Financial Statements for the Year Ended March 31, 2016
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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, 2016, and all information contained in these statements rests with the management of the Department of Public Safety and Emergency Preparedness Canada (PSEPC). These financial statements have been prepared by management using the Government's accounting policies, which are based on Canadian public sector accounting standards.
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 PSEPC's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada and included in PSEPC's Departmental Performance Report, is consistent with these financial statements.
Management is also responsible and accountable for maintaining an effective system of internal control over financial reporting (ICFR) 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; and through communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood and applied throughout PSEPC and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.
The system of ICFR is designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.
A risk-based assessment of the system of ICFR for the year ended March 31, 2016 was completed in accordance with the Treasury Board Policy on Internal Control and the results and action plans are summarized in the annex.
The effectiveness and adequacy of PSEPC's system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of PSEPC's operations, and by the Departmental 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 Deputy Minister of PSEPC.
The financial statements of PSEPC have not been audited.
Original signed by Malcolm Brown
Malcolm Brown
Deputy Minister
Original signed by Mark Perlman
Mark Perlman
Chief Financial Officer and Assistant Deputy Minister
Corporate Management Branch
Ottawa, Canada
August 8, 2016
2016 |
2015 |
|
---|---|---|
Liabilities |
||
Accounts payable and accrued liabilities (note 4) |
274,611 |
376,568 |
Vacation pay and compensatory leave |
3,840 |
3,952 |
Employee future benefits (note 5) |
6,329 |
6,156 |
Disaster Financial Assistance Arrangements (DFAA) (note 6) |
1,976,999 |
1,655,687 |
Total liabilities |
2,261,779 |
2,042,363 |
Financial assets |
||
Due from Consolidated Revenue Fund |
273,186 | 365,980 |
Accounts receivable and advances (note 7) |
1,954 | 2,254 |
Total financial assets |
275,140 | 368,234 |
Departmental net debt |
1,986,639 | 1,674,129 |
Non-financial assets |
||
Tangible capital assets (note 8) |
14,818 |
15,864 |
Total non-financial assets |
14,818 |
15,864 |
Departmental net financial position |
(1,971,821) |
(1,658,265) |
Contractual obligations (note 9) Contingent liabilities (note 10) The accompanying notes form an integral part of these financial statements |
Original signed by Malcolm Brown
Malcolm Brown
Deputy Minister
Original signed by Mark Perlman
Mark Perlman
Chief Financial Officer and Assistant Deputy Minister
Corporate Management Branch
Ottawa, Canada
August 8, 2016
2016 Planned Results |
2016 |
2015 |
|
---|---|---|---|
Expenses |
|||
Emergency Management |
528,167 |
501,115 |
80,245 |
Countering Crime |
199,892 | 151,052 | 155,824 |
Internal Services |
60,847 | 64,083 | 61,364 |
National Security |
28,317 | 27,414 | 29,085 |
Border Strategies |
4,844 | 4,343 | 4,860 |
Total expenses |
822,067 | 748,007 | 331,378 |
Revenues |
|||
Interdepartmental provision of internal support services |
2,700 | 1,782 | 2,045 |
Miscellaneous revenues |
85 | 128 | 100 |
Revenues earned on behalf of government |
(85) | (128) | (100) |
Total revenues |
2,700 | 1,782 | 2,045 |
Net cost of operations before government funding and transfers |
819,367 | 746,225 | 329,333 |
Government funding and transfers |
|||
Net cash provided by Government |
504,638 | 604,715 | |
Change in due from the Consolidated Revenue Fund |
(92,794) | 169,707 | |
Services provided without charge by other government departments (note 11) |
20,873 | 20,651 | |
Transfer of the transition payments for implementing salary payments in arrears (note 12) |
(48) | (3,335) | |
Net cost of operations after government funding and transfers |
313,556 | (462,405) | |
Departmental net financial position – Beginning of year |
(1,658,265) | (2,120,670) | |
Departmental net financial position – End of year |
(1,971,821) | (1,658,265) | |
Segmented information (note 14) The accompanying notes form an integral part of these financial statements. |
2016 |
2015 |
|
---|---|---|
Net cost of operations after government funding and transfers |
313,556 |
