Statement of Management Reponsibility including Internal Control over Financial Reporting

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, 2013 and all information contained in these statements rests with the management of Veterans Review and Appeal Board. 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 judgement, 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 Veterans Review and Appeal Board's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in Veterans Review and Appeal Board'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 Veterans Review and Appeal Board; 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.

The Veterans Review and Appeal Board will be subject to periodic Core Control Audits performed by the Office of the Comptroller General and will use the results of such audits to adhere to the Treasury Board Policy on Internal Control.

In the interim, the Veterans Review and Appeal Board will proceed with a risk-based assessment of the system of ICFR. It should be noted that the Board has a service partnership agreement with Veterans Affairs Canada (VAC) regarding a full range of administrative and financial services. Consequently, the Board's ICFR are completely reliant on VAC's ICFR.

The financial statements of Veterans Review and Appeal Board have not been audited.

John D. Larlee, Chair, Veterans Review and Appeal Board, Charlottetown, Canada

Date

Charlotte Stewart, Chief Financial Officer, Charlottetown, Canada

Date

Statement of Financial Position


Veterans Review and Appeal Board
Statement of Financial Position (unaudited)
At March 31
(in thousands of dollars)
  2013 2012
Restated
(Note 10)
Liabilities
   Accounts payable and accrued liabilities (Note 4) $                        326 $                        298
   Vacation pay and compensatory leave 197 188
   Employee future benefits(Note 5) 1,232 1,246
        Total net Liabilities 1,755 1,732
 
Financial assets
   Due from the consolidated Revenue Fund 326 297
        Total net Financial Assets 326 297
 
        Departmental Net Debt 1,429 1,435
 
Non-financial assets
   Tangible capital assets (Note 6) 5 19
        Total non-financial assets 5 19
 
Departmental net financial position $                 (1,424) $                 (1,416)
 

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

John D. Larlee, Chair, Veterans Review and Appeal Board, Charlottetown, Canada

Date

Charlotte Stewart, Chief Financial Officer, Charlottetown, Canada

Date


Veterans Review and Appeal Board
Statement of Operations and Departmental Net Financial Position (unaudited)
For the year ended March 31
(in thousands of dollars)
N/A 2013
Planned
Results
2013 2012
Expenses
   Veterans Review and Appeal Board $  13,190 $  13,587 $  13,686
          Total expenses 13,190 13,587 13,686
 
Net cost from continuing operations 13,190 13,587 13,686
 
Transferred operations (Note 8)
   Expenses 0 0 44
Net cost of transferred operations 0 0 44
 
Net cost of operations before government funding and transfers 13,190 13,587 13,730
Government funding and transfers
   Net cash provided by Government 11,525 11,926 12,750
   Change in due from Consolidated Revenue Fund 0 29 (193)
   Services provided without charge by other government departments (Note 7) 1,568 1,624 1,553
   Transfer of assets and liabilities to other government departments (Note 8) 0 0 (153)
 
Net cost of operations after government funding and transfers 97 8 (227)
 
Departmental net financial position - Beginning of year (1,416) (1,416) (1,643)
 
Departmental net financial position - End of year $  (1,513) $  (1,424) $  (1,416)

Segmented information (Note 9)

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


Veterans Review and Appeal Board
Statement of Change in Departmental Net Debt (unaudited)
For the year ended March 31
(in thousands of dollars)
  2013
Planned
results
2013 2012
 
Net cost of operations after government funding and transfers $    97 $      8 $    (227)
 
   Change due to tangible capital assets
      Amortization of tangible capital assets (80) (14) (61)
      Adjustments to tangible capital assets 0 0 (161)
      Transfer to other government departments 0 0 (153)
Total change due to tangible capital assets (80) (14) (375)
 
Net increase (decrease) in departmental net debt 17 (6) (602)
 
Departmental net debt - Beginning of year 1,435 1,435 2,037
 
Departmental net debt - End of year $1,452 $1,429 $1,435

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


Veterans Review and Appeal Board
Statement of Cash Flows (unaudited)
For the year ended March 31
(in thousands of dollars)
  2013 2012
 
Operating activities
Net cost of operations before government funding and transfers $  13,587 $  13,730
   Non-cash items:
      Amortization of tangible capital assets (14) (61)
      Services provided without charge (1,624) (1,553)
   Variations in Statement of Financial Position
      Decrease (increase) in accounts payable and accrued liabilities (28) 193
      Decrease (increase) in vacation pay and compensatory leave (9) 11
      Decrease (increase) in future employee benefits 14 591
Cash used for operating activities 11,926 12,911
 
Capital Investment Activities
   Adjustments to tangible capital assets (Note 6) 0 (161)
Cash used for capital investment activities 0 (161)
 
Financing activities 0 0
 
Net cash provided by Government of Canada $  11,926 $  12,750

The accompanying notes form an integral part of these statements.

