Real Property Services Revolving Fund

Public Accounts of Canada 2015 Volume III - Top of the page Navigation

Statement of Management Responsibility

We have prepared the accompanying financial statements of the Real Property Services Revolving Fund as required by and in accordance with the policy of the Treasury Board on Special Revenue Spending Authorities and the reporting requirements of the Receiver General for Canada. These financial statements were prepared in accordance with the significant accounting policies set out in Note 2 of the statements, on a basis consistent with that of the preceding year.

Responsibility for the integrity and objectivity of these financial statements rests with the management of the Fund. The information included in these financial statements is based on management's best estimates and judgment with due consideration given to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts which provides a centralized record of the Fund's financial transactions. Financial information submitted to the Public Accounts of Canada and included in the Departmental Performance Report is consistent with these financial statements.

Management develops and disseminates financial management and accounting policies and issues specific directives which maintain standards of financial management, accounting and reporting. Management maintains systems of financial management and internal control which give due consideration to costs, benefits and risks. They are designed to provide reasonable assurance that transactions are properly authorized by Parliament, are executed in accordance with prescribed regulations, and are properly recorded to maintain accountability of government funds and safeguard the assets under the Fund's administration. Management also seeks to assure the objectivity and integrity of data in its financial statements by the 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 its regulations, policies, standards and managerial authorities are understood throughout the organization.

With the exception of the Statement of Authority Provided (Used) and the Reconciliation of Unused Authority, management has presented the financial statements to external auditors who have audited them and have provided an independent opinion which is appended to these financial statements. The Statement of Authority Provided (Used) and the Reconciliation of Unused Authority were not audited as it is not required by the Treasury Board policy.

Approved by:

Alex Lakroni
Chief Financial Officer,
Public Works and Government Services Canada

Pierre‑Marc Mongeau
Assistant Deputy Minister,
Real Property Branch
Public Works and Government Services Canada

May 28, 2015

Statement of Authority provided (Used) (Unaudited) for the year ended March 31

Table Summary

The table presents on a comparative basis the statement of Authority provided (Used) (Unaudited). It consists of five columns: item descriptions, current year with two columns — estimates and actual, and previous year with two columns — estimates and actual. Subtotals are displayed at operating source (use) of funds and totals are displayed at authority provided (used).

(in thousands of dollars)

  2015 2014
Estimates Actual Estimates Actual
Net results (negative 4,600) 3,310   12,628
Items not requiring use of funds   310   831
Operating source (use) of funds (negative 4,600) 3,620   13,459
Items requiring use of funds        
Allocation for employee severance benefits (negative 2,098) (negative 4,821) (negative 6,147) (negative 9,971)
Transition payments for implementing salary payments in arrears (Note 10)   (negative 7,274)    
Net other assets and liabilities   (negative 11,815) (negative 10,000) 849
Subtotal (negative 2,098) (negative 23,910) (negative 16,147) (negative 9,122)
Authority provided (used) (negative 6,698) (negative 20,290) (negative 16,147) 4,337

Reconciliation of Unused Authority (Unaudited) as at March 31

Table Summary

The table presents on a comparative basis the reconciliation of Unused Authority (Unaudited). It consists of three columns: item descriptions, current year and previous year. Subtotals are displayed at net authority provided end of year and totals are displayed at the unused authority carried forward.

(in thousands of dollars)

  2015 2014
Accumulated net charge against the Fund's authority Link to footnote 1 168,984 182,006
Payables at year‑end charged against the appropriation account after March 31 (negative 262,412) (negative 278,004)
Amounts credited to the appropriation account after March 31 125,468 142,181
Authority provided, end of year 32,040 46,183
Allocation from Treasury Board for paid employee severance benefits (Note 1) 2,098 6,147
Net authority provided, end of year 34,138 52,330
Authority limit (Note 1) 150,000 150,000
Unused authority carried forward 184,138 202,330

Independent Auditors' Report

To the Deputy Minister
Public Works and Government Services Canada

We have audited the accompanying financial statements of the Real Property Services Revolving Fund, which comprise the statement of financial position as at March 31, 2015, and the statements of operations and net liabilities, and cash flow for the year then ended, and a summary of significant accounting policies and other explanatory information. These financial statements have been prepared by management of the Real Property Services Revolving Fund to comply with Section 6.4 of the Treasury Board of Canada's Policy on Special Revenue Spending Authorities.

Management's responsibility for the financial statements

Management is responsible for the preparation of these financial statements in accordance with Section 6.4 of the Treasury Board of Canada's Policy on Special Revenue Spending Authorities and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements of the Real Property Services Revolving Fund as at and for the year ended March 31, 2015 are prepared, in all material respects, in accordance with Section 6.4 of the Treasury Board of Canada's Policy on Special Revenue Spending Authorities.

