Future-oriented Statement of Operations

Future-oriented Statement of Operations
For the year ending March 31
(in thousands of dollars)
  Estimated Results
2014-15
Planned Results
2015-16
Expenses
Legal Services to Government Program
486,937 522,333
Stewardship of the Canadian Legal Framework
428,167 438,649
The Office of the Federal Ombudsman for Victims of Crime
1,388 1,462
Internal Services
199,412 170,732
Total expenses 1,115,904 1,133,176
Revenues
Legal services
339,519 337,958
Family Law fees
8,376 8,376
Common Services
3,455 3,455
Revenues earned on behalf of Government
(8,376) (8,376)
Total revenues 342,974 341,413
Net cost of operations 772,930 791,763

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 2014-15 is based on actual results as at the 31st of October, 2014 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2015-16 fiscal year.

The main assumptions underlying the forecasts are as follows:

  1. The department's activities will remain substantially the same as in 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 experience. The general historical pattern is expected to continue.
  3. Allowances for uncollectibility are based on experience. The general historical pattern is expected to continue.

These assumptions are adopted as at February 2, 2015.

2. Variations and changes to the forecast financial information

While every attempt has been made to forecast final results for the remainder of 2014-15 and for 2015-16, 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 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 the following:

  1. The timing and amount 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 using the Government's accounting policies that came into effect for the 2014-15 fiscal year, 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) Expenses

Expenses are recorded on an accrual basis. Expenses for the Department’s operations are recorded when goods are received or services are rendered, including services provided without charge for accommodation, 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 terms of employment.

Transfer payments are recorded as expenses when the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement or, in the case of transactions that do not form part of an existing program, 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 statement. 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.

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 provisions to reflect changes in the value of assets, including provisions for bad debt on accounts receivable. Under the Family Orders and Agreements Enforcement Assistance Act, the allowance for doubtful accounts represents management's best estimate of probable losses on receivables. The allowance is determined based on an analysis of historic loss experience and an assessment of current conditions.

Expenses also include amortization of tangible capital assets, which are capitalized at their acquisition cost. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset.

(b) Revenues

Revenues are derived from the provision of advisory, litigation and legislative services provided by the Department of Justice's law practitioners and are recognized in the year the services are rendered. These revenues are based on legal services rates approved annually by the 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 on services provided in the year, such as upon validation of the garnishment application or upon issuance of the divorce clearance certificate. Fees prescribed by the Family Orders and Agreements Enforcement Assistance Act are chargeable in respect of the processing 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.

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 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 presented in reduction of the entity's gross revenues.

4. Parliamentary authorities

The Department is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the Department do not parallel financial reporting according to generally accepted accounting principles because authorities are primarily based on cash flow requirements. 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 tables:

(a) Reconciliation of net cost of operations to requested authorities
(in thousands of dollars)
  Estimated
2014-15
Planned
2015-16
Net cost of operations 772,930 791,763
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets
(14,520) (15,032)
Employee future benefits
5,380 (1,000)
Accrual for unratified collective agreements
(3,834) (8,387)
Employee benefits recovered
43,098 43,572
Bad debt expense
(5,294) (5,294)
Services provided without charge by other government departments
(99,225) (99,010)
Total items affecting net cost of operations but not affecting authorities (74,395) (85,151)
Adjustments for items not affecting net cost of operations but affecting appropriations:
Acquisitions of tangible capital assets
5,121 5,121
Total items not affecting net cost of operations but affecting authorities 5,121 5,121
Requested authorities 703,656 711,733
(b) Authorities requested
(in thousands of dollars)
  Estimated
2014-15
Planned
2015-16
Vote1 - Operational expenditures 271,826 276,828
Vote 5 - Grants and contributions 348,361 354,900
Statutory amounts 83,469 80,005
Requested authorities 703,656 711,733
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