Statement of Management Responsibility including Internal Control over Financial Reporting
Table of Contents
- Statement of Management Responsibility Including Internal Control over Financial Reporting
- Statement of Financial Position (unaudited)
- Statement of Operations and Departmental Net Financial Position (unaudited)
- Statement of Change in Departmental Net Debt (unaudited)
- Statement of Cash Flows (unaudited)
- Notes to Financial Statements (unaudited)for the year ended March 31
- Annex to the Statement of Management Responsibility 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, 2019 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 Results Report, is consistent with these financial statements.
Management is also responsible for maintaining an effective system of Internal Control over Financial Reporting (ICFR) designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.
Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout 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 Financial Management.
In the interim, the Veterans Review and Appeal Board has undertaken a risk-based assessment of the system of ICFR for the year ended March 31, 2019, in accordance with Treasury Board Policy on Financial Management, and the action plan is summarized in the annex. 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.
Chris McNeil, Chair,
Charlottetown, Canada
Date - August 29, 2019
Elizabeth M. Stuart
Rear-Admiral (Retired)
Chief Financial Officer,
Charlottetown, Canada
Date - September 4, 2019
| 2019 | 2018 | |
|---|---|---|
| Liabilities | ||
| Accounts payable and accrued liabilities (note 4) | $ 689 | $ 902 |
| Vacation pay and compensatory leave | 294 | 178 |
| Employee future benefits (note 5) | 360 | 379 |
| Total liabilities | 1,343 | 1,459 |
| Financial assets | ||
| Due from the consolidated Revenue Fund | 639 | 903 |
| Account receivable (note 6) | 95 | 30 |
| Total Financial Assets | 734 | 933 |
| Departmental net debt | 609 | 526 |
| Non-financial assets | ||
| Tangible capital assets (note 7) | 27 | 0 |
| Total non-financial assets | 27 | 0 |
| Departmental net financial position | $ (582) | $ (526) |
The accompanying notes form an integral part of these financial statements.
Chris McNeil
Chairperson,
Charlottetown, Canada
Date - August 29, 2019
Elizabeth M. Stuart
Rear-Admiral (Retired)
Chief Financial Officer
Charlottetown, Canada
Date - September 4, 2019
| 2019 Planned Results |
2019 | 2018 | |
|---|---|---|---|
| Expenses | |||
| Veterans Review and Appeal Board | $ 12,289 | 11,234 | 12,253 |
| Total expenses | 12,289 | 11,234 | 12,353 |
| Net cost from continuing operations | 12,289 | 11,234 | 12,353 |
| Net cost of operations before government funding and transfers | 12,369 | 11,267 | 12,367 |
| Government funding and transfers | |||
| Net cash provided by Government | 10,158 | 10,718 | |
| Change in due from Consolidated Revenue Fund | (264) | 123 | |
| Services provided without charge by other government departments (note 8) | 1,284 | 1,375 | |
| Net cost of operations after government funding and transfers | 56 | 37 | |
| Departmental net financial position - Beginning of year | (526) | (489) | |
| Departmental net financial position - End of year | $ (582) | $ (526) | |
Segmented information (Note 9)
The accompanying notes form an integral part of these financial statements.
| 2019 | 2018 | |
|---|---|---|
| Net cost of operations after government funding and transfers | $ 56 | $ 37 |
| Change due to tangible capital assets | ||
| Acquisition of tangible capital assets | $ 27 | $ - |
| Net increase (decrease) in departmental net debt | 83 | 37 |
| Departmental net debt - Beginning of year | 526 | 489 |
| Departmental net debt - End of year | $ 609 | $ 526 |
The accompanying notes form an integral part of these financial statements.
| 2019 | 2018 | |
|---|---|---|
| Operating activities | ||
| Net cost of operations before government funding and transfers | $ 11,234 | $ 12,253 |
| Non-cash items: | ||
| Services provided without charge by other government departments | (1,284) | (1,375) |
| Variations in Statement of Financial Position | ||
| Increase (decrease) in accounts receivable and advances | 65 | (12) |
| Decrease (increase) in accounts payable and accrued liabilities | 213 | (122) |
| Increase in vacation pay and compensatory leave | (116) | (61) |
| Decrease in future employee benefits | 19 | 35 |
| Cash used for operating activities | 10,131 | 10,718 |
| Capital investment activities | ||
| Acquisitions of tangible capital assets (Note 7) | 27 | 0 |
| Net cash provided by Government of Canada | $ 10,158 | $ 10,718 |
The accompanying notes form an integral part of these statements.
Notes to Financial Statements (unaudited) for the year ended March 31, 2019
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.
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 2018-2019 Departmental Plan. Planned results are not presented in the “Government funding and transfers” section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2018-2019 Departmental Plan.
(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 Government.
(c) Amounts due from or to the CRF
Amounts due from or to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that the 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 carrying value.
(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 - The accumulation of severance benefits for voluntary departures ceased for applicable employee groups. The remaining obligation for employees who did not withdraw benefits is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.
(f) Non-financial assets
The costs of acquiring land, buildings, equipment and other capital property are capitalized as tangible capital assets and, except for land, are amortized to expense over the estimated useful lives of the assets, as described in Note 6. All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Tangible capital assets do not include immovable assets located on reserves as defined by the Indian Act, works of art, museum collection and Crown land to which no acquisition cost is attributable; and intangible assets.
(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 and accompanying notes at March 31. The estimates are based on facts and circumstances, historical experience, general economic conditions and reflect the Government’s best estimate of the related amount at the end of the reporting period. 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.
(h) Related party transactions
Related party transactions, other than inter-entity transactions, are recorded at the exchange amount.
Inter-entity transactions are transactions between commonly controlled entities. Inter-entity transactions, other than restructuring transactions, are recorded on a gross basis and are measured at the carrying amount, except for the following:
- Services provided on a recovery basis are recognized as revenues and expenses on a gross basis and measured at the exchange amount.
- Certain services received on a without charge basis are recorded for departmental financial statement purposes at the carrying amount.
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
| 2019 | 2018 | ||
|---|---|---|---|
| (in thousands of dollars) | |||
| Net cost of operations before government funding and transfers | $ 11,234 | $ 12,253 | |
| Adjustments for items affecting net cost of operations but not affecting authorities: | |||
| Services provided without charge by other government departments | (1,284) | (1,375) | |
| Increase in vacation pay and compensatory leave | (116) | (61) | |
| Decrease in employee future benefits | 19 | 35 | |
| Other | 26 | 0 | |
| Net cost of operations after government funding and transfers | 9,879 | 10,852 | |
| Adjustment for items not affecting net cost of operations but affecting authorities: | |||
| Acquisition of tangible capital assets | 27 | 0 | |
| Total items not affecting net cost of operations but affecting authorities | 27 | 0 | |
| Current year authorities used | $ 9,906 | $ 10,852 | |
(b) Authorities provided and used
| 2019 | 2018 | ||
|---|---|---|---|
| (in thousands of dollars) | |||
| Authorities provided: | |||
| Vote 1 - Operating expenditures | $ 10,171 | $ 10,103 | |
| Statutory amounts | 1,089 | 1,118 | |
| N/A | 11,260 | 11,221 | |
| Less: | |||
| Lapsed: Operating | (1354) | (369) | |
| N/A | (1354) | (369) | |
| Current year authorities used | $ 9,906 | $ 10,852 | |
4. Accounts Payable and accrued liabilies
The following table presents details of the Veterans Review and Appeal Board's accounts payable and accrued liabilities:
| 2019 | 2018 | ||
|---|---|---|---|
| (in thousands of dollars) | |||
| Accounts payable to other government departments and agencies | $ 6 | $ 23 | |
| Accrued liabilities | 683 | 879 | |
| Total accounts payable and accrued liabilities | $ 689 | $ 902 | |
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 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 2018-2019 expense amounts to $759,770 ($761,244 in 2017-2018). For Group 1 members, the expense represents approximately 1.01 times (1.01 times for 2017-2018) the employee contributions and, for Group 2 members, approximately 1.00 times (1.00 times in 2017-2018) the employee contributions.
Veterans Review and Appeal Board’s responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the Consolidated Financial Statements of the Government of Canada, as the Plan’s sponsor.
