Statement of Management Reponsibility including Internal Control over Financial Reporting

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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, 2017 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 Veterans Review and Appeal Board has a service partnership agreement with Veterans Affairs Canada (VAC) regarding a full range of administrative and financial services. Consequently, the Veterans Review and Appeal Board’s ICFR are completely reliant on VAC’s ICFR.

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

Thomas Jarmyn, Chair,
Charlottetown, Canada


Date - August 17, 2017

Elizabeth M. Stuart
Rear-Admiral (Retired)
Chief Financial Officer,
Charlottetown, Canada

Date - August 17, 2017

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Veterans Review and Appeal Board
Statement of Financial Position (unaudited)
As at March 31
(in thousands of dollars)
  2017 2016
Liabilities
   Accounts payable and accrued liabilities (note 4) $                                      780 $                                         960
   Vacation pay and compensatory leave 117 162
   Employee future benefits (note 5) 414 610
        Total liabilities 1,311 1,732
Financial assets
   Due from the consolidated Revenue Fund 780 960
   Account receivable 42 0
        Total Financial Assets 822 960
        Departmental net debt 489 772
Non-financial assets
   Tangible capital assets (note 6) 0 0
        Total non-financial assets 0 0
Departmental net financial position $                                     (489) $                                        (772)

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

Thomas Jarmyn
Chairperson,
Charlottetown, Canada

Date - August 17, 2017

Elizabeth M. Stuart
Rear-Admiral (Retired)
Chief Financial Officer
Charlottetown, Canada

Date - August 17, 2017

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Veterans Review and Appeal Board
Statement of Operations and Departmental Net Financial Position (unaudited)
For the year ended March 31
(in thousands of dollars)
  2017
Planned
Results
2017 2016
Expenses
   Veterans Review and Appeal Board $  12,369 11,267 12,367
          Total expenses 12,369 11,267 12,367
Net cost from continuing operations 12,369 11,267 12,367
Net cost of operations before government funding and transfers 12,369 11,267 12,367
Government funding and transfers
   Net cash provided by Government   10,382 10,800
   Change in due from Consolidated Revenue Fund (180) 200
   Services provided without charge by other government departments (note 7) 1,348 1,369
Net cost of operations after government funding and transfers (283) (2)
Departmental net financial position - Beginning of year (772) (774)
Departmental net financial position - End of year   $    (489) $    (772)

Segmented information (Note 9)

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

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Veterans Review and Appeal Board
Statement of Change in Departmental Net Debt (unaudited)
For the year ended March 31
(in thousands of dollars)
  2017 2016
Net cost of operations after government funding and transfers $               (283) $          (2)
Net increase (decrease) in departmental net debt (283) (2)
Departmental net debt - Beginning of year 772 774
Departmental net debt - End of year $            489 $            772

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

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Veterans Review and Appeal Board
Statement of Cash Flows (unaudited)
For the year ended March 31
(in thousands of dollars)
  2017 2016
Operating activities
Net cost of operations before government funding and transfers $      11,267 $      12,367
   Non-cash items:
      Services provided without charge by other government departments (1,348) (1,369)
   Variations in Statement of Financial Position
      Increase in accounts receivable and advances 42 0
      Decrease (increase) in accounts payable and accrued liabilities 180 (200)
      Decrease in vacation pay and compensatory leave 45 6
      Decrease (increase) in future employee benefits 196 (4)
Cash used for operating activities 10,382 10,800
Net cash provided by Government of Canada $      10,382 $      10,800

The accompanying notes form an integral part of these statements.

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Notes to Financial Statements (unaudited) for the year ended March 31, 2017

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 Armed 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.

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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 "Expenses" section of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-oriented Statement of Operations included in the 2016-2017 Report on Plans and Priorities. Planned results are not presented in the "Government funding and transfers" sections 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 2016-2017 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 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 Veterans Review and Appeal Board is entitled to draw from the CRF without further authorities to discharge its liabilities.

(d) Expenses are recorded on the accrual basis:

  • 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 and the employer contribution 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, a multiemployer pension plan, administered by the Government. Veterans Review and Appeal Board's contributions to the Plan are charged to expense in the year incurred and represent its 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, 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) 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
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.

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3. Parliamentary Authorities

Veterans Review and Appeal Board 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, 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

  2017   2016
  (in thousands of dollars)
Net cost of operations before government funding and transfers $          11,267   $          12,367
Adjustments for items affecting net cost of operations but not affecting authorities:      
     Services provided without charge by other government departments (1,348)   (1,369)
     Decrease in vacation pay and compensatory leave 45   6
     Decrease (increase) in employee future benefits 196   (4)
     Other 75   2
N/A 10,235   11,002
Current year authorities used $          10,235   $          11,002

(b) Authorities provided and used

  2017   2016
  (in thousands of dollars)
Vote 10 - Operating expenditures $                                                  9,924   $                                                  9,934
Statutory amounts 1,167   1,325
N/A 11,091   11,259
Less:
Unused authorities (856)   (257)
N/A (856)   (257)
Current year authorities used $                                                 10,235   $                                                11,002

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4. Accounts Payable and accrued liabilies

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

  2017   2016
  (in thousands of dollars)
Accounts payable to other government departments and agencies $                           47   $                           13
Accrued liabilities 733   947
Total accounts payable and accrued liabilities $                         780   $                         960

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5. Employee future benefits

(a) Pension benefits: Veterans Review and Appeal Board 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 Plans benefits and they are indexed to inflation.

Both the employees and Veterans Review and Appeal Board contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Canada's 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 2016-2017 expense amounts to $813,191 ($913,159 in 2015-2016). For Group 1 members, the expense represents approximately 1.12 times (1.25 times for 2015-2016) the employee contributions and, for Group 2 members, approximately 1.08 times (1.24 times in 2015-2016) the employee contributions.

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: Severance benefits provided to the Board’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, 2017, 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:


  2017   2016
  (in thousands of dollars)
Accrued benefit obligation - beginning of year $                                      610   $                                        606
Expenses for the year (130)   59
Benefits paid during the year (66)   (55)
Accrued benefit obligation - end of year $                                      414   $                                      610

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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 $                              68 $                             0 $                           68
Total $                              68 $                             0 $                           68
Net Book Value
Capital Asset Class 2017
Net book value
2016
Net book value
Machinery and equipment $                                       0 $                                      0
Total $                                       0 $                                      0

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Veterans Review and Appeal Board is related as a result of common ownership to all government 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. During the year, Veterans Review and Appeal Board 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, Veterans Review and Appeal Board 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 Veterans Review and Appeal Board's Statement of Operations and Departmental Net Financial Position as follows:

N/A 2017 N/A 2016
(in thousands of dollars)
Accommodation $                              653   $                              653
Employer's contribution to the health and dental insurance plans 695 716
N/A    
Total $                           1,348   $                           1,369

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 cost 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 Veterans Review and Appeal Board's Statement of Operations and Departmental Net Financial Position.


(b) Other transactions with related parties

  2017   2016
  (in thousands of dollars)
Accounts payable - Other government department and agencies $                            47   $                            13
Expenses - Other Government departments and agencies 278   167
Total $                           325   $                           180

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

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8. Segmented Information

Presentation by segment is based on the Veterans Review and Appeal 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 expense. The segmented results for the period are as follows:

(in thousands of dollars) 2017 2016
Operating    
Salaries and employee benefits $                                                 9,171 $                                             10,460
Transportation and communications 601 642
Accommodation 653 653
Professional and special services 434 351
Utilities, materials and supplies 134 55
Repairs and maintenance 131 75
Other 143 131
Total operating expenses 11,267 12,367
Total expenses 11,267 12,367


Net Cost from continuing operations


$                                               11,267


$                                             12,367

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Statement of Management Responsibility including Internal Control over Financial Reporting for the Fiscal Year 2016-2017

Annex to the Statement of Management Responsiblity 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 2016-2017

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 is in place to ensure that they continue to perform as expected. Overall, 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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