Future-oriented Statement of Operations

Future-oriented Statement of Operations (unaudited)
For the year ending March 31
(in thousands of dollars)
  Forecast Results
Planned Results
Legal Services
546,788 510,796
Justice System Support
486,925 480,354
Internal Services
150,855 133,612
Total expenses 1,184,568 1,124,762
Legal Services
372,966 366,345
Family Law fees
8,245 8,245
Common services
2,852 2,852
Other revenues
1,015 1,015
Revenues earned on behalf of Government
(52,018) (51,457)
Total revenues 333,060 327,000
Net cost of operations before government funding and tranfers 851,508 797,762

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 (FOSO) 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 (FY) 2018-19 is based on actual results as at December 31, 2018 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the FY 2019-20.

The main assumptions underlying the forecasts are as follows:

These assumptions are made as at December 31, 2018.

2. Variations and changes to the forecast financial information

Although every attempt has been made to forecast final results for the remainder of 2018-19 and for 2019-20, actual results achieved for both years are likely to differ from the forecast information presented, and this variation could be material.

In preparing this FOSO, 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 FOSO and the historical statement of operations include:

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 FOSO has been prepared using the Government of Canada’s accounting policies in effect for FY 2018-19, 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

Transfer payments are recorded as an expense in the year the transfer is authorized and all eligibility criteria have been met by the recipient.

Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.

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.

Services provided without charge by other government departments for accommodation, employer contributions to health and dental insurance plans, and workers’ compensation are recorded as operating expenses at their carrying value.

Other expenses are generally recorded when goods are received or services are rendered and include expenses related to personnel, professional and special services, repair and maintenance, utilities, materials and supplies, as well as amortization of tangible capital assets. Expenses also include provisions to reflect changes in the value of assets or liabilities, such as provisions for bad debt on receivables, and 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 and an assessment of current conditions.

(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. Revenues are based on legal service rates approved by Treasury Board in accordance with the Common Services Policy, for non-appropriated mandatory legal services to government departments and agencies, as well as for 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. Although the Deputy Minister is expected to maintain accounting control, she has no authority over 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 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 differs from financial reporting according to generally accepted accounting principles, because authorities are based mainly on cash flow requirements. Items recognized in the FOSO in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, the Department has different net cost 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 requested authorities
(in thousands of dollars)
  Forecast Results 2018-19 Planned Results 2019-20
Net cost of operations before government funding and transfers 851,508 797,762
Adjustment for items affecting net cost of operations but not affecting authorities: 
Amortization of tangible capital assets
(7,495) (6,412)
Services provided without charge by other government departments
(93,185) (89,155)
Increase in vacation pay and compensatory leave
(1,086) (1,086)
Decrease in employee future benefits
327 363
Adjustments to previous years' accounts payable
9,384 9,672
Bad debt expense
(5,061) (5,061)
Total items affecting net cost of operations but not affecting authorities (97,116) (91,679)
Adjustment for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets
15,000 11,800
Total items not affecting net cost of operations but affecting authorities 15,000 11,800
Requested authorities 769,392 717,883
(b) Authorities requested
(in thousands of dollars)
  Forecast Results 2018-19 Planned Results 2019-20
Authorities requested:
Vote 1 – Operating expenditures
285,490 243,378
Vote 5 – Grants and contributions
402,506 398,195
Statutory amounts
81,396 76,310
Total authorities requested 769,392 717,883