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Notes to the Financial Statements (unaudited)

Notes to the Financial Statements (unaudited)

For the year ended March 31

1. Authority and objectives

The mandate of the Public Service Labour Relations Board (the Board), established in 2005 by the enactment of Public Service Labour Relations Act and successor to the former Public Service Staff Relations Board established in 1967, is to effectively and efficiently administer the systems of collective bargaining and grievance adjudication established under the Public Service Labour Relations Act and the Parliamentary Employment and Staff Relations Act, as well as certain provisions of Part II of the Canada Labour Code concerning occupational safety and health applicable to employees in the Public Service. The Board also administers the Yukon Public Service Labour Relations Act and the Yukon's Education Labour Relations Act.

The Board has one strategic outcome: the resolution of labour relations issues in the federal public service and in Parliament. According to the approved Program Activity Architecture (PAA), the Statement of Operations was detailed by the following Program Activities (Business Lines):

Adjudication, mediation and compensation analysis and research

Hold hearings with respect to grievance adjudication, complaints and other types of proceedings, throughout Canada. The Board provides conciliation and arbitration services to assist parties in the renewal and negotiation of new collective agreements; mediation services to help parties work together to resolve grievances and complaints; and, an interactive training session on interest- based negotiations and mediation. A compensation analysis and research function consists of delivering information on comparative rates of pay, employee earnings, conditions of employment and benefits in the public and private sectors. The Board is required by statute to provide physical and administrative support services to the National Joint Council (NJC), but plays no direct role in its operations.

Internal Services

Internal Services are groups of activities and resources that are administered to support the needs of programs and other corporate obligations of the Board. Internal Services include only those activities and resources that apply across the Board, not those provided specifically to a program.

2. Summary of significant accounting policies

These financial statements have been prepared using the Government's accounting policies stated below, which are 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) Parliamentary authorities

The Board is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Board 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 Departmental Net Financial Position and in 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. The planned results amounts in the Statement of Operations and Departmental Net Financial Position are the amounts reported in the future-oriented financial statements included in the 2011-12 Report on Plans and Priorities.

(b) Net Cash Provided by Government

The Board operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Board is deposited to the CRF and all cash disbursements made by the Board 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 Government.

(c) Due from the CRF

Amounts due from or 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 Board is entitled to draw from the CRF without further appropriations to discharge its liabilities.

(d) Revenues

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

(e) Expenses

Expenses are recorded on the accrual basis:

(f) Employee future benefits

(g) Accounts receivables

Receivables recorded by the Board are from other government departments. Recovery is considered certain and a provision has not been made. Accounts and loans receivable are stated at the lower of cost and net recoverable value.

(h) Tangible capital assets

All tangible capital assets plus leasehold improvements having an initial cost of $3,000 or more are recorded at their acquisition cost. The Board does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value. Amortization of capital assets is done on a straight-line basis over the estimated useful life of the assets as follows:

Asset class Amortization Period
Informatics Hardware and Software 3 years
Furniture and equipment 5 years

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

(i) Measurement uncertainty

The preparation of these financial statements 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 Authorities

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

(a) Reconciliation of net cost of operations to current year authorities used

(in dollars)

  2012 2011
Net cost of operations 15,411,270 15,074,302
Adjustments for items affecting net cost of operations but not affecting authorities:
Add (Less):
 
Services provided without charge by other government departments (3,110,270) (2,767,388)
Decrease (increase) in employee future benefits 880,461 (76,936)
Increase in vacation pay and compensatory leave 61,623 10,156
Refund of previous year expenditures 48,607 41,208
Amortization of tangible capital assets (179,829) (104,930)
Loss on disposal of tangible capital assets - (648,863)
  (2,299,408) (3,546,753)
Adjustments for items not affecting net cost of operations but affecting authorities:
Add (Less):
 
Acquisition of tangible capital assets 316,480 361,227
Variation in prepaid expenses 18,359 -
  334,839 361,227
 
Current year authorities used 13,446,701 11,888,776

(b) Authorities provided and used

(in dollars)

  2012 2011
Authorities provided:
Vote 110 - Program expenditures 14,026,811 12,892,947
Statutory authorities 1,306,699 1,221,153
Less:
Lapsed authorities (1,886,809) (2,225,324)
Current year authorities used 13,446,701 11,888,776

4. Accounts payable and accrued liabilities

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

(in dollars) 2012 2011
Accounts payable - other government departments
and agencies
124,178 22,841
Accounts payable - external parties 519,538 716,854
  643,716 739,695
Accrued liabilities 207,883 301,532
  851,599 1,041,227

5. Employee future benefits

(a) Pension benefits

The Board's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government. 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 Board contribute to the cost of the Plan. The 2011-12 expense amounts to $939,517 ($857,204 in 2010-11), which represents approximately 1.8 times (1.9 times in 2010-11) the contributions by employees.