Basis of accounting and restrictions on use

Without modifying our opinion, we draw attention to Note 2 to the financial statements, which describes the basis of accounting. The financial statements are prepared to assist the Real Property Services Revolving Fund to comply with Section 6.4 of the Treasury Board of Canada's Policy on Special Revenue Spending Authorities. As a result, the financial statements may not be suitable for another purpose. Our auditors' report is intended solely for the information and use of the Real Property Services Revolving Fund and the Treasury Board of Canada and should not be used by parties other than the Real Property Services Revolving Fund and the Treasury Board of Canada.

Ernst & Young LLP
Chartered Professional Accountants,
Licensed Public Accountants

Ottawa, Canada
May 29, 2015

Statement of Financial Position as at March 31

Table Summary

The table presents on a comparative basis the statement of Financial Position. It consists of three columns: item descriptions, current year and previous year. Item descriptions are grouped in two: the assets and the liabilities and net liabilities, both displaying totals. Current item descriptions are grouped together for assets and for liabilities with subtotals for current liabilities.

(in thousands of dollars)

  2015 2014
Assets    
Current    
Cash in transit 25 4
Accounts receivable (Note 3) 144,453 148,923
Other assets (Note 4) 18,534 20,505
Total 163,012 169,432
Liabilities and net liabilities    
Current    
Accounts payable and accrued liabilities (Note 5) 265,406 280,366
Vacation pay and compensatory leave 10,820 11,065
Contingent liabilities (Note 6) 39  
Other liabilities (Note 7) 4,618 419
Subtotal 280,883 291,850
Long term    
Employee severance benefits (Note 8) 16,350 20,861
Total 297,233 312,711
Net liabilities (Note 9) (negative 134,221) (negative 143,279)
Total 163,012 169,432

Statement of Operations and Net Liabilities for the year ended March 31

Table Summary

The table presents on a comparative basis the statement of Operations and Net Liabilities. It consists of three columns: item descriptions, current year and previous year. Item descriptions for gross revenues and operating expenses are group together, both displaying subtotals. Subtotals for gross revenues, net of cost of sales are displayed at net revenues. Subtotals for net revenues, net of operating expenses are displayed at net results. Totals are displayed at net liabilities end of year.

(in thousands of dollars)

  2015 2014
Gross revenue    
Real Property services ‑ other government organizations 1,122,889 1,254,862
Real property services ‑ Public Works and Government Services Canada portfolio 208,753 224,208
Other revenues 529 978
Subtotal 1,332,171 1,480,048
Cost of sales (negative 968,998) (negative 1,102,424)
Net revenue 363,173 377,624
Operating expenses    
Salaries and employee benefits 223,680 223,378
Real Property indirect activities 76,549 77,930
Corporate and administrative services 45,940 46,604
Occupancy costs 13,982 14,186
Employee severance benefits 310 2,480
Professional and special services 149 95
Other expenses (negative 747) 323
Total 359,863 364,996
Net results 3,310 12,628
Net liabilities, beginning of year (negative 143,279) (negative 156,301)
Transfer of the transition payements for implementing salary payments in arrears (Note 10) (negative 7,274)  
Net financial resources used and change in the accumulated net charge against the Fund's authority account, during the year (Note 9) 13,022 394
Net liabilities, end of year (negative 134,221) (negative 143,279)

Statement of Cash Flows for the year ended March 31

Table Summary

The table presents on a comparative basis the statement of Cash Flows. It consists of three columns: item descriptions, current year and previous year. Item descriptions are grouped together for the operating activities displaying subtotals. Subtotals are displayed at net financial resources provided and change in the accumulated net charge against the Fund's authority account during the year. Totals are displayed at accumulated net charge against the Fund's authority account end of year.

(in thousands of dollars)

  2015 2014
Operating activities    
Net results 3,310 12,628
Non‑cash items:    
Provision for employee severance benefits 310 2,480
Subtotal 3,620 15,108
Changes in current assets and liabilities    
Increase in cash in transit (negative 21) (negative 1)
Decrease in accounts receivable 4,470 14,063
Decrease (increase) in other assets 1,971 (negative 4,172)
Decrease in accounts payable and accrued liabilities (negative 14,960) (negative 12,832)
Decrease in vacation pay and compensatory leave (negative 245) (negative 237)
Increase (decrease) in contingent liabilities 39 (negative 500)
Increase (decrease) in other liabilities 4,199 (negative 1,852)
Subtotal (negative 4,547) (negative 5,531)
Changes in other assets and liabilities    
Payments on provision for employee severance benefits (negative 4,821) (negative 9,971)
Transition payments for implementing salary payments in arrears (negative 7,274)  
Net financial resources used and change in the accumulated net charge against the Fund's authority account, during the year (negative 13,022) (negative 394)
Accumulated net charge against the Fund's authority account, beginning of year 182,006 182,400
Accumulated net charge against the Fund's authority account, end of year 168,984 182,006

