Financial statements, March 31, 2012

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, 2012, and all information contained in these statements rests with the management of Statistics Canada (the Agency).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 the Agency's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Agency'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 Agency; and through conducting an annual assessment of the effectiveness of the system of internal control over financial reporting.

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.

A risk-based assessment of internal control over financial reporting for the year ended March 31, 2012 was completed in accordance with the Treasury Board Policy on Internal Control and the results and action plans are summarized in the Annex to the Statement of Management Responsibility including Internal Control over Financial Reporting, which can be found at the end of the notes to these financial statements (note 18).

The effectiveness and adequacy of the Agency's system of internal control is reviewed through the work of internal finance staff, who conduct periodic assessments of different areas of the Agency's operations and by the Departmental Audit Committee (DAC), which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting. The DAC ensures that the Chief Statistician has independent, objective advice and guidance on the adequacy of the agency's risk management, control and governance processes. It does this by exercising active oversight of core areas of the agency's control and accountability in an integrated and systematic way. The DAC reviews Statistics Canada's financial statements with management and determines their acceptability.

The financial statements of the Agency have not been audited.

The original version was signed by Wayne R. Smith, Chief Statistician, and by Michel Cloutier, Chief Financial Officer.

Statement of Financial Position (Unaudited)
As at March 31

(in thousands of dollars)
  2012 2011
Restated
(note 16)
Liabilities    
Accounts payable and accrued liabilities (note 4) 78,776 64,025
Vacation pay and compensatory leave 23,362 24,270
Deferred revenue (note 5) 3,200 4,215
Lease obligation for tangible capital asset (note 6) 299 475
Employee future benefits (note 7) 82,935 90,735
Total net liabilities 188,572 183,720
Financial assets    
Due from Consolidated Revenue Fund 33,270 59,626
Accounts receivable and advances (note 8) 8,532 10,170
Total net financial assets 41,802 69,796
Departmental net debt 146,770 113,924
Non-financial assets    
Prepaid expenses 3,655 5,999
Inventory (note 9) 3,515 3,368
Tangible capital assets (note 10) 134,296 155,909
Total non-financial assets 141,466 165,276
Departmental net financial position (5,304) 51,352
Contractual obligations (note 11)
Contingent liabilities (note 12)
The accompanying notes form an integral part of these financial statements.
Statement of Operations and Departmental Net Financial Position (Unaudited)
For the Year Ended March 31

(in thousands of dollars)
  2012
(Planned
Results)
2012 2011
Restated
(note 16)
Expenses      
Economic Statistics 241,581 245,613 216,613
Social Statistics 209,016 219,642 191,996
Census, Demography and Aboriginal Statistics 379,101 387,221 205,146
Internal Services 87,608 114,092 97,886
Total expenses 917,306 966,568 711,641
Revenues      
Special statistical services 112,415 111,842 95,300
Publications 1,136 299 1,252
Other - 15 7
Revenues earned on behalf of Government - (136) (1,549)
Total revenues 113,551 112,020 95,010
Net cost from continuing operations 803,755 854,548 616,631
Transferred operations (note 14)      
Expenses 37,576 19,361 30,872
Revenue 1,493 637 1,235
Net cost of transferred operations 36,083 18,724 29,637
Net cost (revenue) of operations before government funding and transfers 839,838 873,272 646,268
Less: Government funding and transfers      
Net cash provided by Government 764,411 770,561 561,047
Change in due from Consolidated Revenue Fund (3,642) (26,356) 14,396
Services provided without charge by other government departments (note 13) 79,748 82,207 75,030
Transfer of assets and liabilities to other government department (note 14) - (9,796) -
Net cost (revenue) of operations after government funding and transfers (679) 56,656 (4,205)
Departmental net financial position - Beginning of year 54,161 51,352 47,147
Departmental net financial position - End of year 54,840 (5,304) 51,352
Segmented information (note 15)
The accompanying notes form an integral part of these financial statements.
Statement of Change in Departmental Net Debt (Unaudited)
For the Year Ended March 31

(in thousands of dollars)
  2012
(Planned
Results)
2012 2011
Net cost (revenue) of operations after government funding and transfers (679) 56,656 (4,205)
Change due to tangible capital assets      
Acquistion of tangible capital assets (note 10) 40,780 31,427 43,346
Amortization of tangible capital assets (note 10) (39,655) (37,120) (32,650)
Net (loss) or gain on disposal of tangible capital assets including adjustments - (2,363) (1,009)
Transfer to other government department (note 14) - (13,557) -
Total change due to tangible capital assets 1,125 (21,613) 9,687
Change due to inventories (note 9) (93) 147 90
Change due to prepaid expenses 465 (2,344) 676
Net increase (decrease) in departmental net debt 818 32,846 6,248
Departmental net debt - Beginning of year 110,349 113,924 107,676
Departmental net debt - End of year 111,167 146,770 113,924
The accompanying notes form an integral part of these financial statements.
Statement of Cash Flow (Unaudited)
For the Year Ended March 31

