Future-oriented Financial Statements 2012-13

Statement of Management Responsibility

Management is responsible for these future-oriented financial statements, including responsibility for the appropriateness of the assumptions on which these statements are prepared. These statements are based on the best information available and assumptions adopted as at February 15, 2012, and reflect the plans described in the Report on Plans and Priorities.

1. Authority and Objectives

The mandate of the Commissioner of Official Languages is to oversee the full implementation of the Official Languages Act, protect the language rights of Canadians, and promote linguistic duality and bilingualism in Canada.

Section 56 of the Official Languages Act (1) states that it is the duty of the Commissioner to take all actions and measures within the authority of the Commissioner with a view to ensuring recognition of the status of each of the official languages and compliance with the spirit and intent of this Act in the administration of the affairs of federal institutions, including any of their activities relating to the advancement of English and French in Canadian society.

Under the Act, therefore, the Commissioner is required to take every measure within his power to ensure that the three main objectives of the Official Languages Act are met:

• the equality of the status and use of English and French in Parliament, the Government of Canada, the federal administration and the institutions subject to the Act;
• the development of official language minority communities in Canada; and
• the advancement of the equality of English and French in Canadian society.

The Commissioner of Official Languages is appointed by commission under the Great Seal, after approval by resolution of the House of Commons and the Senate, for a seven-year term. The Commissioner of Official Languages reports directly to Parliament.

2. Methodology and Significant Assumptions

The future-oriented financial statements have been prepared on the basis of the government priorities and the plans of OCOL as described in the Report on Plans and Priorities.

The main assumptions are as follows:

1. OCOL's activities will remain substantially the same as for the previous year;
2. Expenses, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue;
3. Estimated year end information for 2011-12 is used as the opening position for the 2012-13 planned results.

These assumptions are adopted as at February 15, 2012.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to forecast final results for the remainder of 2011-12 and for 2012-13, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing these financial statements, the Office of the Commissioner of Official Languages 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 future-oriented financial statements and the historical financial statements include:

1. The timing and amounts of acquisitions and disposals of equipment may affect gains/losses and amortization expense.
2. Further changes to the operating budget through new initiatives or technical adjustments later in the year.

Once the Report on Plans and Priorities is presented, the Office of the Commissioner of Official Languages will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

4. Summary of Significant Accounting Policies

The future-oriented financial statements have been prepared in accordance with the Treasury Board accounting policies in effect for the 2011-2012 fiscal year. These accounting policies, stated below, 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:

1. Parliamentary authorities

   OCOL is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to OCOL do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items presented in the Future-oriented Statement of Operations and the Future-oriented Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a reconciliation between the bases of reporting.

2. Net Cash Provided by Government

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

3. Due from/to the Consolidated Revenue Fund (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 OCOL is entitled to draw from the CRF without further parliamentary expenditure authorities to discharge its liabilities.

4. Accounts receivable

   Accounts receivable are stated at the lower of cost and net recoverable value. A valuation allowance is established for receivables where recovery is considered uncertain.

5. Tangible capital assets

   All tangible capital assets and leasehold improvements having an initial cost of $1,000 or more are recorded at their acquisition costs.  OCOL does not capitalize intangibles.

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

   Asset Class	Amortization Period
   Machinery and equipment	5 years
   Informatics hardware	4 years
   Furniture	5 years
   Informatics software	3 years
   Motor vehicles	7 years
   Leasehold improvements	Lesser of the remaining term of the lease or the useful life of the improvement

6. Expenses

   Expenses are recorded on the accrual basis:

   1. Vacation pay and compensatory leave

      Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.

   2. Services provided without charge by other government departments

      Services provided without charge by other government departments for accommodation, the employer's contribution to the health and dental insurance plans, audit and payroll services are recorded as operating expenses at their estimated cost.

   3. Workers' compensation benefits

      The Government of Canada sponsors workers' compensation benefits available across Canada. OCOL is charged for its share of the annual benefit payments incurred under this Plan. These amounts represent OCOL's contribution to the Plan and they are recorded by OCOL as an expense in the period incurred.

7. Employee future benefits

   1. Pension benefits

      Eligible employees participate in the Public Service Pension Plan, a multiemployer plan administered by the Government of Canada. OCOL's contributions to the Plan are charged to expenses in the year incurred and represent OCOL's total obligation to the Plan. Current legislation does not require OCOL to make contributions for any actuarial deficiencies of the Plan.

   2. Severance benefits

      Employees are entitled to severance benefits, as provided for under labour contracts and conditions of employment. The cost of these benefits is 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.

8. Contingent liabilities

   Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the future-oriented financial statements.

5. Parliamentary Authorities

OCOL receives its funding through annual Parliamentary authorities. Items recognized in the Future-oriented Statements of Operations and Financial Position in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, OCOL 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:

Authorities presented reflect current forecasts of statutory items, approved initiatives included and expected to be included in Estimates documents and, when reasonable estimates can be made, estimates of amounts to be allocated from Treasury Board central votes.

6. Tangible Capital Assets

7. Accounts Payable and Accrued Liabilities

8. Employee Future Benefits

9. Related party transactions

OCOL is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. OCOL enters into transactions with these entities in the normal course of business and on normal trade terms.

10. Contingent Liabilities

In the normal course of its operations, OCOL may become involved in various legal actions. Some of these legal actions may result in actual liabilities when one or more future events occur. To the extent that the future event is likely to occur, and a reasonable estimate of the loss can be made, a liability is accrued and an expense recorded. No contingent liabilities are recognized in OCOL's future-oriented financial statements.

11. Contractual Obligations

OCOL has multi-years contracts and obligations arising in the normal course of its activities. These obligations include equipment rental, service contracts, as well as an obligation related to workers' compensation death benefits.

Significant contractual obligations that can be reasonably estimated are summarized as follows:

12. Segmented Information

Presentation by segment is based on OCOL'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 4. The following table presents the forecasted expenses incurred for the main program activities, by major object of expenses. The segment results for the period are as follows: