Financial Statements (Unaudited) of Royal Canadian Mounted Police for the Year Ended March 31, 2021

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, 2021, 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 using the Government of Canada'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 RCMP's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the RCMP's Departmental Results 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 RCMP 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 ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

A risk-based assessment of the system of ICFR for the year ended March 31, 2021 was completed in accordance with the Treasury Board Policy on Financial Management and the results and action plans are summarized in the annex.

The effectiveness and adequacy of the RCMP's system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of the RCMP's operations, and by the Departmental Audit Committee, which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting, and which recommends the financial statements to the Commissioner.

The financial statements of the RCMP have not been audited.

Brenda Lucki
Commissioner

Jen O'Donoughue
Chief Financial Officer

Ottawa, Canada
August 26, 2021

Statement of Financial Position (Unaudited)

As at March 31, 2021

Statement of Financial Position (Unaudited) as at March 31, 2021 (in thousands of dollars)
2021 2020
Liabilities
Accounts payable and accrued liabilities (Note 4) $549,223 $636,679
Vacation pay and compensatory leave 328,585 265,892
RCMP Pension accounts (Note 5) 38,278 23,828
Environmental liabilities (Note 6) 10,807 11,260
Deferred revenue (Note 7) 68,497 64,020
Lease obligation for tangible capital assets (Note 8) 11,401 12,240
Employee future benefits (Note 9c) 137,239 140,888
Other liabilities (Note 10) 13,048 14,784
Total gross liabilities 1,157,078 1,169,591
Liabilities held on behalf of Government
Deferred revenue (Note 7) (3,944) (3,590)
Total liabilities held on behalf of Government (3,944) (3,590)
Total net liabilities 1,153,134 1,166,001
Financial assets
Due from Consolidated Revenue Fund 343,086 326,798
Accounts receivable and advances (Note 11) 931,230 983,578
Total gross financial assets 1,274,316 1,310,376
Financial assets held on behalf of Government
Accounts receivable and advances (Note 11) (380,437) (448,319)
Total financial assets held on behalf of Government (380,437) (448,319)
Total net financial assets 893,879 862,057
Departmental net debt 259,255 303,944
Non-financial assets
Inventory (Note 12) 82,211 61,412
Tangible capital assets (Note 13) 1,893,276 1,801,911
Total non-financial assets 1,975,487 1,863,323
Departmental net financial position $1,716,232 $1,559,379

Contractual obligations and contractual rights (Note 14)

Contingent liabilities (Note 15)

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

Brenda Lucki
Commissioner

Jen O'Donoughue
Chief Financial Officer

Ottawa, Canada
August 26, 2021

Statement of Operations and Departmental Net Financial Position (Unaudited)

For the Year Ended March 31, 2021

Statement of Operations and Departmental Net Financial Position (Unaudited) For the Year Ended March 31, 2021 (in thousands of dollars)
2021
Planned Results
2021 2020
Expenses
Contract and Indigenous Policing $3,437,373 $3,598,505 $4,156,793
Federal Policing 968,060 965,102 1,176,272
National Police Services 567,765 626,712 692,572
Internal Services 587,390 613,388 701,311
Expenses incurred on behalf of Government 1,216 (1,453) 1,286
Total expenses 5,561,804 5,802,254 6,728,234
Revenues
Policing services 2,547,878 2,472,826 2,373,413
Firearms licence fees 33,776 28,277 31,442
Other revenues 19,044 33,028 39,620
Revenues earned on behalf of Government (822,755) (849,237) (749,079)
Total revenues 1,777,943 1,684,894 1,695,396
Net cost of operations before government funding and transfers $3,783,861 4,117,360 $5,032,838
Government funding and transfers
Net cash provided by Government of Canada 3,884,001 4,631,072
Change in due from Consolidated Revenue Fund 16,288 88,897
Services provided without charge by other government departments (Note 16) 373,924 384,042
Net cost (Net results) of operations after government funding and transfers (156,853) (71,173)
Departmental net financial position – beginning of year 1,559,379 1,488,206
Departmental net financial position – end of year $1,716,232 $1,559,379

Segmented information (Note 17)

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

Statement of Change in Departmental Net Debt (Unaudited)

For the Year Ended March 31, 2021

Statement of Change in Departmental Net Debt (Unaudited) For the Year Ended March 31, 2021 (in thousands of dollars)
2021 2020
Net cost (Net results) of operations after government funding and transfers $(156,853) $(71,173)
Change due to tangible capital assets
Acquisition of tangible capital assets 249,419 248,608
Amortization of tangible capital assets (151,812) (159,408)
Proceeds from disposal of tangible capital assets (9,516) (10,981)
Net gain (loss) on disposal of tangible capital assets including adjustments 3,274 2,493
Total change due to tangible capital assets 91,365 80,712
Change due to inventory 20,799 8,049
Net increase (decrease) in departmental net debt (44,689) 17,588
Departmental net debt – beginning of year 303,944 286,356
Departmental net debt – end of year $259,255 $303,944

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

Statement of Cash Flows (Unaudited)

