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Statement of Management Responsibility

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2009 and all information contained in these statements rests with the Agency management. These financial statements have been prepared by management in accordance with Treasury Board accounting policies, which are consistent with 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 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 maintains a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are in accordance with the Financial Administration Act,are executed in accordance with prescribed regulations, within Parliamentary authorities, and are properly recorded to maintain accountability of government funds. Management also 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, and by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the Agency.

The financial statements of the Public Service Human Resources Management Agency of Canada have not been audited.

Statement of Operations (unaudited)

For the year ended March 31

($ thousands)

	2009	2008
EXPENSES (Note 4)
Policy Direction, Partnerships and Integration Program	42,562	37,165
Strategic Services Program	39,000	45,031
Integrity and Sustainability Program	22,544	29,586
TOTAL EXPENSES	104,106	111,782
REVENUES (note 5)
Policy Direction, Partnerships and Integration Program	1	3
Strategic Services Program	1	4
Integrity and Sustainability Program	-	1
TOTAL REVENUES	2	8
NET COST OF OPERATIONS	104,104	111,774

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

Statement of Financial Position(unaudited)

At March 31

($ thousands)

	2009	2008
ASSETS
Financial Assets
Accounts receivable and advances (Note 6)	2,437	3,293
Non-financial assets
Tangible capital assets (Note 7)	76	28
TOTAL	2,513	3,321
LIABILITIES
Accounts payable and accrued liabilities (Note 8)	9,670	16,364
Employee severance benefits (Note 10)	11,727	10,900
Vacation pay and compensatory leave	2,858	3,230
Total liabilities	24,255	30,494
EQUITY OF CANADA	(21,742)	(27,173)
TOTAL	2,513	3,321

Contractual Obligations (Note 11)

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

Statement of Equity of Canada (unaudited)

At March 31

($ thousands)

	2009	2008
Equity of Canada, beginning of year	(27,173)	(23,275)
Net cost of operations	(104,104)	(111,774)
Current year appropriations used (Note 3)	93,969	103,052
Revenue not available for spending	(2)	(8)
Change in net position in the Consolidated Revenue Fund (Note 3)	6,085	(5,353)
Transfer to other departments (Note 9)	(1,476)	-
Services received without charge from other government departments (Note 12)	10,959	10,185
Equity of Canada, end of year	(21,742)	(27,173)

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

Statement of Cash Flow (unaudited)

For the year ended March 31

($ thousands)

	2009	2008
Operating activities
Net cost of operations	104,104	111,774
Non-cash items:
Amortization of tangible capital assets	(14)	(28)
Gain on disposal and write-off of tangible capital assets	-	8
Services received without charge from other departments	(10,959)	(10,185)
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances	(856)	1,740
(Increase) decrease in liabilities:
Accounts payable and accrued liabilities	6,694	(5,995)
Employee severance benefits	(827)	623
Vacation pay and compensatory leave	372	(262)
Transfers to other departments	1,476	-
Cash used by operating activities	99,990	97,675
Capital investment activities
Acquisition of tangible capital assets	71	24
Proceeds from the disposal of surplus Crown assets	(9)	(8)
Cash used by capital investment activities	62	16
Financing activities
Cash used by capital investment activities	(100,052)	(97,691)

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

Notes to the Financial Statements (Unaudited)

1.  Authority and Objectives

The Agency’s raison d’�tre is to modernize, and to foster continuing excellence in people management and leadership across the Public Service. The Agency was created by Order PC 2003-2074 of December 12, 2003, and is governed by paragraphs 6 (4.1) a) and 6 (4.1) b) of the Financial Administration Act.

The Agency’s strategic outcome is a modern, professional Public Service dedicated to the public interest and supporting ministers in democratic governance, representative of the Canadian public and serving Canadians with excellence in the official language of their choice, with employees effectively and ethically led in a high quality work environment respectful of their linguistic rights.

To achieve its strategic outcome and deliver results for Canadians, the Agency articulates its plans and priorities around three results-based program activities. These activities were updated in 2008-2009, as approved by the Treasury Board on June 7, 2007, to better capture the full range of what the Agency does and why it does it. Figures for 2007-2008 in the Statement of Operations are redistributed for comparison purposes.

1. Integrity and Sustainability Program

   This program develops, collects, assesses and communicates information on people management across the Public Service, initiating enterprise-wide activities to ensure the ongoing integrity of people management and the associated sustainability of the Public Service.

2. Policy Direction, Partnerships and Integration Program

   This program provides people management leadership and direction from a central point to ensure consistent and high performance across the Public Service on the basis of a shared direction, common standards and collective expectations.

3. Strategic Services Program

   This program provides strategic and value-added services to support the common direction through targeted programs and infrastructure.

