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Financial statements for the year ended March 31, 2014

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 , and all information contained in these statements rests with the management of the Office of the Commissioner of Lobbying (OCL). These financial statements have been prepared by management using the Government's accounting policies, which are based on Canadian public sector accounting standards.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgment, and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the OCL's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the OCL's Departmental Performance Report, is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting (ICFR) designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the OCL 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 was completed in accordance with the Treasury Board Policy on Internal Control and the results and action plans are summarized in the annex.

The effectiveness and adequacy of the OCL's system of internal control is reviewed by an independent Audit and Evaluation 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 of Lobbying.

The Office of the Auditor General, the independent auditor for the Government of Canada, has expressed an opinion on the fair presentation of the financial statements of the OCL which does not include an audit opinion on the annual assessment of the effectiveness of the OCL's internal controls over financial reporting.

Original signed by

Karen E. Shepherd
Commissioner of Lobbying
René Leblanc
Deputy Commissioner and Chief Financial Officer

Ottawa, Canada


Independent auditor's report

To the Speaker of the House of Commons and the Speaker of the Senate

Report on the financial statements

I have audited the accompanying financial statements of the Office of the Commissioner of Lobbying of Canada, which comprise the statement of financial position as at , and the statement of operations and net financial position, statement of change in net debt and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian public sector accounting standards, 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.

Auditor's responsibility

My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I 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 auditor's 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 auditor considers 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.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

In my opinion, the financial statements present fairly, in all material respects, the financial position of the Office of the Commissioner of Lobbying of Canada as at , and the results of its operations, changes in its net debt, and its cash flows for the year then ended in accordance with Canadian public sector accounting standards.

Report on other legal and regulatory requirements

In my opinion, the transactions of the Office of the Commissioner of Lobbying of Canada that have come to my notice during my audit of the financial statements have, in all significant respects, been in accordance with the Financial Administration Act and regulations and the Lobbying Act.

Original signed by

Sylvain Ricard, CPA, CA
Assistant Auditor General
for the Auditor General of Canada


Ottawa, Canada


Statement of Financial Position
As at March 31
(in dollars) 2014 2013
Liabilities
Accounts payable and accrued liabilities ( note 4) 393,701 258,301
Vacation pay and compensatory leave 157,719 107,345
Employee future benefits ( note 5) 307,852 382,388
Total liabilities 859,272 748,034
Financial assets
Due from the Consolidated Revenue Fund 383,710 227,683
Accounts receivable and advances ( note 6) 10,191 30,818
Total financial assets 393,901 258,501
Net debt 465,371 489,533
Non-financial assets
Prepaid expenses 499 339
Tangible capital assets ( note 7) 1,026,054 1,361,123
Total non-financial assets 1,026,553 1,361,462
Net financial position 561,182 871,929

Contingent liabilities (note 8)
Contractual obligations (note 9)

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

Original signed by

Karen E. Shepherd
Commissioner of Lobbying
René Leblanc
Deputy Commissioner and Chief Financial Officer

Ottawa, Canada

Statement of Operations and Net Financial Position
For the year ended March 31
(in dollars) Planned
Results
( note 2)
2014
2014 2013
Expenses
Registration of Lobbyists 1,330,651 1,400,449 1,344,936
Education and Research 931,378 872,345 1,026,418
Reviews and Investigations under the Lobbying Act and the Lobbyists' Code of Conduct 1,240,059 1,206,858 1,193,562
Internal Services 1,867,133 1,943,400 1,886,895
Net cost of operations before government funding 5,369,221 5,423,052 5,451,811
Government funding
Net cash provided by Government 4,538,391 4,313,374 4,757,082
Change in due from Consolidated Revenue Fund (21,958) 156,027 (12,007)
Services provided without charge by other government departments ( note 10) 472,445 642,904 637,818
Net cost of operations after government funding 380,343 310,747 68,918
Net financial position — Beginning of year 920,587 871,929 940,847
Net financial position — End of year 540,244 561,182 871,929

Segmented information (note 11)
The accompanying notes form an integral part of these financial statements.