For the Year Ended March 31, 2021

Statement of Cash Flows (Unaudited) For the Year Ended March 31, 2021 (in thousands of dollars)
2021 2020
Operating activities
Net cost of operations before government funding and transfers $4,117,360 $5,032,838
Non-cash items:
Amortization of tangible capital assets (151,812) (159,408)
Net gain (loss) on disposal of tangible capital assets including adjustments 3,274 2,493
Services provided without charge by other government departments (Note 16) (373,924) (384,042)
Adjustments to tangible capital assets 109 -
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances 15,534 (4,977)
Increase (decrease) in inventory 20,799 8,049
Decrease (increase) in accounts payable and accrued liabilities 87,456 (92,368)
(Increase) decrease in vacation pay and compensatory leave (62,693) (5,718)
(Increase) decrease in RCMP Pension accounts (14,450) 12,840
Decrease (increase) in environment liabilities 453 (171)
(Increase) decrease in deferred revenue (4,123) (8,425)
Decrease (increase) in employee future benefits 3,649 (10,501)
Decrease (increase) in other liabilities 1,736 1,760
Cash used in operating activities 3,643,368 4,392,370
Capital investing activities
Acquisition of tangible capital assets (excluding assets under capital lease) 249,310 248,608
Proceeds from disposal of tangible capital assets (9,516) (10,981)
Cash used in capital investing activities 239,794 237,627
Financing activities
Lease payments for tangible capital assets 839 1,075
Cash used in financing activities 839 1,075
Net cash provided by Government of Canada $3,884,001 $4,631,072

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

Notes to the Financial Statements (Unaudited)
For the Year Ended March 31, 2021

1. Authority and objectives

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

The RCMP's mandate, as outlined in section 18 of the Royal Canadian Mounted Police Act, is multi-faceted. It includes: preventing and investigating crime; maintaining peace and order; enforcing laws; contributing to national security; ensuring the safety of state officials, visiting dignitaries and foreign missions; and providing vital operational support services to other police and law enforcement agencies within Canada and abroad. The core business of the RCMP is currently organized into the following four core responsibilities:

Contract and Indigenous Policing

Under the Police Service Agreements, the RCMP provides policing services to the provinces (except Ontario and Quebec) and territories, as well as municipalities and Indigenous communities. These services include the general administration of justice, preservation of peace, prevention of crime, and fulfilment of all duties as outlined under the laws of Canada or the laws of respective provinces and territories.

Federal Policing

Through Federal Policing, the RCMP prevents, detects, and investigates serious and organized crime, financial crime, and cybercrime, as well as crimes related to national security. In addition, it enforces federal statutes, conducts international policing activities, and ensures border integrity and the security of major events, state officials, dignitaries and designated sites.

National Police Services

Through National Police Services, the RCMP provides training, national criminal data repositories, and investigative assistance, expertise, and tools to all Canadian law enforcement agencies in a variety of fields such as forensics, identification, firearms, and online child exploitation. Internally, the RCMP provides a diverse range of technical services to support operations such as the collection of digital evidence, the delivery of policing information technology tools, and the implementation of departmental security standards.

Internal Services

Internal Services are those groups of related activities and resources that the federal government considers to be services in support of Programs and/or required to meet corporate obligations of an organization. Internal Services refers to the activities and resources of the 10 distinct services that support Program delivery in the organization, regardless of the Internal Services delivery model in a department. These services are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Materiel Management Services; and Acquisition Management Services.

2. Summary of significant accounting policies

These financial statements are prepared using the RCMP'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 RCMP is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the RCMP does 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 "Revenues" 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 2020-2021 Departmental Plan. 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 2020-2021 Departmental Plan.

b) Net cash provided by Government

The RCMP 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 Government.

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

d) Revenues

Revenues from regulatory fees are recognized based on the services provided in the year.

Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. Revenues are then recognized in the period in which the related expenses are incurred.

Deferred revenue consists of amounts received in advance of the delivery of goods and rendering of services that will be recognized as revenue in a subsequent fiscal year as it is earned.

Other revenues are recognized in the period the event giving rise to the revenues occurred.

Revenues that are non-respendable are not available to discharge the RCMP's liabilities. While the Commissioner is expected to maintain accounting control, 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 entity's gross revenues.

e) Expenses

Transfer payments are recorded as an expense in the year the transfer is authorized and all eligibility criteria have been met by the recipient.

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 for accommodation, employer contributions to the health and dental insurance plans, legal services and workers' compensation are recorded as operating expenses at their carrying value.

f) Employee future benefits

  1. Pension benefits for Public Service employees: Eligible employees participate in the Public Service Pension Plan (the "Plan"), a multiemployer pension plan administered by the Government. The RCMP's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The RCMP'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.
  2. Pension benefits for RCMP members: Members of the RCMP participate in a defined benefit pension plan (the "RCMP Plan") under the Royal Canadian Mounted Police Superannuation Act (RCMPSA), which is sponsored by the Government of Canada. The Minister of PSEP is the Minister responsible for the RCMPSA. The RCMP is responsible for the management of the RCMP Plan, while Public Services and Procurement Canada (PSPC) provides the day-to-day administration of the RCMP Plan. The Office of the Chief Actuary makes periodic actuarial valuations of the RCMP Plan. The RCMP Pension Accounts are the responsibility of the Government and are presented in the Consolidated Financial Statements of the Government of Canada. The RCMP's annual contributions toward the cost of current and prior service are charged to salaries and employee benefits expense in the year incurred. In addition to its regular contributions, current legislation also requires the RCMP to make contributions for actuarial deficiencies in the RCMP Plan. These contributions are expensed in the year they are credited to the RCMP Plan. This accounting treatment corresponds to the funding provided to departments through Parliamentary authorities.
  3. Severance benefits: The accumulation of severance benefits for voluntary departures ceased for applicable employee groups. The remaining obligation for employees who did not withdraw benefits is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

