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Financial Statements (unaudited) for the year ending 2008-2009

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Statement of Management Responsibility

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2009 and all information contained in these statements rests with the management of the Royal Canadian Mounted Police (RCMP). These financial statements have been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

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

Management maintains a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are in accordance with the Financial Administration Act, are executed in accordance with prescribed regulations, within Parliamentary authorities, and are properly recorded to maintain accountability of Government funds. Management also seeks to ensure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility, and by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the RCMP.

The financial statements of the RCMP have not been audited.

William J.S. Elliott
Commissioner
Alain P. Séguin
Chief Financial and Administrative Officer

Ottawa, Canada
August 5, 2009


Statement of Operations (Unaudited)

For the year ended March 31, 2009
 (in thousands of dollars)

($ thousands)
  2009 2008
Expenses (Note 4)
Community, Contract and Aboriginal Policing $2,667,487 $2,386,135
Federal and International Operations 811,752 691,887
Techincal Policing Operations 256,283 220,629
Protective Policing Services 247,850 146,484
National Police Services 215,292 197,752
Policing Support Services 116,713 89,259
Criminal Intelligence Operations 83,473 94,573
Firearms Registration 53,088 52,104
Firearms Licensing and Supporting Infrastructure 8,449 10,040
Other Activities 94,358 83,821
  4,554,745 3,972,684
Revenues (Note 5)
Community, Contract and Aboriginal Policing 1,463,396 1,386,391
National Police Services 18,198 14,688
Other Activities 65,923 42,266
  1,547,517 1,443,345
Net Cost of Operations $3,007,228 $2,529,339

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

Statement of Financial Position (Unaudited)

As at March 31, 2009
(in thousands of dollars)

  2009 2008
Assets
Financial assets
Accounts receivable and advances (Note 6) $570,817 $570,860
  570,817 570,860
Non-financial assets
Inventory 51,708 44,133
Tangible capital assets (Note 7) 1,267,033 1,160,654
  1,318,741 1,204,787
  $1,889,558 $1,775,647
Liabilities and Equity of Canada
Liabilities
Accounts payables and accrued liabilities (Note 8) $439,211 $364,199
Vacation pay and compensatory leave 206,270 191,138
RCMP Pension accounts (Note 9) 12,372,143 12,052,061
Deferred revenue (Note 10) 161,908 110,350
Employee severance benefits (Note 11) 521,483 461,683
Other liabilities (Note 12) 11,898 9,242
  13,712,913 13,189,223
Equity of Canada (11,823,355) (11,413,586)
  $1,889,558 $1,775,647

Contingent liabilities (Note 13)
Contractual obligations (Note 14)

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

Statement of Equity (Unaudited)

As at March 31, 2009
(in thousands of dollars)

  2009 2008
Equity of Canada, beginning of year $11,413,586 $11,243,510
Net cost of operations 3,007,228 2,529,339
Current year appropriations used (Note 3) (2,895,650) (2,455,813)
Revenue not available for spending 113,023 96,719
Refund of prior year expenditures 14,222 8,531
Change in net position in the Consolidated Revenue Fund (Note 3) 442,427 206,315
Services received without charge from other government departments (Note 15) (271,481) (215,015)
Equity of Canada, end of year $11,823,355 $11,413,586

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

 

Statement of Cash Flow (Unaudited)

For the year ended March 31, 2009
(in thousands of dollars)

  2009 2008
Operating Activities
Net cost of operations $3,007,228 $2,529,339
Non-cash items:
Amortization of tangible capital assets (146,532) (136,892)
Loss on disposal, write-off, and adjustments in tangible capital assets (2,036) (8,593)
Services received without charge from other government departments (271,481) (215,015)
Variations in Financial Position:
Increase (decrease) in financial assets (43) 206,350
Increase in inventory 7,575 7,216
Increase in liabilities (523,680) (440,778)
Cash used by operating activities 2,071,031 1,941,627

Capital investment activities

Acquisitions of tangible capital assets 265,833 206,853
Proceeds from disposal or transfer of capital assets (10,886) (4,232)
Cash used by capital investment activities $254,947 $202,621
 
Financing Activities
Net cash provided by Government of Canada ($2,325,978) ($2,144,248)

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

 

Notes to the Financial Statements (Unaudited)

For the year ended March 31, 2009

1. Authority and Mandate

The Royal Canadian Mounted Police (RCMP) is Canada’s national police service and an agency of the Department of Public Safety and Emergency Preparedness.

