Consolidated Future-Oriented Statement of Operations 2019-2020

Correctional Service of Canada

Consolidated Future-Oriented Statement of Operations (unaudited)

(in thousands of dollars)
For the Year Ended March 31 Forecast Results 2019 Planned Results 2020
Expenses
Care and Custody 1,690,865 1,628,674
Correctional Interventions 529,665 530,480
Community Supervision 174,185 172,936
Internal Services 344,242 316,180
Total expenses 2,738,957 2,648,270
Revenues
Sales of goods and services 62,111 65,794
Others 3,748 3,640
Revenues earned on behalf of Government (3,748) (3,640)
Total revenues 62,111 65,794
Net cost of operations before government funding and transfers 2,676,846 2,582,476

The accompanying notes form an integral part of the Consolidated Future-Oriented Statement of Operations.

Notes to the Consolidated Future-Oriented Statement of Operations (unaudited)

For the Year Ended March 31

1. Methodology and significant assumptions

The Consolidated Future-Oriented Statement of Operations (CFOSO) has been prepared on the basis of the Government priorities and CSC's plans described in the Departmental Plan.

The information in the forecast results for fiscal year 2018-2019 is based on actual results as at November 30, 2018 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for fiscal year 2019-2020.

The main assumptions underlying the forecasts are as follows:

  1. CSC's activities will remain substantially the same as for the previous year.
  2. Expenses and revenues, including the determination of amounts internal and external to the Government, are based on a combination of historical experience and future planned spending.
  3. Estimated year end information for 2018-2019 is used as the opening position for the 2019-2020 planned results.

These assumptions are adopted as at December 20, 2018.

2. Variations and Changes to the Forecast Financial Information

While every attempt has been made to forecast final results for the remainder of 2018-2019 and for 2019-2020, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing these CFOSO, CSC has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Factors that could lead to material differences between the CFOSO and the historical consolidated statement of operations include:

  1. The timing and amounts of acquisitions and disposals of tangible capital assets may affect gains, losses and amortization expense;
  2. Implementation of new collective agreements;
  3. Economic conditions may affect both the amount of revenue earned and the collectability of accounts and loan receivables; and
  4. Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.

After the Departmental Plan is tabled in Parliament, CSC will not update forecasted information for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the ensuing Departmental Results Report.

3. Summary of Significant Accounting Policies

The CFOSO has been prepared using Government's accounting policies that came into effect for the 2018-2019 fiscal year, 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:

  1. Consolidation
    • The CFOSO includes the accounts of the CORCAN revolving fund sub-entity that have been consolidated with those of CSC. All inter-organizational transactions have been eliminated.
  2. Expenses
    • Expenses are recorded on an accrual basis;
    • Expenses for CSC operations are recorded when goods are received or services are rendered including services provided without charge for accommodation, employer contributions to health and dental insurance plans, legal services and workers' compensation which are recorded as expenses at their estimated cost;
    • Vacation pay and compensatory leave as well as severance benefits, are accrued, and expenses are recorded as the benefits are earned by employees under their respective terms of employment;
    • Transfer payments are recorded as an expense in the year the transfer is authorized and all eligibility criteria have been met by the recipient.
    • Expenses also include provisions to reflect changes in the value of assets, including provisions for bad debt on accounts receivable, provision for valuation on loans, investments and advances and inventory obsolescence or liabilities, including contingent liabilities and environmental liabilities to the extent the future event is likely to occur and a reasonable estimate can be made; and
    • Expenses also include amortization of tangible capital assets which are capitalized at their acquisition cost. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset.
  3. Revenues
    • Funds that have been received are recorded as deferred revenue, provided CSC 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 which the underlying transaction or event that gave rise to the revenue takes place; and
    • Revenues that are non-respendable are not available to discharge CSC's liabilities. While the Commissioner 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 as a reduction of the CSC's gross revenues.

4. Parliamentary Authorities

CSC is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to CSC differs from financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Items recognized in the CFOSO in one year may be funded through parliamentary authorities in prior, current, or future years. Accordingly, CSC 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 2019 Planned Results 2020
Net cost of operations before government funding and transfers 2,676,846 2,582,476
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (127,738) (129,588)
Loss on disposals of capital assets, including adjustments (9,344) (12,942)
Services provided without charge by other government departments (149,522) (155,187)
Decrease (increase) in vacation pay and compensatory leave (431) 2,838
Decrease (increase) in employee future benefits (1,608) 924
Decrease in obligation for termination benefits 143 0
Refund of prior years' expenditures 4,217 4,467
  (284,283) (289,488)
Adjustments for items not affecting net cost of operations but affecting appropriations:
Acquisitions of tangible capital assets 238,928 191,809
(Decrease) increase in inventories (2,540) 244
Decrease in environmental liabilities 54 54
Transition payments for implementing salary payments in arrears 5 0
  236,447 192,107
Requested authorities 2,629,010 2,485,095

(b) Authorities requested

(in thousands of dollars)
  Forecast Results 2019 Planned Results 2020
Authorities requested
Vote 1 - Operating expenditures 2,154,520 2,062,951
Vote 5 - Capital expenditures 235,661 187,809
Statutory amounts 238,829 234,335
Total authorities requested 2,629,010 2,485,095
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