g) Accounts receivable

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

h) Non-financial assets

The costs of acquiring land, buildings, equipment and other capital property are capitalized as tangible capital assets and, except for land, are amortized to expense over the estimated useful lives of the assets, as described in Note 13. All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Tangible capital assets do not include immovable assets located on reserves as defined in the Indian Act, works of art, museum collections and Crown land to which no acquisition cost is attributable or intangible assets.

Inventories are valued at cost and are comprised of spare parts and supplies held for future program delivery and are not primarily intended for resale. Inventories that no longer have service potential are valued at the lower of cost or net realizable value.

i) Contingent liabilities

Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, a provision is accrued and an expense recorded to other expenses. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in Note 15.

j) Contingent assets

Contingent assets are possible assets which may become actual assets when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, the contingent asset is disclosed in Note 15.

k) Environmental liabilities

An environmental liability for the remediation of contaminated sites is recognized when all of the following criteria are satisfied: an environmental standard exists, contamination exceeds the environmental standard, the RCMP is directly responsible or accepts responsibility, it is expected that future economic benefits will be given up and a reasonable estimate of the amount can be made. The liability reflects the RCMP's best estimate of the amount required to remediate the sites to the current minimum standard for its use prior to contamination. When the future cash flows required to settle or otherwise extinguish a liability are estimable, predictable and are expected to occur over extended future periods, a present value technique is used. The discount rate used reflects the Government's cost of borrowing, associated with the estimated number of years to complete remediation.

The recorded liabilities are adjusted each year, for present value adjustments, inflation, new obligations, changes in management estimates and actual costs incurred.

If the likelihood of the RCMP's responsibility is not determinable, a contingent liability is disclosed in Note 15.

l) Measurement uncertainty

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported and disclosed amounts of assets, liabilities, revenues and expenses reported in the financial statements and accompanying notes as at March 31, 2021. The estimates are based on facts and circumstances, historical experience, general economic conditions and reflect the RCMP's best estimate of the related amount at the end of the reporting period. The most significant items where estimates are used are contingent liabilities, environmental liabilities, the liability for employee future benefits, allowance for vacation pay and compensatory leave, deferred revenue for Contract Policing arrangements on tangible capital assets, accrued salaries and wages at year-end, accrued revenues for Contract Policing 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.

m) Related party transactions

Related party transactions, other than inter-entity transactions, are recorded at the exchange amount. Inter-entity transactions are transactions between commonly controlled entities.

Inter-entity transactions, other than restructuring transactions, are recorded on a gross basis and are measured at the carrying amount, except for the following:

  1. Services provided on a recovery basis are recognized as revenues and expenses on a gross basis and measured at the exchange amount.
  2. Certain services received on a without charge basis are recorded for departmental financial statement purposes at the carrying amount.

3. Parliamentary authorities

The RCMP 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 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 authorities used

Reconciliation of net cost of operations to current year authorities used (in thousands of dollars)
2021 2020
Net cost of operations before government funding and transfers $4,117,360 $5,032,838
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (151,812) (159,408)
Services provided without charge by other government departments (373,924) (384,042)
Increase (decrease) in vacation pay and compensatory leave (62,693) (5,718)
Decrease (increase) in employee future benefits 3,649 (10,501)
Decrease (increase) in accrued liabilities 67,303 (2,822)
Decrease (increase) in environmental liabilities 453 (171)
Bad debt expense (2,600) 160
Post-capitalization of capital assets 273 8
Refund of prior years' expenditures 2,790 4,301
Refund of program expenditures 1,242 (1,358)
Uncollected respendable revenue (50,045) (10,559)
Other - 3,639
Total items affecting net cost of operations but not affecting authorities (565,364) (566,471)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets (excluding assets under capital lease) 249,310 248,608
Lease payments for tangible capital assets 839 1,075
Salary overpayments 4,398 8,874
Increase (decrease) in inventory 20,799 8,049
Advances to employees 10 -
Other 13 -
Total items not affecting net cost of operations but affecting authorities 275,369 266,606
Current year authorities used $3,827,365 $4,732,973

b) Authorities provided and used

Authorities provided and used (in thousands of dollars)
2021 2020
Authorities provided:
Vote 1 – Operating Expenditures $2,843,147 $2,896,500
Vote 5 – Capital Expenditures 305,680 325,625
Vote 10 – Grants and Contributions 398,439 408,065
Vote 15 – Delivering Better Air Service for Air Travellers - 368
Vote 20 – Enhancing the Integrity of Canada's Borders and Asylum System - 3,321
Vote 25 – Protecting Canada's National Security - 189
Vote 30 – Strengthening Canadaʼs Anti-Money Laundering and
Anti-Terrorist Financing Regime
- 4,100
Statutory Amounts 478,215 1,406,885
Total Authorities provided 4,025,481 5,045,053
Less:
Authorities available for future years (6,257) (6,982)
Lapsed: Operating (120,143) (144,109)
Lapsed: Capital (60,443) (78,842)
Lapsed: Grants and Contributions (11,273) (74,169)
Lapsed: Budget Implementation - (7,978)
Current year authorities used $3,827,365 $4,732,973