(in thousands of dollars)
  2012 2011
Restated
(note 16)
Operating activities    
Net cost of operations before government funding and transfers 873,272 646,268
Non-cash items:    
Amortization of tangible capital assets (37,120) (32,650)
Loss on disposal of tangible capital assets (2,363) (1,009)
Services provided without charge by other government departments (note 13) (82,207) (75,030)
Variations in Statement of Financial Position:    
Increase (decrease) in accounts receivable and advances (1,638) 3,517
Increase (decrease) in prepaid expenses (2,344) 676
Increase (decrease) in inventory 147 90
(Increase) decrease in accounts payable and accrued liabilities (14,751) (17,632)
(Increase) decrease in vacation pay and compensatory leave 908 646
(Increase) decrease in deferred revenue 1,015 1,529
(Increase) decrease in employee future benefits 7,800 (8,688)
Transfer of liabilities to other government department (note 14) (3,761) -
Cash used (provided) in operating activities 738,958 517,717
Capital investment activities    
Acquisitions of tangible capital assets (note 10) 31,427 43,346
Cash used (provided) in capital investing activities 31,427 43,346
Financing activities    
(Increase) decrease in lease obligation for tangible capital assets 176 (16)
Cash used (provided) in financing activities 176 (16)
Net cash provided by Government of Canada 770,561 561,047
The accompanying notes form an integral part of these financial statements.

Notes to the Financial Statements (Unaudited)
For the year ended March 31, 2012
(in thousands of dollars)

1. Authority and objectives

Statistics Canada (the Agency) was established in 1918 pursuant to the Statistics Act. The Agency received full departmental status by order-in-council in 1965.

The Agency is a division of the public service named in Schedule I.1 of the Financial Administration Act. The minister currently responsible for Statistics Canada is the Minister of Industry, who represents the Agency in Parliament and Cabinet.

The Agency's mandate derives primarily from the Statistics Act. The act requires the Agency, under the direction of the Minister, to collect, compile, analyze and publish statistical information on the economic, social and general conditions of the country and its citizens. Statistics Canada's mandate also provides for co-ordination and leadership of the country's statistical system.

The Agency's mandate has two primary objectives:

  • to provide statistical information and analysis of the economic and social structure and functioning of Canadian society as a basis for the development, operation and evaluation of public policies and programs, for public and private decision-making and for the general benefit of all Canadians;
  • to promote the quality, coherence and international comparability of Canada's statistics through collaboration with other federal departments and agencies, with the provinces and territories and in accordance with sound scientific standards and practices.

To facilitate the understanding of the Agency's program activity architecture, its activities have been grouped into four program activities: Economic Statistics, Social Statistics, Census, Demography and Aboriginal Statistics, and Internal Services. The Economic Statistics activity provides information and analysis on the entire spectrum of Canadian economic activity, both domestic and international, through a set of macro-economic statistics and focuses on the business and trade sectors of the Canadian economy. The Social Statistics activity provides information on the economic and social characteristics of individuals, families and households in Canada, and on the major factors that can contribute to their well-being. The Census, Demography and Aboriginal Statistics activity (called Census Statistics prior to 2008-09) provides benchmark information on the structure of the Canadian population, its demographic characteristics and conditions, and their change over time. The Internal Services activity supports the entire Agency in areas such as finance, human resources, communications and client 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:

  1. Parliamentary authorities –The Agency is financed by the Government of Canada through Parliamentary authorities. In addition to its yearly parliamentary appropriations, the Agency has the authority to expend revenue received during the fiscal year. Financial reporting of authorities provided to the Agency 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 Statement of Operations and Departmental Net Financial Position are the amounts reported in the future-oriented financial statements included in the 2011-12 Report on Plans and Priorities. The future-oriented financial statements for 2011-2012 have been restated to reflect the revenue net of non-respendable amounts. In addition, the future-oriented financial statements have also been reclassified to conform to the current year presentation.
  2. Net cash provided by Government – The Agency operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Agency is deposited to the CRF and all cash disbursements made by the Agency 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.
  3. Amounts due from/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 the Agency is entitled to draw from the CRF without further authorities to discharge its liabilities.
  4. Revenues:
    • Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.
    • Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in which the related expenses are incurred.
    • Funds that have been received are recorded as deferred revenue, provided the Agency has an obligation to other parties for the provision of goods, services or the use of assets in the future.
    • Other 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 the Department's liabilities. While the DH 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
  5. 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.
  6. Employee future benefits
    1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. The Agency's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The Agency'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.
    2. 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.
  7. Accounts receivables are stated at the lower of cost and net recoverable value; a valuation allowance is recorded for accounts receivables where recovery is considered uncertain.
  8. 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 an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.
  9. Inventory – Inventory is recorded as an asset until issued for consumption or sale, at which time the inventory is expensed. The Agency records two types of inventory:
    • Inventory held for re-sale – This includes publications and special statistical services which will be sold in the future in the ordinary course of business. Inventory held for re-sale is valued at the average production cost.
    • Inventory held for consumption – This includes items held for future program delivery and not intended for re-sale. Inventory held for consumption is valued at the acquisition cost. If there is no longer a service potential, the inventory held for consumption is valued at the lower of cost or net realizable value.
  10. Foreign currency transactions – Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in a foreign currency are translated into Canadian dollars using the rate of exchange in effect on March 31, 2012. Gains and losses resulting from foreign currency transactions are included in the Statement of Operations and Departmental Net Financial Position.
  11. 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. The Agency does not capitalize intangibles, works of art and historical treasures that have a 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:
    Amortization of tangible capital assets
    Asset class Amortization period
    Computer hardware 5 years
    Computer software 5 years
    Other equipment 5 years
    Motor vehicles 7 years
    Leasehold improvements 25 years
    Software under development Once in service
    Leased tangible capital assets Term of lease

