Archived – Financial statements, March 31, 2013

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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, 2013, 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 (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; organizational arrangements that provide appropriate divisions of responsibility; communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the Agency; and 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, assess effectiveness of associated key controls, and make any necessary adjustments.

A risk-based assessment of the system of ICFR for the year ended March 31, 2013 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 17).

The effectiveness and adequacy of the Agency's system of internal control is reviewed by 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 provides the Chief Statistician with objective advice and recommendations regarding the sufficiency, quality and results of assurance on the adequacy and functioning of Statistics Canada's risk management, control and governance processes (including accountability and auditing systems). It does this by using a risk-based approach, reviewing all core areas of the Agency's management, control and accountability processes, including reporting.

The financial statements of Statistics Canada have not been audited.

The original version was signed by
Wayne R. Smith, Chief Statistician
Stéphane Dufour, Chief Financial Officer.

Statement of Financial Position (Unaudited)
As at March 31

(in thousands of dollars)
  2013 2012
Liabilities    
Accounts payable and accrued liabilities (Note 4) 39,331 78,776
Vacation pay and compensatory leave 20,869 23,362
Deferred revenue (Note 5) 914 3,200
Lease obligation for tangible capital asset (Note 6) 161 299
Employee future benefits (Note 7b) 46,158 82,935
Total net liabilities 107,433 188,572
Financial assets    
Due from Consolidated Revenue Fund 31,660 33,270
Accounts receivable and advances (Note 8) 8,433 8,532
Total net financial assets 40,093 41,802
Departmental net debt 67,340 146,770
Non-financial assets    
Prepaid expenses 6,416 3,655
Inventory and consumable supplies (Note 9) 483 3,515
Tangible capital assets (Note 10) 119,813 134,296
Total non-financial assets 126,712 141,466
Departmental net financial position 59,372 (5,304)
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)
  Planned Results
2013
2013 2012
Expenses      
Economic Statistics 244,554 227,109 245,613
Social Statistics 206,506 205,415 219,642
Census, Demography and Aboriginal Statistics 104,929 89,969 387,221
Internal Services 111,706 108,645 114,092
Total expenses 667,695 631,138 966,568
Revenues      
Special statistical services 97,748 94,003 111,842
Publications - 81 299
Other - 105 15
Revenues earned on behalf of Government of Canada - (2,364) (136)
Total revenues 97,748 91,825 112,020
Net cost from continuing operations 569,947 539,313 854,548
Transferred operations (Note 14)      
Expenses - - 19,361
Revenue - - 637
Net cost of transferred operations - - 18,724
Net cost of operations before government funding and transfers 569,947 539,313 873,272
Government funding and transfers      
Net cash provided by Government of Canada 486,487 524,357 770,561
Change in due from Consolidated Revenue Fund 2,375 (1,610) (26,356)
Services provided without charge by other federal government departments (Note 13a) 73,414 81,431 82,207
Transfer of capital assets to other government department - (189) -
Transfer of assets and liabilities to other government department (Note 14) - - (9,796)
Net cost (revenue) of operations after government funding and transfers 7,671 (64,676) 56,656
Departmental net financial position - Beginning of year 54,414 (5,304) 51,352
Departmental net financial position - End of year 46,743 59,372 (5,304)
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)
  Planned Results
2013
2013 2012
Net cost (revenue) of operations after government funding and transfers 7,671 (64,676) 56,656
Change due to tangible capital assets      
Acquistion of tangible capital assets (Note 10) 25,962 24,960 31,427
Amortization of tangible capital assets (Note 10) (34,240) (34,383) (37,120)
Net loss on disposal of tangible capital assets - (5,117) (2,363)
Adjustment to tangible capital assets - 246 -
Capital asset transfer to other government department - (189) -
Transfer to other government department (Note 14) - - (13,557)
Total change due to tangible capital assets (8,278) (14,483) (21,613)
Change due to inventory and consumable supplies (52) (3,032) 147
Change due to prepaid expenses - 2,761 (2,344)
Net increase (decrease) in departmental net debt (659) (79,430) 32,846
Departmental net debt - Beginning of year 104,272 146,770 113,924
Departmental net debt - End of year 103,613 67,340 146,770
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)
  2013 2012
Operating activities    
Net cost of operations before government funding and transfers 539,313 873,272
Non-cash items:    
Amortization of tangible capital assets (Note 10) (34,383) (37,120)
Loss on disposal of tangible capital assets (5,117) (2,363)
Services provided without charge by other federal government departments (Note 13a) (81,431) (82,207)
Adjustments to tangible capital assets 246 -
Variations in Statement of Financial Position:    
(Increase) decrease in accounts payable and accrued liabilities 39,445 (14,751)
(Increase) decrease in vacation pay and compensatory leave 2,493 908
(Increase) decrease in deferred revenue 2,286 1,015
(Increase) decrease in employee future benefits 36,777 7,800
Increase (decrease) in accounts receivable and advances (99) (1,638)
Increase (decrease) in prepaid expenses 2,761 (2,344)
Increase (decrease) in inventory and consumable supplies (3,032) 147
Transfer of liabilities to other government department (Note 14) - (3,761)
Cash used in operating activities 499,259 738,958
Capital investing activities    
Acquisitions of tangible capital assets, excluding capital leases (Note 10) 24,960 31,427
Cash used in capital investing activities 24,960 31,427
Financing activities    
Payments of lease obligation for tangible capital assets 138 176
Cash used in financing activities 138 176
Net cash provided by Government of Canada 524,357 770,561
The accompanying notes form an integral part of these financial statements.