Notes to Financial Statements (unaudited) for the year ended March 31

1. Authority and Objectives

The Veterans Review and Appeal Board was established in 1995 pursuant to the Veterans Review and Appeal Board Act. The Veterans Review and Appeal Board received full departmental status by Order in Council in 2009.

Veterans Review and Appeal Board is a division of the public service named in Schedule I.1 of the Financial Administration Act. The Minister of Veterans Affairs is designated the appropriate Minister for the Veterans Review and Appeal Board in Parliament and at Cabinet.

The Veterans Review and Appeal Board program provides Canada's traditional Veterans, Canadian Forces members and Veterans, Royal Canadian Mounted Police members, qualified civilians and their families with full opportunity to request review and appeal hearings to ensure a fair adjudicative process for disability pension, disability award, and War Veterans Allowance applications.

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

Veterans Review and Appeal Board is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to Veterans Review and Appeal Board 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 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 Statement of Operations and Departmental Net Financial Position are the amounts reported in the future-oriented financial statements included in the 2012-2013 Report on Plans and Priorities.

(b) Net cash provided by Government

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

(c) Amounts due from/to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that the Board is entitled to draw from the CRF without further appropriations to discharge its liabilities.

(d) Expenses are recorded on the accrual basis:

  • Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
  • Services provided without charge by other government departments for accommodations, the employer's contribution to the health and dental insurance plans, and legal services are recorded as operating expenses at their estimated cost.

(e) Employee future benefits

(i) Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer pension plan, administered by the Government. Veterans Review and Appeal Board Canada contributions to the Plan are charged to expense in the year incurred and represent the Board's total obligation to the plan. Veterans Review and Appeal Board's responsibility with regards to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada.

(ii) Severance benefits: Employees entitled to severance benefits, as provided for 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) Tangible capital assets

All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Veterans Review and Appeal Board does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections.

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
N/A N/A
Machinery and equipment 5-15 Years

(g) 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 are reasonable. The most significant items where estimates are used are the useful life of tangible capital assets and the liability for employee future benefits. 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

Veterans Review and Appeal Board receives 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, Veterans Review and Appeal Board 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

  2013   2012
  (in thousands of dollars)
Net cost of operations before government funding and transfers $          13,587   $          13,730
 
Adjustments for items affecting net cost of operations but not affecting authorities:      
Amortization of tangible capital assets
(14)   (61)
Services provided without charge by other government departments
(1,624)   (1,553)
Decrease (Increase) vacation pay and compensatory leave
(9)   11
Decrease (Increase) employee future benefits
14   591
Other
9   28
N/A 11,963   12,746
 
Adjustment for items not affecting net cost of operations but affecting authorities 0   0
 
N/A 0   0
 
Current year authorities used $          11,963   $          12,746
(b) Authorities provided and used
  2013   2012
  (in thousands of dollars)
Vote 10 - Operating expenditures $          10,685   $          11,232
Statutory amounts 1,609   1,685
N/A 12,294   12,917
 
Less:
Lapsed: Operating (331)   (171)
N/A (331)   (171)
 
Current year authorities used $          11,963   $          12,746

4. Accounts Payable and accrued liabilies

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

  2013   2012
  (in thousands of dollars)
Accounts payable to other government departments and agencies $            57   $           81
Accounts payable to external parties 0   0
Accrued liabilities 269   217
 
Total accounts payable and accrued liabilities $          326   $          298

5. Employee Future Benefits

(a) Pension benefits: Veterans Review and Appeal Board employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government. Pension benefits accrue 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/Quebec Pension Plans benefits and they are indexed to inflation.

Both the employees and Veterans Review and Appeal Board contribute to the cost of the Plan. The 2012-2013 expense amounts to $1,149,120.81 ($1,211,740.37 in 2011-2012), which represents approximately 1.7 times (1.8 in 2011-12) the contributions by employees.

Veterans Review and Appeal Board's responsibility with regards 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: Veterans Review and Appeal Board 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 appropriations. Information about the severance benefits, measured as at March 31, is as follows:

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 to benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.