(462,405) |
Change due to tangible capital assets |
||
Acquisition of tangible capital assets |
1,733 | 2,185 |
Amortization of tangible capital assets |
(2,779) | (2,641) |
Total change due to tangible capital assets |
(1,046) | (456) |
Net increase (decrease) in departmental net debt due to operations |
312,510 | (462,861) |
Departmental net debt – Beginning of year |
1,674,129 | 2,136,990 |
Departmental net debt – End of year |
1,986,639 | 1,674,129 |
The accompanying notes form an integral part of these financial statements. |
2016 |
2015 |
|
---|---|---|
Operating activities |
||
Net cost of operations before government funding and transfers |
746,225 | 329,333 |
Non-cash items: |
||
Amortization of tangible capital assets |
(2,779) | (2,641) |
Services provided without charge by other government departments (note 11) |
(20,873) | (20,651) |
Transition payments for implementing salary payments in arrears (note 12) |
48 | 3,335 |
Variations in Statement of Financial Position: |
||
Increase (decrease) in accounts receivable and advances |
(300) | 98 |
Decrease (increase) in accounts payable and accrued liabilities |
101,957 | (66,471) |
Decrease (increase) in vacation pay and compensatory leave |
112 | 665 |
Decrease (increase) in employee future benefits |
(173) | (1,081) |
Decrease (increase) in DFAA program |
(321,312) | 359,943 |
Cash used in operating activities |
502,905 | 602,530 |
Capital investing activities |
||
Acquisition of tangible capital assets |
1,733 | 2,185 |
Cash used in capital investing activities |
1,733 | 2,185 |
Net cash provided by Government of Canada |
504,638 | 604,715 |
The accompanying notes form an integral part of these financial statements. |
Notes to the Financial Statements (Unaudited) For the year ended March 31, 2016
1. Authority and objectives
The Department of Public Safety and Emergency Preparedness Canada (PSEPC) was created in 2003 to ensure coordination across all federal departments and agencies responsible for national security and the safety of Canadians. PSEPC operates under the Department of Public Safety and Emergency Preparedness Act (2005, c.10) that received Royal assent on March 23, 2005.
PSEPC contributes to the public safety of Canadians through the promotion and maintenance of a just, peaceful and safe society, it has five main core programs:
- National Security: Develops and coordinates policy to define and advance Canada's national security objectives;
- Border Strategies: Provides federal policy leadership and coordination on a variety of border issues to ensure that security objectives are achieved in a manner that facilitates the flow of legitimate trade and travel, and contributes to the effective management of the Canada-US border agenda;
- Countering Crime: Collaborates with regions and communities to build crime prevention programs that are specific and appropriate to them. It provides communities with tools, knowledge and support to implement prevention programs;
- Emergency Management: Addresses all-hazards through the development of an integrated emergency management system, legislation and national strategies, training and standards to protect Canada and Canadians; and
- Internal Services: Supports the work of all other programs and provides key corporate services.
2. Summary of significant accounting policies
These financial statements have been prepared using the Government's accounting policies stated below, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.
Significant accounting policies are as follows:
(a) Parliamentary authorities
PSEPC is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to PSEPC 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 Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. The planned results amounts in the “Expenses” and “Revenues” sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-oriented Statement of Operations included in the 2015-16 Report on Plans and Priorities. Planned results are not presented in the “Government funding and transfers” section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2015-16 Report on Plans and Priorities.
(b) Net cash provided by government
PSEPC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by PSEPC is deposited to the CRF, and all cash disbursements made by PSEPC 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) Amounts due from/to the CRF
Amounts due from or to 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 PSEPC is entitled to draw from the CRF without further authorities to discharge its liabilities.