Notes to the Financial Statements (Unaudited)
For the year ended March 31

1. Authority and objectives

Statistics Canada 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 in 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 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 in accordance with Treasury Board accounting policies in effect for the 2012-13 fiscal year. These accounting policies, stated below, are based on Canadian generally accepted accounting principles for the public sector. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian generally accepted accounting principles.

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 2012-13 Report on Plans and Priorities. The future-oriented financial statements have also been reclassified to conform to the current year presentation.
  2. Net cash provided by Government of Canada — 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; all cash disbursements made by the Agency are paid from the CRF. The net cash provided by the Government of Canada is the difference between all cash receipts and all cash disbursements, including transactions between federal government departments.
  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 received for special statistical services are recorded as deferred revenue upon receipt. These amounts are recognized as revenue in the period in which the services are rendered and related expenses are incurred.
    • Publication and 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 Agency'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 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 federal 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
    • i. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer pension plan administered by the Government of Canada. 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, 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 of Canada as a whole.
  7. Accounts receivable — 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 that 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 includes publications and special statistical services that will be sold in the future in the ordinary course of business. Inventory is valued at the average production cost.
  10. Consumable supplies — Consumable supplies include items held for future program delivery and not that are intended for resale. These supplies are recorded at the acquisition cost. If there is no longer a service potential, the supplies are valued at the lower of cost or net realizable value.
  11. 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, 2013. Gains and losses resulting from foreign currency transactions are included in the Statement of Operations and Departmental Net Financial Position.
  12. 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.

    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 assets under development are recorded in the applicable capital asset class in the year that they become available for use. They are not amortized until that time.
     
  13. 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)
  2013 2012
Net cost of operations before government funding and transfers 539,313 873,272
Adjustments for items affecting net cost of operations but not affecting authorities:    
Add (Less):    
Amortization of tangible capital assets (Note 10) (34,383) (37,120)
Loss on disposal of tangible capital assets (5,117) (2,363)
Services provided without charge by other federal government departments (Note 13a) (81,431) (82,207)
Increase in accrued liabilities not charged to authorities (946) (41,109)
Decrease in vacation pay and compensatory leave 2,493 72
Decrease in employee future benefits 36,777 4,875
Adjustments to tangible capital assets 246 -
Refunds of previous years' expenditures 636 1,082
Revenue not available for spending in the fiscal year 645 (1,790)
Consumption of prepaid expenses (7,366) (12,018)
Loss on write-down of inventory (130) (286)
Bad debt expense (13) (6)
Inventory usage (2,902) 433
Total items affecting net cost of operations but not affecting authorities (91,491) (170,437)
Adjustments for items not affecting net cost of operations but affecting authorities:    
Accrued liabilities charged to authorities 36,844 -
Payment of lease obligations for tangible capital assets 138 176
Acquisitions of prepaid expenses 10,127 9,674
Acquisitions of tangible capital assets, excluding capital leases 24,960 31,427
Total items not affecting net cost of operations but affecting authorities 72,069 41,277
Current year authorities used 519,891 744,112
(b) Authorities provided and used
(in thousands of dollars)
  2013 2012
Authorities provided:    
Vote 105 - Operating expenditures 472,275 709,584
Statutory amounts 79,837 86,408
Total authorities provided 552,112 795,992
Less:    
Lapsed: Operating (32,221) (51,880)
Current year authorities used 519,891 744,112

4. Accounts payable and accrued liabilities

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

Accounts payables and accrued liabilities
(in thousands of dollars)
  2013 2012
Accounts payable - external parties 12,906 17,269
Accounts payable - other federal government departments and agencies 11,857 8,600
Accrued salaries and wages 9,041 11,482
Accrued liabilities 5,527 41,425
Total accounts payable and accrued liabilities 39,331 78,776

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 2012-13. As a result, the Agency has recorded at March 31, 2013, an obligation for termination benefits for an amount of $5.5 million ($41.4 million in 2011-12) as part of accrued liabilities to reflect the estimated workforce adjustment costs.