    Software under development 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.
  12. 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 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

The Agency 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, the Agency 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 authorities used
(in thousands of dollars)
  2012 2011
Restated
(note 16)
Net cost of operations before government funding and transfers 873,272 646,268
Adjustments for items affecting net cost of operations but not affecting authorities:    
Amortization of tangible capital assets (37,120) (32,650)
Gain (loss) on disposal of tangible capital assets (2,363) (1,009)
Services provided without charge by other government departments (note 13) (82,207) (75,030)
Decrease in vacation pay and compensatory leave 72 646
Decrease (increase) in Employee future benefits 4,875 (8,688)
Refunds of previous years expenditures 1,082 655
Revenue not available for spending in the fiscal year (1,790) 921
Reversal of prior year prepaid expenses (12,018) (8,906)
Loss on write-down of inventory (286) (119)
Bad debt expense (6) (1)
Inventory usage 433 210
Increase in accrued liabilities not charged to authorities (41,109) -
Total items affecting net cost of operations but not affecting authorities 702,835 522,297
Adjustments for items not affecting net cost of operations but affecting authorities:    
Decrease (increase) in lease obligations for tangible capital assets 176 (16)
Acquisitions of tangible capital assets (note 10) 31,427 43,346
Increase in prepaid expenses 9,674 9,582
Total items not affecting net cost of operations but affecting authorities 41,277 52,912
Current year authorities used 744,112 575,209
(b) Authorities provided and used
(in thousands of dollars)
  2012 2011
Authorities provided:    
Vote 105 - Operating expenditures 709,584 523,433
Statutory amounts 86,408 76,401
Total authorities provided 795,992 599,834
Less lapsed appropriations:    
Operating (51,880) (24,625)
Current year authorities used 744,112 575,209

4. Accounts payables and accrued liabilities

The following table presents details of the Agency's accounts payables and accrued liabilities:

Accounts payables and accrued liabilities (in thousands of dollars)
  2012 2011
Accounts payable - external parties 17,269 47,768
Accounts payable - other government departments and agencies 8,600 7,482
Accrued salaries and wages 11,482 8,775
Accrued liabilities 41,425 -
Total accounts payable and accrued liabilities 78,776 64,025

In Canada's Economic Action Plan 2012, the Government announced savings measures to be implemented by departments over the next three fiscal years starting in 2012-2013. As a result, the Agency has recorded at March 31, 2012 an obligation for termination benefits for an amount of $41,425 as part of accrued liabilities to reflect the estimated workforce adjustment costs.

5. Deferred revenues

Statistics Canada has the authority to expend revenue received during the fiscal year. Deferred revenue represents the balance at year end of unearned revenue stemming from amounts received from external parties which are restricted in order to fund the expenditures related to specific research projects and stemming from amounts received for fees prior to services being performed. Revenue is recognized in the period in which these expenditures are incurred or in which the service is performed. Details of the transactions related to this account are as follows:

Deferred revenues (in thousands of dollars)
  2012 2011
Opening balance 4,215 5,744
Amount received 113,810 95,324
Revenues recognized (114,825) (96,853)
Net closing balance 3,200 4,215

6. Lease obligation for tangible capital assets

Statistics Canada has entered into agreements to lease all photocopiers under capital lease with a cost of $716 and accumulated amortization of $423 as at March 31, 2012 ($1,009 and $543 respectively as at March 31, 2011). The obligations for the upcoming years include the following:

Lease obligation for tangible capital assets (in thousands of dollars)
  2012 2011
2012 - 208
2013 144 138
2014 89 84
2015 52 46
2016 22 18
2017 and thereafter 2 -
Total future minimum lease payments 309 494
Less : imputed interest (1.24% to 4.77%) (10) (19)
Balance of obligations under leased tangible capital assets 299 475

7. Employee future benefits

(a) Pension benefits:

Statistics Canada's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government. 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 Agency contribute to the cost of the Plan. The 2011-12 expense amounts to $62,087 ($53,625 in 2010-11), which represents approximately 1.8 times (1.9 in 2010-11) the contributions by employees.