Statement of Change in Net Debt
For the year ended March 31
(in dollars) Planned
Results
( note 2)
2014
2014 2013
Net cost of operations after government funding 380,343 310,747 68,918
Change due to tangible capital assets
Acquisition of tangible capital assets (note 7) 75,876 250,601
Amortization of tangible capital assets
(note 7)
(423,826) (410,945) (371,284)
Total change due to tangible capital assets (423,826) (335,069) (120,683)
Change due to prepaid expenses 160 (10,347)
Net decrease in net debt (43,483) (24,162) (62,112)
Net debt — Beginning of year 506,361 489,533 551,645
Net debt — End of year 462,878 465,371 489,533

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

Statement of Cash Flows
For the year ended March 31
(in dollars) 2014 2013
Operating activities
Net cost of operations before government funding 5,423,052 5,451,811
Non-cash items:
Amortization of tangible capital assets (note 7) (410,945) (371,284)
Services provided without charge by other government departments (note 10) (642,904) (637,818)
Variations in Statement of Financial Position:
Decrease in accounts receivable and advances (20,627) (25,313)
Increase (decrease) in prepaid expenses 160 (10,347)
Decrease (increase) in accounts payable and accrued liabilities (135,400) 37,320
Decrease (increase) in vacation pay and compensatory leave (50,374) 18,034
Decrease in employee future benefits 74,536 44,078
Cash used in operating activities 4,237,498 4,506,481
Capital investing activities
Acquisition of tangible capital assets (note 7) 75,876 250,601
Cash used in capital investing activities 75,876 250,601
Net cash provided by Government of Canada 4,313,374 4,757,082

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

Notes to the financial statements
For the year ended March 31

1. Authority and objectives

The mandate of the Office of the Commissioner of Lobbying (OCL) is derived from the Lobbying Act. Its purpose is to ensure transparency and accountability in the lobbying of public office holders in order to contribute to confidence in the integrity of government decision-making.

Registration of lobbyists

Lobbying the federal government is a legitimate activity but it must be done transparently. The Lobbying Act requires that individuals who are paid to lobby public office holders must disclose certain details of their lobbying activities. The OCL approves lobbyists' registrations and makes them available for searching in an electronic registry that is accessible on the Internet.

Education and research

The OCL develops and implements educational and research programs to foster awareness of the requirements of the Lobbying Act and the Lobbyists' Code of Conduct. The primary audiences for programs are lobbyists, their clients and public office holders.

Reviews and investigations under the Lobbying Act and the Lobbyists' Code of Conduct

The OCL validates information provided by registered lobbyists to ensure accuracy. Allegations of non-registration or misconduct by lobbyists are reviewed and formal investigations are carried out when required.

Internal services

Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

2. Summary of significant accounting policies

These financial statements have been prepared using the Government's accounting policies stated below, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

(a) Parliamentary authorities

The OCL is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the OCL do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and 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 Statement of Operations and Net Financial Position and the Statement of Change in Net Debt are the amounts reported in the future-oriented financial statements included in the 2013-14 Report on Plans and Priorities.

Liquidity risk is the risk that the OCL will encouter difficulty in meeting its obligations associated with financial liabilities. The OCL's objective for managing liquidity risk is to manage operations and cash expenditures within the appropriation authorized by Parliament or allotment limits approved by the Treasury Board.

Each year, the OCL presents information on planned expenditures to Parliament through the tabling of Estimates publications. These estimates result in the introduction of supply bills (which, once passed into legislation, become appropriation acts) in accordance with the reporting cycle for government expenditures. The OCL exercises expenditure initiation processes such that unencumbered balances of budget allotments and appropriations are monitored and reported on a regular basis to help ensure sufficient authority remains for the entire period and appropriations are not exceeded.

Consistent with Section 32 of the Financial Administration Act, the OCL's policy to manage liquidity risk is that no contract or other arrangement providing for a payment shall be entered into with respect to any program for which there is an appropriation by Parliament or an item included in estimates then before the House of Commons to which the payment will be charged unless there is a sufficient unencumbered balance available out of the appropriation or item to discharge any debt that, under the contract or other arrangement, will be incurred during the fiscal year in which the contract or other arrangement is entered into.

The OCL's risk exposure and its objectives, policies and processes to manage and measure this risk did not change significantly from the prior year.

(b) Net cash provided by government

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

(c) Due from or to the consolidated revenue fund

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 OCL is entitled to draw from the CRF without further authorities to discharge its liabilities. This amount is not considered to be a financial instrument.

(d) Expenses

Expenses are recorded on the accrual basis:

  • Vacation pay and other leaves 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 and employer contributions to the health and dental insurance plans are recorded as operating expenses at their estimated cost.