5. Deferred revenue

The Agency 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 for specific statistical services. Revenue is recognized in the period in which these expenditures are incurred or in which the service is rendered. Details of the transactions related to this account are as follows:

Deferred revenue
(in thousands of dollars)
  2013 2012
Opening balance 3,200 4,215
Amount received 91,179 113,810
Revenue recognized (93,465) (114,825)
Net closing balance 914 3,200

6. Lease obligation for tangible capital assets

The Agency has entered into agreements to lease all photocopiers under capital lease with a cost of $507,330 and accumulated amortization of $350,765 as at March 31, 2013 ($715,720 and $423,174, respectively, as at March 31, 2012). Obligations for the coming years include the following:

Lease obligation for tangible capital assets
(in thousands of dollars)
  2013 2012
2013 - 144
2014 90 89
2015 52 52
2016 22 22
2017 2 2
2018 and thereafter - -
Total future minimum lease payments 166 309
Less : imputed interest (1.66% to 3.53%) (5) (10)
Balance of obligations under leased tangible capital assets 161 299

7. Employee future benefits

(a) Pension benefits

The Agency's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Quebec Pension Plans benefits and they are indexed to inflation.

Both the employees and the Agency contribute to the cost of the plan. The 2012-13 expense amounts to $57 million ($62.1 million in 2011-12), which represents approximately 1.7 times (1.8 in 2011-12) the contributions by employees.

The Agency's responsibility to the plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, the plan's sponsor.

(b) Severance benefits

The Agency 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, 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)
  2013 2012
Accrued benefit obligation - Beginning of year 82,935 90,735
Transferred to other government department, effective November 15, 2011 (Note 14) - (2,925)
Subtotal 82,935 87,810
Expense or adjustment for the year 4,731 17,090
Benefits paid during the year (41,508) (21,965)
Accrued benefit obligation - End of year 46,158 82,935

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)
  2013 2012
Receivables - other federal government departments and agencies 2,017 3,812
Receivables - external parties 6,304 4,466
Employee advances 127 269
Subtotal 8,448 8,547
Allowance for doubtful accounts on receivables from external parties (15) (15)
Net accounts receivable and advances 8,433 8,532

9. Inventory and consumable supplies

The following table presents details of inventory and consumable supplies:

Inventory and consumable supplies
(in thousands of dollars)
  2013 2012
Consumable supplies 483 3,305
Inventory - 210
Total inventory 483 3,515

The cost of consumed inventory recognized as an expense in the Statement of Operations and Departmental Net Financial Position is $319,900 in 2012-13 ($433,167 in 2011-12).

10. Tangible capital assets

Tangible capital assets
(in thousands of dollars)
  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 2013 2012
Computer hardware 30,874 20 21,319 (2,200) 7,375 22,544 2,681 17,447 (935) 6,843 532 8,330
Computer software 180,545 63 6,335 26,148 200,421 101,501 30,515 5,097 - 126,919 73,502 79,044
Other equipment 4,001 230 736 (117) 3,378 3,469 348 736 (283) 2,798 580 532
Motor vehicles 1,127 890 185 - 1,832 1,017 42 179 - 880 952 110
Leasehold improvements 16,515 72 - - 16,587 3,110 661 - - 3,771 12,816 13,405
Software under development 32,582 23,685 - (24,993) 31,274 - - - - - 31,274 32,582
Leased tangible capital assets 716 - 208 - 508 423 136 208 - 351 157 293
Total 266,360 24,960 28,783 (1,162) 261,375 132,064 34,383 23,667 (1,218) 141,562 119,813 134,296
Notes:
Footnote 1

Adjustments include software assets under development of $25,081,660 that were transferred to computer software upon completion of the assets.

Return to footnote 1 referrer

The Agency transferred computer hardware and other equipment with a net book value of $188,857 to Shared Services Canada.

11. Contractual obligations

The nature of 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 or goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

Contractual obligations
(in thousands of dollars)
  2014 2015 2016 2017 Total
Professional services 1,137 - - - 1,137
Survey supplies and services 1,060 50 - - 1,110
Acquisition of capital assets 740 - - - 740
Licence, maintenance and/or support - software 520 144 - - 664
Repairs and maintenance 136 65 45 - 246
Other 782 110 39 4 935
Total 4,375 369 84 4 4,832

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 others for which no amount is specified. The total amount claimed in these actions is not material, and their outcomes are not determinable.