Statistics Canada'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:

Statistics Canada 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, is as follows:

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.

Severance benefits (in thousands of dollars)
  2012 2011
Accrued benefit obligation - Beginning of year 90,735 82,047
Transferred to other government department, effective November 15, 2011 (note 14) (2,925) -
Subtotal 87,810 82,047
Expense or adjustment for the year 17,090 17,443
Benefits paid during the year (21,965) (8,755)
Accrued benefit obligation - End of year 82,935 90,735

8. Accounts receivable and advances

The following table presents details of the Agency's accounts receivable and advances balances:

Accounts receivable and advances(in thousands of dollars)
  2012 2011
Restated
(note 16)
Receivables from other government departments and agencies 3,812 3,904
Receivables from external parties 4,466 5,786
Employees advances 269 495
Subtotal 8,547 10,185
Allowance for doubtful accounts on receivables from external parties (15) (15)
Net accounts receivable 8,532 10,170

9. Inventory

The following table presents details of the inventory:

Inventory (in thousands of dollars)
  2012 2011
Inventory held for consumption - STC Store (Office supplies) 503 600
Inventory held for consumption - Warehouse (Furniture) 2,802 2,390
Inventories for resale - Publication 210 378
Total inventory 3,515 3,368

The cost of consumed inventory recognized as an expense in the Statement of Operations and Departmental Net Financial Position is $433 in 2011-2012 ($210 in 2010-2011).

10. Tangible capital assets

Tangible capital assets (in thousands of dollars)Table Summary
This table contains information on the cost, accumulated amortization and net book value of tangible capital assets. The row headers provide information by capital asset class. The column headers provide information on the opening balance, acquisitions/amortization, disposals and write-offs, adjustments, and closing balance for the cost and the accumulated amortization. The table also contains column headers for the net book value in 2012 and 2011
  Cost Accumulated amortization Net book value
Capital asset Class Opening balance Acquisitions Disposals and write-offs Adjustments Footnote 1 Closing balance Opening balance Amortization Disposals and write-offs Adjustments Footnote 1 Closing balance 2012 2011
Computer hardware 72,801 2,140 6,418 (37,649) 30,874 46,775 7,418 7,282 (24,367) 22,544 8,330 26,026
Computer software 163,413 89 21,406 38,449 180,545 92,315 28,505 18,180 (1,139) 101,501 79,044 71,098
Other equipment 5,108 293 44 (1,356) 4,001 4,400 301 44 (1,188) 3,469 532 708
Motor vehicles 1,086 86 45 - 1,127 957 104 44 - 1,017 110 129
Leasehold improvements 14,823 1,692 - - 16,515 2,517 593 - - 3,110 13,405 12,307
Software under development 45,175 27,101 - (39,694) 32,582 - - - - - 32,582 45,175
Leased tangible capital assets 1,009 26 319 - 716 543 199 319 - 423 293 466
Total 303,415 31,427 28,232 (40,250) 266,360 147,507 37,120 25,869 (26,694) 132,064 134,296 155,909
Notes:
Footnote 1

The column "Adjustments" includes transfer of asset costs from software under development accounts to the computer software account. Effective November 15, 2011, the Agency transferred Computer Hardware, Computer Software and Other equipment with a net book value of $13,557 to Shared Services Canada. This transfer is also included in the "Adjustment" column (refer to note 15 for further detail on the transfer).

Return to footnote 1 referrer

11. Contractual obligations

The nature the Agency's activities can result in some large multi-year contracts and obligations whereby the Agency will be obligated to make future payments when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

Contractual obligations (in thousands of dollars)
  2013 2014 2015 2016 2017 and thereafter Total
Maintenance and Support - Hardware 10 41 35 - - 86
Maintenance and Support - Software 2 - - - - 2
Licence and/or certificate 2,725 2,190 180 360 - 5,455
Other 669 370 77 9 - 1,125
Total 3,406 2,601 292 369 - 6,668

12. Contingent liabilities

Claims and litigation

Claims have been made against the Agency in the normal course of operations. These claims include items with pleading amounts and other for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. The Agency has recorded an allowance for claims and litigations where it is likely that there will be a future payment and a reasonable estimate of the loss can be made.

13. Related party transactions

The Agency is related as a result of common ownership to all government departments, agencies, and Crown corporations. The Agency enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the Agency 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, The Agency received services without charge from certain common service organizations, related to accommodation, the employer's contribution to the health and dental insurance plans, worker's compensation coverage and legal services. These services provided without charge have been recorded in the Agency's Statement of Operations and Departmental Net Financial Position as follows:

Common services provided without charge by other government departments (in thousands of dollars)
  2012 2011
Accommodation 38,819 36,653
Employer's contribution to the health and dental insurance plans 43,235 38,197
Worker's compensation 142 149
Legal services 11 31
Total 82,207 75,030

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 service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as the payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General are not included in the Agency's Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties:

Other transactions with related parties (in thousands of dollars)
  2012 2011
Accounts receivable - Other government departments and agencies 3,812 3,904
Accounts payable - Other government department and agencies 8,600 7,482
Expenses - Other government departments and agencies 20,850 21,125
Revenues - Other government departments and agencies 85,792 75,316

Expenses and revenues disclosed in (b) exclude common services provided without charge, which are already disclosed in (a).

14. Transfers to other government departments

Effective November 15, 2011, the Agency transferred responsibility for the Informatics Technology Services to Shared Services Canada in accordance with Order-in-Council P.C. 2011-1291 to P.C. 1297, including the stewardship responsibility for the assets and liabilities related to the program. Accordingly, the Agency transferred the following assets and liabilities related to Informatics Technology Services to Shared Services Canada on November 15, 2011:

Transfers to other government departments (in thousands of dollars)
Assets: Value
Tangible capital assets (net book value) (note 10) 13,557
Total assets transferred 13,557
Liabilities:  
Vacation pay and compensatory leave 836
Employee future benefits (note 7) 2,925
Total liabilities transferred 3,761
Adjustment to the departmental net financial position 9,796

In addition, the 2011 comparative figures have been reclassified on the Statement of Operations and Departmental Net Financial Position to present the revenues and expenses of the transferred operations.

During the transition period, the Agency continued to administer the transferred activities on behalf of Shared Services Canada. The administered revenues and expenses amounted to $857 and to $18,216 respectively, for the year. These revenues and expenses are not recorded in these financial statements.

15. Segmented information

Presentation by segment is based on the Agency'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 and by major type of revenues. The segment results for the period are as follows:

Segmented information (in thousands of dollars)
  Economic Statistics Social Statistics Census, Demography and Aboriginal Statistics Internal Services 2012 Total 2011
Restated
(note 16)
Transfer payments            
Canadian Institute of Health Information (CIHI) - 561 - - 561 561
Total transfer payments - 561 - - 561 561
Operating expenses            
Salaries and employee benefits 215,299 177,160 161,213 87,003 640,675 531,456
Accommodations 12,604 10,626 10,280 5,309 38,819 36,653
Professional services 6,277 6,027 146,204 3,562 162,070 35,621
Transportation and postage 2,603 12,378 35,772 1,813 52,566 33,201
Amortization 4,959 7,705 11,388 9,396 33,448 25,091
Repairs and maintenance 2,521 1,477 5,151 4,692 13,841 14,964
Materials and supplies 112 1,949 276 650 2,987 8,904
Rentals 683 928 2,633 538 4,782 4,268
Communication and printing 138 264 13,245 461 14,108 19,726
Loss on write-down of inventory 3 5 269 9 286 119
Loss on disposal of tangible capital assets 410 554 746 653 2,363 1,009
Interest component on leased tangible capital assets 2 2 3 3 10 14
Bad debts - 1 5 - 6 1
Other 2 5 36 3 46 53
Total operating expenses 245,613 219,081 387,221 114,092 966,007 711,080
Total Expenses 245,613 219,642 387,221 114,092 966,568 711,641
Revenues            
Special statistical services 22,454 64,394 22,410 2,584 111,842 95,299
Publications 60 172 60 7 299 1,252
Other 3 9 3 - 15 8
Revenues earned on behalf of Government (7) (15) (106) (8) (136) (1,549)
Total Revenues 22,510 64,560 22,367 2,583 112,020 95,010
Net cost from continuing operations 223,103 155,082 364,854 111,509 854,548 616,631

16. Accounting changes

During 2011, amendments were made to Treasury Board Accounting Standard 1.2 - Departmental and Agency Financial Statements to improve financial reporting by government departments and agencies. The amendments are effective for financial reporting of fiscal years ending March 31, 2012, and later. The significant changes to the Agency's financial statements are described below. These changes have been applied retroactively, and comparative information for 2010-2011 has been restated.

Net debt (calculated as liabilities less financial assets) is now presented in the Statement of Financial Position. Accompanying this change, the Agency now presents a Statement of Change in Net Debt and no longer presents a Statement of Equity.

Revenue is now presented net of non-respendable amounts in the Statement of Operations and Departmental Net Financial Position. The effect of this change was to increase the net cost of operations before government funding and transfers by $136 for 2012 ($1,549 for 2011).

Government funding and transfers, as well as the credit related to services provided without charge by other government departments are now recognized in the Statement of Operations and Department Net Financial Position below "Net cost of operations before government funding and transfers". In previous years, the Agency recognized these transactions directly in the Statement of Equity of Canada. The effect of this change was to decrease the net cost of operations after government funding and transfers by $816,616 for 2012 ($650,473 for 2011).