(d) Revenues
Revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.
Revenues that are non-respendable are not available to discharge PSEPC's liabilities. While the Deputy Head is expected to maintain accounting control, he has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of the PSEPC's gross revenues.
(e) Expenses - Expenses are recorded on the accrual basis
Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.
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, employer contributions to the health and dental insurance plans, legal services and workers' compensation are recorded as operating expenses at their estimated cost.
(f) Employee future benefits
(i) Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer plan administered by the Government. PSEPC's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. PSEPC'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.
(ii) Severance benefits: Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. 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 receivable
Accounts receivable are stated at the lower of cost and net recoverable value. A valuation allowance is recorded for accounts receivable where recovery is considered uncertain.
(h) Contingent liabilities
Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or if an amount cannot be reasonably estimated, the contingency is disclosed in note 10 to the financial statements.
(i) Tangible capital assets
All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. PSEPC 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 asset as follows:
Asset Class |
Amortization period |
---|---|
Computer hardware |
4-7 years |
Machinery and equipment |
5 years |
Computer software |
3-5 years |
Vehicles |
3 years |
Leasehold improvements |
Lesser of the remaining term of the lease or useful life of the improvement |
Other equipment including furniture |
5 years |
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.
(j) Measurement uncertainty
The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues 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 the Disaster Financial Assistance Arrangements Program, the liability for employee future 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 authorities
PSEPC receives most of its funding through annual Parliamentary authorities. Items recognized in the Statement of Operations and Departmental Net Financial Position and the Statement of Financial Position in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, PSEPC 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:
2016 |
2015 |
|
---|---|---|
Net cost of operations before government funding and transfers |
746,225 |
329,333 |
Adjustments for items affecting net cost of operations but not affecting authorities: |
||
Amortization of tangible capital assets |
(2,779) |
(2,641) |
Services provided without charge by other government departments |
(20,873) | (20,651) |
Decrease (increase) in vacation pay and compensatory leave |
112 | 665 |
Decrease (increase) in employee future benefits |
(173) | (1,081) |
Refund of prior years' expenditures |
882 | 861 |
Decrease (increase) in accruals for DFAA |
(321,312) | 359,943 |
Adjustments to previous years' payables at year-end |
2,920 | 3,514 |
(341,223) | 340,610 | |
Adjustments for items not affecting net cost of operations but affecting authorities: |
||
Acquisitions of tangible capital assets |
1,733 | 2,185 |
Transition payments for implementing salary payments in arrears (note 12) |
48 | 3,335 |
1,781 | 5,520 | |
Current year authorities used |
406,783 | 675,463 |
2016 |
2015 |
|
---|---|---|
Authorities provided: |
||
Vote 1 - Operating expenditures |
125,904 |
125,824 |
Vote 5 - Grants & Contributions |
1,005,557 |
1,046,154 |
Salary and motor car allowance |
82 |
80 |
Contributions to employee benefits plan |
13,949 |
13,611 |
1,145,492 |
1,185,669 |
|
Less: |
||
Lapsed: Operating and transfer payments |
(738,709) |
(510,206) |
Current year authorities used |
406,783 |
675,463 |
4. Accounts payable and accrued liabilities
The following table presents details of PSEPC's accounts payable and accrued liabilities
2016 |
2015 |
|
---|---|---|
Accounts payable - Other government departments and agencies |
1,701 |
1,999 |
Accounts payable - External parties |
267,443 |
370,178 |
Total accounts payable |
269,144 |
372,177 |
Accrued liabilities |
5,467 |
4,391 |
Total accounts payable and accrued liabilities |
274,611 |
376,568 |
5. Employee future benefits
(a) Pension benefits
PSEPC's employees participate in the Public Service Pension Plan (the “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 PSEPC contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Economic Action Plan 2012, employee contributors have been divided into two groups – Group 1 relates to existing plan members as of December 31, 2012 and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.
