activity 3 - Public Outreach. Similarly, legal services are excluded from Internal Services at the Office, given the legislated requirement to pursue court action under the two federal privacy laws. Legal services form part of Program Activity 1 - Compliance Activities, and Program Activity 2 - Research and Policy Development.

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. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian generally accepted accounting principles, except as disclosed in Note 10 - Net Debt indicator.

Significant accounting policies are as follows:

(a) Due from the Consolidated Revenue Fund (CRF)
Amounts due from / to the CRF are the result of timing differences at year-end between when a transaction effects authorities and when it is processed through the CRF. Amounts due from the 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 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, provided that the transfer is authorized and a reasonable estimate can be made.
  • 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 the lower of cost or net recoverable value; a valuation allowance is recorded for receivables where a 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.

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) 2011 2010
Net cost of operations 24,812 24,808
 
Adjustments for items affecting net cost of operations but not affecting appropriations:
Services received without charge (2,505) (2,520)
Amortization on tangible capital assets (454) (475)
Previous years' accounts payable 56 100
Increase (decrease) in vacation pay and compensatory leave 82 (29)
Increase in employee severance benefits 33 303
Other (78) 123
  21,946 22,310
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets 867 375
Increase (decrease) in prepaid expenses 12 (45)
  879 330
 
Current year appropriations used 22,825 22,640

(b) Appropriations provided and used:

(in thousands of dollars) 2011 2010
Vote 45 - Program expenditures 22,215 21,691
Statutory contributions to employee benefit plans 1,998 2,119
  24,213 23,810
Lapsed Appropriations: Operating (1,388) (1,170)
Current year appropriations used 22,825 22,640

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

(in thousands of dollars) 2011 2010
Net cash provided by Government 21,359 23,748
Variation in accounts receivable and advances (385) 320
Variation in accounts payable and accrued liabilities 1,665 (973)
Variation in accrued employee salaries 121 (699)
Other adjustments 65 244
Current year appropriations used 22,825 22,640

4. Accounts receivable and advances

The following table presents details of accounts receivable and advances:

(in thousands of dollars) 2011 2010
Receivables from other Federal Government departments and agencies 600 154
Receivables from external parties 17 79
Employee advances 2 1
  619 234

5. Tangible capital assets

Cost
(in thousands of dollars)
Opening
Balance
Acquisitions Disposals and
adjustments
Closing
Balance
Machinery and equipment 4 268 - 272
Informatics hardware 1,637 425 (496) 1,566
Computer software 266 83 (2) 347
Other equipment 1,166 91 (365) 892
Leasehold improvements 262 - - 262
  3,335 867 (863) 3,339
Accumulated
amortization
(in thousands of dollars)
Opening
Balance
Amortization Disposals Closing
Balance
Machinery and equipment 3 20 (1) 22
Informatics hardware 1,109 282 (479) 912
Computer software 199 40 (1) 238
Other equipment 499 79 (287) 291
Leasehold improvements 169 33 - 202
  1,979 454 (768) 1,665
Net book value
(in thousands of dollars)
Opening
Balance
Closing
Balance
Machinery and equipment 1 250
Informatics hardware 528 654
Computer software 67 109
Other equipment 667 601
Leasehold improvements 93 60
Net book value 1,356 1,674
Amortization expense for the year ended March 31, 2011 was $454,000 ($475,000 in 2010).

6. Employee Future 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 Plan benefits and they are indexed to inflation.

Both the employees and the Office contribute to the cost of the Plan. The 2010-11 expense amounts to $1,402,886 ($1,530,256 in 2009-10), which represents approximately 1.9 times (1.9 in 2009-10) 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) 2011 2010
Accrued benefit obligation, beginning of year 2,683 2,986
Expense for the year 295 (193)
Benefits paid during the year (328) (110)
Accrued benefit obligation, end of year 2,650 2,683

7. 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 for 2011-12 are $227,016.

8. 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 $4,800,709 ($5,578,568 in 2010) from transactions with other government departments, agencies and Crown corporations. These expenses include services received without charge in the amount of $2,505,146 ($2,519,813 in 2010), 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) 2011 2010
Accommodations provided by Public Works and Government Services Canada 1,369 1,364
Contributions covering employer's share of employees' insurance premiums and expenditures paid by Treasury Board Secretariat 1,009 1,019
Payroll services provided by Public Works and Government Services Canada 9 9
Audit services provided by the Office of the Auditor General of Canada 118 128
  2,505 2,520

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

(in thousands of dollars) 2011 2010
Accounts receivable with other government departments and agencies 600 154
Accounts payable to other government departments and agencies 85 66

9. Equity of Canada

The Equity of Canada, which is currently in a deficit position, represents liabilities incurred by the Office, net of tangible capital 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.

10. Net Debt indicator

The presentation of the net debt indicator and a statement of change in net debt is required under Canadian generally accepted accounting principles.

Net debt is the difference between a government's liabilities and its financial assets and is meant to provide a measure of the future revenues required to pay for past transactions and events. A statement of change in net debt would show changes during the period in components such as tangible capital assets, prepaid expenses and inventories. The Office is financed by the Government of Canada through appropriations and operates within the Consolidated Revenue Fund (CRF), 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. Under this government business model, assets reflected on the financial statements, with the exception of the Due from the CRF, are not available to use for the purpose of discharging the existing liabilies of the Office. Future appropriations and any respendable revenues generated by the Office's operations would be used to discharge existing liabilities.

(in thousands of dollars) 2011 2010
Financial Liabilities
Accounts payable and accrued liabilities 3,392 1,727
Accrued employee salaries 285 164
Vacation pay and compensatory leave 508 590
Employee severance benefits (Note 6) 2,650 2,683
Other liabilities - 8
Total - Financial Liabilities 6,835 5,172
 
Financial Assets
Due from Consolidated Revenue Fund 3,004 1,709
Accounts receivable and advances (Note 4) 619 234
Total - Financial Liabilities 3,623 1,943
 
Net Debt indicator 3,212 3,229

11. Segmented Information

Presentation by segment is based on the Office's program activity architecture. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 2. The following table presents the expenses incurred and revenues generated for the main program activities, by major object of expenses. The segment results for the period are as follows:

(in thousands of dollars) Compliance Research &
Policy
Development
Public
Outreach
Internal
Services
2011 2010
Operating expenses
Salaries and employee benefits 7,416 2,509 1,904 3,231 15,060 15,073
Professional and special services 2,091 264 400 1,301 4,056 4,939
Accommodation 648 220 166 336 1,370 1,364
Transportation and communications 424 158 213 134 929 794
Equipment 191 52 110 425 778 338
Information 13 2 651 25 691 488
Repairs and maintenance 58 - 26 444 528 625
Amortization 221 52 58 123 454 475
Utilities, materials and supplies 30 4 37 160 231 147
Other 36 13 16 125 190 26
Rentals 3 1 31 44 79 83
  11,131 3,275 3,612 6,348 24,366 24,379
 
Contributions - 446 - - 446 429
 
Net cost of operations 11,131 3,721 3,612 6,348 24,812 24,808
Date modified: