Future-oriented Statement of Operations

Future-oriented Statement of Operations
For the year ending March 31
(in thousands of dollars)
  Estimated Results
2013-14
Planned Results
2014-15
Expenses
Legal Services to Government Program 498,497 525,703
Stewardship of the Canadian Legal Framework 434,395 395,059
The Office of the Federal Ombudsman for Victims of Crime 1,436 1,454
Internal Services 196,138 158,786
Total expenses 1,130,466 1,081,002
Revenues
Legal services 344,785 339,820
Family Law fees 6,764 6,764
Common Services 5,312 5,312
Revenues earned on behalf of Government (6,764) (6,764)
Total revenues 350,097 345,132
Net cost of operations 780,369 735,870

The accompanying notes form an integral part of this future-oriented statement of operations.

Notes to the Future-oriented Statement of Operations

1. Methodology and significant assumptions

The future-oriented statement of operations has been prepared on the basis of the government priorities and departmental plans as described in the Report on Plans and Priorities.

The information in the estimated results for fiscal year 2013–2014 is based on actual results as at the 31st of October, 2013 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2014-2015 fiscal year.

The main assumptions are as follows:

  1. The department's activities will remain substantially the same as for the previous year with the exception of the sunsetting Grants and Contributions Programs.
  2. Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.
  3. Allowances for uncollectibility are based on historical experience. The general historical pattern is expected to continue.

These assumptions are adopted as at February 10, 2014.

2. Variations and changes to the forecast financial information

While every attempt has been made to forecast final results for the remainder of 2013-14 and for 2014-15, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing this future-oriented statement of operations Justice Canada has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Factors that could lead to material differences between the future-oriented statement of operations and the historical statement of operations include:

  1. The timing and amounts of acquisitions and disposals of tangible capital assets may affect gains/losses and amortization expense.
  2. Implementation of new collective agreements and severance payments.
  3. Economic conditions may affect both the amount of revenue earned and the collectability of receivables.
  4. Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.

Once the Report on Plans and Priorities is presented, Justice Canada will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

3. Summary of significant accounting policies

The future-oriented statement of operations has been prepared in accordance with the Government's accounting policies in effect for the 2013-14 fiscal year. These accounting policies, stated below, are based on Canadian public sector accounting principles. 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) Revenues

  • Revenues are derived from the provision of advisory, litigation and legislative services provided by Department of Justice's law practitioners and they are recognized in the year the services are rendered. These revenues are based on legal services rates approved annually by Treasury Board in accordance with the Common Services Policy, for non-appropriated mandatory legal services to Government departments and agencies as well as legal services to Crown corporations and non-federal and international organizations.
  • Common Services revenues are derived in accordance with the Common Services Policy, for specific internal services provided to Public Prosecution Service of Canada (PPSC).
  • Service and administration fees revenues under the Family Law programs are recognized based upon the services provided in the year, such as upon validation of the garnishment application or upon issuance of the divorce clearance certificate. The fees prescribed by Family Orders and Agreements Enforcement Assistance Act are to cover the administrative costs of processing each garnishee summons served on the Minister.
  • Fines, forfeitures and awarded court costs are recognized upon receipt of payment by the Department.  Fines and forfeitures include two groups of payments: those provided for under the Criminal Code (s.734 through s.737) and those provided for under the Contraventions Act. Fines and forfeitures are in effect penalties for illegal actions, rather than fees.
  • Revenues that are non-respendable are not available to discharge the Department's liabilities. While the Deputy Head is expected to maintain accounting control, he or she 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 entity's gross revenues.

(b) Expenses

Expenses are recorded on an 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 future-oriented statement of operations.
  • Expenses are recorded on an accrual basis. Expenses for the Department operations are recorded when goods are received or services are rendered including services provided without charges for accomodation, employee contributions to health and dental insurance plans and worker's compensation which are recorded as expenses at their estimated cost. Vacation pay and compensatory leave as well as severance benefits are accrued and expenses are recorded as the benefits are earned by employees under their respective terms of employment.
  • Expenses related to the provision of legal services are limited to those costs borne and settled directly by the Department. The cost of legal services which are paid directly by client departments to outside suppliers such as legal agents, are not included in the expenses of the Department.
  • Expenses also include amortization of tangible capital assets which are capitalized at their acquisition cost. Amortization of tanglible capital assets is done on a straight-line basis over the estimated useful life of the asset.
  • Expenses also include provisions to reflect changes in the value of assets, including provisions for bad debt on accounts receivables. Under the Family Orders and Agreements Enforcement Assistance Act, the allowance for doubtful accounts represents management's best estimate of probable losses in receivables. The allowance is determined based on an analysis of historic loss experience and an assessment of current conditions.

4. Parliamentary authorities

The Department is financed by the Government of Canada through parliamentary authorities. Items recognized in the Future-Oriented Statement of Operations in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, the Department has different net cost of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following table:

Reconciliation of net cost of operations to requested authorities
(in thousands of dollars)
  Estimated
2013-14
Planned
2014-15
Net cost of operations 780,369 735,870
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (7,686) (7,686)
Employee future benefits 54,007 (1,000)
Accrual for unratified collective agreements (755) (5,045)
Employee benefits recovered 46,290 44,110
Bad debt expense (3,690) (3,690)
Services provided without charge by other government departments (103,350) (103,517)
Total adjustments for items affecting net cost of operations but not affecting authorities (15,184) (76,828)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets 3,000 3,000
Total adjustments for items not affecting net cost of operations but affecting authorities 3,000 3,000
Forecasted authorities available

768,185

662,042
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