Financial Statements (Unaudited) of Royal Canadian Mounted Police for the year ended March 31, 2013

Statement of Management Responsibility Including Internal Control Over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2013, and all information contained in these statements rests with the management of the Royal Canadian Mounted Police (RCMP). These financial statements have been prepared by management using the Government's accounting policies, which are based on Canadian public sector accounting standards.

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

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

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training, and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the RCMP 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 on-going process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

A risk-based assessment of the system of ICFR for the year ended March 31, 2013 was completed in accordance with the Treasury Board Policy on Internal Control and the results and action plans are summarized in the annex.

The effectiveness and adequacy of the RCMP's overall system of internal control is reviewed by the work of internal audit staff, who conduct risk-based audits of different areas of the RCMP's operations, and by the Departmental Audit Committee, which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting, and which reviews the financial statements and provides advice when warranted to the Commissioner.

The financial statements of the RCMP have not been audited.

Ottawa, Canada
August 26, 2013

STATEMENT OF FINANCIAL POSITION (Unaudited)

As at March 31, 2013

($ thousands)

	2013	2012 Restated (Note 18)
Liabilities
Accounts payables and accrued liabilities (Note 4)	$ 383,106	$ 421,028
Vacation pay and compensatory leave	254,518	246,337
RCMP Pension accounts (Note 5)	13,247,939	13,084,019
Deferred revenue (Note 6)	18,606	1,260
Lease obligation for tangible capital assets (Note 7)	15,109	14,696
Employee future benefits (Note 8)	240,132	516,877
Other liabilities (Note 9)	7,177	6,733
Total gross liabilities	14,166,587	14,290,950
Liabilities held on behalf of Government
Deferred revenue (Note 6)	(1,562)	(678)
Total Liabilities held on behalf of Government	(1,562)	(678)
Total net liabilities	14,165,025	14,290,272
Assets
Financial assets
Due from Consolidated Revenue Fund	13,385,547	13,251,746
Accounts receivable and advances (Note 10)	717,470	698,801
Total gross financial assets	14,103,017	13,950,547
Financial assets held on behalf of Government
Accounts receivable and advances (Note 10)	(70,921)	(44,028)
Total financial assets held on behalf of Government	(70,921)	(44,028)
Total net financial assets	14,032,096	13,906,519
Departmental net debt	132,929	383,753
Non-financial assets
Inventory (Note 11)	61,798	64,923
Tangible capital assets (Note 12)	1,378,946	1,358,943
Total non-financial assets	1,440,744	1,423,866
Departmental net financial position	$ 1,307,815	$ 1,040,113

Contractual obligations (Note 13)

Contingent liabilities (Note 14)

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

Ottawa, Canada
August 26, 2013

STATEMENT OF OPERATIONS AND DEPARTMENTAL NET FINANCIAL POSITION (Unaudited)

For the year ended March 31, 2013

($ thousands)

	2013 Planned Results (Note 2a)	2013	2012 Restated (Note 18)
Expenses
Police Operations	$ 3,714,700	$ 3,924,842	$ 3,541,066
Internal Services	771,947	480,410	833,098
Canadian Law Enforcement Services	303,080	295,378	289,186
International Policing Operations	63,910	66,463	64,369
Canadian Police Culture and Heritage	11,580	14,632	13,353
Statutory Payments	130,442	134,623	122,818
Expenses incurred on behalf of Government	(222)	(761)	(2,347)
Total expenses	4,995,437	4,915,587	4,861,543
Revenues
Policing services	1,867,284	1,937,462	1,821,806
Firearms registration fees	8,032	14,136	7,436
Gain on disposal of tangible capital assets	-	905	899
Other revenues	63,090	10,488	14,432
Revenues earned on behalf of Government	(120,995)	(200,204)	(123,625)
Total revenues	1,817,411	1,762,787	1,720,948
Net cost of operations before government funding and transfers	3,178,026	3,152,800	3,140,595
Government funding and transfers
Net cash provided by Government	2,833,970	2,955,583	2,887,794
Change in due from Consolidated Revenue Fund	164,270	133,801	195,469
Services provided without charge by other government departments (Note 15)	313,931	331,118	298,681
Transfer of assets and liabilities to other government departments (Note 16)	-	-	(24,336)
Net cost of operations after government funding and transfers	(134,145)	(267,702)	(217,013)
Departmental net financial position - Beginning of year	1,010,436	1,040,113	823,100
Departmental net financial position - End of year	$ 1,144,581	$ 1,307,815	$ 1,040,113

Segmented information (Note 17)

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

STATEMENT OF CHANGE IN DEPARTMENTAL NET DEBT (Unaudited)

For the year ended March 31, 2013

($ thousands)

	2013 Planned Results (Note 2a)	2013	2012 Restated (Note 18)
Net cost of operations after government funding and transfers	$ (134,145)	$ (267,702)	$ (217,013)
Change due to tangible capital assets
Acquisition of tangible capital assets	287,505	190,222	244,039
Amortization of tangible capital assets	(200,630)	(157,620)	(168,344)
Proceeds from disposal of tangible capital assets	-	(1,543)	(4,392)
Net loss on disposal of tangible capital assets including adjustments	-	(11,056)	(7,833)
Transfer to other government departments	-	-	(31,809)
Total change due to tangible capital assets	86,875	20,003	31,661
Change due to inventories	3,337	(3,125)	(517)
Net decrease in departmental net debt	(43,933)	(250,824)	(185,869)
Departmental net debt - Beginning of year	545,373	383,753	569,622
Departmental net debt - End of year	$ 501,440	$ 132,929	$ 383,753

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

STATEMENT OF CASH FLOW (Unaudited)

For the year ended March 31, 2013

($ thousands)

	2013	2012 Restated (Note 18)
Operating Activities
Net cost of operations before government funding and transfers	$ 3,152,800	$ 3,140,595
Non-cash items:
Amortization of tangible capital assets	(157,620)	(168,344)
Net loss on disposal of tangible capital assets including adjustments	(11,056)	(7,833)
Services provided without charge by other government departments (Note 15)	(331,118)	(298,681)
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances	(8,224)	27,679
Decrease in inventory	(3,125)	(517)
Decrease in accounts payable and accrued liabilities	37,922	10,256
Increase in vacation pay and compensatory leave	(8,181)	(5,151)
Increase in RCMP Pension Accounts	(163,920)	(170,376)
(Increase) decrease in deferred revenue	(16,462)	121,486
Decrease in future employee benefits	276,745	4,602
Increase (decrease) in other liabilities	(444)	1,582
Transfer of liabilities to other government departments (Note 16)	-	(7,473)
Cash used in operating activities	2,767,317	2,647,825
Capital investing activities
Acquisitions of tangible capital assets (excluding capital assets)	190,222	244,039
Proceeds from disposal or transfer of tangible capital assets	(1,543)	(4,392)
Cash used in capital investing activities	188,679	239,647
Financing activities
Lease obligation for tangible capital assets	(771)	-
Lease payment for tangible capital assets	358	322
Cash used in financing activities	(413)	322
Net cash provided by Government of Canada	$ 2,955,583	$ 2,887,794

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

1. Authority and Objectives

The Royal Canadian Mounted Police (RCMP) is Canada's national police service and an agency of the Department of Public Safety and Emergency Preparedness.

The RCMP objectives are based on the authority and responsibility assigned under section 18 of the Royal Canadian Mounted Police Act. The objectives of the RCMP are to enforce laws, prevent crime, and maintain peace, order and security. Six programs highlight our Program Alignment Architecture (PAA). These include:

Police Operations

Under the authority of the RCMP Act, this Program provides Canadians with policing services at the federal, provincial and municipal levels and within Aboriginal communities. As described in the RCMP Act, these services include all duties that are assigned to peace officers in relation to the preservation of the peace, the prevention of crime and of offences against the laws of Canada and the laws in force in any province in which they may be employed, and the apprehension of criminals and offenders and others who may be lawfully taken into custody; the execution of all warrants, and performing all duties and services in relation thereto, that may, under the RCMP Act or the laws of Canada or the laws in force in any province, be lawfully executed and performed by peace officers; performing of all duties that may be lawfully performed by peace officers in relation to the escort and conveyance of convicts and other persons in custody to or from any courts, places of punishment or confinement, asylums or other places; and performing other duties and functions as are prescribed by the Governor in Council or the Commissioner. This Program contributes to a safe and secure Canada by providing general law enforcement activities in addition to education and awareness activities delivered by employees of the RCMP to the public, businesses and other agencies/organizations within Canada. The RCMP's education and awareness activities, for example information sessions on crime prevention, national security, financial crime, drugs and organized crime, are aimed at reducing victimization of Canadians. Additionally, this Program ensures the protection of designated persons and security at major events which in turn mitigates any potential threats to Canada's population. The Program also delivers a high level of technical and operational support to ensure that the RCMP reaches its overarching goal of reducing criminal activity which affects Canadians.

Internal Services

Internal services are groups of related activities and resources that are administered to support the needs of Programs and other corporate obligations of an organization. These groups are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Materiel Services; Acquisition Services; Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a Program.

Canadian Law Enforcement Services

This Program provides the Canadian Law Enforcement community with the necessary scientific, technical, investigative and educational support to deliver proactive, intelligence based policing and law enforcement services to their respective communities and partners. Additionally, this Program provides educational opportunities to members of the Canadian Law Enforcement community to enable them to develop their skills thus increasing their effectiveness in contributing to a safer Canada. This Program is necessary to ensure that Canadian law enforcement communities have access to the required tools, systems, technologies (i.e. forensic support and expertise, criminal intelligence and firearms registry and databases, etc) and education which in turn will contribute to the reduction of criminal activity affecting Canadians.

International Policing Operations

This Program furthers Canada's global peace and security agenda through cooperation and support of the international law-enforcement community, thereby ensuring that both Canadians and the global community are safer. This Program addresses the transnational scope of crime and terrorism by building relationships with international policing partners, participating in the INTERPOL global information sharing network and conducting extra-territorial criminal investigations. Additionally, the RCMP actively participates in multiple missions abroad in a peacekeeping role and by providing support to nations at risk in building their law enforcement capacity. Through this international cooperation and collaboration, this Program contributes directly to a more secure world and Canada.

Canadian Police Culture and Heritage

In order to protect the RCMP's internationally recognized image, reputation and rich heritage, this Program works to promote the positive image of the RCMP while building relationships with domestic and international law enforcement, government and community partners. The Program provides advice and analysis to internal and external clients, including federal, provincial and municipal partners, academic institutions, Royal Household representatives, and non-government organizations, regarding appropriate ceremonial features of special events and occurrences (e.g., Olympics, expos, summits, police officer funerals). Through the activities of this Program, the RCMP contributes to Canada's vibrant culture and heritage.

Statutory Payments

This Program ensures that RCMP employees and their families are provided income security in the event of disability or death. This program ensures that an appropriate level of support is afforded to those who are affected by circumstances beyond their control and as a result of their employment with the RCMP. The activities within this program are regulated by statutory payments, for example, the RCMP Pension Continuation Act payments.

2. Summary of Significant Accounting Policies

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

Significant accounting policies are as follows:

(a) Parliamentary authorities - the RCMP is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the RCMP do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. The planned results amounts in the Statement of Operations and Departmental Net Financial Position are the amounts reported in the future-oriented financial statements included in the 2012-13 Report on Plans and Priorities which were based on assumptions and information available as of March 7, 2012. The future-oriented financial statements for 2012-13 have been restated to conform to current year presentation and to reflect the revenue net of non-respendable amounts. This restatement resulted in a $120.7 million increase in net costs of operations before government funding and transfers.

(b) Net cash provided by Government - The RCMP operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the RCMP is deposited to the CRF and all cash disbursements made by the RCMP 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 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 RCMP is entitled to draw from the CRF without further authorities to discharge its liabilities.

(d) Revenues:

Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.

Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in which the related expenses are incurred.

Funds that have been received are recorded as deferred revenue, provided the Department has an obligation to other parties for the provision of goods, services or the use of assets in the future.

Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

Revenues that are non-respendable are not available to discharge the Department's liabilities. While the deputy head is expected to maintain accounting control, he has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of the entity's gross revenues.

(e) Expenses - Expenses are recorded on the accrual basis:

Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior the completion of the financial statements. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.

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, employer contributions to the health and dental insurance plans, legal services and workers' compensation are recorded as operating expenses at their estimated cost.

(f) Employee future benefits:

Pension benefits for Public Service employees: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. The RCMP'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 the RCMP to make contributions for any actuarial deficiencies of the Plan. The RCMP'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.

Pension benefits for RCMP members: The Government sponsors a variety of employee future benefits such as pension plans and disability benefits, which cover members of the RCMP. The department administers the pension benefits for members of the RCMP. The actuarial liability and related disclosures for these future benefits are presented in the financial statements of the Government. This differs from the accounting and disclosures of future benefits for RCMP presented in these financial statements whereby pension expense corresponds to the department's annual contributions toward the cost of current service. In addition to its regular contributions, current legislation also requires the department to make contributions for actuarial deficiencies in the RCMP Pension Plan. These contributions are expensed in the year they are credited to the Plan. This accounting treatment corresponds to the funding provided to departments through Parliamentary authorities.

Severance benefits: Public Service employees and RCMP members 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 and RCMP members is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

(g) Accounts receivable are stated at the lower of cost and net recoverable value; a valuation allowance is recorded for receivables where recovery is considered uncertain.

(h) Contingent liabilities - Contingent liabilities are potential liabilities which 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.

(i) 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 RCMP becomes aware of the contamination and is obligated, or is likely to be obligated to incur such costs. If the likelihood of the RCMP'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.

(j) Inventory - Inventory consists primarily of uniforms, firearms and ammunition and other parts, material and supplies held for future program delivery and not intended for resale. Inventory is valued at cost using the average cost method. If there is no longer any service potential, inventory is valued at the lower of cost net or net realizable value.

(k) 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. The RCMP does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, and assets located on Indian Reserves and museum collections.

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

Asset Class	Amortization Period
Buildings	20 to 30 years
Works and Infrastructure	20 years
Machinery and Equipment	5 to 15 years
Vehicles	3 to 15 years
Computer Hardware	4 to 7 years
Computer Software	3 to 7 years
Leasehold Improvements	Lesser of remaining term of lease or useful life of the improvement
Leased Tangible Capital Assets	Over term of lease/useful life

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

(l) Intellectual property such as licences, patents and copyrights are expensed in the period in which they are incurred.

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

3. Parliamentary Authorities

The RCMP 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, the RCMP 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

($ thousands)

($ thousands)

	2013	2012 Restated (Note 18)
Net cost of operations before government funding and transfers	$ 3,152,800	$ 3,140,595
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets	(157,620)	(168,344)
Loss on disposal of tangible capital assets	(16,669)	(12,247)
Services provided without charge by other government departments	(331,118)	(298,681)
Increase in vacation pay and compensatory leave	(8,181)	(6,556)
Decrease (increase) in employee future benefits	276,745	(1,441)
Decrease (increase) in accrued liabilities	(1,129)	25,588
Decrease (increase) in liability for contaminated sites	(1,770)	1,877
Bad debt expense	(873)	(1,901)
Refund of prior years' expenditures	16,139	18,399
Refund of program expenditures	(1,415)	(710)
Uncollected respendable revenue	5,869	34,295
Other	164	142
Total items affecting net cost of operations but not affecting authorities	(219,858)	(409,863)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets (excluding capital lease)	189,451	244,039
Post-capitalization of capital assets	4,795	-
Lease payments for tangible capital assets	358	322
Increase (decrease) in accountable advances	(22)	-
Increase (decrease) in inventory	(3,125)	(517)
Total items not affecting net cost of operations but affecting authorities	191,457	243,844
Current year authorities used	$ 3,124,399	$ 2,974,576

(b) Authorities provided and used

($ thousands)

	2013	2012
Authorities provided and used:
Authorities provided
Vote 45 - Operating Expenditures	$ 2,465,405	$ 2,236,611
Vote 50 - Capital expenditures	341,327	346,197
Vote 55 - Grants and Contributions	140,454	128,437
Statutory Amounts	516,762	462,162
Total Authorities Provided	3,463,948	3,173,407
Less:
Authorities available for future years	(4,484)	(5,587)
Lapsed: Operating	(335,065)	(193,244)
Current year authorities used	$ 3,124,399	$ 2,974,576

4. Accounts Payable and Accrued Liabilities

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

($ thousands)

	2013	2012
Accounts payable - Other government departments and agencies	$ 26,936	$ 35,385
Accounts payable - External parties	266,089	298,792
Total accounts payable	293,025	334,177
Accrued liabilities	90,081	86,851
Total accounts payable and accrued liabilities	$ 383,106	$ 421,028

5. RCMP Pension Accounts

The department maintains accounts to record the transactions pertaining to the RCMP Pension Plan, which comprises the RCMP Superannuation Account, the RCMP Pension Fund Account, the Retirement Compensation Arrangement Account and the Dependants Pension Fund Account.

The Royal Canadian Mounted Police Pension Plan (the "Plan"), which is governed by the Royal Canadian Mounted Police Superannuation Act (the "RCMPSA" or the "Act"), provides pension benefits to all members of the Royal Canadian Mounted Police ("RCMP"). This Act has been in effect since April 1, 1960. The following description of the plan is a summary only:

The Plan is a contributory defined benefit plan covering all Regular and Civilian members of the RCMP. Membership in the Plan is compulsory for all members of the RCMP regardless of length of service.

The Government of Canada is the sole sponsor of the Plan. The Minister of Public Safety is the Minister responsible for the RCMPSA. The RCMP is responsible for the management of the Plan. Responsibility for the day-to-day administration of the Plan was outsourced to Morneau Shepell. The Office of the Superintendent of Financial Institutions makes periodic actuarial valuations of the Plan.

RCMP Superannuation Account

Until April 1, 2000, separate market-invested funds were not set aside to provide for payment of pension benefits. Instead, transactions relating to the Plan were recorded in a RCMP Superannuation Account created by legislation in the Accounts of the Government of Canada.

The RCMP Superannuation Account is established in the Accounts of Canada pursuant to the RCMPSA. It portrays a notional portfolio of bonds and is not funded by the Government of Canada. The RCMPSA requires that this Account record transactions such as contributions, benefits paid and transfers that pertain to pre-April 1, 2000 service, and that the Account be credited with interest. The Royal Canadian Mounted Police Superannuation Regulations require that the interest be credited quarterly at rates calculated as though the amounts recorded in the Account were invested quarterly in a notional portfolio of Government of Canada 20-year bonds held to maturity.

RCMP Pension Fund Account

Pursuant to the RCMPSA as amended by the Public Sector Pension Investment Board Act, transactions relating to service subsequent to March 31, 2000, are now recorded in the RCMP Pension Fund (the "Pension Fund"), where the excess of contributions over benefits and administration costs is invested in capital markets by the Public Sector Pension Investment Board ("PSP Investments"). PSP Investments is a separate Crown Corporation that commenced operations in April 1, 2000. Its statutory objectives are to manage the funds transferred to it in the best interests of the contributors and beneficiaries and to maximize investment returns without undue risk of loss having regard to the funding requirements of the Plan.

The net amount of contributions less benefits and other payments is regularly transferred to PSP Investments for investment in capital markets. At March 31, the balance in the RCMP Pension Fund Account represents amounts of net contributions in transit awaiting imminent transfer to PSP investments. The balance of $69M includes an actuarial adjustment of $57M, which will be cleared in 2013-14.

Retirement Compensation Arrangement Account

The Retirement Compensation Arrangement (RCA) account records transactions for pension benefits that are provided in excess of those permitted under the Income Tax Act. The RCA is registered with Canada Revenue Agency (CRA) and a transfer is made annually between the RCA Account and CRA to either remit a 50-percent refundable tax in respect of the net contributions and interest credits or to be credited a reimbursement based on the net benefit payments. As at March 31, 2013 the total refundable tax transferred (RCMP only) amounts to $31 million ($30 million in 2012).

Dependants Pension Fund Account

The Royal Canadian Mounted Police (Dependants) Pension Fund was established in 1934 pursuant to the Royal Canadian Mounted Police Act and is currently operated under Part IV of the Royal Canadian Mounted Police Pension Continuation Act (effective 1959) and the related Regulations.

The Act provides for members of the Force, other than commissioned officers appointed before March 1, 1949, to purchase certain survivorship benefits for their dependants by payment of specified contributions.

All monetary transactions of the Fund are made through a specified purpose account in the Consolidated Revenue Fund (CRF).

The following table provides details of the RCMP Pension Plan Pension Accounts:

($ thousands)

RCMP Superannuation Account	2013	2012
Opening Balance	$ 13,015,853	$ 12,846,578
Funds received and other credits	720,516	751,825
Payments and other charges	(611,506)	(582,550)
Transfer to the PSPIB	-	-
Closing balance	$ 13,124,863	$ 13,015,853

($ thousands)

RCMP Pension Fund Account	2013	2012
Opening Balance	$ 13,680	$ 12,553
Funds received and other credits	481,158	413,493
Payments and other charges	(103,638)	(81,442)
Transfer to the PSPIB	(322,012)	(330,924)
Closing balance	$ 69,188	$ 13,680

($ thousands)

Retirement Compensation Arrangement Account	2013	2012
Opening Balance	$ 30,546	$ 29,215
Funds received and other credits	2,843	3,384
Payments and other charges	(1,855)	(2,053)
Transfer to the PSPIB	-	-
Closing balance	$ 31,534	$ 30,546

($ thousands)

Dependants Pension Fund Account	2013	2012
Opening Balance	$ 23,940	$ 25,297
Funds received and other credits	1,301	1,469
Payments and other charges	(2,887)	(2,826)
Transfer to the PSPIB	-	-
Closing balance	$ 22,354	$ 23,940

($ thousands)

Total Pension Accounts	2013	2012
Opening Balance	$ 13,084,019	$ 12,913,643
Funds received and other credits	1,205,818	1,170,171
Payments and other charges	(719,886)	(668,871)
Transfer to the PSPIB	(322,012)	(330,924)
Closing balance	$ 13,247,939	$ 13,084,019

6. Deferred Revenue

Deferred revenue represents the balance at year-end of unearned revenues stemming from amounts received from external parties that are restricted in order to fund the expenditures related to specific research projects and stemming from amounts received for fees prior to services being performed. Revenue is recognized in the period in which these expenditures are incurred or in which the service is performed.

Deferred revenue consists of three categories: deferred revenue for contract policing arrangements on tangible capital assets, deferred revenue for donation and bequest accounts and deferred revenue for registration fees.

Deferred revenue - Contract policing arrangements on tangible capital assets - Current Year

Deferred revenue for contract policing agreements (effective April 1, 2012 to March 31, 2032) on tangible capital assets represents the net balance of revenue received in advance of the construction, purchase and maintenance of buildings pursuant to the contract policing arrangements accommodations program. The revenue is recognized as costs for the construction, purchase and maintenance of buildings are incurred.

The opening balance of $62,000 represents the carry-forward of deferred revenue from donated assets.

($ thousands)

	2013	2012
Opening balance	$ 62	$ 62
Balance of revenue received in advance of construction, purchase and maintenance of contract policing capital assets	16,498	-
Revenue recognized	-	-
Gross closing balance	$ 16,560	$ 62

Deferred revenue - Contract policing arrangements on tangible capital assets - Adjustments to Prior Year's Results (Note 18)

($ thousands)

	2013	2012 Restated (Note 18)
Opening balance	$ -	$ 136,947
Increase in net book value of contract policing capital assets	-	-
Revenue recognized	-	(136,947)
ross closing balance	$ -	$ -

Deferred revenue - Donations and bequest

Deferred revenue for donation and bequest accounts represents the balance of contributions received for various purposes. They are recognized as revenue when the funds are expended for the specified purposes.