The RCMP mandate is based on the authority and responsibility assigned under section 18 of the Royal Canadian Mounted Police Act.  The mandate of the RCMP is to enforce laws, prevent crime, and maintain peace, order and security.  Ten program activities highlight our Program Activity Architecture (PAA). These include:

  • Community, Contract and Aboriginal Policing
    Contributes to safe homes and safe communities by providing police services to diverse communities in eight provinces (with the exception of Ontario and Quebec) and three territories through cost-shared policing service agreements with federal, provincial, territorial, municipal and Aboriginal governments.
  • Federal and International Operations
    Provides policing, law enforcement, investigative, and protective services to the federal government, its departments and agencies and to Canadians.
  • Technical Policing Operations
    Provides policy, advice and management to predict, research, develop and ensure the availability of technical tools and expertise to enable front line members and partners to prevent and investigate crime and enforce the law, protect against terrorism, and operate in a safe and secure environment.
  • Protective Policing Services
    Directs the planning, implementation, administration and monitoring of the RCMP National Protective Security Program including the protection of dignitaries, the security of major events and Special Initiatives including Prime Minister-led summits of an international nature.
  • National Police Services
    Contributes to safe homes and safe communities for Canadians through the acquisition, analysis, dissemination and warehousing of law enforcement-specific applications of science and technology to all accredited Canadian law enforcement agencies.
  • Criminal Intelligence Operations
    A national program for the management of criminal information and intelligence in the detection and prevention of crime of an organized, serious or national security nature in Canada or internationally as it affects Canada.
  • Policing Support Services
    Support services provided in support of the RCMP’s role as a police organization.
  • Firearms Registration
    All activities related to the processing of all firearms registration and transfer applications, including registration on import; support to public agencies and law enforcement.
  • Firearms Licensing and Supporting Infrastructure
    Delivery of licensing activities through federal Chief Firearms Officers (CFO) operations, arrangements with other federal government departments, and the management of provincial CFO roles and relationships; operations of the Central Processing Site, the 1-800 call centre; maintenance and analysis of program performance data, management of the Program's information technology infrastructure and its interface with other databases; and support to public agencies and the law enforcement.
  • Corporate Infrastructure
    Includes the vital administrative services required for an organization to operate effectively. The costs associated with this activity are distributed among the remaining program activities.

2. Summary of Significant Accounting Policies

The financial statements have been prepared in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

(a) The RCMP is primarily financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to the department do not parallel financial reporting according to generally accepted accounting principles since appropriations are primarily based on cash flow requirements.  Consequently, items recognized in the statement of operations and in the statement of financial position are not necessarily the same as those provided through appropriations from Parliament. Note 3 provides a high-level reconciliation between the bases of reporting.

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

(c) Change in net position in the Consolidated Revenue Fund is the difference between the net cash provided by Government and appropriations used in a year, excluding the amount of non respendable revenue recorded by the department.  It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.

(d) Revenues are accounted for in the period in which the underlying transactions or events occurred that gave rise to the revenues.  Revenues that have been received but not yet earned or not spent in accordance with any external restrictions are recorded as deferred revenues.

(e) Expenses are recorded when the underlying transaction or expense occurred subject to the following:

  • Grants are recognized in the year in which payment is due or in which the recipient has met the eligibility criteria.
  • Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement.
  • Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
  • Services provided without charge by other government departments for accommodation, the employer’s contribution to the health and dental insurance plans, Worker’s compensation and legal services are recorded as operating expenses at their estimated cost.

(f)  Employee future benefits:

  • Pension benefits for Public Service employees:  Eligible employees participate in the Public Service Pension Plan, a multi-employer Plan administered by the Government of Canada.  The department’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan.  Current legislation does not require the department to make contributions for any actuarial deficiencies of the Plan.
  • Pension benefits for RCMP members: The Government of Canada sponsors a variety of employee future benefits such as pension plans and disability benefits, which cover members of the RCMP.  The department administers the pension benefits for members of the RCMP.   The actuarial liability and related disclosures for these future benefits are presented in the financial statements of the Government of Canada. This differs from the accounting and disclosures of future benefits for RCMP presented in these financial statements whereby pension expense corresponds to the department’s annual contributions toward the cost of current service.  In addition to its regular contributions, current legislation also requires the department to make contributions for actuarial deficiencies in the RCMP Pension Plan. These contributions are expensed in the year they are credited to the Plan. This accounting treatment corresponds to the funding provided to departments through Parliamentary appropriations.
  • Severance benefits: Employees and RCMP members are entitled to severance benefits under labor contracts or conditions of employment.  These benefits are accrued as employees render the services necessary to earn them.  The obligation relating to the benefits earned by employees and RCMP members is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole. 