4. Accounts payable and accrued liabilities

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

Accounts payable and accrued liabilities (in thousands of dollars)
2021 2020
Accounts payable – Other government departments and agencies $81,884 $79,667
Accounts payable – External parties 318,536 389,161
Total accounts payable 400,420 468,828
Accrued liabilities 148,803 167,851
Total accounts payable and accrued liabilities $549,223 $636,679

5. RCMP Pension accounts

The RCMP maintains accounts to record the transactions pertaining to the Royal Canadian Mounted Police Pension Plan (the "RCMP Plan"), which comprises the RCMP Superannuation Account, the RCMP Pension Fund Account and the Retirement Compensation Arrangement Account. Details of the RCMP Plan can be found in the RCMP Pension Plan Annual Report and in the Public Accounts of Canada.

a) RCMP Superannuation Account

Until April 1, 2000, separate market-invested funds were not set aside to provide for payment of pension benefits. Instead, transactions relating to this plan were recorded in a RCMP Superannuation Account created by legislation in the Accounts of the Government of Canada. The RCMP Superannuation Account is established in the Accounts of Canada pursuant to the RCMPSA.

The RCMPSA requires that this Account record transactions such as contributions, benefits paid and transfers that pertain to pre-April 1, 2000 service, and that the Account be credited with interest. The Royal Canadian Mounted Police Superannuation Regulations require that the interest be credited quarterly at rates calculated as though the amounts recorded in the Account were invested quarterly in a notional portfolio of Government of Canada 20-year bonds held to maturity.

The balances and transactions in the Superannuation Account are not included in the RCMP's Statement of Financial Position as they are the responsibility of the Government of Canada and are presented in the Consolidated Financial Statements of the Government of Canada. They are presented here for information only.

RCMP Superannuation Account (in thousands of dollars)
2021 2020
RCMP Superannuation Account
Opening balance $13,620,704 $12,916,634
Funds received and other credits 461,917 1,427,599
Payments and other charges (729,995) (723,529)
Closing balance RCMP Superannuation Account $13,352,626 $13,620,704

b) RCMP Pension Fund Account

Pursuant to the RCMPSA as amended by the Public Sector Pension Investment Board Act, transactions relating to service subsequent to March 31, 2000, are recorded in the RCMP Pension Fund (the "Pension Fund"), where the excess of contributions over benefits and administration costs is invested in capital markets by the Public Sector Pension Investment Board (PSPIB). PSPIB is a separate Crown Corporation that commenced operations on April 1, 2000. The statutory objectives of PSPIB are to manage the funds transferred to it in the best interests of the contributors and beneficiaries and to maximize investment returns without undue risk of loss having regard to the funding requirements of the Pension Fund.

The net amount of contributions less benefits and other payments is regularly transferred to PSPIB for investment in capital markets. As at March 31, 2021, the balance in the RCMP Pension Fund Account represents amounts to net contributions in transit awaiting imminent transfer to PSPIB.

c) Retirement Compensation Arrangement Account

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 the CRA to either remit a 50% 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, 2021 the total refundable tax transferred amounts to $35.6 million ($35.3 million in 2020).

The following table provides details of the RCMP Plan accounts:

RCMP Pension Fund Account and Retirement Compensation Arrangement Account (in thousands of dollars)
2021 2020
RCMP Pension Fund Account
Opening balance $(11,550) $1,481
Funds received and other credits 504,960 500,268
Payments and other charges (350,550) (301,904)
Transfer to the PSPIB (140,095) (211,395)
Closing balance 2,765 (11,550)
Retirement Compensation Arrangement Account
Opening balance 35,378 35,187
Funds received and other credits 1,932 2,226
Payments and other charges (1,797) (2,035)
Closing balance 35,513 35,378
Total closing balance of the RCMP Pension Fund Account and the Retirement Compensation Arrangement Account $38,278 $23,828

6. Environmental liabilities

Remediation of contaminated sites

The Government's "Federal Approach to Contaminated Sites" sets out a framework for the management of contaminated sites using a risk-based approach. Under this approach the Government has inventoried the contaminated sites identified on federal lands, allowing them to be classified, managed and recorded in a consistent manner. This systematic approach aids in identification of the high risk sites in order to allocate limited resources to those sites which pose the highest risk to human health and the environment.

The RCMP has identified approximately 175 sites (175 sites in 2020) where contamination may exist and assessment, remediation and monitoring may be required. Of these, the RCMP has identified 17 sites (17 sites in 2020) where action is required and for which a gross liability of $7.2 million ($8.1 million in 2020) has been recorded. This liability estimate has been determined based on site assessments performed by environmental experts.

In addition, a statistical model based upon a projection of the number of sites that will proceed to remediation and upon which current and historical costs are applied is used to estimate the liability for a group of unassessed sites. As a result, there are approximately 144 unassessed sites (144 sites in 2020) where a liability estimate of $3.6 million ($3.2 million in 2020) has been recorded using this model.