($ thousands)

	2013	2012
Opening balance	$ 520	$ 521
Contributions received	-	96
Revenue recognized	(36)	(97)
Gross closing balance	$ 484	$ 520

Deferred revenue - Firearms registration fees (Note 18)

Deferred revenue for registration fees represents the firearms application fee received from clients where the application processing has not reached a sufficient stage to warrant recognizing revenue. When the application reaches a stage where the eligibility of the applicant has been assessed, the fees are recognized as revenue.

($ thousands)

	2013	2012 Restated (Note 18)
Opening balance	$ 678	$ 201
Registration fees received on application request	11,317	7,906
Revenue recognized	(10,433)	(7,429)
Gross closing balance	$ 1,562	$ 678

Deferred revenue - Total

($ thousands)

	2013	2012 Restated (Note 18)
Opening balance	$ 1,260	$ 137,731
Amounts received	27,815	8,002
Revenue recognized	(10,469)	(144,473)
Gross closing balance	18,606	1,260
Deferred revenue held on behalf of Government	(1,562)	(678)
Net closing balance	$ 17,044	$ 582

7. Lease Obligation for Tangible Capital Assets

The RCMP has entered into agreements to lease buildings under capital lease arrangements with a cost of $16,264,642 and accumulated amortization of $2,200,737 as at March 31, 2013 ($15,493,459 and $1,549,346 respectively as at March 31, 2012). The obligations related to the upcoming years include the following:

($ thousands)

	2013	2012
2013	$ -	$ 1,146
2014	1,206	1,146
2015	1,206	1,146
2016	1,206	1,146
2017 and thereafter	22,214	21,106
Total future minimum lease payments	25,832	25,690
Less: imputed interest	10,723	10,994
Balance of obligations under leased tangible capital assets	$ 15,109	$ 14,696

8. Employee Future Benefits

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

Both the employees and the RCMP contribute to the cost of the Plan. The 2012-13 expense amounts to $55 million ($59 million in 2011-12), which represents approximately 1.7 times (1.8 in 2011-12) the contributions by employees. The RCMP'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) Pension benefits (RCMP members): The Government of Canada sponsors a variety of employee future benefits such as pension plans and disability benefits, which cover members of the RCMP. The department administers the pension benefits for members of the RCMP. The actuarial liability and related disclosures for these future benefits are presented in the financial statements of the Government of Canada. This differs from the accounting and disclosures of future benefits for RCMP presented in these financial statements whereby pension expense corresponds to the department's annual contributions toward the cost of current service.

Both the members and the RCMP contribute to the cost of the Plan. The 2012-13 total expense amounts to $334 million ($275 million in 2011-12) which consists of an actuarial adjustment of $57 million and $277 million of government contributions. The $277 million of government contributions represents approximately 1.9 times the contributions by members (2.0 in 2011-12). The RCMP is responsible for the administration of the Plan including determining eligibility for benefits, calculating and paying benefits, developing legislation and related policies, and providing information to Plan members. The actuarial liability and actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

(c) Severance benefits: The RCMP provides severance benefits to its employees and RCMP members based on eligibility, years of service and salary at termination of employment. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, measured as at March 31, is as follows:

As part of collective agreement negotiations with certain employee groups (PS and RCMP members), and changes to conditions of employment for executives and certain non-represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon termination of their employment. These changes have been reflected in the calculation of the outstanding severance benefit obligation.

In 2012-13, RCMP members' severance immediate payout totaled $316.5M, consequently causing a substantial reduction in the Future Employee Benefits liability and an increase in the RCMP's Personnel expenditures.