(g) Receivables from external parties are stated at amounts expected to be ultimately realized; a provision is made for external receivables where recovery is considered uncertain.

(h) 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 financial statements.

(i) Environmental liabilities – Environmental liabilities reflect the estimated costs related to the management and remediation of environmentally contaminated sites.  Based on management’s best estimates, a liability is accrued and an expense recorded when the contamination occurs or when the department becomes aware of the contamination and is obligated, or is likely to be obligated to incur such costs.  If the likelihood of the department’s obligation to incur these costs is not determinable, or if an amount cannot be reasonably estimated, the costs are disclosed as contingent liabilities in the notes to the financial statements.

(j) Inventories – Inventories consist of parts, material and supplies held for future program delivery and not intended for re-sale.  They are valued at cost.  If they no longer have service potential, they are valued at the lower of cost or net realizable value.

(k) Foreign currency transactions - Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions.  Monetary assets and liabilities denominated in foreign currencies are translated using exchange rates in effect on March 31st.  Gains resulting from foreign currency transactions are included under “Other revenues” in note 5.  Losses are included under “Other operating expenses” in note 4.

(l) Tangible capital assets - All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost.  Capital assets do not include intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections.

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

 

Asset Class Sub-asset Class Amortization Period
Buildings   20 to 30 years
Works and Infrastructures   20 years
Machinery and Equipment Machinery and Equipment 5 to 15 years
Informatics - Hardware 4 to 7 years
Informatics - Software 3 to 7 years
Vehicles Marine Transportation 10 to 15 years
Air Transportation 10 years
Land Transportation (non-military) 3 to 10 years
Land Transportation (military) 10 years
Leasehold Improvements   Lesser of useful life of the improvement or term of lease

 

3.  Parliamentary Appropriations

The RCMP receives most of its funding through annual Parliamentary appropriations. Items recognized in the Statement of Operations and the Statement of Financial Position in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, the RCMP 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 appropriations used

($ thousands of dollars)
  2009 2008
Net cost of operations $3,007,228 $2,529,339
Adjustments for items affecting net cost of operations but not affecting appropriations:
Add (less):
Services received without charge from other government departments (271,481) (215,015)
Revenue not available for spending 113,023 96,719
Amortization of tangible capital assets (146,532) (136,892)
Refunds of prior year expenditures 14,222 8,531
Increase in liability for severance benefits (59,800) (22,230)
Increase in liability for vacation pay and compensatory leave (15,132) (9,916)
Increase in liability for contaminated sites (3,100) (524)
Loss on disposal, write-off, and adjustments in tangible capital assets (2,036) (12,249)
Other (23,712) (4,908)
  2,612,680 2,232,855
Adjustments for items not affecting net cost of operations but affecting appropriations
Add (less):
Acquisitions of tangible capital assets 265,833 206,853
Accountable advances 22 (8)
Inventory purchased 17,115 16,113
Current year appropriation used $2,895,650 $2,455,813

(b) Appropriations provided and used

($ thousands of dollars)
  2009 2008
Operating expenditures $2,173,995 $1,990,204
Capital expenditures 390,787 328,460
Grants and Contributions 90,098 81,956
Statutory amounts 419,010 378,782
Less:
Appropriations available for future years (3,912) (4,060)
Lapsed appropriations - Operating (174,328) (319,529)
Current year appropriation used $2,895,650 $2,455,813

(c) Reconciliation of net cash provided by Government to current year appropriations used:

($ thousands of dollars)
  2009 2008
Net cash provided by Government $2,325,978 $2,144,248
Revenue not available for spending 113,023 96,719
Refunds of prior year expenditures 14,222 8,531
  2,453,223 2,249,498

Change in net position in the Consolidated Revenue Fund:

Variations in accounts receivables & advances 43 (206,350)
Variations in accounts payables & accrued liabilities 75,012 56,216
Variations in pension liabilities 319,522 349,205
Variations in deferred revenue 51,558 6,597
Variations in other liabilities 2,656 823
Other adjustments (6,364) (176)
  442,427 206,315
     