(b) 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. 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:
| 2019 | 2018 | ||
|---|---|---|---|
| (in thousands of dollars) | |||
| Accrued benefit obligation - beginning of year | $ 379 | $ 414 | |
| Expenses for the year | (9) | 0 | |
| Benefits paid during the year | (10) | (35) | |
| Accrued benefit obligation - end of year | $ 360 | $ 379 | |
6. Accounts receivable and advances
The following table presents details the Board’s accounts receivable and advances balances:
| 2019 | 2018 | ||
|---|---|---|---|
| (in thousands of dollars) | |||
| Receivables - external parties | 34 | 22 | |
| Receivables - other Government departments and agencies and other receivables | 50 | 0 | |
| Employee advances | 11 | 8 | |
| Sub-total | 95 | 30 | |
| Allowance for doubtful accounts on external receivables | 0 | 0 | |
| Gross accounts receivable | 95 | 30 | |
| Accounts receivable held on behalf of Government | 0 | 0 | |
| Net accounts receivable | $ 95 | $ 30 | |
7. Tangible capital assets
Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:
Asset Class
Informatics
Amortization Period
2-5 years
The following tables present details of tangible capital assets: (in thousands of dollars)
| Cost | ||||
|---|---|---|---|---|
| Capital Asset Class | Opening balance | Acquisitions | Disposals and Write-Offs |
Closing balance |
| Informatics | $ 0 | $ 27 | $ 0 | $ 27 |
| Minor Equipment | 20 | 0 | 0 | 20 |
| Total | $ 20 | $ 27 | $ 0 | $ 47 |
| Accumulated Amortization | ||||
|---|---|---|---|---|
| Capital Asset Class | Opening balance | Amortization | Disposals and Write-Offs |
Closing balance |
| Informatics | $ 0 | $ 0 | $ 0 | $ 0 |
| Minor Equipment | 20 | 0 | 0 | 20 |
| Total | $ 20 | $ 0 | $ 0 | $ 20 |
| Net Book Value | ||
|---|---|---|
| Capital Asset Class | 2019 Net book value |
2018 Net book value |
| Informatics | $ 27 | $ 0 |
| Minor Equipment | 0 | 0 |
| Total | $ 27 | $ 0 |
8. Related party transactions
Veterans Review and Appeal Board is related as a result of common ownership to all government departments, agencies and Crown corporations. Related parties also include individuals who are members of key management personnel or close family members of those individuals, and entities controlled by, or under shared control of, a member of key management personnel or a close family member of that individual.
Veterans Review and Appeal Board enters into transactions with these entities in the normal course of business and on normal trade terms.
a) Common services provided without charge by other government departments:
During the year, 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 at the carrying value in the Veterans Review and Appeal Board’s Statement of Operations and Departmental Net Financial Position as follows:
| N/A | 2019 | N/A | 2018 |
|---|---|---|---|
| (in thousands of dollars) | |||
| Accommodation | $ 679 | $ 666 | |
| Employer's contribution to the health and dental insurance plans | 605 | 709 | |
| N/A | |||
| Total | $ 1,284 | $ 1,375 | |
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 Services and Procurement 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
| 2019 | 2018 | ||
|---|---|---|---|
| (in thousands of dollars) | |||
| Accounts payable - Other government department and agencies | $ 6 | $ 23 | |
| Expenses - Other Government departments and agencies | 158 | 273 | |
| Total | $ 164 | $ 296 | |
Expenses disclosed in (b) exclude common services provided without charge, which are already disclosed in (a).
9. Segmented Information
Presentation by segment is based on the Veterans Review and Appeal Board’s core responsibility. 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) | 2019 | 2018 |
|---|---|---|
| Operating | ||
| Salaries and employee benefits | $ 8,966 | $ 9,741 |
| Transportation and communications | 691 | 888 |
| Accommodation | 679 | 666 |
| Professional and special services | 551 | 459 |
| Utilities, materials and supplies | 95 | 96 |
| Repairs and maintenance | 120 | 159 |
| Other | 132 | 244 |
| Total operating expenses | 11,234 | 12,253 |
| Total expenses | 11,234 | 12,253 |
Net Cost from continuing operations |
$ 11,234 |
$ 12,253 |
Statement of Management Responsibility including Internal Control over Financial Reporting Annex for the Fiscal Year 2018-2019
Annex to the Statement of Management Responsiblity including Internal Control over Financial Reporting
A.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 that:
- 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
- payments have been properly authorized
The Veterans Review and Appeal Board will leverage the results of the periodic core control audits performed by the Office of the Comptroller General. A summary of the results of the assessment conducted during the 2018 to 2019 fiscal year is provided in subsection A.2.
A.2 Assessment results for the 2018 to 2019 fiscal year
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 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.