These two estimates combined, totalling $10.8 million ($11.3 million in 2020) represents management's best estimate of the costs required to remediate sites to the current minimum standard for its use prior to contamination, based on information available at the financial statement date.

For the remaining 14 sites (14 sites in 2020), no liability for remediation has been recognized. Some of these sites are at various stages of testing and evaluation and if remediation is required, liabilities will be reported as soon as a reasonable estimate can be determined. For other sites, the RCMP does not expect to give up any future economic benefits (there is likely no significant environmental impact or human health threats). These sites will be re-examined and a liability for remediation will be recognized if future economic benefits will be given up.

The following table presents the total estimated amounts of these liabilities by nature and source, the associated expected recoveries and the total undiscounted future expenditures as at March 31, 2021 and March 31, 2020. When the liability estimate is based on a future cash requirement, the amount is adjusted for inflation using a forecast CPI rate of 2.0% (2.0% in 2020). Inflation is included in the undiscounted amount. The Government of Canada's cost of borrowing by reference to the actual zero-coupon yield curve for Government of Canada bonds has been used to discount the estimated future expenditures. The March 2021 rates range from 0.16% for 1 year term to 2.01% for a 30 or greater year term. The March 2020 rates ranged from 0.37% for 1 year term to 1.37% for a 30 or greater year term.

Remediation of contaminated sites (in thousands of dollars)
Nature and Source Total Number of Sites
2021
Number of Sites with a Liability
2021
Estimated
Liability
2021
Estimated Total
Undiscounted
Liability
2021
Total Number of Sites
2020
Number of Sites with a Liability
2020
Estimated Liability
2020
Estimated Total
Undiscounted
Liability
2020
Fuel Related Practices table 1 note 1 28 15 $7,190 $9,161 28 15 $7,925 $9,389
Engineering Assets/Air
and Land Transportationtable 1 note 2
2 1 127 127 2 1 127 127
Office/Commercial/
Industrial Operations table 1 note 3
140 32 2,180 2,188 140 32 2,183 2,188
Other table 1 note 4 5 3 1,310 1,311 5 3 1,025 1,025
Total 175 51 $10,807 $12,787 175 51 $11,260 $12,729
Table 1 Notes
Table 1 Note 1

Contamination primarily associated with fuel storage and handling. E.g., accidental spills related to fuel storage tanks or former fuel handling practices, e.g. petroleum hydrocarbons, polyaromatic hydrocarbons and BTEX (benzene, toluene, ethylbenzene and xylenes).

Return to table 1 note 1 referrer

Table 1 Note 2

Contamination associated with the operations of engineered assets such as airports, railways and roads where activities such as fuel storage/handling, waste sites, firefighting training facilities and chemical storage areas resulted in former of accidental contamination, e.g. metals, petroleum hydrocarbons, polyaromatic hydrocarbons, BTEX and other organic contaminants. Sites often have multiple sources of contamination.

Return to table 1 note 2 referrer

Table 1 Note 3

Contamination associated with the operations of the office/commercial/industrial facilities where activities such as fuel storage/handling, waste sites and use of metal-based paint resulted in former or accidental contamination, e.g. metals, petroleum hydrocarbons, polyaromatic hydrocarbons, BTEX, etc. Sites often have multiple sources of contamination.

Return to table 1 note 3 referrer

Table 1 Note 4

Contamination from other sources e.g. use of pesticides, herbicides, fertilizers at agricultural sites, use of PCBs, firefighting training areas, firing ranges and training facilities, etc.

Return to table 1 note 4 referrer

Also during the year 8 sites (10 sites in 2020) were closed as they were either remediated or assessed to confirm that they no longer meet all the criteria required to record a liability for contaminated sites.

The RCMP's ongoing efforts to assess contaminated sites may result in additional environmental liabilities.

7. Deferred revenue

Deferred revenue represents the balance at year-end of unearned revenues stemming from amounts received from external parties that are restricted in order to fund the expenditures related to specific programs and stemming from amounts received for fees prior to services being performed. Revenue is recognized in the period in which these expenditures are incurred or in which the service is performed.

Deferred revenue consists of three categories: deferred revenue for contract policing arrangements on tangible capital assets, deferred revenue for donations and bequests and deferred revenue for firearms licence fees.

a) Contract policing arrangements on tangible capital assets

Deferred revenue for contract policing agreements (effective April 1, 2012 to March 31, 2032) on tangible capital assets represents the net balance of revenue received in advance of the construction, purchase and maintenance of buildings and works pursuant to the contract policing arrangements accommodations program. The revenue is recognized as costs for the construction, purchase and maintenance of buildings are incurred.

b) Donations and bequests

Deferred revenue for donations and bequests represents the balance of contributions received for various specified purposes. The revenue is recognized in the period in which the related expenses are incurred.

c) Firearms licence fees

Deferred revenue for firearms licence fees represents the firearms application fees received from clients where the application processing has not reached a sufficient stage to warrant recognizing revenue. When the application reaches a stage where the eligibility of the applicant has been assessed and the firearms licence has been issued, the fees are recognized as revenue.

