Financial Statements

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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, 2011 and all information contained in these statements rests with departmental management. These financial statements have been prepared by management in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector.

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 Department’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada and included in the Department’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 Department; and through conducting an annual assessment of the effectiveness of the system of internal control over financial reporting.

An assessment for the year ended March 31, 2011 was completed in accordance with the Policy on Internal Control and the results and action plans are summarized in the annex.

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. The effectiveness and adequacy of the Department’s system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of the Department's operations, and by the Departmental Audit Committee, which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting, and which recommends the financial statements to the Deputy Head of the Department.

The financial statements of the Department have not been audited.

Statement of Financial Position (unaudited)
As at March 31
(in thousands of dollars)

Assets

	2011	2010
Financial assets
Due from the Consolidated Revenue Fund	424,418	444,915
Receivables and advances (Note 4)	24,488	19,151
Total financial assets	448,906	464,066
Non-financial assets
Prepaid expenses	70	85
Tangible capital assets (Note 5)	43,916	40,282
Total non-financial assets	43,986	40,367
Total	492,892	504,433

Liabilities and Equity of Canada

Liabilities	2011	2010
Accounts payable and accrued liabilities (Note 6)	63,667	70,284
Family Law account (Note 7)	4,962	6,578
Transfer payments payable	392,331	400,114
Vacation pay and compensatory leave	19,157	18,082
Employee severance benefits (Note 8)	91,517	90,297
Total liabilities	571,634	585,355
Deficit of Canada	(78,742)	(80,922)
Total	492,892	504,433

Contingent liabilities (Note 9)
Contractual obligations (Note 10)
The accompanying notes form an integral part of these financial statements.

Statement of Operations (unaudited)
For the year ended March 31
(in thousands of dollars)

	2011	2010
Expenses
Services to government	497,368	456,876
Justice policies, laws and programs	459,126	455,209
The Office of the Federal Ombundsman for Victims of Crime	1,394	1,353
Internal Services	169,107	161,923
Total expenses	1,126,995	1,075,361
Revenues
Services to government	298,300	240,723
Justice policies, laws and programs	8,464	8,603
Internal Services	30,882	21,622
Total revenues	337,646	270,948
Net cost of operations	789,349	804,413

The accompanying notes form an integral part of these financial statements.

Statement of Equity of Canada (unaudited)
For the year ended March 31
(in thousands of dollars)

	2011	2010
Deficit of Canada, beginning of year	(80,922)	(107,914)
Net cost of operations	(789,349)	(804,413)
Change in due from the Consolidated Revenue Fund	(20,497)	46,898
Net cash provided by Government	726,630	702,045
Services provided without charge by other government departments (Note 11)	85,396	82,462
Deficit of Canada, end of year	(78,742)	(80,922)

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)

Operating activities	2011	2010
Net cost of operations	789,349	804,413
Non-cash items
Amortization of tangible capital assets (Note 5)	(11,389)	(10,700)
Gain on disposal and transfer of capital assets	11	-
Services provided without charge by other government departments (Note 11)	(85,396)	(82,462)
Variations in Statement of Financial Position
Increase (decrease) in accounts receivable and advances	5,337	(540)
(Decrease) increase in prepaid expenses	(15)	7
Decrease (increase) in liabilities	13,721	(22,819)
Cash used by operating activities	711,618	687,899

Capital investment activities	2011	2010
Acquisitions of tangible capital assets (Note 5)	15,023	14,146
Proceeds from disposal of tangible capital assets	(11)	-
Cash used by capital investment activities	15,012	14,146
Net cash provided by Government	726,630	702,045

The accompanying notes form an integral part of these financial statements.

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