(e) Employee future benefits

Pension benefits: Eligible employees participate in the Public Service Pension Plan (Plan), a multiemployer pension plan administered by the Government. The OCL's contributions to the Plan are charged to expenses in the year incurred and represent the total OCL obligation to the Plan. The OCL'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.

Severance benefits: Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

(f) Accounts receivable

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

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The OCL is not exposed to significant credit risk. Accounts receivable are due on demand. The majority of accounts receivable are due from other government of Canada departments and agencies where there is minimal potential risk of loss. The maximum exposure the OCL has to credit risk equal to the carrying value of its accounts receivable.

(g) Contingent liabilities

Contingent liabilities are potential liabilities that 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 if an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

(h) Tangible capital assets

All tangible capital assets having an initial cost of $5,000 or more and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. The OCL does not capitalize intangible assets.

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

Tangible capital assets
Asset Class Amortization Period
Machinery and equipment 5 years
Computer software 5 years
Furniture and fixtures 5 years
Leasehold improvements Lesser of the remaining term of the lease or useful life of the improvement

Assets under construction are recorded in the applicable capital asset class in the year that they become available for use and are not amortized until they become available for use.

(i) Measurement uncertainty

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are the liability for employee future benefits and the useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3. Parliamentary authorities

The OCL receives its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and 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 OCL has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

(a) Reconciliation of net cost of operations to current year authorities used
(in dollars) 2014 2013
Net cost of operations before government funding 5,423,052 5,451,811
Adjustments for items affecting net cost of operations but not affecting authorities:
Services provided without charge by other government departments (note 10) (642,904) (637,818)
Amortization of tangible capital assets (note 7) (410,945) (371,284)
Decrease (increase) in vacation pay and other leaves (50,374) 18,034
Decrease in employee future benefits 74,536 44,078
Other adjustments (5,878) 239
Total: Adjustments for items affecting net cost of operations but not affecting authorities (1,035,565) (946,751)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets (note 7) 75,876 250,601
Increase (decrease) in prepaid expenses 160 (10,347)
Total: Adjustments for items not affecting net cost of operations but not affecting authorities 76,036 240,254
Current year authorities used 4,463,523 4,745,314
(b) Authorities provided and used
(in dollars) 2014 2013
Authorities provided:
Vote 45 — Program expenditures 4,299,854 4,494,261
Statutory  — Proceeds from the disposal of surplus Crown assets 186
Statutory  — Contributions to employee benefit plans 436,595 422,901
Less:
Lapsed: Operating (272,926) (172,034)
Current year authorities used 4,463,523 4,745,314

4. Accounts payable and accrued liabilities

Accounts payable and accrued liabilities are measured at cost, the majority of which are due within six months of year-end.

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

OCL's accounts payable and accrued liabilities
(in dollars) 2014 2013
Accounts payable — Other government departments and agencies 138,426 5,682
Accounts payable — External parties 167,947 178,747
Total: Accounts payable 306,373 184,429
Accrued liabilities 87,328 73,872
Total: Accounts payable + Accrued liabilities 393,701 258,301

5. Employee future benefits

(a) Pension benefits

The OCL's employees participate in the Public Service Pension Plan (Plan), which is sponsored and administered by the Government. Pension benefits accrue up to a maximum period of 35 years at a rate of 2% per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Quebec Pension Plans benefits and they are indexed to inflation.

Both the employees and the OCL contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to EAP 2012, employee contributors have been divided into two groups – Group 1 relates to existing plan members as of and Group 2 relates to members joining the Plan as of . Each group has a distinct contribution rate.

The 2013–14 expense amounts to $306,970 ($301,951 in 2012–13). For Group 1 members, the expense represents approximately 1.6 times (1.7 times in 2012–13) the employee contributions and, for Group 2 members, approximately 1.5 times (1.6 times in 2012–13) the employee contributions.

The OCL's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

(b) Severance benefits

The OCL 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 from future authorities.

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 commencing in 2012. 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 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.