The following table provides details of deferred revenue:

Deferred revenue (in thousands of dollars)
2021 2020
Contract policing arrangements on tangible capital assets
Opening balance $59,785 $51,538
Revenue received in advance of construction,
purchase and maintenance of buildings and works
51,813 48,446
Revenue recognized (47,848) (40,199)
Gross closing balance 63,750 59,785
Donations and bequests
Opening balance 645 467
Contributions received 159 194
Revenue recognized (1) (16)
Gross closing balance 803 645
Firearms licence fees
Opening balance 3,590 3,680
Firearms application fees received 28,207 29,793
Revenue recognized (27,853) (29,883)
Gross closing balance 3,944 3,590
Total
Opening balance 64,020 55,685
Amounts received 80,179 78,433
Revenue recognized (75,702) (70,098)
Gross closing balance 68,497 64,020
Deferred revenue held on behalf of Government (3,944) (3,590)
Net closing balance $64,553 $60,430

8. Lease obligation for tangible capital assets

The RCMP has entered into agreements to lease certain buildings under capital leases with a cost of $16.3 million and accumulated amortization of $7.4 million as at March 31, 2021 ($30.3 million and $8.8 million respectively as at March 31, 2020). The obligations related to the upcoming years include the following:

Lease obligation for tangible capital assets (in thousands of dollars)
2021
2022 $1,206
2023 1,206
2024 1,206
2025 1,206
2026 1,206
2027 and subsequent 10,152
Total future minimum lease payments 16,182
Less: imputed interest (5.54%) 4,781
Balance of obligations under leased tangible capital assets $11,401

9. Employee future benefits

a) Pension benefits (Public Service employees)

The RCMP's public service 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 RCMP contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to the 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 2021 expense amounts to $67.7 million ($57.0 million in 2020). For Group 1 members, the expense represents approximately 1.01 times (1.01 times in 2020) the employee contributions and, for Group 2 members, approximately 1.00 times (1.00 times in 2020) the employee contributions.

The RCMP's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the Consolidated Financial Statements of the Government of Canada, as the Plan's sponsor.

b) Pension benefits (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 RCMP is responsible for the overall management of the RCMP Plan. Under the terms of a Service Level Agreement, PSPC provides the day-to-day administration of the RCMP Plan, including determining eligibility for benefits and calculating and paying benefits.

Both the members and the RCMP contribute to the cost of the RCMP Plan. The 2021 expense amounts to $265.7 million ($266.6 million in 2020) with $0 actuarial adjustment ($956.0 million in 2020). The $269.6 million of government contribution represents approximately 1.22 times the contributions by members (1.22 in 2020). The actuarial liability and actuarial surpluses or deficiencies are recognized in the Consolidated Financial Statements of the Government of Canada, as the RCMP Plan's sponsor.

The actuarial liability and related disclosures for these future benefits are presented in the Consolidated Financial Statements of the Government of Canada. This differs from the accounting and disclosures of future benefits for the RCMP presented in these financial statements whereby pension expense corresponds to the RCMP's annual contributions toward the cost of current service.

c) Severance benefits

Severance benefits provided to the RCMP'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, 2021, substantially all settlements for immediate cash out were completed. Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities.

The changes in the obligations during the year were as follows:

Severance benefits (in thousands of dollars)
2021 2020
Public Service employees
Accrued benefit obligation – beginning of year $22,157 $21,933
Expense for the year 1,778 2,710
Benefits paid during the year (2,035) (2,486)
Accrued benefit obligation – end of year 21,900 22,157
RCMP members
Accrued benefit obligation – beginning of year 118,731 108,454
Expense for the year 5,909 22,711
Benefits paid during the year (9,301) (12,434)
Accrued benefit obligation – end of year 115,339 118,731
Total
Accrued benefit obligation – beginning of year 140,888 130,387
Expense for the year 7,687 25,421
Benefits paid during the year (11,336) (14,920)
Accrued benefit obligation – end of year $137,239 $140,888

10. Other liabilities

Benefit Trust Fund: This account was established by section 23 of the Royal Canadian Mounted Police Act, to record funds received by personnel of the RCMP, in connection with the performance of duties, over and above their pay and allowances, including forfeitures of pay. The money paid to the Benefit Trust Fund is used for the benefit of RCMP members, former members and their dependants; use of the funds is governed by the Royal Canadian Mounted Police Regulations, 2014.

RCMP (Dependants) Pension Fund: This fund, which pertains to Part IV of the Royal Canadian Mounted Police Pension Continuation Act, provides pension benefits to certain widows and other dependants of Constables of the RCMP, who purchased pension benefits between October 1, 1934 and March 1, 1949. There are no longer any active members amongst the contributors.

