Financial Statements 2009-10 RCMP External Review Committee

Responsibility for the integrity and objectivity of the accompanying financial statements for the period ended March 31, 2010 and all information contained in these statements rests with the RCMP External Review Committee (ERC) 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 ERC's financial transactions. Financial information submitted to the Public Accounts of Canada and to be included in the ERC's Departmental Performance Report is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal controls 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 ERC.

The financial statements of the ERC have not been audited.

Catherine Ebbs
Chair
Ottawa, Canada

David Paradiso
Executive Director and Senior Counsel
Ottawa, Canada

Date: August 11, 2010

RCMP EXTERNAL REVIEW COMMITTEE

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

RCMP EXTERNAL REVIEW COMMITTEE

Segmented information (note 8).

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

RCMP EXTERNAL REVIEW COMMITTEE

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

RCMP EXTERNAL REVIEW COMMITTEE

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

RCMP EXTERNAL REVIEW COMMITTEE

For the Year Ended March 31, 2010

1. Authority and Objectives

Under the Royal Canadian Mounted Police (RCMP) Act, the RCMP Commissioner refers all appeals of formal discipline and all discharge and demotion appeals to the ERC unless the member of the RCMP requests that the matter not be referred. In addition, pursuant to section 33 of the RCMP Act, the RCMP Commissioner refers certain types of grievances to the ERC in accordance with regulations made by the Governor in Council. Section 36 of the RCMP Regulations specifies the grievances which the RCMP Commissioner is obliged to refer to the ERC, namely grievances respecting:

• the Force's interpretation and application of government policies that apply to government departments and that have been made to apply to members;
• the stoppage of pay and allowances of members made pursuant to subsection 22(3) of the RCMP Act;
• the Force's interpretation and application of the Isolated Posts Directive;
• the Force's interpretation and application of the RCMP Relocation Directive;
• and administrative discharge on the grounds of physical or mental disability, abandonment of post, or irregular appointment.

The ERC is also responsible for outreach and information dissemination. The ERC ensures that its findings and recommendations in each case are clearly explained for the parties and the RCMP Commissioner. Summaries of the findings and recommendations in each case, as well as articles of interest on the role of the ERC, relevant legal principles and information on related issues are distributed widely.

2. Significant accounting policies

The financial statements have been prepared in accordance with Treasury Board accounting policies stated below, which are based on Canadian generally accepted accounting principles for the public sector. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian generally accepted accounting principles.

Significant accounting policies are as follows:

(a) Parliamentary Authorities

The ERC is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the ERC 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 statement of operations and the statement of financial position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting.

(b) Net Cash Provided by Government

The ERC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the ERC is deposited to the CRF and all cash disbursements made by the ERC are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.

(c) Amounts due from/to the CRF

Amounts due from/to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that the ERC is entitled to draw from the CRF without further appropriations to discharge its liabilities.

(d) Revenues

Revenues from regulatory fees are recognized in the accounts based on the services in the year.

Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in wich the related expenses are incurred.

Funds that have been received are recorded as deferred revenue, provided the ERC has an obligation to other parties for the provision of goods, services or the use of assets in the future.

Other revenues are accounted for in the period in wich the underlying transaction or event that gave rise to the takes place.

(e) Expenses

Expenses are recorded on the accrual basis:

• Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.
• Services provided without charge by other government Committees for accommodation and the employer contribution to the health and dental insurance plans are recorded as operating expenses at their estimated cost.

(f) Employee future benefits

Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer administered by the Government of Canada. The ERC's contributions to the Plan are charged to expenses in the year incurred and represent the total obligation to the Plan. Current legislation does not require the ERC 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 is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

(g) Receivables

Accounts receivables are stated at the lower of cost and net recoverable value; a valuation allowance is recorded for receivables where recovery is considered uncertain.

(h) Tangible capital assets

All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. The ERC does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections.

Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:

Asset under construction are recorded in the applicable class in the year that they become available for use and not amortized until they become available for use.

(i) Measurement uncertainty

The preparation of these financial statements requires management to make estimate 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 authorities

The ERC receives its funding through annual Parliamentary authorities. Items recognized in the Statement of Operations and the Statement of Financial Position in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, the ERC 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:

4. Accounts receivable and advances

The following table presents details of accounts receivable and advances:

5. Tangible capital assets

Amortization expense for the year ended March 31, 2010 is $3,806 ($3,349 for the year ended March 31, 2009)

6. Accounts payable and accrued liabilities

The following table presents details of the ERC's accounts payable and accrued liabilities:

7. Employee future benefits

(a) Pension benefits

The ERC'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/Québec Pension Plans benefits and they are indexed to inflation.

Both the employees and the ERC contribute to the cost of the Plan. The 2009-10 expense amounts to $99,844 ($114,944 in 2008-09), which represents approximately 1.9 times (2.0 in 2008-09) the contributions by employees.

The ERC'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.

(b) Severance benefits

The ERC provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are no pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, measured as at March 31, is as follows:

8. Segmented information

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

9. Related party transactions

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

(a) Common services received without charge from other government departments

During the year the ERC received services without charge from certain common service organisations related to accommodation and the employer contributions to the health and dental insurance plans. These services provided without charge have been recorded in the ERC's Statement of Operations as follows:

The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common services organization so that one department performs services for all other departments and agencies without charge The costs of these services, such as payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General are not included in the ERC's Statement of Operations.

(b) Other transactions with related parties

10. Adoption of new accounting policies

During the year, the ERC adopted the revised Treasury Board accounting policy TBAS 1.2: Departmental and Agency Financial Statements which is effective for the ERC for the 2009-10 fiscal year. The major change in the accounting policies of the ERC required by the adoption of the revised TBAS 1.2 is the recording of amounts due from the Consolidated Revenue Fund as an asset on the Statement of Financial Position. The adoption of the new Treasury Board accounting policies have been accounted for retroactively with the following impact on comparatives for 2008-2009:

11. Comparative Information

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