The 2015-2016 expense amounts to $9,614,892 ($9,304,268 in 2014-2015). For Group 1 members, the expense represents approximately 1.25 times (1.41 times in 2014-2015) the employee contributions and, for Group 2 members, approximately 1.24 times (1.39 times in 2014-2015) the employee contributions.
PSEPC'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
PSEPC provides severance benefits to its employees based on eligibility, years of service and salary at termination of employment. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, measured as at March 31, are as follows:
2016 |
2015 |
|
---|---|---|
Accrued benefit obligation - Beginning of year |
6,156 |
5,075 |
Expense for the year |
1,002 |
2,160 |
Benefits paid during the year |
(829) |
(1,079) |
Accrued benefit obligation - End of year |
6,329 |
6,156 |
As part of collective agreement negotiations with certain employee groups, and changes to conditions of employment for executives and certain non-represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.
6. Disaster Financial Assistance Arrangements (DFAA)
IIn the event of a natural disaster in Canada, the federal government provides financial assistance to provincial and territorial governments through the Disaster Financial Assistance Arrangements program to help meet the basic costs of response and recovery when such expenditures exceed what an individual province or territory could reasonably be expected to bear on its own. The current outstanding liabilities of $1,976,999,000 is the estimated cost to PSEPC of 62 natural disaster events for which the Federal Government has agreed to share the costs and final payments have not yet been made.
2016 |
2015 |
|
---|---|---|
Opening balance |
1,655,687 |
2,015,630 |
Disbursements |
(139,348) |
(305,272) |
Accrued expenses for the year |
460,660 |
(54,671) |
Closing balance |
1,976,999 |
1,655,687 |
7. Accounts receivable and advances
The following table presents details of PSEPC's accounts receivable and advances balances
2016 |
2015 |
|
---|---|---|
Receivables – Other government departments and agencies |
1,472 |
1,587 |
Receivables – External parties |
547 |
738 |
Employee advances |
15 |
9 |
Subtotal |
2,034 |
2,334 |
Allowance for doubtful accounts on receivables from external parties |
(80) |
(80) |
Total accounts receivable and advances |
1,954 |
2,254 |
8. Tangible capital assets
Cost |
Accumulated amortization |
Net book value |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
Capital asset class |
Opening balance |
Acquisitions |
Disposals and write-offs |
Closing balance |
Opening balance |
Amortization |
Disposals and write-offs |
Closing balance |
2016 |
2015 |
Computer hardware |
5,199 |
1,124 |
0 | 6,323 | 4,741 | 196 | 0 | 4,937 | 1,386 | 458 |
Machinery and equipment |
16 | 0 | 0 | 16 | 10 | 2 | 0 | 12 | 4 | 6 |
Computer software |
907 | 609 | 0 | 1,516 | 280 | 147 | 0 | 427 | 1,089 | 627 |
Other equipment including furniture |
1,405 | 0 | 0 | 1,405 | 995 | 261 | 0 | 1,256 | 149 | 410 |
Vehicles |
235 | 0 | (98) | 137 | 181 | 24 | (98) | 107 | 30 | 54 |
Leasehold improvements |
26,419 | 0 | 0 | 26,419 | 12,110 | 2,149 | 0 | 14,259 | 12,160 | 14,309 |
Total |
34,181 | 1,733 | (98) | 35,816 | 18,317 | 2,779 | (98) | 20,998 |
14,818 | 15,864 |
9. Contractual obligations
The nature of PSEPC's activities can result in some large multi-year contracts and obligations whereby PSEPC will be obligated to make future payments in order to carry out its transfer payment programs or when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:
Fiscal Year |
Total |
||||||
---|---|---|---|---|---|---|---|
2017 |
2018 |
2019 |
2020 |
2021 |
2022 |
||
Transfer payments |
138,845 |
100,627 |
20,405 |
9,606 |
1,105 |
279 |
270,867 |
10. Contingent liabilities
Claims and litigation
Claims have been made against PSEPC in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amount to approximately $77,110 ($77,110 in 2014-2015) at March 31, 2016.