13. Related party transactions

The Agency is related, as a result of common ownership, to all federal 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 federal government departments as disclosed below.

(a) Common services provided without charge by other federal 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, workers' 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)
  2013 2012
Accommodation 38,874 38,819
Employer's contribution to the health and dental insurance plans 42,407 43,235
Worker's compensation 147 142
Legal services 3 11
Total 81,431 82,207

The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes, and economical 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)
  2013 2012
Accounts receivable - other federal government departments and agencies 2,017 3,812
Accounts payable - other federal government departments and agencies 11,857 8,600
Expenses - other federal government departments and agencies 8,427 20,850
Revenues - other federal government departments and agencies 76,644 85,792

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

14. Transfers to other government department

Effective November 15, 2011, the Agency transferred responsibility for 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 department
(in thousands of dollars)
  2013 2012
Assets:    
Tangible capital assets (net book value) - 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

During the transition period from November 16, 2011 to March 31, 2012, the Agency continued to administer the transferred activities on behalf of Shared Services Canada. The administered revenues and expenses amounted to $0.9 million and $18 million, respectively, for the period. These revenues and expenses are not recorded in these financial statements.

15. Segmented information

Presentation by segment is based on the Agency'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 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 2013 Total 2012
Transfer payments            
Canadian Institute of Health Information (CIHI) - - - - - 561
Operating expenses            
Salaries and employee benefits 185,984 161,050 68,016 83,294 498,344 640,675
Accommodations 14,508 12,563 5,306 6,497 38,874 38,819
Professional services 5,422 5,892 1,958 5,476 18,748 162,070
Transportation and postage 1,885 9,091 1,568 639 13,183 52,566
Amortization 16,503 6,561 9,678 1,641 34,383 33,448
Repairs and maintenance 26 79 34 908 1,047 13,841
Materials and supplies 893 6,516 246 1,934 9,589 2,987
Rentals 1,632 1,824 2,248 5,395 11,099 4,782
Communication and printing 89 63 6 383 541 14,108
Loss on write-down of inventory 21 15 1 93 130 286
Loss on disposal of tangible capital assets 135 1,720 899 2,363 5,117 2,363
Interest component on leased tangible capital assets - 2 1 3 6 10
Bad debts - 13 - - 13 6
Other 11 26 8 19 64 46
Total operating expenses 227,109 205,415 89,969 108,645 631,138 966,007
Total expenses 227,109 205,415 89,969 108,645 631,138 966,568
Revenues            
Special statistical services 22,265 47,632 21,256 2,850 94,003 111,842
Publications 19 41 18 3 81 299
Other 25 53 24 3 105 15
Revenues earned on behalf of Government (560) (1,198) (534) (72) (2,364) (136)
Total revenues 21,749 46,528 20,764 2,784 91,825 112,020
Net cost from continuing operations 205,360 158,887 69,205 105,861 539,313 854,548

16. Comparative information

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

17. 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 2012-13

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

1. Introduction

This document provides summary information on the measures taken by Statistics Canada to maintain an effective system of internal control over financial reporting (ICFR) including information on internal control management, assessment results and related action plans.

Detailed information on Statistics Canada's authority, mandate and program activities can be found in its Departmental Performance Report and Report on Plans and Priorities.

2. Departmental system of internal control over financial reporting

2.1 Internal control management

Statistics Canada has a well-established governance and accountability structure to support departmental assessment efforts and oversight of its system of internal control. A departmental internal control management framework, approved by the Deputy Head and reviewed by the Departmental Audit Committee (DAC), is in place and includes:

  • Organizational accountability structures as they relate to internal control management to support sound financial management, including roles and responsibilities of senior managers in their areas of responsibility for control management;
  • Values and ethics;
  • Ongoing communication and training on statutory requirements, and policies and procedures for sound financial management and control; and
  • At least semi-annual monitoring of and regular updates on internal control management, as well as the provisions of related assessment results and action plans to the Deputy Head and departmental senior management and DAC.

The DAC provides advice to the Deputy Head on the adequacy and functioning of the agency's risk management, control and governance frameworks and processes.

2.2 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 as follows.

