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SECTION 3 Supplementary Information

3.1 Organizational Information

CSC is organized to provide effective correctional services in a fiscally responsible manner. There are three levels of management: national, regional and local.

National Headquarters

Provides support to the Commissioner and the Executive Committee and delivers services to all of CSC including: provision of information to Parliamentary Committees, Central Agencies and the public; ministerial liaison; communications and citizen engagement; correctional operations; human resource and financial management expert advice; corporate review and audit; performance assurance; policy and planning; program development; research; legal services; and information management.

Regional Headquarters

Provides support to National Headquarters in developing Commissioner's Directives and national programs; develops and implements regional procedures, plans and programs for performance measurement, human resources, financial management, federal/provincial/territorial relations and public consultation; and provides information to the media, elected officials, interest groups and the public.

Institutional/Parole Offices --CSC manages 58 institutions, 16 Community Correctional Centres and 71 Parole Offices. A description of institutional security level classifications (i.e., maximum, medium, minimum and multi-level) is provided in the Glossary, at the end of this report

National, Regional Headquarters

The Commissioner is the Agency Head of the Correctional Service Canada and is accountable to the Minister of Public Safety. An Executive Committee of national and regional officials sets the vision and agenda for correctional services delivery. Specific functions, as of March 2007, are depicted in the following chart and outlined in the paragraphs below:79

Organizational Information

The Senior Deputy Commissioner is accountable to the Commissioner. His or her main role is to support the Commissioner, focus on the management of operational and strategic issues, provide leadership on Aboriginal initiatives and oversight of policy and program development for Aboriginal offenders, oversee the incident investigation process, and act as Commissioner when required. As of July 2007, the Senior Deputy Commissioner acquired additional accountabilities, including for the Information Management Technology Branch and the Performance Assurance Sector.

The five Regional Deputy Commissioners are responsible for the management of CSC operations within their respective regions, implementation of correctional policy, and leadership in providing advice on criminal justice system matters.

The Deputy Commissioner for Women is responsible for effective policy and program development and oversight for program delivery for women offenders.

The Assistant Commissioner, Correctional Operations and Programs is responsible for the integrity of community and institutional operations across CSC for improving the development and delivery of health care,80 security, case management, and program development.

The Assistant Commissioner, Policy and Research is responsible for corporate policy and research in support of the government agenda; federal, provincial, territorial and international relations; and fairness and equity of correctional practices through offender redress mechanisms and delivery of services under the Access to Information Act and the Privacy Act.

The Assistant Commissioner, Performance Assurance is responsible for ensuring mechanisms are in place to analyze, monitor and measure CSC's performance on delivering correctional results. In addition, Performance Assurance is accountable for evaluation, internal disclosure programs, the informal conflict management system, integrated business planning and reporting. The Assistant Commissioner is currently the Senior Values and Ethics Officer.

The Assistant Commissioner, Corporate Services is responsible for technical services, facilities, finance and materiel management and for the Comptroller's Branch.

The Assistant Commissioner, Human Resource Management is responsible for the development of human resource management strategies, management of administrative and human resource activities and interpretation of human resources-related policies, directives and guidelines.

The Assistant Commissioner, Communications and Citizen Engagement is responsible for leadership in the development of the voluntary sector and communication engagement initiatives, for the implementation of communication policy, and for the development and implementation of strategies to improve media and public understanding of CSC's mandate, policies and programs, through outreach activities and public consultation, as well as the design, production, dissemination and evaluation of multi-media products.

The Executive Director, Executive Secretariat is responsible for Ministerial liaison and Parliamentary relations to support the Commissioner and the Minister in fulfilling CSC's mandate.

The Director and General Counsel, Legal Services Unit provides advice on legal risks in the development of correctional policy, programs and services, as well providing legal advice to CSC on litigation.

The Chief Audit Executive is responsible for the effective management of the internal audit function, which is designed to assess and improve the effectiveness of risk management, control and governance processes within CSC.

The Assistant Commissioner, Health Services is responsible for supporting and continually improving the quality of health services provided to inmates, while ensuring that policies are applied consistently. In addition, the Health Services Sector will ensure standardized practices and provide greater integration of physical and mental health services.

Federal Institutions81 by Region and Security Level


Atlantic Region

Quebec Region

Atlantic Institution (Maximum)

Donnacona Institution (Maximum)

Nova Institution for Women (Multi)

Port-Cartier Institution (Maximum)

Shepody Healing Centre (Multi)

Regional Reception Centre82 (Maximum)

Dorchester Penitentiary (Medium)

Joliette Institution (Multi)

Springhill Institution (Medium)

Regional Mental Health Centre (Multi)

Westmorland Institution (Minimum)

Archambault Institution (Medium)

Carlton CCC (Minimum)

Cowansville Institution (Medium)

Carlton Annex CCC (Minimum)

Drummond Institution (Medium)

Newfoundland and Labrador CCC (Min)

La Macaza Institution (Medium)

Parrtown CCC (Minimum)

Leclerc Institution (Medium)

 

Federal Training Centre (Minimum)

 

Monte Saint-Franois Institution (Min)

Ontario Region

Sainte-Anne-des Plaines Institution (Min)

Kingston Penitentiary (Maximum)

Hochelaga CCC (Minimum)

Millhaven Institution (Maximum)

Laferrire CCC (Minimum)

Grand Valley Institution for Women (Multi)

Marcel Caron CCC (Minimum)

Regional Treatment Centre (Multi)

Martineau CCC (Minimum)

Bath Institution (Medium)

Ogilvy CCC (Minimum)

Collins Bay Institution (Medium)

Sherbrooke CCC (Minimum)

Fenbrook Institution (Medium)

 

Joyceville Institution (Medium)

 

Warkworth Institution (Medium)

Prairie Region

Beaver Creek Institution (Minimum)

Edmonton Institution (Maximum)

Frontenac Institution (Minimum)

Edmonton Institution for Women (Multi)

Isabel McNeill (Minimum)

Okimaw Ohci Healing Lodge (Minimum/Medium)

Pittsburgh Institution (Minimum)

Regional Psychiatric Centre (Multi)

Hamilton CCC (Minimum)

Saskatchewan Penitentiary (Multi)

Keele CCC (Minimum)

Bowden Institution (Medium)

Portsmouth CCC (Minimum)

Bowden Annex (Minimum)

 

Drumheller Institution (Medium)

 

Drumheller Annex (Minimum)

Pacific Region

Stony Mountain Institution (Medium)

Kent Institution (Maximum)

Grande Cache Institution (Minimum)

Fraser Valley Institution (Multi)

Riverbend Institution (Minimum)

Pacific Institution (Multi)

Rockwood Institution (Minimum)

Regional Treatment Centre (Multi)

Willow Cree Healing Lodge (Minimum)

Matsqui Institution (Medium)

Grierson Centre (Minimum)

Mission Institution (Medium)

P Skstw (Minimum)

Mountain Institution (Medium)

Osborne CCC (Minimum)

Ferndale Institution (Minimum)

Oskana CCC (Minimum)

Kwikwxwelhp Healing Village (Minimum)

 

William Head Institution (Minimum)

 

Chilliwack CCC (Minimum)

 


3.2 Financial Information

List of Tables Page

Table 1 - Comparison of Planned to Actual Spending (including FTEs)

Table 2 - Resources by Program Activity

Table 3 - Voted and Statutory Items

Table 4 - Services Received Without Charge

Table 6 - Sources of Respendable and Non-respendable Revenue

Table 7 - Revolving Fund

Table 8 - Resource Requirement by Sub-Activity

Table 9-a - User Fees Act

Table 11 - Details on Project Spending

Table 15-a - Financial Statements of Departments and Agencies

Table 15-b - Financial Statements of Departments and Agencies

Table 16 - Response to Parliamentary Committees, Audits and Evaluations (non-financial)

Table 17 - Sustainable Development Strategies (non-financial)

In 2006-07, the budget of the CSC was $1,709,353,000 as approved by Parliament in the Main Estimates. This budget was comprised of the following main elements, excluding CORCAN.


  ($ millions) %

Salaries

877.2

51.3%

Employee Benefit Plans (EBP)

166.7

9.7%

Operating

503.5

29.5%

Capital

162.0

9.5%

 

1,709.4

100%


With regard to the distribution of the budget by Program Activity, the resources were broken down as follows:


  ($ millions) %

Care and Custody

1,225.5

71.7%

Rehabilitation and Case Management

483.9

28.3%

CORCAN

-

N/A

 

1,709.4

100%


Table 1 - Comparison of Planned to Actual Spending (including FTEs)


($ millions) 2004-05 Actual 2005-06 Actual 2006-07
Main Estimates Planned Spending Total Authorities Total Actual

Care and Custody

1,161.0

1,197.4

1,225.5

1,228.1

1,418.8

1,397.9

Rehabilitation and Case Management

425.7

452.9

483.9

487.5

501.6

470.4

CORCAN

-4.1

1.8

0.0

0.0

10.0

-2.8

TOTAL

1,582.6

1,652.1

1,709.4

1,715.6

1,930.4

1,865.5

Less: Non-respendable Revenue

14.9

13.4

N/A

10.9

N/A

9.6

             

Plus: Cost of services received without charge

91.9

91.2

N/A

86.6

N/A

106.4

             

Total Departmental Spending

1,659.6

1,729.9

N/A

1,791.3

N/A

1,962.3

             

Full-Time Equivalents

14,530

14,638

N/A

14,829

N/A

14,803


The increase in expenditures for all Program Activities is mostly due to signed collective agreements and in prices paid (inflation) for basic goods and services.

Explanations of changes between the Estimates and the actual expenditures for 2006-07:

CSC has spent $1,865.5M, or $156.1M in excess of the amount approved in the PART II of the Estimates; i.e., $1,709.4M. In order to analyze the financial results of the Service, additional resources provided via Supplementary Estimates and Treasury Board should be taken into consideration. The following reconciliation is provided:


Main Estimates

 

1,709.4

Plus

   

Operating Expenditures - Supplementary Estimates

 

33.5

Adjustments and Transfers

   

TB Vote 10 (Internal Audit)

0.4

 

TB Vote 15 (Collective Agreements)

161.7

 

Total Adjustments and Transfers

 

162.1

     
     

Increase to Employee Benefit Plan

 

14.3

     
     

Non-Estimates Items

   

CORCAN - ANCAFA

 

10.0

Others (including Crown Assets, etc.)

 

1.1

Total Authority available for use

 

1,930.4

     

Less

   

CORCAN & Crown Assets Disposal

 

(13.8)

     

Total Available to CSC

 

1,916.6

Less

   

Actual

 

(1,865.5)

     

Variance

 

51.1


Table 2 - Resources by Program Activity


2006-07
($ millions) Budgetary Plus: Non-Budgetary Total
Operating 3 Capital Grants Contributions and Other Transfer Payments Total: Gross Budgetary Expenditures Less: Respendable Revenue 4 Total Net Budgetary Expenditures Loans, Investments, and Advances

Care and Custody

                 

Main Estimates

1,083.6

141.5

0.3

0.1

1,225.5

0.0

1,225.5

0.0

1,225.5

Planned spending

1,079.9

147.8

0.3

0.1

1,228.1

0.0

1,228.1

0.0

1,228.1

Total authorities

1,303.0

115.5

0.3

0.0

1,418.8

0.0

1,418.8

0.0

1,418.8

Actual Spending

1,293.5

104.0

0.4

0.0

1,397.9

0.0

1,397.9

0.0

1,397.9

Rehabilitation and
Case Management

                 

Main Estimates

462.0

20.5

0.2

1.2

483.9

0.0

483.9

0.0

483.9

Planned spending

465.6

20.5

0.2

1.2

487.5

0.0

487.5

0.0

487.5

Total authorities

478.8

21.3

0.2

1.3

501.6

0.0

501.6

0.0

501.6

Actual Spending

448.8

20.7

0.0

0.9

470.4

0.0

470.4

0.0

470.4

CORCAN

                 

Main Estimates

73.2

0.0

0.0

0.0

73.2

73.2

0.0

0.0

0.0

Planned spending

73.2

0.0

0.0

0.0

73.2

73.2

0.0

0.0

0.0

Total authorities

80.8

2.4

0.0

0.0

83.2

73.2

10.0

0.0

10.0

Actual Spending

76.9

3.3

0.0

0.0

80.2

83.0

-2.8

0.0

-2.8


Notes:

  1. Numbers in italics denote Total Authorities for 2006-07 (Main Estimates plus Supplementary Estimates and other authorities).
  2. Bolded numbers denote actual expenditures in 2006-07.
  3. Operating includes Contributions to Employee Benefit Plans.
  4. These revenues were formerly called "Revenues Credited to the Vote".

Table 3 - Voted and Statutory Items


($ millions) 2006-07
Vote or
Statutory Item
Truncated Vote or
Statutory Wording
Main
Estimates
Planned
Spending
Total
Authorities
Actual
 

Correctional Service

       

40

Operating Expenditures

1,380.7

1,380.6

1,601.6

1,562.6

45

Capital Expenditures

162.0

168.3

136.7

124.5

S

Contributions to employee benefit plan

166.7

166.7

181.0

181.0

S

CORCAN Revolving Fund

   

10.0

-2.8

S

Spending of proceeds from

Disposal of Crown Assets

   

1.1

0.2

S

Refund of previous year's

revenues

   

0.0

0.0

 

TOTAL

1,709.4

1,715.6

1,930.4

1,865.5


Table 4 - Services Received Without Charge


($ millions) 2006-07
Actual
Spending

Accommodation provided by Public Works and Government Services Canada (PWGSC)

10.0

Contributions covering employers' share of employees' insurance premiums and expenditures paid by TBS (excluding revolving funds)

88.7

Salary and associated expenditures of legal services provided by Justice Canada

1.9

Worker's compensation coverage provided by Social Development Canada

5.8

Total 2006-07 Services received without charge

106.4


Table 5 - Loans, Investments and Advances (Non-Budgetary)

Not Applicable.

Table 6 - Sources of Respendable and Non-respendable Revenue

Respendable Revenue


($ millions) Actual
2004-05
Actual
2005-06
2006-07
Main Estimates Planned Revenues Total Authorities 1 Actual


Care and Custody

0.0

0.0

0.0

0.0

0.0

0.0

Rehabilitation and Case Management

0.0

0.0

0.0

0.0

0.0

0.0

CORCAN
Revolving Fund

77.7

69.1

73.2

73.2

73.2

83.0

Total Respendable Revenues 2

77.7

69.1

73.2

73.2

73.2

83.0


Non-Respendable Revenue


($ millions) Actual
2004-05
Actual
2005-06
2006-07
Main Estimates Planned Revenues Total Authorities 1 Actual


Care and Custody

10.9

12.0

N/A

9.4

6.8

8.6

Rehabilitation and
Case Management

4.0

1.4

N/A

1.5

3.6

1.0

CORCAN
Revolving Fund

0.0

0.0

N/A

0.0

0.0

0.0

Total Non-Respendable

Revenues 3

14.9

13.4

N/A

10.9

10.4

9.6


Notes:

  1. Main Estimates plus Supplementary Estimates and other authorities.
  2. The source of this revenue is the CORCAN Revolving Fund. Revenues are mainly from the sale of products made by inmates.
  3. The main sources of these revenues are: offender canteen sales, revenues such as contracted offender temporary detention; offender board and lodgings; and miscellaneous revenues.

Table 7 - Revolving Fund

CORCAN Revolving Fund

Statement of Operations


($ millions) Actual
2004-05
Actual
2005-06
2006-07
Main
Estimates
Planned
Spending
Total
Authorities

Actual*

           

Revenue

77.6

69.9

73.2

73.2

73.2

82.9

             

Expenses

           
             

Salaries & employee benefits

28.2

34.2

27.9

27.9

27.9

34.1

Depreciation

1.2

1.3

1.4

1.4

1.4

1.5

Repairs & maintenance

1.9

1.3

1.6

1.6

1.6

2.6

Admin & support services

10.7

8.9

10.2

10.2

10.2

9.5

Utilities, materials & supplies

32

25.1

32.1

32.1

32.1

33.1

           

74.0

70.8

73.2

73.2

73.2

80.8

Net results

3.6

(0.9)

0.0

0.0

0.0

2.1


Since the table above refers to the Revolving Fund's operating surplus or deficit and not to cash requirements, the Fund has been calculated through accrual accounting. Therefore, the cash expenditures in the estimates do not affect the operating balance, and other items that must be considered when calculating the surplus or deficit do not require a direct cash outlay. The two can be reconciled as follows:

Statement of Cash Flows


($ millions) Actual 2004-05 Actual 2005-06 2006-07
Main Estimates Planned Spending Author-ized Actual

Net results

3.6

(0.9)

0.0

0.0

0.0

2.1

             

Adjustments for non-cash item:

           

Provision for termination benefits

0.9

0.6

0.8

0.8

0.8

0.7

Amortization

1.1

1.3

1.4

1.4

1.4

1.5

Other

(0.1)

0.1

0.0

0.0

0.0

0.0

             

Change in non-cash working capital

           

Accounts receivable

2.4

1.0

2.3

2.3

2.3

0.5

Inventories

1.2

(2.4)

1.2

1.2

1.2

0.6

Employee termination
benefits payouts

(0.3)

(0.4)

0.4

0.4

0.4

(0.4)

Accounts payable

(2.4)

3.4

(1.8)

(1.8)

(1.8)

0.5

Vacation pay and salary accrual

2.7

(2.1)

0.0

0.0

0.0

0.1

Deferred revenue

0.0

0.0

0.0

0.0

0.0

0.5

             

Investing activities:

           

Net capital asset acquisitions

(2.9)

(2.2)

(4.3)

(4.3)

(4.3)

(3.4)

             

Increase (decrease) in accumulated net charge against the Fund's authority (ANCAFA)

6.2

(1.6)

0.0

0.0

0.0

2.7


Projected Use of Authority


($ millions) Actual 2004-05 Actual 2005-06 2006-07
Main Estimates Planned Spending Author-ized Actual

Authority

5.0

5.0

5.0

5.0

5.0

5.0

             

Drawdown:

           

ANCAFA balance as
at April 1

7.1

13.3

11.6

11.6

11.6

11.6

Increase (decrease) in ANCAFA

6.2

(1.7)

0.0

0.0

0.0

2.7

ANCAFA balance as
at March 31

13.3

11.6

11.6

11.6

11.6

14.3

Net PAYE/RAYE adjustment to authority

(4.3)

(4.4)

     

(6.4)

 

9.0

7.2

11.6

11.6

11.6

7.9

Unused authorities
carried forward

14.0

12.2

16.6

16.6

16.6

12.9


Table 8 - Resource Requirement by Sub-Activity


2006-07 ($ millions)

CARE AND CUSTODY

 

SECURITY

 

Planned Spending

581.4

Actual Spending

790.6

HEALTH

 

Planned Spending

144.5

Actual Spending

156.7

INSTITUTIONAL SERVICES

 

Planned Spending

110.1

Actual Spending

105.0

ACCOMMODATION

 

Planned Spending

392.1

Actual Spending

345.6

REHABILITATION AND CASE MANAGEMENT

 

CASE MANAGEMENT

 

Planned Spending

282.4

Actual Spending

276.7

PROGRAM DEVELOPMENT & DELIVERY

 

Planned Spending

178.9

Actual Spending

171.1

INMATE PAY

 

Planned Spending

26.2

Actual Spending

22.6

CORCAN (Revolving Fund)

 

Planned Spending

0.0

Actual Spending

(2.8)


Note: For Health, Institutional Services, Accommodation and Case Management, the difference between planned and actual spending is mainly due to the in-year adjustments such as signed collective agreements and other new initiatives.

Table 9-a - User Fees Act


($ thousands)

2006-07

Planning Years

A.
User Fee

Fee Type

Fee
Setting
Authority

Date Last
Modified

Forecasted
Revenue

Actual
Revenue

Full
Cost

Performance
Standard

Performance
Results

Fiscal Year

Forecasted Revenue

Estimated Full Cost

Fees charged for the processing of access requests under the Access to Information Act (ATIA)

R

Access to Information Act

April 2004

2.8

2.3

2,100.0

Requests must be responded to within 30 working days. Responses may be extended as per section 9. In accordance with the Federal Accountability Act, TBS policies presently being modified. For more info, see ATI legislation on Justice Website

97% on time

2007-08

2008-09
2009-10

3.3
3.3
3.3

2,400
2,400
2,400

     

Sub-Total (O)

2.8

2.3

2,100.0

   

2007-08

3.3

2,400

Sub-Total (R)

0.0

0.0

0.0

2008-09

3.3

2,400

       

2009-10

3.3

2,400

Total

2.8

2.3

2,100.0

Total

9.9

7,200

B. Date Last Modified : N/A

C. Other Information: N/A


Table 9-b - Policy on Service Standards for External Fees

Supplementary information on Service Standards for External Fees can be found at: www.tbs-sct.gc.ca/rma/dpr3/06-07/index_e.asp

Table 10 - Progress Against the Department's Regulatory Plan

Not Applicable.

Table 11 - Details on Project Spending

Capital Projects by Program Activity ($ millions)


Program Activity Current
Estimated
Total
Cost
Actual
2004-
05
Actual
2005-
06
2006-07
Main
Estimates
Total Planned
Spending
Total
Authority 1
Actual

Care and Custody

             

A. New Accommodation Projects

             

RHC Pacific Expansion

71.5

11.5

0.1

0.0

0.0

0.0

0.0

Archambault New CRSM & Redevelopment

33.0

0.5

0.4

0.7

1.8

0.7

0.1

Sask Pen 96-Bed Maximum Unit

21.7

0.0

0.0

7.1

6.0

7.1

6.3

Kent 96-Bed Maximum Unit

23.1

0.0

0.0

6.1

0.5

6.1

0.6

             

B. Major Asset Preservation

             

Springhill Institution Refurbish/ Replace

32.2

7.0

7.9

9.8

10.0

9.8

9.2

Collins Bay Refurbish/ Replace

57.6

2.0

22.0

20.0

23.0

20.0

19.1

Cowansville Refurbish/ Replace

49.5

0.3

0.6

4.4

14.8

4.4

4.2

Saskatchewan Pen Refurbish/ Replace

180.0

0.6

1.2

0.0

0.0

0.0

0.0

             

Total Capital Spending

 

21.9

32.2

48.1

56.1

48.1

39.5


Notes:

  1. 1 Main Estimates plus Supplementary Estimates and other authorities.
    2 CSC's delegation authority level is $18 million according to TB decision of December 14, 1995 ; therefore, only capital projects with total estimated value of $18 million or above have been individually listed.

Table 12 - Status Report on major Crown Projects

Not Applicable.

Table 13 - Details on Transfer Payment Programs (TPPs)

Not Applicable.

Table 14 - Conditional Grants (Foundations)

Not Applicable.

Table 15-a - Financial Statements of Departments and Agencies

(including Agents of Parliament)

CORRECTIONAL SERVICE CANADA

Statement of Management Responsibility

4


CORRECTIONAL SERVICE CANADA

Statement of Operations (unaudited)

For the year-ended March 31

(in thousands of dollars)


   

2007

(restated)

2006

   

Care and Custody

Rehabilitation
and Case Management

Total

Total

Transfer payments

       
 

Non-profit organizations

-

846

846

1,960

 

Individuals

356

-

356

252

 

Other countries and international organizations

-

55

55

80

 

Total transfer payments

356

901

1,257

2,292



Operating expenses

     
 

Salaries and employee benefits

1,047,379

391,556

1,438,935

1,200,479

 

Professional and special services

140,699

66,010

206,709

199,262

 

Utilities

104,560

11,901

116,461

115,292

 

Amortization

73,262

3,758

77,020

74,067

 

Repairs and maintenance

36,728

14,818

51,546

44,590

 

Travel

19,631

17,099

36,730

37,176

 

Payment in lieu of taxes

26,651

-

26,651

26,773

 

Machinery and equipment

10,750

12,601

23,351

26,958

 

Inmate pay

-

19,581

19,581

19,018

 

Cost of goods sold

-

14,754

14,754

11,340

 

Accommodation

3,287

6,677

9,964

10,143

 

Relocation

2,492

1,090

3,582

3,145

 

Loss on disposal of tangible capital assets

603

421

1,024

3,397

 

Other

8,505

3,301

11,806

9,936

 

Total operating expenses

1,474,547

563,567

2,038,114

1,781,846

           
Total Expenses 14,474,903 564,468 2,039,371 1,784,138


Revenues

       
 

Sales of goods and services

2,274

48,539

50,813

39,921

 

Gains on sales of tangible capital assets

866

4

870

823

 

Other

4,522

607

5,129

4,168

           

Total Revenues

7,662

49,150

56,812

44,912

           

Net Cost of Operations

1,467,241

515,318

1,982,559

1,739,226


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

CORRECTIONAL SERVICE CANADA

Statement of Financial Position (unaudited)

At March 31

(in thousands of dollars)


   

2007

(restated)
2006

       
Assets    

Financial Assets

   
 

Accounts receivable, loans and advances (Note 4)

21,361

11,684

 

Inventory held for resale

9,215

9,860

 

Total financial assets

30,576

21,544

       

Non-financial Assets

   
 

Prepaid expenses

344

2,316

 

Inventory not for resale

19,936

18,539

 

Tangible capital assets (Note 5)

1,252,382

1,246,726

 

Total non-financial assets

1,272,662

1,267,581

     

Total

1,303,238

1,289,125

       

Liabilities and Equity of Canada

   

Liabilities

   
 

Accounts payable and accrued liabilities

187,788

142,912

 

Employee severance benefits (Note 6)

132,750

117,961

 

Vacation pay and compensatory leave

52,196

48,646

 

Environmental liabilities (Note 8)

13,776

12,964

 

Inmate trust fund (Note 7)

12,271

11,459

 

Claims and litigations (Note 8)

5,519

3,860

 

Total Liabilities

404,300

337,802

       

Equity of Canada

898,938

951,323

Total

1,303,238

1,289,125


Contingent liabilities (Note 8)

Contractual obligations (Note 9)

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

CORRECTIONAL SERVICE CANADA

Statement of Equity of Canada (unaudited)

For the year ended March 31

(in thousands of dollars)


   

2007

(restated)
2006

     

Equity of Canada, beginning of year

951,323

954,380

 

Correction of previous years' severance benefit liability (Note 11)

-

4,001

 

Correction of previous years' tangible capital assets (Note 11)

-

(17,864)

Equity of Canada, adjusted beginning of year

951,323

940,517

 

Net cost of operations

(1,982,559)

(1,739,226)

 

Current year appropriations used (Note 3)

1,865,543

1,652,095

 

Revenue not available for spending

(8,715)

(10,680)

 

Change in net position in the Consolidated Revenue Fund (Note 3)

(33,020)

17,289

 

Services received without charge from other government departments (Note 10)

106,366

91,228

Equity of Canada, end of year

898,938

951,323


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

CORRECTIONAL SERVICE CANADA

Statement of Cash Flow (unaudited)

For the year ended March 31

(in thousands of dollars)


   

2007

(restated)
2006

       

Operating activities

   

Net cost of operations

1,982,559

1,739,226

Non Cash items

   
 

Amortization of tangible capital assets

(77,020)

(74,067)

 

Loss on disposal and write-down of tangible capital assets

(154)

(2,574)

 

Services provided without charge

(106,366)

(91,228)

 

Capital asset adjustments

-

(1,602)

Variations in Statement of Financial Position:

   
 

(Decrease) increase in accounts receivable and advances

9,677

(19,474)

 

(Decrease) increase in prepaid expenses

(1,972)

(63)

 

Increase in inventories

752

3,153

 

Decrease (increase) in liabilities

(66,498)

15,397

Cash used by operating activities

1,740,978

1,568,768

       

Capital investment activities

   
 

Acquisitions of tangible capital assets

83,700

90,859

 

Proceeds from disposal of tangible capital assets

(870)

(823)

Cash used by capital investment activities

82,830

90,036

       

Financing activities

   

Cash Provided by Government of Canada

1,823,808

1,658,804


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

CORRECTIONAL SERVICE CANADA

Notes to the Financial Statements (unaudited)

1. Authority and Objectives

The constitutional and legislative framework that guides the Correctional Service of Canada (CSC) is set out by the Constitution Act 1982 and the Corrections and Conditional Release Act (CCRA).

The Correctional Service of Canada (CSC), as part of the criminal justice system and respecting the rule of law, contributes to public safety by actively encouraging and assisting offenders to become law-abiding citizens, while exercising reasonable, safe, secure and humane control. It delivers its mandate under two major program activities:

  • Care and Custody: Administering a sentence through reasonable, safe and humane custody;
  • Rehabilitation and Case Management: Assisting in the safe rehabilitation and reintegration of offenders into communities.

2. Summary of Significant Accounting Policies

The financial statements have been prepared in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector.

Significant accounting policies are as follows:

a) Parliamentary appropriations

CSC is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to the department do not parallel financial reporting according to generally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the statement of operations and in the statement of financial position are not necessarily the same as those provided through appropriations from Parliament. Note 3 provides a high-level reconciliation between the bases of reporting.

b) Consolidation

These financial statements include the accounts of CSC including its revolving fund CORCAN. All of the accounts of this sub-entity have been consolidated with those of CSC and all inter-organizational balances and transactions have been eliminated.

c) Net Cash Provided by Government

CSC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada . All cash received by the department is deposited to the CRF and all cash disbursements made by the department 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.

d) Change in Net Position in the Consolidated Revenue Fund (CRF)

Change in net position in the Consolidated Revenue Fund is the difference between the net cash provided by Government and appropriations used in a year, excluding the amount of non-respendable revenue recorded by the department. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.

e) Revenues

Revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.

f) Expenses

Expenses are recorded on the accrual basis:

  • Grants are recognized in the year in which the conditions for payment are met. In the case of grants which do not form part of an existing program, the expense is recognized when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements;
  • a Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement;
  • a Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment;
  • a Services provided without charge by other government departments for accommodation, the employer's contribution to the health and dental insurance plans, worker's compensation coverage and legal services are recorded as operating expenses at their estimated cost.

g) Employee future benefits

a Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer plan administered by the Government of Canada. CSC's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Current legislation does not require CSC to make contributions for any actuarial deficiencies of the Plan.

a Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. 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.

h) Accounts and loans receivables from external parties

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

i) 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 an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

j) Environmental liabilities

Environmental liabilities reflect the estimated costs related to the management and remediation of environmentally contaminated sites. Based on management's best estimates, a liability is accrued and an expense recorded when the contamination occurs or when the department becomes aware of the contamination and is obligated, or is likely to be obligated to incur such costs. If the likelihood of the department's obligation to incur these costs is not determinable, or if an amount cannot be reasonably estimated, the costs are disclosed as contingent liabilities in the notes to the financial statements.

k) Inventories

a Inventories held for resale include raw materials, finished goods and work-in-progress. They belong to the CORCAN revolving fund and are valued at the lower of cost and net realizable value.

a Inventories not for resale consist of material and supplies held for future program delivery. They are valued at cost. If they no longer have service potential, they are written-off.

l) 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. CSC 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

Sub-asset class

Amortization Period

Buildings

Buildings

25 to 40 years

Works and infrastructure

Works and infrastructure

20 to 25 years

Machinery & equipment

Machinery & equipment

10 years

 

Informatics hardware

3 to 4 years

 

Informatics software

3 to 10 years

 

Arms and weapons for defence

10 years

 

Other equipment

10 years

Vehicles

Motor vehicles (non-military)

5 years

 

Other vehicles

10 years

Leasehold improvements

Leasehold improvements

Term of lease

Assets under construction

Buildings

Once in service, 25 to 40 years

 

Informatics software

Once in service, 3 to 10 years

Assets under capital leases

Assets under capital leases

In accordance with asset type


m) Measurement uncertainty

The preparation of these financial statements in accordance with Treasury Board accounting policies, which are consistent with Canadian generally, accepted accounting principles for the public sector 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 contingent liabilities, environmental liabilities, the liability for employee severance 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 Appropriations

The Department receives most of its funding through annual Parliamentary appropriations. Items recognized in the statement of operations and the statement of financial position in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, the Department 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 appropriations used:

(in thousands of dollars)

2007

2006

       

Net cost of operations

1,982,559

1,739,226

       

Adjustments for items affecting net cost of operations but not affecting appropriations:

Add (Less):

 

 

 

Amortization

(77,020)

(74,067)

 

Vacation pay and compensatory leave

(3,550)

(4,195)

 

Prepaid expenses

-

(63)

 

Environmental liabilities and other provisions

(2,471)

760

 

Employee severance benefits

(14,789)

(14,799)

 

Loss on disposal and write-down of tangible capital assets

(154)

(2,574)

 

Legal services

(2,029)

(2,131)

 

Services provided without charge

(106,366)

(91,228)

 

Revenue not available for spending

8,715

10,680

 

Other

(4,107)

(1,530)

   

(201,771)

(179,047)

       

Adjustments for items not affecting net cost of operations but affecting appropriations:

 

Add (Less):

   
 

Acquisitions of tangible capital assets

83,700

90,859

 

Inventory

752

1,057

 

Prepaid expenses

303

-

   

84,755

91,916

       

Current year appropriations used

1,865,543

1,652,095



b) Appropriations provided and used:

   

(in thousands of dollars)

2007

2006

Vote 40 (35) - Operating expenditures

1,601,550

1,388,791

Vote 45 (40) - Capital expenditures

136,740

138,217

Statutory amounts

192,130

177,386

Less:

   
 

Authorities available for future years

13,746

12,423

 

Lapsed appropriations: Operating

38,930

12,423

 

Lapsed appropriations: Capital

12,201

21,374

Current year appropriations used

1,865,543

1,652,095



c) Reconciliation of net cash provided by Government to current year appropriations used:

(in thousands of dollars)

2007

2006

Net cash provided by Government

1,823,808

1,658,804

Revenue not available for spending

8,715

10,680

Change in net position in the Consolidated Revenue Fund

   
 

Variation in accounts receivable and advances

(9,639)

19,484

 

Variation in accounts payable and accrued liabilities

44,876

(34,149)

 

Other adjustments

(2,217)

(2,724)

Current year appropriations used

1,865,543

1,652,095


4. Accounts Receivable, Loans and Advances


The following table presents details of cash, accounts receivable, loans and advances:

(in thousands of dollars)

2007

2006

Receivables from other Federal Government departments and agencies

13,004

5,519

Receivables from external parties

8,409

6,317

Employee advances

331

336

Parolee loans

4

5

 

21,748

12,177

Less:
allowance for doubtful accounts on external receivables and parolee loans

(387)

(493)

Total

21,361

11,684


5. Tangible Capital Assets

(in thousands of dollars)


 

Cost

Accumulated amortization

   

Capital asset class

(restated)
Opening Balance

Acquis-itions

Dis-posals and write-offs

Transfer of assets under con-struction and adjust-ments

Closing Balance

Opening Balance

Amorti-zation

Dis-posals, write-offs and adjust-ments

Closing Balance

2007
Net book Value

(restated)
2006
Net book value


Land

12,467

-

-

-

12,467

-

-

-

-

12,467

12,467


Buildings

1,384,090

-

-

70,437

1,454,527

505,545

42,123

-

547,668

906,859

878,545

Works and infrastructure

408,103

-

-

349

408,452

238,985

17,698

-

256,683

151,769

169,118

Machinery and equipment

152,837

15,957

14,626

47,464

201,632

105,503

12,937

13,847

104,593

97,039

47,334


Vehicles

42,343

4,396

3,583

-

43,156

25,914

4,131

3,338

26,707

16,449

16,429

Leasehold improvements

1,380

1,301

-

-

2,681

268

131

-

399

2,282

1,112

Assets under construction

121,721

62,046

-

(118,250)

65,517

-

-

-

-

65,517

121,721


Total

2,122,941

83,700

18,209

0

2,188,432

876,215

77,020

17,185

936,050

1,252,382

1,246,726


Amortization expense for year ended March 31, 2007 is $77,020,000 (2006 - $74,067,000).

6. Employee Benefits

a) Pension benefits:

CSC's employees participate in the Public Service Pension 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/Qubec Pension Plans benefits and they are indexed to inflation.

Both the employees and the department contribute to the cost of the Plan. The 2006-2007 expense amounts to $136,752,791 ($123,760,134 in 2005-2006), which represents approximately 2.2 times (2.6 in 2005-2006) the contributions by employees.

The department'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:

CSC provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future appropriations. Information about the severance benefits, measured as of March 31, is as follows:


(in thousands of dollars)

2007

(restated)
2006

Accrued benefit obligation, beginning of year

117,691

103,162

Expenses for the year

34,333

29,736

Benefits paid during the year

(19,544)

(14,937)

Accrued benefit obligation, end of year

132,750

117,961


7. Inmate trust fund

Pursuant to section 111 of the Corrections and Conditional Release Regulations, the Inmate Trust Fund is credited with moneys received from inmates at the time of incarceration, net of earnings of inmates from employment inside institutions, moneys received for inmates while in custody, moneys received from sales of hobby craft, money earned through work while on day parole, and interest. Payments to assist in the rehabilitation of inmates are also charged to this account. Receipts to the Inmate Trust Fund totalled $37,809,500 ($36,312,608 in 2005-2006), while payments totalled $36,998,114 ($35,593,251 in 2005-2006).


(in thousands of dollars)

2007

2006

Beginning balance

11,460

10,740

Receipts

37,809

36,313

Disbursements

(36,998)

(35,593)

Ending Balance

12,271

11,460


8. Contingent Liabilities

a) Contaminated sites

Liabilities are accrued to record the estimated costs related to the management and remediation of contaminated sites where the department is obligated or likely to be obligated to incur such costs. The department has identified approximately 67 sites (same as in 2006) where such action is possible and for which a liability of $13,775,571 ($12,964,000 in 2006) has been recorded. CSC has estimated additional clean-up costs of $22,039,000 ($24,239,000 in 2006) that are not accrued, as these are not considered likely to be incurred at this time. CSC's ongoing efforts to assess contaminated sites may result in additional environmental liabilities related to newly identified sites, or changes in the assessments or intended use of existing sites. These liabilities will be accrued by the department in the year in which they become known.

b) Claims and litigations

Claims have been made against the department in the normal course of operations. Legal proceedings for claims totalling approximately $5,519,500 ($3,859,500 in 2006) were still pending at March 31, 2007. Some of these potential liabilities 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 in the financial statements.

9. Contractual Obligations

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


(in thousands of dollars)

2008

2009

2010

2011

2012 and thereafter

Total

Acquisition of other goods
and services

25,900

10,353

3,331

2,685

-

42,269


10. Related Party Transactions

CSC is related, as a result of common ownership, to all Government of Canada departments, agencies, and Crown corporations. CSC enters into transactions with these entities in the normal course of business and on normal trade terms. Also, during the year, CSC received services that were obtained without charge from other Government departments as presented in part a). In addition, as at March 31, CSC had accounts receivable and accounts payable with other government departments and agencies as presented in part b).

a) Services provided without charge:

During the year, CSC received without charge from other departments services such as accommodation, legal fees, employer's contribution to the health and dental insurance plans and worker's compensation coverage. These services without charge have been recognized in CSC's Statement of Operations as follows:


(in thousands of dollars)

2007

2006

Accommodation

9,964

10,143

Employer's contribution to the health and dental insurance plans

88,696

72,894

Legal services

1,942

1,973

Worker's compensation

5,764

6,218

Total

106,366

91,228


The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge. The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada, are not included as an expense in CSC's Statement of Operations.

b) Payables and receivables outstanding at year-end with related parties:


(in thousands of dollars)

2007

2006

Accounts receivable from other government departments and agencies

13,004

5,519

Accounts payable to other government departments and agencies

41,848

16,107


11. Correction of previous year's errors

In 2006-2007, CSC reviewed its tangible capital assets balances. During that exercise, prior years' errors were detected. The tangible capital asset balance was overstated. As a result, an adjustment of $20,757,000 was made. The equity was restated for $17,864,000 and the statement of operations for 2005-2006, for $2,893,000.

In addition, an adjustment of $4,001,000 was made to equity for an overstatement of the severance liability.

12. Comparative Information

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

Table 15-b - Financial Statements of Departments and Agencies

(including Agents of Parliament)

CORCAN Revolving Fund

AUDITORS' REPORT

To the Commissioner of Correctional Services Canada

We have audited the statement of financial position of CORCAN Revolving Fund as at March 31, 2007 and the statements of operations, net assets and cash flows for the year then ended. These financial statements have been prepared to comply with Section 6.4 of the Treasury Board of Canada's policy on special revenue spending authorities. These financial statements are the responsibility of CORCAN's Revolving Fund management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects, the financial position of CORCAN Revolving Fund as at March 31, 2007 and the results of its operations and its cash flows for the year then ended in accordance with the basis of accounting as described in note 2 to the financial statements.

These financial statements, which have not been, and were not intended to be, prepared in accordance with Canadian generally accepted accounting principles, are solely for the information and use of the management of the Revolving Fund and the Treasury Board. The financial statements are not intended to be and should not be used by anyone other than the specified users or for any other purpose.

7

Ottawa, Canada,

May 23, 2007.

 

CORCAN Revolving Fund

Statement of Financial Position

As at March 31

(in thousands of dollars)


 

2007

2006

ASSETS

   

Current

   

Accounts receivable (note 4)

4,299

4,753

Inventories (note 5)

9,215

9,861

Other

181

231

 

13,695

14,845

Capital Assets (note 6)

10,467

8,571

 

24,162

23,416

     

LIABILITIES

   

Current

   

Accounts payable (note 7)

8,476

8,036

Deferred revenue

727

284

Vacation pay and salary accrual

2,447

2,306

 

11,650

10,626

     

Long-Term

   

Employee termination benefits (note 8)

3,890

3,602

Commitments and contingencies (note 9)

   
     

Net assets (note 10)

8,622

9,188

 

24,162

23,416


The accompanying notes are an integral part of the financial statements.

CORCAN Revolving Fund

Statement of Operations and Net Assets

Year ended March 31

(in thousands of dollars)


 

2007

2006

Revenues (note 11)

60,307

46,477

Cost of goods sold (note 11)

66,253

56,490

 

(5,946)

(10,013)

     

OTHER REVENUES

   

Training and correctional fees (note 3)

22,262

22,598

Miscellaneous

332

581

 

22,594

23,179

     

EXPENSES

   

National/regional headquarters

9,038

9,008

Employment and employability programs

3,331

3,105

Selling and marketing

2,172

1,961

 

14,541

14,074

Net results

2,107

(908)

     

Net assets, beginning of year

9,188

8,499

Net financial resources used (provided) and
change in the ANCAFA account during the year

(2,673)

1,597

Net assets, end of year (note 10)

8,622

9,188


The accompanying notes are an integral part of the financial statements.

CORCAN Revolving Fund

Statement of Cash Flows

Year ended March 31

(in thousands of dollars)


    2007 2006
     

OPERATING ACTIVITIES

   

Net Results

2,107

(908)

Adjustments for non-cash items:

   
 

Provision for termination benefits

701

638

 

Amortization

1,516

1,298

 

Loss on disposal of capital assets

3

64

 

Other

(1)

16

   

4,326

1,108

Changes in non-cash working capital:

   
 

Accounts receivable

454

1,042

 

Inventories

646

(2,449)

 

Other

50

(58)

 

Employee termination benefits

(412)

(375)

 

Accounts payable

440

3,436

 

Deferred revenue

443

(1)

 

Vacation pay and salary accrual

141

(2,069)

Net Financial resources used by operating activities

6,088

634

INVESTING ACTIVITIES

   

Capital asset acquisitions

(3,419)

(2,265)

Proceeds on disposal of capital assets

4,

34

Net financial resources used by investing activities

(3,415)

(2,231)

Net financial resources provided (used) and change in
accumulated net charge against the Fund's authority

2,673

(1,597)

Accumulated net charge against the Fund's authority,
beginning of year

11,707

13,304

Accumulated net charge against the Fund's authority,
end of year

14,380

11,707


The accompanying notes are an integral part of the financial statements.

CORCAN Revolving Fund

Notes to Financial Statements

March 31, 2007

1. Authority and Purpose

CORCAN Revolving Fund is a special operating agency within Correctional Service Canada financed by way of a Revolving Fund. The CORCAN Revolving Fund ("CORCAN" or "the Fund") was established under Appropriation Act No. 4, 1991-92, which authorized the operation of the Fund effective April 1, 1992 in accordance with terms and conditions prescribed by Treasury Board. CORCAN Revolving Fund's purpose is to aid in the safe reintegration of offenders into Canadian society by providing employment and training opportunities to offenders incarcerated in federal penitentiaries and, for brief periods, after they are released into the community. The Fund has a continuing non-lapsing authority from Parliament to make payments out of the Consolidated Revenue Fund for working capital, capital acquisitions and temporary financing of accumulated operating deficits, the total of which is not to exceed $5,000,000 at any time. An amount of $15,218,000 representing Net Assets assumed by the Fund was charged to this authority when the Fund became operative on April 1, 1992. The Fund is a non-taxable entity.

2. Significant Accounting Policies

The accompanying financial statements have been prepared in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector, except for the following: (1) The obligation for employee termination benefits is based on management's estimate of the liability and not an actuarial valuation; and (2) The liability for employee termination benefits earned prior to the creation of the Fund will not to be recorded until 2008, the fifteenth anniversary of the Fund (see note 8).

The significant accounting policies are as follows:

a) Recognition of revenue and expense

Except as noted below, the Fund recognizes revenue when persuasive evidence of a final agreement exists, delivery has occurred and services have been rendered, the selling price is fixed or determinable and collectibility is reasonably assured.

Revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues. Revenues that have been received but not yet earned are recorded as deferred revenues.

For multi-year construction contracts in excess of $100,000, the percentage of completion method of accounting is used. Degree of completion is determined by comparing direct costs incurred to date to the total direct costs anticipated for the entire contract. The effect of changes to the total estimated income for each contract is recognized in the period in which the determination is made and losses, if any, are recognized fully when anticipated. Revenues and profits on construction contracts of up to $100,000 are recognized only when the contract has been substantially completed.

Expenses are recorded in the period they are incurred. Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.

b) Net cash provided by government

CORCAN operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada . All cash received by CORCAN is deposited to the CRF and all cash disbursements made by CORCAN 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) Accounts receivable

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

d) Inventories

Raw materials, Finished Goods and Work in Process inventories are valued at the lower of cost and net realizable value. The Fund makes provisions for excess and obsolete inventory on a site-by-site basis.

e) Capital assets

Capital assets with an initial cost of $10,000 or greater are recorded at cost and are amortized on a straight-line basis over their estimated useful lives commencing on the month after they are put in service, as follows:


Equipment

10 years

Office furniture and equipment

10 years

Leasehold improvement

Straight line over the life of the lease

Vehicle fleet

5 years

Computer equipment

3 years


f) Employee future benefits

i. Pension plan: Employees of CORCAN Revolving Fund are covered by the Public Service Superannuation Act and the Supplementary Retirement Benefits Act. The Government of Canada's portion of the pension cost is included in the employee benefits assessed against the Fund. The actual payment of the pension is made from the Public Service Superannuation and Supplementary Retirement Benefits accounts. Pension plan expense is recognized when it is paid. Contributions to the Plan are charged to expenses in the year incurred and represent CORCAN's total obligation to the Plan. Current legislation does not require CORCAN to make contributions for any actuarial deficiencies of the Plan.

ii. Severance benefits: Employees of CORCAN Revolving Fund are entitled to severance benefits under labour contracts or conditions of employment. Severance benefits earned by employees of CORCAN Revolving Fund prior to April 1, 1992 are considered a liability of the Treasury Board and, accordingly, have not been recorded in the accounts of the Fund. The financial statements of CORCAN Revolving Fund include the severance benefits earned by the employees of CORCAN since the inception of the Fund. These benefits are accrued as employees render the services necessary to earn them. 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. CORCAN will account for the pre 1992 severance benefit liability of $1,255,000 on April 1, 2007.

g) Measurement uncertainty

The preparation of these financial statements in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector 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 severance benefits, the provision for warranty 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.

h) Sick leave

Employees are permitted to accumulate unused sick leave. However, such leave entitlements may only be used in the event of an illness. As per current Government practice, unused sick leave upon employee termination is not payable to the employee. Accordingly, no amount has been accrued in these financial statements.

i) Warranty provision

Potential warranty costs associated with products are recorded when the products are sold.

j) Financial instruments

The fair value of the financial instruments approximates costs unless otherwise specified. The Fund's financial instruments consist of accounts receivable, accounts payable, accrued liabilities and long-term debt. It is management's opinion that the Fund is not exposed to significant interest, currency or credit risks arising from those instruments.

3. Related Party Transactions

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

During the year, Correctional Service Canada, the parent organization of CORCAN, has provided and is to continue to provide CORCAN Revolving Fund with the use of existing infrastructure including buildings, shops and farms as well as maintenance of said facilities and human resource services. The costs of these services are not included as an expense in the CORCAN's Statement of Operations and Net Assets.

The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge. The costs of these services, which include payroll, cheque issuance services and legal services provided by Public Works, Government Services Canada and Justice Canada, are not included as an expense in the CORCAN's Statement of Operations and Net Assets.

CORCAN Revolving Fund entered into the following transactions with the Correctional Service Canada ("CSC") and all Other Government Departments:


 

2007

2006

 

(in thousands of dollars)

Correctional Service Canada

   

Trade revenues

14,524

12,470

Training, correctional and other fees

22,262

22,598

Other Government Departments

   

Trade revenues

34,964

24,542

 

71,750

59,610


4. Accounts Receivable


 

2007

2006

 

(in thousands of dollars)

     

Government of Canada

1,182

2,120

Outside parties

3,315

2,911

 

4,497

5,031

Allowance for doubtful accounts

(198)

(278)

 

4,299

4,753


5. Inventories

Inventories consist of the following:


 

2007

2006

 

(in thousands of dollars)

     

Raw materials

3,963

4,399

Work-in-progress

439

545

Finished goods

3,869

4,099

Agribusiness inventory

1,222

1,322

 

9,493

10,365

Provision for obsolete inventory

(278)

(504)

 

9,215

9,861


6. Capital Assets and Accumulated Amortization

Capital assets consist of the following:


 

Cost

 

Opening balance

Acquisitions

Disposals and write-offs

Closing balance

 

(in thousands of dollars)

         

Equipment

25,591

1,934

14

27,511

Leasehold improvement

-

1,300

 

1,300

Vehicle fleet

1,375

20,165

 

1,395

Other

158

3,419

 

323

 

27,124

3,419

14

30,529



 

Accumulated amortization

 

Opening balance

Amortization

Disposals and write-offs

Closing balance

 

(in thousands of dollars)

         

Equipment

17,738

1,205

7

18,936

Leasehold improvement

-

77

 

77

Vehicle fleet

667

216

 

883

Other

148

18

 

166

 

18,553

1,516

7

20,062



 

2007 Net book value

2006 Net book value

 

(in thousands of dollars)

     

Equipment

8,575

7,853

Leasehold improvement

1,223

-

Vehicle fleet

512

708

Other

157

10

 

10,467

8,571


The amortization expense for the year was $1,516,010 (2006 - $1,298,000).

7. Accounts Payable


 

2007

2006

 

(in thousands of dollars)

     

Government of Canada

1,628

1,243

Outside parties

6,848

6,793

 

8,476

8,036


8. Employee Future Benefits

a) Pension benefits

CORCAN's employees participate in the Public Service Pension 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/Qubec Pension Plans benefits and they are indexed to inflation.

Both the employees and CORCAN contribute to the cost of the Plan. The 2006 - 2007 expense amounts to $3,364,000 ($3,680,000 in 2005-2006), which represents approximately 2.6 times the contributions by employees.

CORCAN'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

Severance benefits earned prior to the creation of CORCAN on April 1, 1992 are considered a liability of the Treasury Board and therefore not recorded in the accounts of the Fund. As at March 31, 2007, the Treasury Board liability for benefits earned by CORCAN employees prior to April 1, 1992 is $1,255,000 (2006 - $1,335,000). The Treasury Board will fund the payout of these benefits for a period of up to 15 years from the establishment date of CORCAN. CORCAN will therefore become liable for these benefits starting in fiscal 2008.

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


 

2007

2006

 

(in thousands of dollars)

     

Accrued benefit obligation, beginning of the year

3,602

3,339

Expense for the year

701

638

Benefits paid during the year

(413)

(375)

 

3,890

3,602


9. Commitments and Contingencies

The nature of CORCAN's activities can result in some multi-year contracts and obligations whereby CORCAN will be obligated to make future payments when the services/goods are received. CORCAN Revolving Fund is committed under the terms of various lease agreements including an amount of $8,591,182 relating to the Kingston warehouse. The lease was entered into on September 2006 and expires in August 2016.

Significant contractual obligations for future payments that can be reasonably estimated are summarized as follows:


 

(in thousands of dollars)

2008

180

2009

936

2010

1,097

2011

1,085

2012 and thereafter

5,685

 

8,983


In the normal course of operations, CORCAN Revolving Fund becomes involved in various claims and legal proceedings. It is the opinion of management that no claims exist at March 31, 2007.

10. Net Assets

The Net Assets consist of the following:


 

2007

2006

 

(in thousands of dollars)

Contributed capital

30,542

30,542

Accumulated net charge against the Fund's authority

(14,380)

(11,707)

Accumulated deficit

(7,540)

(9,647)

Net assets, end of year

8,622

9,188


11. Revenues and Cost of Goods Sold


Year ended March 31, 2007

 

Revenues

Cost of

Goods Sold

Operating

Results

 

(in thousands of dollars)

       

Agribusiness and forestry

7,896

10,919

(3,023)

Services

5,022

5,586

(564)

Textile

3,935

4,977

(1,042)

Manufacturing

32,392

34,048

(1,656)

Construction

11,062

10,723

339

 

60,307

66,253

(5,946)



Year ended March 31, 2006

 

Revenues

Cost of

Goods Sold

Operating

Results

 

(in thousands of dollars)

       

Agribusiness and forestry

6,674

10,140

(3,466)

Services

5,123

4,728

395

Textile

3,836

5,180

(1,344)

Manufacturing

22,750

27,755

(5,005)

Construction

8,094

8,687

(593)

 

46,477

56,490

(10,013)


12. Expenses

The following table presents details of expenses by category:


 

2007

2006

 

(in thousands of dollars)

     

Salaries and employee benefits

8,652

8,141

Professional and special services

3,335

3,834

Rentals

1,049

909

Transportation and communication

943

789

Utilities, materials and supplies

276

299

Other expenditures

150

6

Purchased repair and maintenance

71

49

Information

65

47

 

14,541

14,074


13. Comparative Information

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

Table 16 - Response to Parliamentary Committees, Audits and Evaluations
(non-financial)

1. Responses to Parliamentary Committees

CSC has not responded to any Parliamentary Committee recommendations in 2006-07.

2. Responses to the Auditor General

Reports related to CSC published by the Office of the Auditor General over the course of the year include the following:

3. External Audits:

Office of the Commissioner of Official Languages: Audit of the Direct Health Care Services by Four Federal Institutions: Health Canada, Veterans Affairs Canada, Royal Canadian Mounted Police, and Correctional Service Canada - July 2007 (audit period: May 2005 to May 2006): www.ocol-clo.gc.ca/docs/e/Sante_Health_EN.pdf

4. Internal Audits

In 2006-07, the following audits were completed and approved by CSC's Audit Committee:

  • Audit of Travel and Hospitality - December 2006;
  • Audit of Staffing Activities - October 2006;
  • Audit of Privacy - October 2006;
  • Audit of Occupational Safety and Health Programs - August 2006;
  • Audit of Drug Interdiction Activities - August 2006;
  • Audit of Compensation and Benefits - August 2006;
  • Audit of Fire Safety Program - June 2006;
  • Audit of Accommodating the Needs of Offenders with Disabilities - April 2006;
  • Audit of Environmental Management System - April 2006; and
  • Audit of Management of Leave & Overtime - April 2006.

Since the beginning of 2007-08, the following audit reports were also completed:

  • Audit of Staff Safety in the Community ;
  • Audit of Administrative Segregation ; and
  • Audit of Contracting for Goods and Services.

These reports, which also contain the Management Action Plans to address the recommendations, can be found on the CSC website at the following address: www.csc-scc.gc.ca/text/pblct/pa/toc_e.shtml

5. Internal Evaluations

The following evaluation reports were completed in 2006-07:

  • Evaluation of the Memorandum of Agreement between the University of Saskatchewan & CSC (2004); and
  • Evaluation of the Impact of Uniforms in Women Offender Facilities (2006).

The following evaluation reports were published in 2006-07:

  • Effective Corrections: Volunteers in CSC;
  • Stan Daniels Healing Centre;
  • Effective Corrections Initiative - Aboriginal Reintegration; and
  • National Contribution Program/National Aboriginal Contribution Program (Nov 2004).

These reports, which also contain the Management Action Plans to address the recommendations, can be found on the CSC website at the following address: www.csc-scc.gc.ca/text/eval_reports_e.shtml

Table 17 - Sustainable Development Strategies (non-financial)


Department/Agency: Correctional Service Canada
Points to address Departmental Input

1. What are the key goals, objectives, and/or long-term targets of the SDS?

During this final year of SDS Revision 2003, CSC's goals, objectives and targets remained focused on the implementation of initiatives and projects aimed at minimizing CSC's contribution to climate change; smog; water pollution; and the depletion of physical resources from its institutional operations.

2. How do your key goals, objectives and/or long-term targets help achieve your department's / agency's strategic outcomes?

CSC has one overarching Strategic Outcome: "Offenders are safely and effectively accommodated and reintegrated into Canadian communities." CSC's Sustainable Development Strategy focuses mostly on the environmental sustainability of CSC's infrastructure, ensuring that CSC's facilities are managed in such a way as to limit the impact on the natural environment. The energy conservation, water conservation and solid waste reduction initiatives yield substantial cost savings for CSC, thereby allowing for better offender reintegration programs. As offenders reintegrate into communities, they, their families and other community residents enjoy a safer environment.

3. What were your targets for the reporting period?

The nine targets established in support of CSC's long-term objectives and key goals are detailed in the agency's Sustainable Development Strategy revision 2003 that can be found at: www.csc-scc.gc.ca/text/pblct/sustain/sds04_e.pdf
All targets sunset in either 2007 or 2010.

4. What is your progress to date?

Progress was made in fostering result-based accountability within our Regions. We found that the call letter from NHQ to the Regions for submissions of environmental projects and initiatives was, on average, responded to in a more comprehensive and better-documented fashion than it had been in previous years.

Cost-benefit analysis studies conducted at some sites in 2004-05 supported acquisition of wind generators for two sites, namely Dorchester and Drumheller institutions. A contract was awarded for the procurement of two 600-kilowatt wind turbines, and commissioning will likely occur in early 2008.

Even though many energy-saving projects were implemented, the latest estimates of our energy consumption indicate only a slight reduction (1 to 2%) from the 2000 baseline. This reduction rate, however, has to be balanced against the additional square meters added to CSC's property holdings since 2000.

4. What is your progress to date? (continued)

The slow administrative processes to award contracts for rehabilitation work on contaminated sites and the limited access to necessary expertise in this field prevented us from making significant progress. However, as a result of the numerous environmental site assessments performed in previous years, we are now in a good position to accelerate site rehabilitation activities in 2007-08.

We developed and, with our CORCAN partners, began implementing an environmental farm plan (EFP) at Westmorland Institution in New Brunswick. There is tangible evidence that significant progress is being made in implementing the EFP.

By replacing the wastewater treatment system at Joyceville Institution in Ontario (project completed in June 2005) with a system that meets current needs, we improved our performance with regard to treated wastewater flow by 11.7%, which is an average wastewater flow of 700 m3 /day on a corporate total of 6,000 m3/day. Furthermore, we invested in many improvement projects for our wastewater treatment systems in 3 smaller institutions, for a total reduction of 20.3% across CSC.

During the first quarter of 2006-07 quarter, our average corporate water consumption was approximately 665 litres per day per occupant, a 17% decrease compared to the 2003 reference year. We attribute this success to the many projects we completed since 2004 to replace water-cooled systems with air-cooled systems, thereby reducing our water consumption.

In 2005, we conducted an extensive survey on solid waste management, in which all institutions participated. Consequently, we were able to determine that the average amount of corporate solid waste sent to landfills was 1.36 kg per day per occupant, a 15% decrease compared to the reference year 2000.

5. What adjustments have you made, if any?

In addition to the above activities, CSC continued to work horizontally within the interdepartmental community, contributing to key issues of sustainable development initiatives and/or programs, including Greening Government Operations.

In developing new commitments for the next SDS cycle, i.e., SDS 2007-2010, CSC placed particular emphasis on contributions that support the federal government's objectives.

Therefore, in our SDS 2007-2010, we have once again confirmed our priorities; i.e., regrouped under seven main goals, and set 14 commitments linked to tangible targets. For each target, measuring our performance will be straightforward, since we have carefully chosen targets that are measurable.

For more information about CSC's SDS 2007-2010, please go to CSC's website at: www.csc-scc.gc.ca/text/pblct/environmentRpt/sds_e.pdf


Table 18 - Procurement and Contracting

Supplementary information on Procurement and Contracting can be found at: www.tbs-sct.gc.ca/rma/dpr3/06-07/index_e.asp

Table 19 - Client-Centred Service

Not Applicable.

Table 20 - Horizontal Initiatives

CSC participates in, but does not lead any horizontal initiatives. TBS's Horizontal Results database is available at: www.tbs-sct.gc.ca/rma/eppi-ibdrp/hrdb-rhbd/dep-min/dep-min_e.asp

Table 21 - Travel Policy

Correctional Service Canada follows the Treasury Board Secretariat Travel Directive, Rates and Allowances. For more information on CSC's travel and hospitality proactive disclosures, see: www.csc-scc.gc.ca/text/travel/travel_e.shtml

Table 22 - Storage Tanks

Not Applicable.