The following table presents details of the other liabilities:

Other liabilities (in thousands of dollars)
2021 2020
Benefit Trust Fund
Opening balance $2,470 $2,395
Funds received and other credits 265 274
Payments and other charges (126) (199)
Closing balance 2,609 2,470
RCMP (Dependants) Pension Fund
Opening balance 10,906 12,863
Funds received and other credits 336 445
Payments and other charges (2,481) (2,402)
Closing balance 8,761 10,906
Other liabilities
Opening balance 1,408 1,286
Funds received and other credits 378 559
Payments and other charges (108) (437)
Closing balance 1,678 1,408
Total Other liabilities $13,048 $14,784

11. Accounts receivable and advances

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

Accounts receivable and advances (in thousands of dollars)
2021 2020
Receivables – Other government departments and agencies $141,184 $170,415
Receivables – External parties 773,580 797,029
Employee advances 20,196 21,227
Subtotal 934,960 988,671
Allowance for doubtful accounts on receivables from external parties (3,730) (5,093)
Gross accounts receivable 931,230 983,578
Accounts receivable held on behalf of Government (380,437) (448,319)
Net accounts receivable $550,793 $535,259

12. Inventory

Inventory (in thousands of dollars)
2021 2020
Uniforms and personal equipment $38,940 $26,662
Firearms and ammunition 29,068 24,887
Aircraft, ship and road motor vehicle parts 6,090 6,002
Other 8,113 3,861
Total inventory $82,211 $61,412

The cost of consumed inventory recognized as an expense in the Statement of Operations and Departmental Net Financial Position is $31.2 million in 2021 ($39.5 million in 2020).

13. Tangible capital assets

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

Asset Class Amortization Period
Buildings 20 to 30 years
Works and infrastructure 20 years
Machinery and equipment 5 to 15 years
Computer hardware 4 to 7 years
Computer software 3 to 7 years
Vehicles 8 to 15 years
Leasehold improvements Lesser of the useful life of the improvement or the lease term
Assets under capital leases Over the lease term

Assets under construction are recorded in the applicable asset class in the year they are put into service and are not amortized until they are put into service.

Cost
(in thousands of dollars)
Capital Asset Class Opening Balance Acquisitions Adjustments
table 2 note 1
Disposals and
Write-Offs
Closing Balance
Land $66,140 7 1,557 155 $67,549
Buildings 1,477,698 - 29,841 3,087 1,504,452
Works and infrastructure 147,859 95 2,428 15 150,367
Machinery and equipment 342,557 19,431 2,029 522 363,495
Computer hardware 227,581 3,095 1,702 - 232,378
Computer software 478,546 113 65,922 - 544,581
Vehicles 690,974 72,386 8,780 49,923 722,217
Leasehold improvements 115,106 - 3,183 - 118,289
Assets under construction 466,824 154,292 (101,114) 178 519,824
Subtotal 4,013,285 249,419 14,328 53,880 4,223,152
Assets under capital leases 30,316 - (14,052) - 16,264
Total $4,043,601 249,419 276 53,880 $4,239,416
Table 2 Notes
Table 2 Note 1

Adjustments include assets under construction of $101.1 million that were transferred to the other categories upon completion of the assets.

Return to table 2 note 1 referrer

Accumulated Amortization
(in thousands of dollars)
Capital Asset Class Opening Balance Amortization Adjustments
table 3 note 1
Disposals and
Write-Offs
Closing Balance
Land $- - - - $-
Buildings 801,573 43,032 2,417 2,626 844,396
Works and infrastructure 70,684 7,076 44 12 77,792
Machinery and equipment 250,170 16,611 (28) 452 266,301
Computer hardware 217,385 3,720 - - 221,105
Computer software 417,041 25,904 - - 442,945
Vehicles 409,004 48,047 10 44,298 412,763
Leasehold improvements 66,987 6,416 - - 73,403
Assets under construction - - - - -
Subtotal 2,232,844 150,806 2,443 47,388 2,338,705
Assets under capital leases 8,846 1,006 (2,417) - 7,435
Total $2,241,690 151,812 26 47,388 $2,346,140
Table 3 Notes
Table 3 Note 1

Adjustments include assets under construction of $101.1 million that were transferred to the other categories upon completion of the assets.

Return to table 3 note 1 referrer

Net Book Value
(in thousands of dollars)
Capital Asset Class 2021 2020
Land $67,549 $66,140
Buildings 660,056 676,125
Works and infrastructure 72,575 77,175
Machinery and equipment 97,194 92,387
Computer hardware 11,273 10,196
Computer software 101,636 61,505
Vehicles 309,454 281,970
Leasehold improvements 44,886 48,119
Assets under construction 519,824 466,824
Subtotal 1,884,447 1,780,441
Assets under capital leases 8,829 21,470
Total $1,893,276 $1,801,911

14. Contractual obligations and contractual rights

a) Contractual obligations

The nature of the RCMP's activities may result in some large multi-year contracts and obligations whereby the RCMP will be obligated to make future payments in order to carry out its transfer payment programs or when services/goods are received. Contractual obligations of $5 million or more that can be reasonably estimated are summarized as follows:

Contractual obligations (in thousands of dollars)
2022 2023 2024 2025 2026 2027 and
subsequent
Total
Operating lease $25,857 25,857 25,857 25,857 25,857 148,199 $277,484
Acquisition of other goods and services 50,443 10,085 10,085 10,085 10,057 47,251 138,006
Acquisition of capital assets 121,404 19,704 - - - - 141,108
Total $197,704 55,646 35,942 35,942 35,914 195,450 $556,598

b) Contractual rights

The activities of the RCMP sometimes involve the negotiation of contracts or agreements with outside parties that result in the RCMP having rights to both assets and revenues in the future. They principally involve sales of goods and services. Major contractual rights that will generate revenues in future years and that can be reasonably estimated are summarized as follows:

