Future-oriented Statement of Operations

Future-oriented Statement of Operations (unaudited)
For the year ending March 31
(in thousands of dollars)
  Forecast Results
2016-17
Planned Results
2017-18
Expenses
Legal Services to Government Program 489,758 508,376
Stewardship of the Canadian Legal Framework 446,742 418,216
Office of the Federal Ombudsman for Victims of Crime 1,344 1,430
Internal Services 144,443 109,921
Total expenses 1,082,287 1,037,943
Revenues
Legal services 337,701 332,017
Family Law fees 8,132 8,132
Common Services 2,893 2,893
Other revenues 822 822
Revenues earned on behalf of Government (54,467) (47,664)
Total revenues 295,081 296,200
Net cost of operations before government funding and tranfers 787,206 741,743

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

Notes to the Future-oriented Statement of Operations

1. Methodology and significant assumptions

The Future-Oriented Statement of Operations has been prepared on the basis of government priorities and departmental plans as described in the Departmental Plan.

The information in the forecast results for fiscal year 2016-17 is based on actual results as at December 31, 2016, and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the fiscal year 2017-18.

The main assumptions underlying the forecasts are as follows:

(a) The Department's activities will remain substantially the same as in the previous year.

(b) Expenses and revenues, including the determination of amounts internal and external to the government, are based on past experience. The general historical pattern is expected to continue.

These assumptions are adopted as at December 31, 2016.

2. Variations and changes to the forecast financial information

Although every attempt has been made to forecast final results for the remainder of 2016-17 and for 2017-18, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing this Future-Oriented Statement of Operations, the Department of Justice has made estimates and assumptions about the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are based on past experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, and are continually evaluated.

Factors that could lead to material differences between the Future-Oriented Statement of Operations and the historical statement of operations include:

(a) The implementation of new collective agreements.

(b) The timing and amount of acquisitions and disposals of tangible capital  assets may affect gains, losses and amortization expenses.

(c) Economic conditions, which may affect both the amount of revenue earned and the collectability of receivables.

(d) Other changes to the operating budget, such as new initiatives or technical adjustments later in the fiscal year.

After the Departmental Plan is tabled in Parliament, the Department of Justice will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Results Report.

3. Summary of significant accounting policies

The Future-Oriented Statement of Operations has been prepared using the Government of Canada’s accounting policies in effect for fiscal year 2016-17, and is based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

(a) Expenses

The Department records expenses on an accrual basis. Expenses for the Department’s operations are recorded when goods are  received  or  services  are  rendered,  including  services  provided  without  charge  for  accommodation, employer contributions to health and dental insurance plans and workers’ compensation, which are recorded as expenses at their estimated cost. Vacation pay and compensatory leave, as well as severance benefits, are accrued, and expenses are recorded as the benefits are earned by employees under their terms of employment.

Transfer payments are recorded as expenses when the recipients have met all the eligibility criteria and the transfers are authorized by March 31. In the case of transfers that do not form part of an existing program, the transfers are considered to be authorized 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.

Expenses related to the provision of legal services are limited to those costs borne and settled directly by the Department. The cost of legal services which are paid directly by client departments to outside suppliers such as legal agents, are not included in the expenses of the Department.

Expenses also include provisions to reflect changes in the value of assets, including provisions for bad debt on accounts receivable, or liabilities, including contingent liabilities to the extent the future event is likely to occur and a reasonable estimate can be made. Under the Family Orders and Agreements Enforcement Assistance Act, the allowance for doubtful accounts represents management's best estimate of probable losses on receivables. The allowance is determined based on an analysis of historic loss experience and an assessment of current conditions.

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

(b) Revenues

Revenues are derived from the provision of advisory, litigation and legislative services provided by the Department of Justice's law practitioners and are recognized in the year the services are rendered. These revenues are based on legal service rates approved by the Treasury Board in accordance with the Common Services Policy, for non-appropriated mandatory legal services to government departments and agencies as well as legal services to crown corporations and non-federal organizations.

Service and administration fee revenues under the Family Law programs are recognized based on services provided in the year, such as upon validation of the garnishment application or upon issuance of the divorce clearance certificate. As prescribed  by the Family Orders  and Agreements Enforcement  Assistance Act, a fee is chargeable  in respect of the processing of every garnishee summons served on the Minister.

Common Services revenues are derived in accordance with the Common Services Policy for specific internal services provided to Public Prosecution Service of Canada (PPSC).

Fines, forfeitures and awarded court costs provided for under the Contraventions Act are recognized upon receipt of payment by the Department. Fines and forfeitures are in effect penalties for illegal actions, rather than fees. These revenues are reported in "Other revenues".

Revenues that are non-respendable are not available to discharge the Department's liabilities. While expected to maintain accounting control, the Deputy Minister 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 as a reduction of the department's gross revenues.

4. Parliamentary authorities

The Department is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the Department do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the future- oriented statement of operations are not necessarily the same as those provided through authorities from parliament. Items recognized in the future-oriented statement of operations in one year may be funded through parliamentary authorities in prior, current, or future years. The differences are reconciled in the following tables:

(a) Reconciliation of net cost of operations to requested authorities
(in thousands of dollars)
  Forecast
2016-17
Planned
2017-18
Net cost of operations before government funding and transfers 787,206 741,743
Adjustment for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (11,740) (12,660)
Services provided without charge by other government departments (87,341) (85,998)
Decrease in vacation pay and compensatory leave 259 255
Decrease (Increase) in employee future benefits 435 (92)
Adjustments to previous years' accounts payable 7,825 7,773
Bad debt expense (4,644) (4,644)
Total items affecting net cost of operations but not affecting authorities (95,206) (95,366)
Adjustment for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets 9,783 9,783
Total items not affecting net cost of operations but affecting authorities 9,783 9,783
Requested authorities 701,783 656,160
(b) Authorities requested
(in thousands of dollars)
  Forecast
2016-17
Planned
2017-18
Authorities requested:
Vote 1 – Operating expenditures 245,412 234,301
Vote 5 – Grants and contributions 375,638 350,315
Statutory amounts 80,733 71,544
Requested authorities 701,783 656,160
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