Accounting changes(in thousands of dollars)
  2011
As previously stated
Effect of change 2011
Restated
Statement of Operations and Departmental Net Financial Position:      
Revenues 96,559 (1,549) 95,010
Government funding and transfers      
Net cash provided by Government - 561,047 561,047
Change in due from Consolidated Revenue Fund - 14,396 14,396
Services provided without charge by other government departments - 75,030 75,030
Transfer of assets and liabilities from (to) other government departments - - -

17. Comparative information

Comparative figures have been reflected to conform to the current year's presentation.

18. Summary of the assessment of effectiveness of the system of internal control over financial reporting and the action plan of Statistics Canada (the Agency) for fiscal year 2011-2012

Annex to the Statement of Management Responsibility Including Internal Control Over Financial Reporting

Note to reader

With the Treasury Board Policy on Internal Control, departments are required to demonstrate the measures they are taking to maintain an effective system of internal control over financial reporting (ICFR).

As part of this policy, departments are expected to conduct annual assessments of their system of ICFR, establish action plan(s) to address any necessary adjustments, and to attach to their Statement of Management Responsibility a summary of their assessment results and action plan.

Effective systems of ICFR aim to achieve reliable financial statements and to provide assurances that:

  • Financial information is reliable;
  • Assets are safeguarded;
  • Transactions are properly authorized; and,
  • Transactions are recorded in accordance with the Federal Administration Act and other applicable legislation, regulations, authorities and policies.

It is important to note that the system of ICFR is not designed to eliminate all risks, rather to mitigate risk to a reasonable level with controls that are balanced with and proportionate to the risks they aim to mitigate.

The maintenance of an effective system of ICFR is an ongoing process designed to identify key risks and associated controls, assess control effectiveness and adjust as required as well as to monitor the system of ICFR's performance in support of continuous improvement. As a result, the scope, pace and status of departmental assessments of the effectiveness of their system of ICFR will vary from one organization to another based on risks and taking into account unique circumstances.

1. Introduction

This document is attached to the Agency's Statement of Management Responsibility Including Internal Control over Financial Reporting for the fiscal-year 2011-2012. As required by the Treasury Board Policy on Internal Control, this document provides summary information on the measures taken by the Agency to maintain an effective system of internal control over financial reporting (ICFR). In particular, it provides summary information on the assessments conducted by the Agency as at March 31, 2012, including progress, results and related action plans along with some financial highlights pertinent to understanding the control environment unique to the Agency.

1.1 Authority, Mandate and Program Activities

Detailed information on the Agency's authority, mandate and program activities can be found in the Departmental Performance Report (DPR) and Report on Plans and Priorities (RPP).

1.2 Financial highlights

Financial statements of the Agency for fiscal-year 2011-2012 can be found in the DPR. Other financial information can also be found in the Public Accounts of Canada. The figures stated below are inclusive of transfers to other government departments unless otherwise stated.

  • Total expenses for the year were $985,929.
    • This represents an increase of $243,416 from 2010-11, which is mostly due to the 2011 Census of Population and National Household Survey and the 2011 Census of Agriculture. This is typical for the agency because of the cyclical nature of the census programs: the peak year of the census cycle was 2011-12.
    • Salaries and employee benefits made up the largest portion of the expenses, at $650,456, or 66% of the total.
  • Total revenues for the year were $112,657.
    • This revenue is primarily received through completion of survey work for external clients (such as other governmental departments) on a cost-recovery basis.
  • Total assets for the year were $183,268.
    • Tangible capital assets, composed mainly of informatics software ($79,044), software under development ($32,582) and leasehold improvements ($13,405), made up the largest portion of assets at $134,296, or 73.3% of the total.
    • This represents a decrease in financial assets from 2010-2011, due primarily to the transfer of assets to Shared Services Canada (net book value of $13,557).
  • Total liabilities for the year were $188,572.
    • Employee future benefits made up the largest portion of the liabilities at $82,935 million, or 44.0% of the total. Accounts payable and accrued liabilities were the next largest portion at $78,776 or 41.8% of the total, composed of accounts payable external parties ($17,269), accounts payable to other federal government departments and agencies ($8,600), accrued salaries and wages ($11,482) and accrued liabilities ($41,425).
1.3 Service arrangements relevant to financial statements

The Agency relies on other organizations for the processing of certain transactions that are recorded in its financial statements. The Agency relies on these departments for ensuring that Internal Controls over these systems are appropriate and effective.

  • For processing of all external financial transactions, Statistics Canada uses the Common Departmental Financial System (CDFS). This system, shared across various departments, is hosted by Public Works Governmental Services Canada (PWGSC).
  • PWGSC centrally administers the pay system and the procurement of goods and services falling outside the Agency's contracting delegation of authority.
  • The information the Agency uses to calculate various accruals and allowances, such as the accrued severance liability is provided by the Treasury Board Secretariat.
  • Legal advice, such as contingent liability assessment, is provided by the Legal Services team of the Department of Industry.
1.4 Material changes in fiscal-year 2011-2012

Effective November 15, 2011, the Agency transferred responsibility for Informatics Technology Services (data storage, e-mail, network and telecommunications) to Shared Services Canada, including the stewardship responsibility for the assets and liabilities related to the program. During the transition period, from November 15th 2011 to March 31st 2012, the Agency continued to administer those activities on behalf of Shared Services Canada and continued to apply its system of ICFR over the management of these funds.