Contractual rights (in thousands of dollars)
2022 2023 2024 2025 2026 2027 and
subsequent
Total
Sales of goods and services $2,379,439 2,438,023 2,498,065 2,559,602 2,622,671 17,063,328 $29,561,128
Total $2,379,439 2,438,023 2,498,065 2,559,602 2,622,671 17,063,328 $29,561,128

15. Contingent liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown. They are grouped into three categories as follows:

a) Environmental Liabilities

The RCMP has disclosed a contingent liability in the amount of $0.8 million for two sites ($0.8 million in 2020 for two sites) where the RCMP has determined that it is not directly responsible, nor does it accept responsibility; however, there is uncertainty as to whether the RCMP may be held responsible at some point in the future.

b) Claims and litigation

Claims have been made against the RCMP in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. The RCMP has recorded an allowance for claims and litigations where it is likely that there will be a future payment and a reasonable estimate of the loss can be made. Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amount to approximately $158.1 million ($129.2 million in 2020) as at March 31, 2021.

c) Contract policing agreements

The contract policing agreements entitle the contract partner to receive proceeds on the disposal of contract policing assets equivalent to the cost-sharing ratio established by the agreement. While it is likely that a contract policing asset will be disposed of at some point in the future, the amount of the liability cannot be reasonably estimated as the applicable credit to the contract partner is contingent on the proceeds (if any) from disposal of the asset.

16. Related party transactions

The RCMP is related as a result of common ownership to all government departments, agencies, and Crown corporations. Related parties also include individuals who are members of key management personnel or close family members of those individuals, and entities controlled by, or under shared control of, a member of key management personnel or a close family member of that individual.

The RCMP enters into transactions with these entities in the normal course of business and on normal trade terms.

a) Common services provided without charge by other government departments

During the year, the RCMP received services without charge from certain common service organizations, related to accommodation, legal services, the employer's contribution to the health and dental insurance plans and workers' compensation coverage. These services provided without charge have been recorded at the carrying value in the RCMP's Statement of Operations and Departmental Net Financial Position as follows:

Common services provided without charge by other government departments (in thousands of dollars)
2021 2020
Employer's contribution to the health and dental insurance plans $266,773 $278,137
Accommodation 105,089 103,983
Legal services 1,927 1,776
Workers' compensation 135 146
Total $373,924 $384,042

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 payroll and cheque issuance services provided by PSPC and audit services provided by the Office of the Auditor General are not included in the RCMP's Statement of Operations and Departmental Net Financial Position.

b) Other transactions with other government departments and agencies

Other transactions with other government departments and agencies (in thousands of dollars)
2021 2020
Expenses $489,967 $436,737
Revenues 16,139 23,232

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

17. Segmented information

Presentation by segment is based on the RCMP's core responsibilities. 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 core responsibilities, by major object of expense and by major type of revenue. The segment results for the period are as follows:

Expenses incurred and revenues generated for the main core responsibilities (in thousands of dollars)
Expense type Contract and
Indigenous Policing
Federal Policing National
Police Services
Internal Services Expenses
incurred on
behalf of
Government
2021
Total
2020
Total
(reclassified)
Operating expenses
Salaries and employee benefits $2,353,989 668,896 417,985 445,110 - 3,885,980 $4,697,532
Professional and special services 316,262 81,466 38,218 98,879 - 534,825 519,137
Rentals 152,099 40,804 15,871 43,185 - 251,959 243,205
Transportation and communications 98,851 24,646 8,418 7,201 - 139,116 214,898
Amortization of tangible capital assets 82,639 15,305 24,886 28,982 - 151,812 159,408
Utilities, materials and supplies 102,564 11,324 11,574 2,058 - 127,520 135,325
Machinery and equipment, including parts and consumable tools 86,271 13,566 35,383 8,840 - 144,060 136,116
Repairs and maintenance 56,236 5,887 4,380 4,056 - 70,559 79,561
Claims,
ex-gratia and
court awards
15,336 3,745 20 755 - 19,856 22,186
Usage of inventory 19,064 2,758 1,571 7,807 - 31,200 39,533
Payments in lieu of property taxes 14,030 2,205 945 3,363 - 20,543 20,874
Information 833 307 1,627 407 - 3,174 3,468
Other 20,969 13,184 35,621 (37,255) (1,453) 31,066 118,803
Total operating expenses 3,319,143 884,093 596,499 613,388 (1,453) 5,411,670 6,390,046
Transfer payments
Individuals 278,841 81,009 15,783 - - 375,633 322,833
Other levels of Government - - 14,174 - - 14,174 14,230
Other 521 - 256 - - 777 1,125
Total transfer payments 279,362 81,009 30,213 - - 390,584 338,188
Total expenses 3,598,505 965,102 626,712 613,388 (1,453) 5,802,254 6,728,234
Revenues
Policing services

2,447,743

2,585

21,901

597

- 2,472,826 2,373,413
Firearms licence fees - - 28,277 - - 28,277 31,442
Other revenues 3,435 2,582 6,770 20,241 - 33,028 39,620
Revenues earned on behalf of Government (803,470) (2,572) (32,907) (10,288) - (849,237) (749,079)
Total revenues 1,647,708 2,595 24,041 10,550 - 1,684,894 1,695,396
Net cost of operations before government funding and transfers $1,950,797 962,507 602,671 602,838 (1,453) 4,117,360 $5,032,838

18. Comparative information

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

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