Notes to the financial statements for the year ended March 31, 2015

1. Authority and purpose

The Real Property Services Revolving Fund (the"Fund") is the funding mechanism for the Real Property Services (RPS) program. This program provides project delivery and facility management services to the real property portfolios of Public Works and Government Services Canada, and to other government departments. Pursuant to the Revolving Funds Act, the program may spend any revenue received in respect of these services and, subject to Treasury Board approval, the aggregate of expenditures shall not at any time exceed the revenues received, by more than $150,000,000 the revenues received.

The Fund received authorization from the Treasury Board to access its unused authority for a total amount of up to $10,000,000 to temporarily fund transitory cash elements at year end.

For the fiscal year 2015, the Fund used $20,289,805 (fiscal year 2014: $0) of its authorities and had a net authority provided of $52,329,792 to cover this usage.

The Treasury Board agreed, as per existing policies and regulations, to cover a portion of employee severance benefits paid by the Fund in fiscal year 2015. The Fund received a non‑reimbursable amount of $2,097,639 (fiscal year 2014: $6,147,078).

2. Significant accounting policies

The financial statements have been prepared in accordance with Treasury Board accounting policies and the reporting requirements of the Receiver General for Canada. The financial statements are not presented on a basis consistent with Canadian public sector accounting standards as:

  • The liabilities for vacation pay and employee severance benefits are based on management's estimate rather than actuarial valuations;
  • No liability is recorded for sick leave;
  • The statement of financial position does not segregate non‑financial assets; and
  • The net debt indicator and statement of change in net debt are not presented in the financial statements.

The significant accounting policies are as follows:

a. Accounts receivable

Accounts receivable are stated at amounts expected to be ultimately realized; a provision is made on receivables where recovery is considered uncertain.

b. Revenue

Revenue is earned on professional and technical services as performed and the recovery of disbursements made on behalf of government departments, agencies, and outside parties are recognized when costs are incurred by the Fund.

c. Expenses

Expenses for real property indirect activities, corporate and administrative services, and occupancy costs are based on the budgeted direct service delivery personnel costs. These costs are determined in the budget exercise for the Real Property Services (RPS) program as well as for the Federal Accommodation (FA) and Federal Holdings (FH) and Parliamentary Precinct (PP) programs of Public Works and Government Services Canada. In the case of service delivery to the FA, FH and PP programs, charges are adjusted to reflect the actual volume of service delivery achieved at year end.

d. Employee future benefits

i. Pension benefits

Eligible employees participate in the Public Service Pension Plan (the "Plan"), a multiemployer pension plan administered by the Government of Canada. The Fund's contributions to the Plan are charged to expenses in the year incurred and represent the total Fund obligation to the Plan. The Fund's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

ii. Severance benefits

Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services are rendered. The obligation relating to the benefits earned by employees is calculated using information derived from management's estimate of the liability. The liability for benefits is recorded in the accounts as the benefits accrue to employees.

iii. Vacation pay and compensatory leave

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

e. Financial instruments

The fair value of the financial instruments approximates costs unless otherwise specified. The Fund's financial instruments consist of cash in transit, accounts receivable, other assets and accounts payable. It is management's opinion that the Fund is not exposed to significant interest, currency or credit risks arising from these financial instruments.

f. Measurement uncertainty

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses reported in the financial statements. At the time of preparation of these financial statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are the allowance for doubtful accounts on external receivables, the liability for vacation pay and compensatory leave, the liability for employee severance benefits and the allowance for contingent liabilities. Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically and as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3. Accounts receivable

Table Summary

The table presents the accounts receivable on a comparative basis. It consists of three columns: item descriptions, current year and previous year. Totals are displayed on the last row.

(in thousands of dollars)

  2015 2014
Other government departments and agencies 125,468 142,181
External parties 19,006 6,773
Less: allowance for doubtful accounts from external parties (negative 21) (negative 31)
Total 144,453 148,923

4. Other assets

Table Summary

The table presents on a comparative basis the other assets. It consists of three columns: item descriptions, current year and previous year. Totals are displayed on the last row.