11. Related party transactions
PSEPC is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. PSEPC enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, PSEPC has agreements with Correctional Services Canada and with Royal Canadian Mounted Police related to the provision of human resources and finance system services. During the year, PSEPC received common services which were obtained without charge from other Government departments as disclosed below:
(a) Common services provided without charge by other government departments
During the year, PSEPC 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 PSEPC's Statement of Operations and Departmental Net Financial Position as follows:
2016 |
2015 |
|
---|---|---|
Accommodation |
11,676 |
11,974 |
Employer's contribution to the health and dental insurance plans |
7,785 |
7,110 |
Legal services |
1,402 |
1,558 |
Workers' compensation |
10 |
9 |
Total |
20,873 |
20,651 |
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 services organization so that one department performs services for all other departments and agencies without charge. The costs of these services, such as payroll and cheque issuance services provided by Public Services and Procurement Canada and audit services provided by the Office of the Auditor General are not included in PSEPC's Statement of Operations and Departmental Net Financial Position.
2016 |
2015 |
|
---|---|---|
Accounts receivable – Other government departments and agencies |
1,472 |
1,587 |
Accounts payable – Other government departments and agencies |
1,701 |
1,999 |
Expenses – Other government departments and agencies |
14,556 |
17,210 |
Revenues – Other government departments and agencies |
1,782 |
2,045 |
Expenses and revenues disclosed in (b) exclude common services provided without charges, which are already disclosed in (a).
12. Transfer of the transition payments for implementing salary payments in arrears
The Government of Canada implemented salary payments in arrears in 2014-2015. As a result, a one-time payment was issued to employees and will be recovered from them in the future. The transition to salary payments in arrears forms part of the transformation initiative that replaces the pay system and also streamlines and modernizes the pay processes. This change to the pay system had no impact on the expenses of the Department. However, it did result in the use of additional spending authorities by the Department, along with the creation of an interim account receivable. Prior to year end, this interim account receivable was transferred to Public Services and Procurement Canada, who is responsible for the administration of the Government pay system.
13. Transfer payments
The following table presents details of transfer payments as follows:
2016 | 2015 | |
Payments to territorial governments for operating expenditures | 9,744 | 62,266 |
Payments to other levels of government | 463,777 | (4,240) |
Payments to Native peoples | 86,399 | 87,526 |
Payments to non-profit organizations | 30,359 | 30,277 |
Other transfer to other countries and international organizations | 143 | |
Total | 590,422 | 175,829 |
14. Segmented information
Presentation by segment is based on PSEPC's program alignment 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 revenue generated for the main programs, by major object of expenses and by major type of revenues. The segment results for the period are as follows:
2016 | 2015 | ||||||
---|---|---|---|---|---|---|---|
Expenses | National Security | Emergency Management | Countering Crime | Border Strategies | Internal Services | Total | Total |
Transfer payments | 1,860 | 465,930 | 122,632 | 0 | 0 | 590,422 | 175,829 |
Operating expenses | |||||||
Salaries and employee benefits | 18,656 | 25,483 | 22,096 | 3,326 | 41,875 | 111,436 | 106,284 |
Professional and special services | 2,266 | 3,735 | 2,906 | 254 | 8,760 | 17,921 | 19,015 |
Accommodation | 1,955 | 2,691 | 2,331 | 348 | 7,466 | 14,791 | 14,577 |
Equipment | 510 | 239 | 40 | 14 | 1,174 | 1,977 | 1,699 |
Travel and relocation | 802 | 1,277 | 806 | 138 | 392 | 3,415 | 3,156 |