Current year appropriation used $2,895,650 $2,455,813

 

4. Expenses

The following table presents details of expenses by category:

(in thousands of dollars)
  2009 2008
Operating Expenses
Salaries and employee benefits $ 3,001,404 $ 2,609,985
Professional & special services 363,715 326,604
Travel & relocation 193,785

167,412

Amortization 146,532 136,892
Utilities, material & supplies 128,358 115,521
Accommodation 124,000 118,695
Purchased repair & maintenance 109,380 99,639
Telecommunications 56,998 46,926
Rentals 30,064 27,028
Loss on disposal and write-off of tangible capital assets 9,162 12,779
Information 8,826 5,558
Provision for severance benefits 5,603

22,230

Other operating expenses 273,248 191,452
  4,451,075 3,880,721
Transfer payments
Compensatory grants to individuals 89,499 78,696
Transfers to other levels of governments 13,544 12,470
Payments to or on behalf of First Nations 45 198
Other 582 599
  103,670 91,963
Total expenses $4,554,745 $3,972,684

 

5. Revenues

The following table presents details of revenues by category:

(in thousands of dollars)
  2009 2008
Policing services $ 1,523,614 $ 1,428,039
Firearms registration fees 7,604

7,742

Gain on disposal of tangible capital assets 7,126 246
Other revenues 9,173 7,318
Total revenues $1,547,517 $1,443,345

 

6. Accounts Receivable and Advances

The following table presents details of accounts receivable and advances by category:

(in thousands of dollars)
  2009 2008
Receivables from other departments and agencies $ 221,619 $ 228,326
Receivables from external parties 336,981 332,259
  558,600 560,585
Less: Allowance for doubtful accounts on external parties (293) (293)
Net receivables 558,307 560,292
Temporary advances 9,991 8,062
Standing advances 2,519 2,506
  12,510 10,568
Total accounts receiveable and advances $570,817 $570,860

 

7. Tangible capital assets

Cost (in thousands of dollars)
  Opening Balance Acquisitions and adjustments (1) Disposals and write-offs Closing Balance
Land $44,188 $1,840 $210 $45,818
Buildings 792,940 23,579 1,387 815,132
Works and Infrastructure 36,527 18,769 - 55,296
Machinery and Equipment 545,363 92,876 1,723 636,516
Vehicles 486,552 99,377 57,440 528,489
Leashold Improvements 18,169 1,559 - 19,728
Assets under Construction 238,555 27,833 213 266,175
Total $2,162,294 $265,833 $60,973 $2,367,154

 

Accumulated Amortization (in thousands of dollars)
  Opening Balance Acquisitions and adjustments (1) Disposals and write-offs Closing Balance
Land - - - -
Buildings $383,464 $31,238 $1,606 $413,636
Works and Infrastructure 2,904 2,609 - 5,513
Machinery and Equipment 359,166 54,585 1,271 412,480
Vehicles 251,108 55,484 45,714 260,878
Leashold Improvements 4,998 2,616 - 7,614
Assets under Construction - - - -
Total $1,001,640 $146,532 $48,051 $1,100,121

Amortization expense for the year ended March 31, 2009 is $ 146,532 (2008 - $ 136,892)
(1) Amounts include capitalization of prior years’ tangible capital assets: Costs $1,320K and Amortization $506K.

Net book value
($ thousands of dollars)
  2009 2008
Land $45,818 $44,188
Buildings 401,496 409,476
Works and Infrastructure 49,783 33,623
Machinery and Equipment 224,036 186,197
Vehicles 267,611 235,444
Leasehold Improvements 12,114 13,171
Assets under Construction 266,175 238,555
Total $1,267,033 $1,160,654

 

8. Accounts Payable and Accrued Liabilities 

The following table presents details of accounts payable and accrued liabilities:

($ thousands of dollars)
  2009 2008
Payables to other government departments $46,700 $29,241
Payables to external parties 296,749 272,561
Accrued salaries and wages 60,734 27,893
Other 35,028 34,504
Total of accounts payables and accrued liabilities $439,211 $364,199

 

9. RCMP Pension Accounts

The department maintains accounts to record the transactions pertaining to the RCMP Pension Plan, which comprises the RCMP Superannuation Account, the RCMP pension Fund Account, the Retirement Compensation Arrangement Account and the Dependents Pension Fund Account.  These accounts record transactions such as contributions, benefit payments, interest credits, refundable taxes and actuarial debit and credit funding adjustments resulting from triennial actuarial valuations and transfers to the Public Sector Investment Board. 