Common arrangements

  • For processing of all external financial transactions, Statistics Canada uses the Common Departmental Financial System. This system, shared across various departments, is hosted by Public Works and Government Services Canada (PWGSC);
  • PWGSC centrally administers the payments of salaries and the procurement of goods and services, in accordance with the Agency's Delegation of Authority, and provides accommodation services;
  • The Treasury Board of Canada Secretariat provides the agency with information used to calculate various accruals and allowances, such as the accrued severance liability;
  • The Department of Justice Canada provides legal services to Statistics Canada;
  • Shared Services Canada provides information technology (IT) infrastructure services to the agency in the areas of data centre and network services. The scope and responsibilities are addressed in the interdepartmental arrangement between Shared Services Canada and the Agency.

3. Departmental assessment results during fiscal year 2012-13

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 that required a reassessment. During the year, a new human resources portal was launched, and subsequent conversion testing was performed. No significant deficiencies were found in the conversion plan.

Ongoing monitoring program — As part of its rotational ongoing monitoring plan, the Agency completed its reassessment of direct and precise, financial closing and reporting, budgeting and forecasting, and parts of IT general controls. For the most part, the key controls tested performed as intended, with remediation required as follows:

Budgeting and financial reporting

  • In some instances, enhanced evidence of performance of control activities should be retained.

IT general controls

  • Lack of periodic review of user access to financial systems and folders.
  • In some instances, increased documentation of control procedures could be beneficial.

4. Statistics Canada's action plan

4.1 Progress during fiscal year 2012-13

The Agency continued to conduct its ongoing monitoring according to the previous fiscal year's rotational plan as shown in the following table.

4.1a Progress during fiscal year 2012-13
Previous year’s rotation ongoing monitoring plan for current year Status
Direct and precise monitoring (entity level controls) Completed as planned; no remedial actions required
General computer controls (including logical security) Completed as planned; remedial actions started

In 2012-13, the Agency conducted the following work in addition to the progress made in ongoing monitoring:

4.1b Progress during fiscal year 2012-13
Additional work Status
Tested the implementation of the human resources portal conversion Completed; no remedial actions required
Operating effectiveness testing: financial close and reporting process Completed; remedial actions started
Operating effectiveness testing: budgeting and forecasting process Completed; remedial actions started
Tested the design of an operating expenditure sub-process (for travel) No significant weaknesses identified

As part of the annual strategic plan, it was decided to postpone testing of the following business cycles as described below:

business cycles
Business process Reason for postponing Proposed action
Operating expenditures Significant process change due to occur in 2013-14 New process will be tested in 2014-15
Revenues System change upcoming in late 2012-13 Process will be tested in 2013-14
Capital assets System change upcoming in early 2013-14 Process and conversion will be tested in 2013-14

Follow-ups were done on previous years' testing recommendations and proposed remediation plans.

In late 2012-13, Statistics Canada's Internal Audit Division performed an Audit of Key Financial Controls, comprising mainly of an examination of processes and mechanisms in place for selected key steps within the internal control framework. The audit concluded that the Agency has met all the significant requirements for the Policy on Internal Control. They identified a few minor weaknesses, which management will address in the next fiscal year. The key findings were as follows:

  • increasing governance and documentation surrounding strategy updates;
  • ensuring testing of compensatory controls during system changes;
  • increase the emphasis of remediation of identified weaknesses.

In addition to the ongoing monitoring work described above, the Agency has in place a rigorous pre- and post-payment verification process and governance. The Agency tests, on a sample basis, transactions for compliance with the Financial Administration Act and specific spending requirements.

4.2 Action plan for the next fiscal year and subsequent years

The Agency'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:

Rotational Ongoing Monitoring Plan for ICFR
Key control areas Operating effectiveness testing rotation
Fiscal year
2013-14
Fiscal year
2014-15
Fiscal year
2015-16
Financial closing and reporting   Yes  
Budgeting and forecasting   Yes  
Payroll and benefits Yes   Yes
Interviewer's pay Yes   Yes
Capital assets Yes   Yes
Operating expenditures   Yes  
Revenue Yes    
Census To be tested in 2016-17
Direct and precise Yes Yes Yes
Information Technology General Controls Yes Yes Yes

Ongoing follow-ups are to be performed on previous years' testing recommendations and proposed remediation plans. For business cycles whose testing was postponed, the compensating controls will be tested.

The Agency is currently restructuring its administrative processes: this should be completed in fiscal year 2014-15. The restructuring will include the streamlining and modification of several business processes that have an impact on financial reporting results. The new processes will be aligned with common business practices that are used across the federal government. As a result, the current documentation will have to be updated and the risks reassessed. Furthermore, design and implementation testing will be conducted on the new business processes.

A policy on internal control steering committee will be created in early 2013-14 to oversee the remediation and implementation of weaknesses identified. The committee will also help stress the importance of internal controls across the Agency.

To facilitate the action plan and to provide objective independent advice, the services of an external accounting firm have been retained.

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