Information | 546 | 41 | 112 | 86 | 1,076 | 1,861 | 5,850 |
Amortization | 432 | 1,159 | 2 | 0 | 1,186 | 2,779 | 2,641 |
Equipment rentals | 165 | 244 | 63 | 0 | 804 | 1,276 | 938 |
Repairs | 5 | 147 | 1 | 0 | 551 | 704 | 384 |
Utilities, material and supplies | 210 | 124 | 61 | 177 | 683 | 1,255 | 869 |
Communication | 5 | 45 | 2 | 0 | 112 | 164 | 136 |
Miscellaneous | 2 | 0 | 0 | 0 | 4 | 6 | 0 |
Total operating expenses | 25,554 | 35,185 | 28,420 | 4,343 | 64,083 | 157,585 | 155,549 |
Total expenses | 27,414 | 501,115 | 151,052 | 4,343 | 64,083 | 748,007 | 331,378 |
Revenues | |||||||
Interdepartmental provision of internal support services | 0 | 0 | 0 | 0 | 1,782 | 1,782 | 2,045 |
Miscellaneous revenues | 75 | 53 | 128 | 100 | |||
Revenues earned on behalf of government | (75) | (53) | (128) | (100) | |||
Total revenues | 0 | 1,782 | 1,782 | 2,045 | |||
Net cost of operations before government funding and transfers | 27,414 | 501,115 | 151,052 | 4,343 | 62,301 | 746,225 | 329,333 |
Annex to the Statement of Management Responsibility
1. Introduction
This document provides summary information on the measures taken by Public Safety and Emergency Preparedness Canada (PSEPC) to maintain an effective system of internal control over financial reporting (ICFR), including information on internal control management and assessment results and related action plans.
Detailed information on the Department's authority, mandate and program activities can be found in the 2015-16 Departmental Performance Report and the 2016-2017 Report on Plans and Priorities.
2. Departmental system of internal control over financial reporting
2.1 Internal control management
Public Safety and Emergency Preparedness Canada has a well-established governance and accountability structure to support departmental assessment efforts and oversight of its system of internal control. The Departmental Financial Management Control Framework, approved by the Deputy Minister, is in place and includes:
- Organizational accountability structures as they relate to internal control management to support sound financial management including roles and responsibilities for senior managers in their areas of responsibility for control management;
- Values and ethics which is further supported by a specific departmental code of conduct;
- On-going communication and training on statutory requirements, policies and procedures for sound financial management and control; and
- Monitoring and regular updates at least semi-annually on internal control management plus assessment results and action plans to the Deputy Minister, departmental senior management and the Departmental Audit Committee (DAC).
The Departmental Audit Committee provides advice to the Deputy Head on the adequacy and functioning of the department's risk management, control and governance frameworks and processes.
2.2 Service arrangements relevant to financial statements
Public Safety and Emergency Preparedness Canada relies on other organizations for the processing of certain transactions that are recorded in its financial statements as follows:
Common Arrangements:
- Public Services and Procurement Canada centrally administers the payments of salaries and the procurement of goods and services, as per Public Safety and Emergency Preparedness Canada's Delegation of Authority, and provides accommodations services;
- Treasury Board Secretariat provides Public Safety and Emergency Preparedness Canada with information used to calculate various accruals and allowances, such as, accrued severance pay;
- Employment and Social Development Canada provides Worker's Compensation coverage;
- The Department of Justice provides legal services to Public Safety and Emergency Preparedness Canada;
- Shared Services Canada provides information technology infrastructure services to Public Safety and Emergency Preparedness Canada in the areas of e-mail, data centre and network services; and
- Public Safety and Emergency Preparedness Canada relies on the internal controls of third party suppliers which provide specific services such as relocation services.