The value of the liabilities reported in these financial statements for the RCMP Pension Plan accounts do not reflect the actuarial value of these liabilities determined by the Chief Actuary of the Office of the Superintendent of Financial Institutions nor the investments that are held by the Public Sector Investment Board.

The following table provides details of the RCMP Pension Plan Pension Accounts:

($ thousands of dollars)
  2009 2008
RCMP Superannuation Account $12,306,593 $11,989,180
RCMP Pension Fund Account 11,699 11,187
Retirement Compensation Arrangement Account * 26,020 23,717
Dependants Pension Fund Account 27,831 28,537
Total $12,372,143 $12,052,621

* The Retirement Compensation Arrangement (RCA) account records transactions for pension benefits that are provided in excess of those permitted under the Income Tax Act. The RCA is registered with Canada Revenue Agency (CRA) and a transfer is made annually between the RCA Account and CRA to either remit a 50-percent refundable tax in respect of the net contributions and interest credits or to be credited a reimbursement based on the net benefit payments. As at March 31, 2009 the total refundable tax transferred (RCMP only) amounts to $25 million ($23 million in 2008).

 

10. Deferred Revenue

Deferred revenue consists of four categories: deferred revenue for contract policing arrangements on tangible capital assets, balance at year-end of unearned revenue stemming from amounts received from external parties, deferred revenue for donation and bequest accounts and deferred revenue for registration fees.  Deferred revenue for contract policing arrangements on tangible capital assets represents the balance of revenue received at the time of acquisition of tangible capital assets owned by RCMP and dedicated for usage to meet contractual obligations over the life of the asset.  The deferred revenue is earned on the same basis as the amortization of the corresponding capital asset. Deferred revenue representing the balance at year-end of unearned revenues stemming from amounts received from external parties to cover expenditures restricted to specific activities in accordance with agreements with the Government of Canada. Deferred revenue for donation and bequest accounts represents the balance of contributions received for various purposes.  They are recognized as revenue when the funds are expended for the specified purposes. Deferred revenue for registration fees represents the application fee received from clients where the application processing has not reached a sufficient stage to warrant recognizing revenue.  They are recognized as revenue when the eligibility checks point of application is processed.

Deferred revenue - contract policing arrangements on tangible capital assets

($ thousands of dollars)
  2009 2008
Beginning of the year $109,459 $103,184
Increase in net book value of contract policing capital assets 7,591 6,275
Revenue recognized (1,579)  
Deferred revenue - end of year $115,471 $109,459

Deferred revenue - contracts with external parties

($ thousands of dollars)
  2009 2008
Beginning of the year    
Amounts received $45,579  
Revenue recognized    
Deferred revenue - end of year $45,579

Donation and bequest

($ thousands of dollars)
  2009 2008
Beginning of the year 739 417
Contributions received 10 396
Revenue recognized (128) (74)
Deferred revenue - end of year 621 739

Firearms registration fees

($ thousands of dollars)
  2009 2008
Beginning of the year 152 152
Registration fees received on application request 237 -
Revenue recognized (152) -
Deferred revenue - end of year 237 152

 

Total deferred revenue $161,908 $110,350

 

11. Employee benefits

(a) Pension benefits (Public Service employees): The department’s public service employees participate in the Public Service Pension 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 Plans benefits and they are indexed to inflation. 

Both the employees and the department contribute to the cost of the Plan. The 2008-09 expense amounts to $53 million ($46 million in 2007-08), which represents approximately 2.0 (2.1 in 2007-08) times the contributions by employees.  The department’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) Pension benefits (RCMP members): The department’s regular and civilian members participate in the RCMP Pension Plan, which is sponsored by the Government of Canada and is administered by the RCMP.  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 members and the department contribute to the cost of the Plan. The 2008-09 expense amounts to $249 million ($224 million in 2007-08), which represents approximately 2.2 times the contributions by members (2.4 in 2007-08).  The RCMP is responsible for the administration of the Plan including determining eligibility for benefits, calculating and paying benefits, developing legislation and related policies, and providing information to Plan members. The actuarial liability and actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan’s sponsor. 

