2016-2017 Annual Financial Statements

Statement of Management Responsibility Including Internal Control Over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2017 and all information contained in these statements rests with the management of the Military Police Complaints Commission of Canada (MPCC). These financial statements have been prepared by management using the Government's accounting policies, which are based on Canadian public sector accounting standards.

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 MPCC’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the MPCC’s Departmental Performance Report, is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting (ICFR) 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 MPCC; and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.

The system of ICFR is designed to mitigate risks to a reasonable level based on an on-going process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

The MPCC is subject to periodic Core Control Audits performed by the Office of the Comptroller General and uses the results of such audits to comply with the Treasury Board Policy on Internal Control.

A Core Control Audit was performed in 2011-12 by the Office of the Comptroller General of Canada (OCG) on the transactions in 2010-11. The Audit Report and related Management Action Plan are posted on the MPCC website.

The financial statements of the MPCC have not been audited.

[Original signed by]
________________________
Hilary McCormack,
Chairperson

[Original signed by]
________________________
Elsy Chakkalakal,
Acting Chief Financial Officer

Ottawa, Canada
August 29, 2017

Military Police Complaints Commission of Canada
Statement of Financial Position (Unaudited)
As at March 31

(in dollars)
  2016 2015
Liabilities
Accounts payable and accrued liabilities (note 4) 474,867 714,339
Vacation pay and compensatory leave 96,440 85,148
Employee future benefits (note 5) - -
Total liabilities 571,307 799,487
Financial assets
Due from the Consolidated Revenue Fund 363,641 621,570
Accounts receivable and advances (note 6) 113,398 92,770
Total financial assets 477,039 714,340
Departmental net debt 94,268 85,147
Non-financial assets
Tangible capital assets (note 7) 1,176,597 1,314,986
Total non-financial assets 1,176,597 1,314,986
Departmental net financial position 1,082,329 1,229,839

Contractual obligations (note 8)

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

[Original signed by]
________________________
Hilary McCormack,
Chairperson

[Original signed by]
________________________
Elsy Chakkalakal,
Acting Chief Financial Officer

Ottawa, Canada
August 29, 2017


Military Police Complaints Commission of Canada
Statement of Operations and Departmental Net Financial Position (Unaudited)
For the year ended March 31

(in dollars)
  2017
Planned Results
2017 2016
Expenses
Complaints Resolution 2,491,866 2,155,968 2,053,523
Internal Services 2,648,320 2,296,897 2,430,616
Net cost of operations before government funding and transfers 5,140,186 4,452,865 4,484,139
Government funding and transfers
Net cash provided by Government - 4,358,884 5,038,732
Services provided without charge by other government departments (note 9) - 204,400 185,790
Transfer of the transition payments for implementing salary payments in arrears - - -
Change in due from the Consolidated Revenue Fund - (257,929) 365,319
Net cost of operations after government fundingand transfers - 147,510 (1,105,702)
Departmental net financial position - Beginning of year - 1,229,839 124,137
Departmental net financial position - End of year - 1,082,329 1,229,839

Segmented information (note 10)

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

Military Police Complaints Commission of Canada
Statement of Change in Departmental Net Debt (Unaudited)
For the year ended March 31

(in dollars)
  2017 2016
Net cost of operations after government funding and transfers 147,510 (1,105,702)
Change due to tangible capital assets
Acquisition of tangible capital assets 71,099 1,203,183
Adjustment of tangible capital assets 0 (28,710)
Amortization of tangible capital assets (209,488) (61,271)
Total change due to tangible capital assets (138,389) 1,113,202
Net increase (decrease) in departmental net debt 9,121 7,500
Departmental net debt - Beginning of year 85,147 77,647
Departmental net debt - End of year 94,268 $85,147

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

Military Police Complaints Commission of Canada
Statement of Cash Flows (Unaudited)
For the year ended March 31

(in dollars)
  2017 2016
Operating Activities
Net cost of operations before government funding and transfers 4,452,865 4,484,139
Non-cash items:
Services provided without charge by other government departments (note 9) (204,400) (185,790)
Amortization of tangible capital assets (209,488) (61,271)
Adjustment of tangible capital assets - (28,710)
Transition payments for implementing salary payments in arrears - -
Variations in Statement of Financial Position
Increase (decrease) in accounts receivable and advances 20,628 (36,261)
Decrease (increase) in accounts payable and accrued liabilities 239,472 (329,818)
Decrease (increase) in vacation pay and compensatory leave (11,292) (6,740)
Decrease (increase) in employee future benefits - -
Cash used in operating activities 4,287,785 3,835,549
Capital investing Activities
Acquisition of tangible capital assets 71,099 1,203,183
Cash used in capital investing activities 71,099 1,203,183
Net Cash Provided by Government of Canada 4,358,884 5,038,732