Specific Arrangements:
- Public Safety and Emergency Preparedness Canada's systems of record are provided by the Royal Canadian Mounted Police, who hosts the Department's financial management system, and by Correctional Services of Canada, who hosts the Department's human resources information management system. Memoranda of Understanding exists between Public Safety and Emergency Preparedness Canada and these agencies, identifying respective roles and responsibilities; and
- Public Safety and Emergency Preparedness Canada provides corporate services to three Public Safety Portfolio Agencies: the Office of the Correctional Investigator, the Royal Canadian Mounted Police External Review Committee and the Civilian Review and Complaints Commission for the Royal Canadian Mounted Police. Memoranda of Understanding exist between Public Safety and Emergency Preparedness Canada and each of these agencies, identifying respective roles and responsibilities.
3. Departmental assessment results during fiscal year 2015-16
The key findings and significant adjustments required from the current year's assessment activities are summarized below.
New or significantly amended key controls: In the current year, there were no significantly amended key controls in existing processes which required a reassessment.
Ongoing monitoring program: As part of its rotational ongoing monitoring plan, the department completed its reassessment of entity-level controls and the financial controls within the business processes of capital expenditures, grants and contributions, Disaster Financial Assistance Arrangements, financial close and reporting, and operating expenditures. For the most part, the key controls that were tested performed as intended, with remediation required as follows:
- The department will look for opportunities to include pertinent financial information in current departmental asset tracking systems. The lack of such information creates difficulties in accurately and consistently valuating an asset at the time of disposal or write-off. Information systems should be enhanced to allow them to capture the required information and to produce the necessary reports. If necessary, exploring other options such as new software or implementing the asset module in SAP may be a solution to maintaining the integrity of this information.
- The Internal Control Unit noted that certain documentation was not available to support the consistent operating effectiveness of certain key controls. This was predominantly observed in Travel related transactions.
Reports and action plans addressing recommendations have been developed and the department has already initiated a course of action to remediate these control deficiencies.
4. Departmental action plan
4.1 Progress During Fiscal Year 2015-2016
PSEPC continued to conduct its ongoing monitoring according to the previous fiscal year's rotational plan as shown in the following table.
Previous year's rotational ongoing monitoring plan for current year |
Status |
---|---|
Capital expenditures |
Completed as planned; remedial actions started. |
Grants and Contributions & Disaster Financial Assistance Arrangements (DFAA) |
Completed as planned; no remedial actions required. |
Financial Close |
Completed as planned; no remedial actions required. |
Operating Expenditures (Procure to Payment) |
Completed as planned; remedial actions started. |
In 2015-16, the department conducted the following work in addition to the progress made in ongoing monitoring:
- Established a framework and a number of enhanced controls to the management accounts receivable, overpayments, recoveries and the writing off of debt/uncollectibles.
- Reviewed the Financial and Human Resources delegation of authority instruments with a view towards:
- Identifying and creating opportunities to formally extend delegated financial and HR authorities to Middle Managers
- Ensuring that delegated signing authorities are pushed down to the lowest level allowed by legislation, regulation and policy
- Moving delegations down to the front-line in order to streamline processes and approvals
4.2 Action plan for the next fiscal year and subsequent years
Public Safety and Emergency Preparedness Canada's rotational ongoing monitoring plan over the next three years, based on an annual validation of the high-risk processes and controls and related adjustments to the ongoing monitoring plan as required, is shown in the following table.
Key Control Areas |
Fiscal year |
Fiscal year |
Fiscal year |
---|---|---|---|
Entity-level controls |
Yes |
Yes |
Yes |
IT general controls under departmental management |
No |
Yes |
No |
Grants and contributions & Disaster Financial Assistance Arrangements |
Yes |
Yes |
Yes |
Operating expenditures |
Yes |
Yes |
Yes |
Capital expenditures |
No |
No |
Yes |
Financial close |
No |
No |
Yes |
Payroll |
Yes |
Yes |
No |
Revenue |
Yes |
No |
No |
In addition to the ongoing monitoring rotational plan, Public Safety and Emergency Preparedness Canada plans to defer control work and testing related to the payroll transformation initiative until the system has been fully implemented and operating efficiently for a period of time.
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