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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 (PSLRA) 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 PSLRA 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 Alignment Architecture (PAA), the Statement of Operations was detailed by the following Programs (business lines):

Adjudication, mediation and compensation analysis and research

The Board holds 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. 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 2013-14 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

Miscellaneous revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

Revenues that are non-respendable are not available to discharge the Board's liabilities. While the Chairperson is expected to maintain accounting control, he or she has no authority regarding 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 in reduction of the entity's gross revenues.

(e) Expenses

Expenses are recorded on the accrual basis:

(f)  Employee future benefits

(g) Accounts receivables

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

(h) Tangible capital assets

All tangible capital assets and 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 3-5 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) 2014 2013
Net cost of operations before government funding 15,533,029 15,457,416

Adjustments for items affecting net cost of operations but not affecting authorities:
Services provided without charge by other government departments (2,878,945) (2,993,620)
Decrease in employee future benefits 113,834 22,696
Increase in vacation pay and compensatory leave (47,258) (61,188)
Refund of previous years' expenditures 10,485 33,274
Amortization of tangible capital assets (363,545) (221,264)
Total items affecting net cost of operations but not affecting authorities (3,165,429) (3,220,102)

Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets 363,651 1,325,276
Increase (decrease) in prepaid expenses (25,303) 71,750
Total items not affecting net cost of operations but affecting authorities 338,348 1,397,026
Current year authorities used 12,705,948 13,634,340

(b) Authorities provided and used

(in dollars) 2014 2013
Authorities provided:
Vote 100 - Program expenditures 13,175,574 13,216,189
Proceeds from the disposal of surplus Crown assets 55 140
Statutory authorities 1,307,089 1,284,279
Lapsed authorities (1,776,770) (866,268)
Current year authorities used 12,705,948 13,634,34

4. Accounts payable and accrued liabilities

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

(in dollars) 2014 2013
Accounts payable - other government departments and agencies 27,314 20,927
Accounts payable - external parties 436,823 829,443
Total accounts payable 464,137 850,370
Accrued liabilities 261,211 248,624
Total accounts payable and accrued liabilities 725,348 1,098,994

5. Employee future benefits

(a) Pension benefits

The Board's employees participate in the public service pension plan (the "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 Plan benefits and they are indexed to inflation.

Both the employees and the Board contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Canada's Economic Action Plan 2012, employee contributors have been divided into two groups – Group 1 relates to existing plan members as of December 31, 2012 and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.

The 2013-14 expense amounts to $919,014 ($916,975 in 2012-13). For Group 1 members, the expense represents approximately 1.6 times (1.7 times in 2012-13) the employee contributions and, for Group 2 members, approximately 1.5 times (1.6 times in 2012-13) the employee contributions.

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) 2014 2013
Accrued benefit obligation, beginning of year 699,958 722,654
Expense for the year 70,471 3,925
Benefits paid during the year (184,305) (26,621)
Accrued benefit obligation, end of year 586,124 699,958

6. Accounts receivable and advances

The following table presents details of the Board's accounts receivable and advances balances:

(in dollars) 2014 2013
Receivables - other government departments and agencies 35,943 117,600
Employee advances 1,000 1,000
Net accounts receivable 36,943 118,600

7. Tangible capital assets

(in dollars)
Opening Balance Acquisitions Adjustments (1) Closing Balance
Informatics hardware and software 1,117,273 20,229 681,959 1,819,461
Furniture and equipment 583,466 - - 583,466
Assets under construction 1,151,763 343,422 (681,959) 813,226
  2,852,502 363,651 - 3,216,153

Accumulated amortization
(in dollars)
Opening Balance Amortization Adjustments (1) Closing Balance
Informatics hardware and software 774,642 263,880 - 1,038,522
Furniture and equipment 273,013 99,665 - 372,678
  1,047,655 363,545 - 1,411,200

Net book value
(in dollars)
2013     2014
Informatics hardware and software 342,631     780,939
Furniture and equipment 310,453     210,788
Assets under construction 1,151,763     813,226
  1,804,847     1,804,953

(1) Adjustments include assets under construction of $681,959 that were transferred to the other categories upon completion of the assets.

8. 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) 2014 2013
Accommodation 2,205,600 2,294,116
Employer's contribution to the health and dental insurance plans 673,345 699,504
  2,878,945 2,993,620

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) 2014 2013
Expenses - Other government departments and agencies 1,675,526 1,601,818
Revenues - Other government departments and agencies 106,910 143,995

Expenses and revenues disclosed in (b) exclude common services provided without charge, which are already disclosed in (a).

9. Segmented information

Presentation by segment is based on the Board's program alignment 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 programs, 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
analysis and research
Internal Services 2014 2013
Operating expenses
Salaries and employee benefits 7,301,369 2,722,788 10,024,157 9,841,887
Accommodation 1,605,961 599,639 2,205,600 2,294,116
Professional and special services 1,087,642 435,226 1,522,868 1,808,066
Transportation and telecommunications 475,181 155,184 630,365 585,117
Rentals 332,842 162,979 495,821 512,295
Amortization of tangible capital assets - 363,545 363,545 221,264
Utilities, materials and supplies 100,032 44,518 144,550 131,653
Machinery and equipment 13,323 82,961 96,284 98,640
Communication 67,212 28,229 95,441 68,622
Repair and maintenance 3,931 38,193 42,124 31,185
Other operating expenses 19,129 - 19,129 8,426
Total Operating expenses 11,006,622 4,633,262 15,639,884 15,601,271

Miscellaneous revenues - 106,910 106,910 143,995
Revenues earned on behalf of Government - (55) (55) (140)
Total Revenues - 106,855 106,855 143,855
Net cost of operations before governement funding 11,006,622 4,526,407 15,533,029 15,457,416

10. Subsequent events

On December 12, 2013, the Economic Action Plan 2013 Act, No. 2 received royal assent. Included in that Act are provisions to merge the Board and the Public Service Staffing Tribunal (PSST) into an organization to be called the Public Service Labour Relations and Employment Board (PSLREB). This new organization will replace the PSLRB and the PSST and will deal with matters previously dealt with by these organizations.

In Canada's Economic Action Plan 2014, the Government announced its intention to create the Administrative Tribunals Support Service of Canada (ATSSC). This new organization, which consolidates operations of several administrative tribunals, will provide support services to the PSLREB. The PSLREB will retain its adjudication powers and will transfer all human and financial resources to the ATSSC. The Economic Action Plan 2014 Act, No. 1 received Royal Assent on June 19, 2014.

As a result, both the PSLREB and the ATSSC are expected to come into force on November 3rd, 2014. On this date, the net assets and net liabilities of the Board and the PSST will be transferred to the PSLREB and, subsequently, the net assets and net liabilities of the PSLREB will be transferred to the ATSSC. The amounts to be transferred cannot be estimated at this time.

11. Comparative information

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