No other significant changes that are relevant to the financial statements occurred in 2011-2012.

2. Statistics Canada's control environment relevant to ICFR

The Agency's focus is to ensure that risks are well managed through a responsive and risk-based control environment that enables continuous improvement and innovation.

The Agency's system of ICFR is appropriately designed to promote a sound control environment as described in the Agency's entity-level controls. These entity-level controls are designed to ensure:

  • an effective control environment designed to achieve effective ICFR and to generate reliable financial statements;
  • an effective risk assessment process which identifies, analyzes and manages risks related to financial reporting within a broader corporate risk management framework;
  • an effective information system and communications, which identify, capture and communicate timely information relevant to maintaining the system of ICFR, for the appropriate individuals;
  • an effective monitoring system designed to detect and remediate control deficiencies within the system of ICFR.
2.1 Key positions, roles and responsibilities

Below are the Agency's key positions and committees with responsibilities for maintaining and reviewing the effectiveness of its system of ICFR.

Chief Statistician – The Agency's Chief Statistician, as Accounting Officer, assumes overall responsibility and leadership for the measures taken to maintain an effective system of internal control. In this role, he chairs Policy Committee.

Chief Financial Officer (CFO) – The Agency's CFO reports directly to the Chief Statistician and provides leadership for the coordination, coherence and focus on the design and maintenance of an effective and integrated system of ICFR, including its annual assessment.

Assistant Chief Statisticians (ACS) – The Agency's ACSs, in charge of program delivery are responsible for maintaining and reviewing effectiveness of their system of ICFR falling within their mandate.

Chief Audit Executive (CAE) – The Agency's CAE reports directly to the Chief Statistician and provides assurance through periodic internal audits which are instrumental to the maintenance of an effective system of ICFR.

Departmental Audit Committee (DAC) – The DAC is an advisory committee that provides objective views on the Agency's risk management, control and governance frameworks. It is comprised of 3 external members and 1 internal member (Chief Statistician) and was established in May 2009.

Policy Committee (PC) – Chaired by the Chief Statistician, this is the most senior executive committee in the Agency, providing broad strategic direction. It acts as the body for all decision-making related to the corporate-level management of the Agency including strategic corporate planning, resource allocation, financial management, human resources management, communications and dissemination, program evaluation and information management/information technology.

Administrative Practices Committee (APC) – The APC oversees the development, implementation and application of administrative, financial management, risk management and evaluation practices. It reports to the Policy Committee.

2.2 Key measures taken by Statistics Canada

The Agency's control environment includes a series of measures to equip its staff to manage risks through raising awareness, providing appropriate knowledge and tools as well as developing skills. Key measures include:

Control Environment
  • A code of ethics is in place and communicated to employees.
  • An Assistant Chief Statistician has been identified as the Senior Officer for the Values and Ethics Code.
  • Annual performance agreements are established, including financial management responsibilities.
  • Management has established a Delegation of Financial Signing Authorities.
  • Every Field has established a rigorous Planning Board that include Senior Management within the Field, human resources, finance and information technology representations to ensure an integrated risk, planning and control management practices.
Risk Management
  • A Program Performance Review process is in place whereby each division conducts a formal review on a two year cycle.
  • The Agency has developed a corporate risk framework that includes a Corporate Risk Profile as well as program area Risk Registers that are updated annually.
  • There is an elaborate committee structure that enables sharing of information and risk identification.
Information Systems and Communications
  • A comprehensive technology plan is in place; it is aligned with government-wide direction.
  • Financial updates are provided regularly throughout the year to managers and senior managers.
Monitoring
  • An Internal Control over Financial Reporting program is in place to document and test the effectiveness of key financial controls.
  • Monitoring performed is regarding compliance with respect to S.33 of the FAA.
  • All projects with total costs $150,000 and over are monitored monthly through the Departmental Project Management Framework dashboards that track scope, schedule, costs, issues and risks to the project.
Oversight
  • An Internal Audit and Evaluation function is in place and provides oversight activities through the execution of a Risk-Based Audit Plan.
  • A Department Audit Committee is in place with a scope that includes internal controls.

3. Assessment of Statistics Canada's system of ICFR

3.1 Assessment baseline

Since 2007, the Agency formalized its approach to the management of its system of ICFR with the primary objective being to ensure control effectiveness and improvement. To determine the assessment baseline (i.e. scope of the ICFR initiative), a comprehensive scoping and planning exercise was undertaken to identify key business processes, entity-level control areas and general computer control areas.