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

Notes to the Financial Statements (Unaudited)
For the year ended March 31, 2017

1. Authority and Objectives

The Military Police Complaints Commission of Canada(MPCC) is a quasi-judicial agency, which reports to Parliament through the Minister of National Defence. It is a civilian body, external and independent of the Department of National Defence (DND) and the Canadian Armed Forces (CAF). The MPCC was established in the fall of 1999 under Part IV of the National Defence Act (Sections 250.1 to 250.53). Its mandate is to monitor and review complaints about the conduct of the military police in performance of their policing duties or functions and to deal with complaints of interference in military police investigations. The MPCC carries out its mandate through its one program, Complaints Resolution, with the support of Internal Services.

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 MPCC is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the MPCC 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 "Expenses" and "Revenue" sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-oriented Statement of Operations included in the 2016-17 Report on Plans and Priorities. Planned results are not presented in the "Government funding and transfers" section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2016-17 Report on Plans and Priorities.

(b) Net Cash Provided by Government

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

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

(d) 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 departments and agencies for employer contributions to the health and dental insurance plans are recorded as operating expenses at their estimated cost.

(e) Employee Future Benefits

i. Pension Benefits

Eligible employees participate in the Public Service Pension Plan, a multi-employer plan administered by the Government of Canada. The MPCC’s contributions to the Plan are charged to expenses in the year incurred and represent its total obligation to the Plan. The MPCC’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.

ii. Severance Benefits

Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. 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.

(f) Accounts Receivable and Advances

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

(g) Tangible Capital Assets

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

Tangible Capital Assets
Asset Class Amortization Period
Informatics hardware 3 years
Software 3 years
Equipment 3-5 years
Leasehold improvements 10 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.

(h) 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 future 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 MPCC 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 MPCC 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)
  2017 2016
Net cost of operations before government funding and transfers 4,452,865 4,484,139
Adjustments for items affecting net cost of operations but not affecting authorities:
Services provided without charge by other government departments (204,400) (185,790)
Amortization of tangible capital assets (209,488) (61,271)
Decrease (increase) in employee future benefits - -
Decrease (increase) in vacation pay and compensatory leave (11,292) (6,740)
Adjustment of tangible capital asset - (28,710)
Adjustment of previous year’s payables at year-end 20,572 2,065
Other non-appropriated expenditures 174 363
Total items affecting net cost of operations but not affecting authorities 4,048,431 4,204,056
Adjustments for items not affecting net cost of operations but affecting authorities:
Transition payments for implementing salary payments in arrears - -
Acquisition of tangible capital assets 71,099 1,203,183
Total items not affecting net cost of operations but affecting authorities 71,099 1,203,183
Current year authorities used 4,119,530 5,407,239
(b) Authorities Provided and Used (in dollars)
  2017 2016
Authorities provided
Vote 1 - Operating expenditures 4,461,510 5,414,346
Statutory amounts 370,830 375,364
Sub-total: 4,832,340 5,789,710
Less: lapsed operating (712,810) (382,471)
Current year authorities used 4,119,530 5,407,239

4. Accounts Payable and Accrued Liabilities

The following table presents details of the MPCC’s accounts payable and accrued liabilities:

Accounts Payable and Accrued Liabilities (in dollars)
  2017 2016
Accounts payable - Other government departments and agencies 67,371 375,069
Accounts payable - External parties 196,858 101,279
Total accounts payable 264,229 476,348
Accrued liabilities 210,637 237,991
Total accounts payable and accrued liabilities 474,867 714,339

5. Employee Future Benefits

(a) Pension benefits

The MPCC’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/Quebec Pension Plan benefits and they are indexed to inflation.

Both the employees and the MPCC contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to 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 2016-2017 expense amounts to $258,357 ($258,738 in 2015‑2016). For Group 1 members, the expense represents approximately 1.12 times (1.25 times in 2015‑2016) the employee contributions and, for Group 2 members, approximately 1.08 times (1.24 times in 2015‑2016) the employee contributions.