Structural change

A significant structural change took place in early 2009 that will result in the dissolution of the Agency. Order in council P.C. 2009-0181 dated February 6, 2009 approved the amalgamation of the Public Service Human Resources Management Agency of Canada with the Treasury Board of Canada Secretariat, effective March 2, 2009.

Although this merger occurred late in 2008-09, separate financial statements were produced due to the fact that parliamentary authorities remained distinct and there continued to be a requirement to provide a separate Departmental Performance Report to Parliament for the Public Service Human Resource Management Agency of Canada.  The transfer of funding to the Secretariat will occur in 2009-10, and the financial impact will be reported in the Secretariat 2009-10 Financial Statements.

2.  Summary of significant accounting policies

The financial statements have been prepared in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector.

Significant accounting policies are as follows:

1. Parliamentary appropriations

   The Agency is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to the Agency do not parallel financial reporting according to generally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and the Statement of Financial Position are not necessarily the same as those provided through appropriations from Parliament. Note 3 to these financial statements provides a high-level reconciliation between the bases of reporting.

2. Net cash provided by the government

   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 and 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 departments of the federal government.

3. Change in net position in the Consolidated Revenue Fund

   Change in net position in the Consolidated Revenue Fund is the difference between the net cash provided by the Government and appropriations used in a year, excluding the amount of non respendable revenue recorded by the Agency.  It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.

4. Revenues

   Revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.

5. Expenses

   Expenses are recorded on the accrual basis:

   • Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
   • Services received without charge from other government departments for accommodation, the employer's contribution to the health and dental insurance plans and legal services are recorded as operating expenses at their estimated cost.
6. Employee future benefits

   Pension benefits:  Eligible employees participate in the Public Service Pension Plan and retirement compensation arrangements. The Public Pension Plan is a multiemployer 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 Agency’s total obligation to the Plan. Current legislation does not require the Agency to make contributions for any actuarial deficiencies of the Plan.

   Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees of the Agency 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 and advances

   Accounts receivable and advances are stated at amounts expected to be ultimately realized; a provision is made for receivables where recovery is considered uncertain. As there were no doubtful amounts reflected in the Agency’s Public Accounts as at March 31, 2009, no write-offs were made, and no Allowance for Doubtful Accounts have been created for 2009.

8. Contingent liabilities

   Contingent liabilities are potential liabilities, which 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. Tangible capital assets

   All tangible capital assets and leasehold improvements having an initial cost of $10,000or 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:

   Asset class	Amortization period
   Machinery and equipment	3 to 5 years
   Motor Vehicles	3 years
   Assets under construction	Once in service, in accordance with asset type

   
   
10. Measurement uncertainty

    The preparation of these financial statements in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector, 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 the liability for employee severance 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 appropriations

The Agency receives most of its funding through annual Parliamentary appropriations.  Items recognized in the Statement of Operations and the Statement of Financial Position in one year may be funded through Parliamentary appropriations in a prior, current or future year.  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:

1. Reconciliation of net cost of operations to current year appropriations used:
   
   

   ($ thousands)

   	2009	2008
   Net cost of operations	104,104	111,774
   Adjustments for items affecting net cost of operations but not affecting appropriations: Add (Less):
   Services received without charge from other departments	(10,959)	(10,185)
   Employee severance benefits	(827)	623
   Vacation pay and compensatory leave	372	(262)
   Amortization of tangible capital assets	(14)	(28)
   Revenue not available for spending	2	8
   Other	1,212	1,098
   Total	(10,214)	(8,746)
   Adjustments for items not affecting net cost of operations but affecting appropriations: Add (Less):
   Acquisition of tangible capital assets	71	24
   Increase in temporary advances to employees	8	-
   Total	79	24
   Current year appropriations used	93,969	103,052

   
   
   
2. Appropriations provided and used
   
   

   ($ thousands)

   	2009	2008
   Appropriations provided:
   Vote 35 – Operating expenditures	-	96,931
   Vote 50 – Operating expenditures	92,451	-
   Total appropriations	92,451	96,931
   Statutory appropriations:
   Contributions to employee benefit plans	9,085	9,673
   Spending of proceeds from the disposal of surplus crown assets	8	-
   Total statutory appropriations	9,093	9,673
   Lapsed Appropriations
   Vote 35 – Operating expenditures	-	(3,552)
   Vote 50 – Operating expenditures	(7,567)	-
   Spending of proceeds from the disposal of surplus crown assets	(8)	-
   Total lapsed appropriations	(7,575)	(3,552)
   Current year appropriations used	93,969	103,052

   
   
   
3. Reconciliation of net cash provided by the Government to current year appropriations used:
   
   

   ($ thousands)