(c) Severance benefits: The department provides severance benefits to its employees and RCMP members based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future appropriations. Information about the severance benefits, measured as at March 31, is as follows:

(in thousands of dollars)
  2009 2008
Public Service Employees
Accrued benefit obligation, beginning of year $60,184 $53,253
Expense for the year 19,997 10,790
Benefits paid during the year (3,697) (3,859)
Accrued benefit obligation, end of year $76,484 $60,184
RCMP Members
Accrued benefit obligation, beginning of year $401,499 $386,200
Expense for the year 73,544 44,889
Benefits paid during the year (30,044) (29,590)
Accrued benefit obligation, end of year $444,999 $401,499
Total
Accrued benefit obligation, beginning of year $461,683 $439,453
Expense for the year 93,541 55,679
Benefits paid during the year (33,741) (33,449)
Accrued benefit obligation, end of year $521,483 $461,683

 

12. Other Liabilities

(in thousands of dollars)
  2009 2008
Benefit Trust Fund $2,352 $2,401
Contractor Services 218 406
Environmental Liabilities 7,376 4,276
Other 1,952 2,159
  $11,898 $9,242

Benefit Trust Fund:  This account was established by section 23 of the Royal Canadian Mounted Police Act, to record moneys received by personnel of the Royal Canadian Mounted Police, in connection with the performance of duties, over and above their pay and allowances.  Receipts of $113,901 ($178,240 in 2008) were received in the year and payments of $163,127 ($88,880 in 2008) were issued.  The fund is use for (i) the benefit of members, former members and their dependants; (ii) as a reward, grant or compensation to any person who assists the RCMP in the performance of its duties in any case where the Minister is of the opinion that such person is deserving of recognition for the services rendered; (iii) as a reward to any person appointed or employed under the authority of the RCMP Act for good conduct or meritorious service, and (iv) for such other purposes that would benefit the RCMP as the Minister may direct.

13. Contingent Liabilities

(a) Contaminated sites

Liabilities are accrued to record the estimated costs related to the management and remediation of contaminated sites where the department is obligated or likely to be obligated to incur such costs. The department has identified approximately 25 sites (21 sites in 2008) where such action is possible and for which a liability of $7,375,678 ($4,275,715 in 2008) has been recorded. The department’s ongoing efforts to assess contaminated sites may result in additional environmental liabilities related to newly identified sites, or changes in the assessments or intended use of existing sites. These liabilities will be accrued by the department in the year in which they become known.

(b) Claims and litigation

Claims have been made against the department in the normal course of operations. Legal proceedings for claims of approximately $71 million ($37 million in 2008) were still pending at March 31, 2009. Some of these potential liabilities 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 in the financial statements.

(c) Pension litigation

The Public Sector Pension Investment Board Act, which received Royal Assent in September 1999, amended the RCMPSA to enable the Federal government to deal with excess amounts in the RCMP Superannuation Account and the RCMP Pension Fund. The legal validity of these provisions has been challenged in the Ontario Superior Court of Justice. On November 20, 2007, the Court has rendered its decision and has dismissed all the claims of the plaintiffs. Several of the plaintiffs are currently appealing this decision to the Ontario Court of Appeal. The outcome of these appeals is not determinable at this time.

14. Contractual Obligations

The nature of the RCMP’s activities can result in some large multi-year contracts and obligation whereby the RCMP will be obligated to make future payments when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

(in thousands of dollars)
  2010 2011 2012 2013 2014
&
therafter
Total
Service agreement $140,234 $16,501 $466 - - $157,201
  $140,234 $16,501 $466 - - $157,201

15. Related Party Transactions

The RCMP is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The RCMP enters into transactions with these entities in the normal course of business and on normal trade terms. Also, during the year the RCMP received without charge from other departments, accommodation, the employer’s contribution to the health and dental insurance plans, worker’s compensation and legal services. These services without charge have been recognized in the department’s Statement of Operations as follows:

Services received without charge from other government departments

(in thousands of dollars)
  2009 2008
Accommodation provided by Public Works and Government Services $64,544 $64,210

Employer`s contributions to the Health and Dental Plans paid by Treasury Board Secretariat

203,720 147,525
Workers’ compensation cost provided by Human Resources Canada 339 378
Legal services provided by Department of Justice 2,878 2,902
  $271,481 $215,015

The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge.The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada, are not included as an expense in the department’s Statement of Operations.

16. Comparative information

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