  2013   2012
  (in thousands of dollars)
Accrued benefit obligation - beginning of year $          1,246   $          1,837
Expenses for the year 350   414
Benefits paid during the year (364)   (1005)
Accrued benefit obligation - end of year $          1,232   $          1,246

6.Tangible Capital Assets

The following tables present details of tangible capital assets: (in thousands of dollars)

Cost
Capital asset class Opening balance Acquisitions Closing balance
Machinery and equipment $                   68 $                   0 $                   68
Total $                   68 $                   0 $                   68
 
Accumulated Amortization
Capital asset class Opening balance Amortization Closing balance
Machinery and equipment $                   49 $                  14 $                   63
Total $                   49 $                  14 $                   63
Net Book Value
Capital Asset Class 2013
Net book value
2012
Net book value
Machinery and equipment $                        5 $                      19
Total $                        5 $                      19

Veterans Review and Appeal Board is related as a result of common ownership to all Government of Canada departments, agencies and Crown corporations. Veterans Review and Appeal Board enters into transactions with these entities in the normal course of business and on normal trade terms. Also, during the year, Veterans Review and Appeal Board received services which were obtained without charge from other Government departments as presented in part (a).

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

During the year Veterans Review and Appeal Board received services without charge from other departments, relating to accommodations, legal fees and employer's contribution to the health and dental insurance plans. These services without charge have been recognized on the Board's Statement of Operations and Departmental Net Financial Position as follows:

N/A 2013 N/A 2012
(in thousands of dollars)
Accommodations $            878   $            685
Employer's contribution to the health and dental insurance plans 746 793
Legal services 0 75
Total $         1,624   $         1,553

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 and audit services provided by the Office of the Auditor General are not included in the Board's Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties
  2013   2012
  (in thousands of dollars)
Expenses - Other Government departments and agencies $         120   $         175
Total $         120   $         175

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

8. Transfers from/to other government departments

Effective November 15, 2011, Veterans Review and Appeal Board transferred responsibility for the information technologies activities to Shared Services Canada in accordance with Section 31.1 of the Financial Administration Act, Order in Council 2011-0877 and 2011-1297, including the stewardship responsibility for the assets and liabilities related to the program. Accordingly, Veterans Review and Appeal Board transferred the following assets to Shared Services Canada on November 15, 2011.

  2012
  (in thousands of dollars)
   
Assets:  
  Tangible capital assets (net book value) $                     153
Total assets transferred                        153
   
Liabilities:                           0
Total liabilities transferred                           0
   
Adjustment to the departmental net financial position $                     153

9. Segmented Information

Presentation by segment is based on the Board'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 by major object of expenses. The segmented results for the period are as follows:

(in thousands of dollars) 2013 Total 2012 Total
Operating    
     
Salaries and employee benefits $             11,188 $             11,263
Transportation and communications 903 987
Accommodations 878 685
Professional and special services 352 523
Utilities, materials and supplies 73 93
Repairs and maintenance 64 70
Amortization 14 17
Other 115 48
Total operating expenses 13,587 13,686
     
Total expenses 13,587 13,686


Net Cost from continuing operations


$             13,587


$             13,686

10. Comparative Information

Previous year's comparative figures have been adjusted to conform to Financial Statement presentation.

(in thousands of dollars) 2012 as previously
stated
2012 restated
Statement of Financial Position    
Due from Consolidated Revenue Fund $                298 $                297

Annex to the Statement of Management Responsibility Including Internal Control over Financial Reporting

1. Introduction

In support of an effective system of internal control, the Veterans Review and Appeal Board annually assesses the performance of its financial controls to ensure:

  • financial arrangements or contracts are entered into only when sufficient funding is available;
  • payments for goods and services are made only when the goods or services are received or the conditions of contracts or other arrangements have been satisfied; and
  • payments have been properly authorized.

Detailed information on the Veterans Review and Appeal Board's authority, mandate, and program activities can be found in Departmental Performance Report and Report on Plans and Priorities.

The Veterans Review and Appeal Board will leverage the results of the periodic Core Control Audit performed by the Office of the Comptroller General.

2. Assessment results during fiscal year 2012 2013

The Veterans Review and Appeal Board relies on Veterans Affairs Canada for the processing of transactions that are recorded in its financial statements.

Ongoing monitoring of financial transaction controls (Section 32 to 34 of the Financial Administration Act) is in place to ensure that they continue to perform as expected. For the most part, controls related to payment for goods and services and payment authority were functioning well and form an adequate basis for the Veterans Review and Appeal Board's system of internal control.

3. Assessment Plan

The Veterans Review and Appeal Board will continue to monitor the performance of its system of internal control with a focus on the core controls related to financial transactions.

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