The following key business processes were identified:

  • Financial Close and Reporting;
  • Census Payroll;
  • Payroll and Benefits;
  • Interviewer Payroll;
  • Operating Expenditures;
  • Revenues; and,
  • Capital Assets.

For Entity-Level Controls (ELCs), the overarching controls of the Agency that set the "tone at the top", the following areas were identified: control environment, risk assessment, information systems and communication and monitoring.

For General Computer Controls (GCCs), some unique processes were identified: information systems operations, information security (logical and physical) and change management.

3.2 Assessment Method at Statistics Canada

Consistent with the Treasury Board Policy on Internal Control, the Agency implemented in 2009-2010 a systematic risk-based and multi-year assessment plan of the design and operating effectiveness of its systems of ICFR.

Through design effectiveness testing, the Agency ensures that key controls relevant to ICFR have been properly identified, documented, in place and that they are aligned with the risks they aim to mitigate and that any remediation is addressed appropriately and in a timely manner.

Through operating effectiveness testing, the Agency ensures that the application of key controls over financial reporting has been tested over a defined period, they are working as intended and that any required remediation is addressed appropriately and in a timely manner.

In addition, such assessments of the effectiveness of the Agency's ICFR are completed on entity, general computer and business process controls.

4. Departmental assessment results as of March 31, 2012

As of March 31, 2012, the Agency had completed a review of its most significant accounts and has identified its key business processes (see section 3.1). For each of these accounts the Agency has identified the key business processes, related IT applications and locations that support the integrity of financial transactions, assets and information. The following summarizes key assessment results from the design and operating effectiveness testing completed by the Agency to date.

4.1 Design effectiveness of key controls

Key risks (with related control objectives) along with the key controls to address these risks were identified and documented for each business processes. In addition, the Agency has completed design effectiveness testing for all of its key business processes, entity-level controls and general computer controls.

During this exercise, many controls were found to be in place and the design was appropriate. Some gaps or weaknesses were noted and remediation requirements were identified to enable corrective action. As a result of these assessments, the Agency identified remediation requirements in the following key areas:

  1. Documentation and evidence of controls
    • Greater consistency in the quality and availability of documentation of controls and procedures; and,
    • In some instances, enhanced evidence of performance of control activities.
  2. Access controls
    • Strengthened controls related to user access, segregation of duties and the monitoring of user roles.

The Agency has made significant progress with respect to remediating the controls weaknesses and gaps identified.

4.2 Operating effectiveness of key controls

The Agency has conducted operating effectiveness testing for all of the key business processes, the entity-level controls and general computer controls.

In general, the operating effectiveness review process confirmed design effectiveness testing results. Many controls were found to be in place and operating effectively. Some gaps or weaknesses were noted and remediation requirements were identified to enable corrective action. As a result of these assessments, remediation requirements were identified in the following key areas:

  1. Documentation and evidence of controls
    • Greater consistency in the quality and availability of documentation of controls and procedures; and,
    • In some instances, enhanced evidence of performance of control activities.
  2. Access controls
    • Strengthened controls related to user access, segregation of duties and the monitoring of user roles.

As mentioned above, the Agency has made significant progress with respect to remediating the controls weaknesses and gaps identified.

5. Statistics Canada's Action Plan

5.1 Progress as of March 31, 2012

The Agency has completed the design effectiveness testing for all of its key business processes and entity-level controls. The Agency has also completed operating effectiveness testing for all of its key business processes, entity-level controls and general computer controls. In addition, the Agency developed a risk-based, multi-year monitoring plan which outlines the testing required on an annual basis. As of March 31, 2012, the Agency has nearly completed the first three years of the monitoring plan.

5.2 Action plan for the next fiscal year and subsequent years

After completing a full review of key business processes during the last fiscal year, the Agency is now planning a major restructuring of its administrative processes during FY 2012-2013. As this will include the streamlining and modification of several business processes that have an impact on Financial Reporting results, the current risk-based monitoring plan will need to be revised. In the meantime, the Agency will continue to remediate control gaps and weaknesses identified during previously-completed operating effectiveness testing, as well as test the following business processes, identified in its risk-based multi-year plan and not believed to be impacted by the restructuring:

  • Direct and Precise Monitoring (Entity Level Controls)
  • General Computer Controls (including Logical Security)

Further business processes may also be tested in 2012-13, once new business processes are implemented and the risk-based monitoring plan is revised.

In order to facilitate the action plan, the services of an external accounting firm have been retained, for a period which may extend up to 2014-2015. In addition, Internal Audit of the Agency will be performing Audit of Key Financial Controls in FY 2012/13. The scope of the audit encompasses an assessment of the operational effectiveness of the key financial controls that are either common or specific to the following significant classes of transactions:

  • Salary and Wage Expenses
  • Purchase of Goods and Services
  • Acquisition Card Purchases
  • Capital Assets
  • Accounts Receivable/Cost Recovery
  • Internal Budget Transfers
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