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

As part of collective agreement negotiations with certain employee groups, and changes to conditions of employment for executives and certain non-represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.

(in dollars) 2012 2011
Accrued benefit obligation, beginning of year 1,603,115 1,526,179
Expense for the year (527,660) 209,057
Benefits paid during the year (307,801) (132,121)
Accrued benefit obligation, end of year 722,654 1,603,115

6. Tangible capital assets

Cost
(in dollars)
Opening Balance Acquisitions Adjustments, Disposals
and Write-Offs
Closing Balance
Informatics Hardware and Software 854,281 33,059 - 887,340
Furniture and equipment 356,465 80,754 - 437,219
Assets under construction - 202,667 - 202,667
  1,210,746 316,480 - 1,527,226

Accumulated amortization
(in dollars)
Opening Balance Amortization Adjustments, Disposals
and Write-Offs
Closing Balance
Informatics Hardware and Software 530,345 107,640 - 637,985
Furniture and equipment 116,217 72,189 - 188,406
  646,562 179,829 - 826,391

Net book value
(in dollars)
2011     2012
Informatics Hardware and Software 323,936     249,355
Furniture and equipment 240,248     248,813
Assets under construction -     202,667
  564,184     700,835

Adjustments include assets under construction of $0 that were transferred to the other categories upon completion of the assets.

7. Related party transactions

The Board is related as a result of common ownership to all Government departments, agencies, and Crown Corporations. The Board enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, the Board has an agreement with the Public Service Staffing Tribunal related to the provision of finance and administration services. During the year, the Board received common services which were obtained without charge from OGD as disclosed below:

a) Common services provided without charge by other government departments

During the year the Board received services without charge from certain common service organizations, related to accommodation and the employer's contribution to the health and dental insurance plans. These services provided without charge have been recorded in the Board's Statement of Operations and Departmental Net Financial Position as follows:

(in dollars) 2012 2011
Accommodation 2,405,962 2,153,653
Employer's contribution to the health and
dental insurance plans
704,308 613,735
  3,110,270 2,767,388

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 service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as the payroll and cheque issuance services provided by Public Works and Government Services Canada are not included in the Board's Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties

(in dollars) 2012 2011
Accounts receivable from other government
departments and agencies
218,540 105,334
Accounts payable to other government
departments and agencies
124,178 22,841
Expenses - Other Government
departments and agencies
1,686,577 1,365,068

8. Segmented Information

Presentation by segment is based on the Board's program activity architecture. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 2. The following table presents the expenses incurred and revenues generated for the main program activities, by major object of expenses and by major type of revenues. The segment results for the period are as follows:

(in dollars) Adjudication,
mediation and
compensation
analysis and research
Internal Services 2012 2011
Operating expenses
Salaries and employee benefits 6,808,277 2,496,583 9,304,860 9,084,852
Accommodation 1,768,224 637,738 2,405,962 2,153,653
Professional and special services 1,247,258 435,888 1,683,146 1,454,108
Transportation and telecommunications 602,156 175,977 778,133 527,544
Rentals 266,081 250,611 516,692 496,666
Machinery and equipment 46,244 200,108 246,352 294,615
Amortization of tangible assets - 179,829 179,829 104,930
Utilities, materials and supplies 116,967 60,230 177,197 172,877
Repairs and maintenance 18,871 45,661 64,532 88,688
Communication 23,037 29,530 52,567 46,766
Other operating expenses 1,999 1 2,000 649,603
Total Operating expenses 10,899,114 4,512,156 15,411,270 15,074,302

Net cost of operations
10,899,114 4,512,156 15,411,270 15,074,302

9. Accounting changes

During 2011, amendments were made to Treasury Board Accounting Standard 1.2––Departmental and Agency Financial Statements to improve financial reporting by government departments and agencies. The amendments are effective for financial reporting of fiscal years ending March 31, 2012, and later. The significant changes to the Board’s financial statements are described below. These changes have been applied retroactively, and comparative information for 2010-11 has been restated.

Net debt (calculated as liabilities less financial assets) is now presented in the Statement of Financial Position. Accompanying this change, the Board now presents a Statement of Change in Net Debt and no longer presents a Statement of Equity.

Government funding, as well as the credit related to services provided without charge by other government departments, are now recognized in the Statement of Operations and Departmental Net Financial Position below “Net cost of operations before government funding.” In previous years, the Board recognized these transactions directly in the Statement of Equity of Canada. The effect of this change was to decrease the net cost of operations after government funding and transfers by $16,515,176 for 2012 ($14,600,798 for 2011).

(in dollars) 2011
As previously
stated
Effect
of change
2011 Restated
Statement of Operations and Departmental Net Financial Position

Governement funding
Net cash provided by Government - 12,317,506 12,317,506
Change in due from Consolidated Revenue Fund - (484,096) (484,096)
Services provided without charge by other government departments - 2,767,388 2,767,388