(in thousands of dollars)

  2015 2014
Sales Tax refundable advances 17,149 19,122
Prepaid expenses 1,376 1,376
Other advances 9 7
Total 18,534 20,505

5. Accounts payable and accrued liabilities

Table Summary

The table presents on a comparative basis the accounts payable and accrued liabilities. It consists of three columns: item descriptions, current year and previous year. Totals are displayed on the last row.

(in thousands of dollars)

  2015 2014
External parties and accrued liabilities 254,721 277,117
Other government departments and agencies 10,685 3,249
Total 265,406 280,366

6. Contingent liabilities

Claims have been made against the Fund in the normal course of operations. These claims include items with determined 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 Fund recorded an allowance of $38,500 this fiscal year (fiscal year 2014: $0) 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 was not determinable and a reasonable estimate could be made by management amounted to $0 (fiscal year 2014: $337,000).

7. Other liabilities

Table Summary

The table presents on a comparative basis the other liabilities. It consists of three columns: item descriptions, current year and previous year. Totals are displayed on the last row.

(in thousands of dollars)

  2015 2014
Contractor's security deposits 1,912 419
Provision for unsigned collective agreements 2,706  
Total 4,618 419

8. Employee severance benefits

The Fund provides severance benefits to its employees based on eligibility, years of service and salary at termination of employment. These severance benefits are not pre‑funded. Benefits will be paid by future authorities.

Commencing in 2012, as part of collective agreement negotiations with certain employee groups, and changes to conditions of employment for executives and certain non‑represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or to collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation. These estimates do not include expenses related to employee benefits payable to Treasury Board as they cannot be reasonably determined. Information about the severance benefits, measured as at March 31, is as follows:

Table Summary

The table presents the employee severance benefits on a comparative basis. It consists of three columns: item descriptions, current year and previous year. The totals net of expenses for the year are displayed at accrued benefit obligation end of year.

(in thousands of dollars)

  2015 2014
Accrued benefit obligation ‑ beginning of year 20,861 28,352
Benefits paid during the year:    
Retirements and departures from the Public Service (negative 2,324) (negative 2,641)
Employees who opted to cash out their accumulated balances as per new collective agreements (negative 2,497) (negative 7,330)
Subtotal (negative 4,821) (negative 9,971)
Expenses for the year 310 2,480
Accrued benefit obligation ‑ end of year 16,350 20,861

9. Net liabilities

The accumulated surplus is the accumulation of each fiscal year's surplus net of deficits since the inception of the Fund.

The accumulated net charge against the Fund's authority represents the cumulative receipts and disbursements over the life of the Fund.

Table Summary

The table presents on a comparative basis the net liabilities. It consists of three columns: item descriptions, current year and previous year. Subtotals are displayed at accumulated surplus closing balance and accumulated net charge against the Fund's authority closing balance. Totals are displayed at net liabilities end of year.

(in thousands of dollars)

  2015 2014
Accumulated surplus    
Opening balance 38,727 26,099
Net results 3,310 12,628
Transition payments for implementing salary payments in arrears (negative 7,274)  
Closing balance 34,763 38,727
Accumulated net charge against the Fund's authority    
Opening balance (negative 182,006) (negative 182,400)
Change during the year 13,022 394
Closing balance (negative 168,984) (negative 182,006)
Net liabilities, end of year (negative 134,221) (negative 143,279)

10. Transfer of the transition payments for implementing salary payments in arrears

The Government of Canada implemented salary payments in arrears in 2014–2015. As a result, a one‑time payment of $7,273,949 was issued to employees and will be recovered from them in the future. The transition to salary payments in arrears forms part of the transformation initiative that replaces the pay system and also streamlines and modernizes the pay processes. This change to the pay system had no impact on the expenses of the Revolving Fund. However, it did result in the use of authorities by the Revolving Fund and impacted the accumulated net charge against the Fund's authority. Prior to year end, transition payments for implementing salary payments in arrears were transferred to a central account administered by Public Works and Government Services Canada, which is responsible for the administration of the Government pay system.

11. Contractual obligations

The nature of the Fund's activities can result in some large multi‑year contracts and obligations whereby the Fund will be obligated to make future payments when the services/goods are received. Estimated future payments are as follows:

Table Summary

The table presents the contractual obligations and consists of two columns. The left hand column lists the years, and the right hand column lists the estimated future payments. Totals are displayed on the last row.

(in thousands of dollars)

2016 409,620
2017 72,963
2018 40,504
2019 6,753
2020 and thereafter 6,935
Total 536,775

12. Comparative figures

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

13. Related party transactions

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

Footnotes

Footnote 1

Debit balance in the accumulated net charge against the Fund's authority.

Return to footnote 1 referrer

Public Accounts of Canada 2015 Volume III - Bottom of the page Navigation