Future-oriented Statement of Operations

Future-oriented Statement of Operations (unaudited)
For the year ending March 31
(in thousands of dollars)
  Forecast Results 2017-18 Planned Results 2018-19
Legal Services
488,848 493,924
Justice System Support
472,418 473,006
Internal Services
149,852 101,925
Total expenses
1,111,118 1,068,855
Legal services
358,619 330,918
Family Law fees
8,502 8,502
Common services
2,522 2,522
Other revenues
761 761
Revenues earned on behalf of Government
(55,529) (46,503)
Total revenues
314,875 296,200
Net cost of operations before government funding and tranfers 796,243 772,655

The accompanying notes form an integral part of this Future-Oriented Statement of Operations.

Notes to the Future-Oriented Statement of Operations (unaudited)

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 2017-18 is based on actual results as at December 31, 2017 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the fiscal year 2018-19.

The main assumptions underlying the forecasts are as follows:

  1. The Department's activities will remain substantially the same as in the previous year.
  2. 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, 2017.

2. Variations and changes to the forecast financial information

Although every attempt has been made to forecast final results for the remainder of 2017-18 and for 2018-19, 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 :

  1. The implementation of new collective agreements.
  2. The timing and amount of acquisitions and disposals of tangible capital assets may affect gains, losses and amortization expenses.
  3. Economic conditions, which may affect both the amount of revenue earned and the collectability of receivables.
  4. 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 2017-18, 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 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 authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program.

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 severance benefits, as well as contingent liabilities to the extent the future event is likely to occur and a ressonable 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.

3. Summary of significant accounting policies (continued)

(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".

A distinction is made between respendable and non-respendable revenues. Although the Deputy Minister is expected to maintain accounting control of non-respendable revenues, she has no authority regarding their disposition. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are presented as a reduction to 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 Results 2017-18 Planned Results 2018-19
Net cost of operations before government funding and transfers 796,243 772,655
Adjustment for items affecting net cost of operations but not affecting authorities: 
Amortization of tangible capital assets
(9,063) (8,360)
Services provided without charge by other government departments
(89,999) (86,740)
Increase in vacation pay and compensatory leave
(346) (351)
Decrease in employee future benefits
782 664
Adjustments to previous years' accounts payable
9,640 9,638
Bad debt expense
(4,761) (4,761)
Total items affecting net cost of operations but not affecting authorities
(93,747) (89,910)
Adjustment for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets
12,000 15,000
Total items not affecting net cost of operations but affecting authorities
12,000 15,000
Requested authorities
714,496 697,745
(b) Authorities requested
(in thousands of dollars)
  Forecast Results 2017-18 Planned Results 2018-19
Authorities requested:
Vote 1 – Operating expenditures
246,303 236,420
Vote 5 – Grants and contributions
392,150 391,765
Statutory amounts
76,043 69,560
Total authorities requested 714,496 697,745