   	2009	2008
   Net cash provided by Government	100,052	97,691
   Revenue not available for spending	2	8
   Change in net position in the Consolidated Revenue Fund:
   Variation in accounts receivable and advances	856	(1,740)
   Variation in accounts payable and accrued liabilities	(6,694)	5,995
   Transfers to other departments	(1,476)	-
   Other adjustments	1,229	1,098
   Total changes in net position in the Consolidated Revenue Fund	(6,085)	5,353
   Current year appropriations used	93,969	103,052

   
   
   

4.  Expenses

The following table shows the expenses by category:

($ thousands)

	2009	2008
Salaries and employee benefits	69,730	74,559
Professional and special services	21,079	23,222
Accommodation	5,595	5,034
Transportation and telecommunications	2,687	3,315
Machinery and equipment, including expendables	2,322	2,171
Information	948	1,010
Repair and maintenance services	871	1,052
Rentals	675	996
Amortization	14	28
Other	185	395
Total expenses	104,106	111,782

5.  Revenues

The following table shows the revenues by category:

($ thousands)

	2009	2008
Gain on disposal and write-off of tangible capital assets	-	8
Miscellaneous revenues	2	-
Total revenues	2	8

6.  Accounts Receivable and Advances

The following table shows the accounts receivable and advances by category:

($ thousands)

	2009	2008
Receivables from other government departments	2,410	3,252
Employee advances	15	8
Receivables from external parties	8	32
Deposits in transit to the Receiver General	4	1
Total accounts receivable and advances	2,437	3,293

7.  Tangible capital assets

($ thousands)

	Cost				Accumulative amortization				Net book value
Capital asset class	Opening balance	Acqui- sitions	Disposals and write-offs	Closing balance	Opening balance	Amorti- zation	Disposals and write-offs	Closing balance	2009	2008
Machinery and Equipment	150	41	52	139	141	4	52	93	46	9
Motor vehicles	24	30	24	30	5	10	15	-	30	19
Total	174	71	76	169	146	14	67	93	76	28

Amortization expense for the year ended March 31, 2009 is $14,000 ($28,000 in 2008).

8.  Accounts payable and accrued liabilities

The following table shows the accounts payables and accrued liabilities by category:

($ thousands)

	2009	2008
Payables to external parties	6,184	8,795
Payables to other government departments	3,486	7,569
Total accounts payable and accrued liabilities	9,670	16,364

9.  Transfer of organization

Equity for the fiscal year ending March 31, 2009 has been adjusted to reflect the transfers of two organizations in 2007-2008, the Office of the Public Sector Integrity Commissioner and Registry of the Public Servants Disclosure Protection Tribunal. The adjusting accounting entries did not occur in the Accounts of Canada prior to closure of the fiscal year ending March 31, 2008.

10.   Employee benefits

1. 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/Qu�bec Pension Plans benefits and they are indexed to inflation.

   Both the employees and the Agency contribute to the cost of the Plan.  The 2008-2009 expense amounts to $6,560,000 ($7,051,000 in 2007-2008), which represents approximately 2.0 times (2.1 times in 2007-2008) the contributions by employees.

   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, as the Plan's sponsor.

2. Severance benefits

   The Agency provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded.  Benefits will be paid from future appropriations.  Information about the severance benefits, measured as at March 31, is as follows:

   
   
   

   ($ thousands)

   	2009	2008
   Accrued benefit obligation, beginning of year	10,900	11,523
   Expense for the year	2,271	1,233
   Benefits paid during the year	(1,444)	(1,856)
   Accrued benefit obligation, end of year	11,727	10,900

   
   
   

11.  Contractual Obligations:

The nature of the Agency’s activities can result in a multi-year contracts and obligations, whereby the Agency will be obligated to make future payments when the goods and services are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

($ thousands)

	2010	2011	2012	2013	2014 and subsequent years	Total
Professional Services	996	-	-	-	-	996

12.  Related Party Transactions

Services received without charge:

The Agency is related as a result of common ownership to all Government of Canada departments, agencies and Crown corporations. The department enters into transactions with these entities in the normal course of business and on normal trade terms. Also, during the year, the Agency receives services which were obtained without charge from other Government departments as presented in the following table.

During the year the department received without charge from other departments, accommodation, legal fees and the employer's contribution to the health and dental insurance plans.  These services without charge have been recognized in the department's Statement of Operations as follows:

($ thousands)

	2009	2008
Accommodation	5,595	5,034
Employer’s contributions to the health and dental insurance plans	4,431	4,286
Legal services	933	865
Total	10,959	10,185

The government has structured some of its administrative activities for efficiency and cost‑effectiveness purposes so that one department performs these on behalf of all departments without charge. The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services, are not included as an expense in the Agency’s Statement of Operations.

13.  Comparative information :

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

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