Information about the severance benefits, measured as at March 31, is as follows:

Employee Severance Benefits
(in dollars) 2014 2013
Accrued benefit obligation — Beginning of year 382,388 426,466
Expense for the year 20,559 126,507
Benefits paid during the year (95,095) (170,585)
Accrued benefit obligation — End of year 307,852 382,388

6. Accounts receivable and advances

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

Accounts receivable and advances
(in dollars) 2014 2013
Receivables — Other government departments and agencies 8,435 26,948
Receivables — External parties 1,556 3,670
Employee advances 200 200
Total: Accounts receivable and advances 10,191 30,818

7. Tangible capital assets

Costs of tangible capital assets
(in dollars) Cost
Capital Asset Class Opening Balance Acquisitions/ Adjustments Closing Balance
Computer software 2,467,645 2,467,645
Furniture and fixtures 46,674 46,674
Leasehold improvements 47,788 47,788
Assets under construction - 75,876 75,876
Total: Cost 2,562,107 75,876 2,637,983
Accumulated Amortization of tangible capital assets
(in dollars) Accumulated Amortization
Capital Asset Class Opening Balance Amortization Closing Balance
Computer software 1,154,900 395,351 1,550,251
Furniture and fixtures 28,562 6,036 34,598
Leasehold improvements 17,522 9,558 27,080
Total: Accumulated Amortization 1,200,984 410,945 1,611,929
Net book value of tangible capital assets
(in dollars) Net Book Value
Capital Asset Class 2014 2013
Computer software 917,394 1,312,745
Furniture and fixtures 12,076 18,112
Leasehold improvements 20,708 30,266
Assets under construction 75,876 -
Total: Net Book Value 1,026,054 1,361,123

8. Contingent liabilities

In the normal course of its operations, the OCL may face legal challenges with regard to a decision made by the Commissioner or for any other reasons. Some of these legal actions may result in actual liabilities when one or more future events occur. To the extent that the future event is likely to occur, and a reasonable estimate of the loss can be made, a liability is accrued and an expense recorded in the financial statements. No contingent liabilities are recognized in the OCL's financial statements for the fiscal year ended .

9. Contractual obligations

The nature of the OCL's activities can result in some multi-year contracts and obligations whereby the OCL will be obligated to make future payments when the goods or services are received. These obligations include service contracts and equipment rental. Significant contractual obligations that can be reasonably estimated are summarized as follows:

Contractual Obligations
(in dollars) Acquisitions of
goods and services
Operating
leases
Total
2015 479,730 18,471 498,201
2016 42,321 5,400 47,721
2017 4,950 4,950
2018
2019 and thereafter

10. Related party transactions

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

(a) Common services provided without charge by other government departments

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

Common services provided without charge by other government departments
(in dollars) 2014 2013
Accommodation 296,465 296,214
Employer's contribution to the health and dental insurance plans 224,439 211,604
Audit services 122,000 130,000
Total: Common services provided without charge by other government departments 642,904 637,818

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 the payroll and cheque issuance services provided by Public Works and Government Services Canada are not included in the OCL's Statement of Operations and Net Financial Position.

(b) Other transactions with related parties

Other transactions with related parties
(in dollars) 2014 2013
Expenses — Other government departments and agencies 822,101 1,082,545
Expenses - Other government departments and agencies - Employee Benefit Plans 436,595 422,901
Total: Other transactions with related parties 1,258,696 1,505,446

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

11. Segmented information

Presentation by segment is based on the OCL's program alignment architecture. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 2. The following table presents the expenses incurred for the programs by major object of expense. The segment results for the period are as follows:

Segmented information
(in dollars) Registration
of
Lobbyists
Education
and
Research
Reviews
and
Investigations
Internal Services 2014 2013
Expenses
Salaries and employee benefits 709,873 712,250 1,083,622 835,210 3,340,955 3,137,709
Professional and special services 190,680 46,085 19,515 869,968 1,126,248 1,465,864
Amortization of tangible capital assets 404,909 6,036 410,945 371,284
Accommodation 74,116 74,116 84,704 63,528 296,464 296,214
Furniture and equipment 2,411 7,115 1,389 64,306 75,221 27,535
Rental 52,949 52,949 52,354
Information services 135 10,605 1,080 31,982 43,802 26,063
Telecommunications services 17,741 2,965 2,018 8,006 30,730 37,042
Travel and relocation 206 17,647 10,326 776 28,955 24,238
Utilities, materials and supplies 378 1,562 4,204 8,915 15,059 13,449
Repair and maintenance 1,724 1,724
Other 59
Net cost of operations 1,400,449 872,345 1,206,858 1,943,400 5,423,052 5,451,811

12. Comparative information

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

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