The MPCC’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

Severance benefits provided to the MPCC’s employees were previously based on an employee’s eligibility, years of service and salary at termination of employment. However, since 2011 the accumulation of severance benefits for voluntary departures progressively ceased for substantially all employees. Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service. By March 31, 2017, substantially all settlements for immediate cash out were completed. Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities.

Outstanding Severance Benefits Obligations (in dollars)
2017 2016
Accrued benefit obligation, beginning of the year - -
Expense for the year - -
Benefits paid during the year - -
Accrued benefit obligation, end of the year - -

6. Accounts Receivable and Advances

The following table presents details of accounts receivable and advances balances:

Accounts Receivable and Advances Balances (in dollars)
  2017 2016
Receivables from other government departments and agencies 113,398 92,770
Petty cash advance 0 0
Total accounts receivable and advances 113,398 92,770

7. Tangible Capital Assets

Cost (in dollars)
Capital Asset Class Opening Balance Acquisitions AdjustmentsNote 1 Closing Balance
Informatics hardware 463,505 53,419 - 516,924
Software 94,018 - - 94,018
Equipment 439,198 17,680 - 456,878
Leasehold improvements 1,073,226 - - 1,073,226
Assets under construction - - - -
Total 2,069,947 71,099 - 2,141,046

Accumulated Amortization (in dollars)
Capital Asset Class Opening Balance Amortization Closing Balance
Informatics hardware 396,280 40,137 436,417
Software 53,574 13,481 67,055
Equipment 196,687 49,957 246,644
Leasehold improvements 108,420 105,913 214,333
Assets under construction - - -
Total 754,961 $209,488 $964,449
Net Book Value (in dollars)
Capital Asset Class 2017 2016
Informatics hardware 80,507 67,225
Software 26,963 40,444
Equipment 210,234 242,511
Leasehold improvements 858,893 964,806
Assets under construction - -
Total 1,176,597 1,314,986

8. Contractual Obligations

The nature of the MPCC’s activities can result in some large multi-year contracts and obligations whereby the MPCC will be obligated to make future payments when the goods and services are received. The most significant commitment relates to an operating lease for its accommodation. Contractual obligations that can be reasonably estimated are summarized as follows:

Contractual Obligations (in dollars)
  2017-18 2018-19 2019-20 2020-21 2021-22 Total
Operating leases 330,044 327,252 327,252 327,252 327,252 1,639,594

The occupancy instrument governing the rental of MPCC space expires May 31, 2022.

9. Related Party Transactions

The MPCC is related as a result of common ownership to all government departments, agencies and Crown Corporations. The MPCC enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the MPCC received common services which were obtained without charge from other government departments and agencies as disclosed below.

(a) Common Services Provided Without Charge by Other Government Departments

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

Services provided without charge (in dollars)
  2017 2016
Employer's contribution to the health and dental insurance plans 204,400 185,790

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 cost of these services, such as the payroll and cheque issuance services provided by Public Services and Procurement Canada are not included in the MPCC's Statement of Operations and Departmental Net Financial Position.

(b) Other Transactions with Related Parties (in dollars)
  2017 20165
Accounts receivable - Other government departments and agencies 113,398 92,770
Accounts payable - Other government departments and agencies 67,371 375,069
Expenses - Other government departments and agencies 1,259,646 1,620,074

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

10. Segmented Information

Presentation by segment is based on MPCC’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 for the main programs, by major object of expenses. The segment results for the period are as follows:

Operating Expenses (in dollars)
  Complaints
Resolution
Internal Services Total
2017 2016
Salaries and employee benefits 1,531,607 1,479,866 3,011,473 2,991,960
Professional and special services 351,997 142,804 494,801 785,798
Accommodation and other rentals 175,057 217,119 392,176 413,768
Transportation and telecommunication 29,682 68,832 98,514 118,602
Office expenses and equipment 43,760 65,997 109,757 57,086
Communication, printing and publishing 23,865 110,589 134,454 55,403
Amortization of tangible capital assets - 209,488 209,488 61,272
Repair and maintenance - 2,202 2,202 250
Net cost of operations before government funding 2,155,968 2,296,897 4,452,865 4,484,139

11. Comparative Information

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

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