($ thousands)

	2013	2012
Public Service Employees
Accrued benefit obligation - Beginning of year	$ 28,620	$ 74,379
Transferred to other government department, effective November 15, 2011	-	(364)
Subtotal	28,620	74,015
Expense for the year	6,607	2,457
Benefits paid during the year	(6,217)	(47,852)
Accrued benefit obligation - End of year	$ 29,010	$ 28,620
RCMP members
Accrued benefit obligation - Beginning of year	$ 488,257	$ 447,100
Transferred to other government department, effective November 15, 2011	-	(5,643)
Subtotal	488,257	441,457
Expense for the year	70,820	80,702
Benefits paid during the year	(347,955)	(33,902)
Accrued benefit obligation - End of year	$ 211,122	$ 488,257
Total
Accrued benefit obligation - Beginning of year	$ 516,877	$ 521,479
Transferred to other government department, effective November 15, 2011 (Note 16)	-	(6,007)
Subtotal	516,877	515,472
Expense for the year	77,427	83,159
Benefits paid during the year	(354,172)	(81,754)
Accrued benefit obligation - End of year	$ 240,132	$ 516,877

9. Other Liabilities

($ thousands)

	2013	2012
Benefit Trust Fund	$ 2,143	$ 2,161
Environmental Liabilities	3,937	2,168
Other	1,097	2,404
Other liabilities	$ 7,177	$ 6,733

Benefit Trust Fund: This account was established by section 23 of the Royal Canadian Mounted Police Act, to record moneys received by personnel of the Royal Canadian Mounted Police, in connection with the performance of duties, over and above their pay and allowances. Receipts of $119,466 ($82,457 in 2011-12) were received in the year and payments of $137,232 ($179,837 in 2011-12) were issued. The fund is used for (i) the benefit of members, former members and their dependants; (ii) as a reward, grant or compensation to any person who assists the RCMP in the performance of its duties in any case where the Minister is of the opinion that such person is deserving of recognition for the services rendered; (iii) as a reward to any person appointed or employed under the authority of the RCMP Act for good conduct or meritorious service, and (iv) for such other purposes that would benefit the RCMP as the Minister may direct.

10. Accounts Receivable and Advances

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

($ thousands)

	2013	2012
Receivables - Other government departments and agencies	$ 204,715	$ 217,276
Receivables - External parties	506,487	475,469
Temporary advances	9,919	8,215
Standing advances	2,971	2,887
Subtotal	724,092	703,847
Less: Allowance for doubtful accounts on receivables from external parties	(6,622)	(5,046)
Gross accounts receivables	717,470	698,801
Accounts receivable held on behalf of Government	(70,921)	(44,028)
Net accounts receivable	$ 646,549	$ 654,773

11. Inventory

The following table presents details of the inventory, measured at cost using the average cost method:

($ thousands)

	2013	2012
Uniforms and equipment	$ 33,955	$ 37,284
Firearms, ammunition and parts	10,972	10,885
Other	16,871	16,754
Total inventory	$ 61,798	$ 64,923

The cost of consumed inventory recognized as an expense in the Statement of Operations and Departmental Net Financial Position is $17,426,000 in 2012-13 ($16,867,000 in 2011-12).

12. Tangible Capital Assets

($ thousands)

Capital Assets Class	Opening Balance	Acquisitions	Adjustments Footnote 1	Disposals and Write-Offs	Closing Balance
Land	$ 53,122	$ -	$ 2,823	$ 340	$ 55,605
Buildings	975,833	129	102,777	5,474	1,073,265
Works and Infrastructure	114,195	176	(2,750)	-	111,621
Machinery and Equipment	214,195	8,651	6,778	872	228,752
Computer Hardware	326,880	632	5,262	-	332,774
Computer Software	255,767	20	78,764	-	334,551
Vehicles	562,889	49,998	28,803	43,489	598,201
Leasehold Improvements	64,525	-	7,346	110	71,761
Capital Leases	15,493	771	-	-	16,264
Assets under Construction	232,523	129,845	(224,561)	5,195	132,612
Total	$ 2,815,422	$ 190,222	$ 5,242	$ 55,480	$ 2,955,406

Accumulated Amortization ($ thousands)

Capital Assets Class	Opening Balance	Amortization	Adjustments Footnote 1	Disposals and Write-Offs	Closing Balance
Land	$ -	$ -	$ -	$ -	$ -
Buildings	505,211	34,858	151	4,372	535,848
Works and Infrastructure	18,034	5,585	(959)	-	22,660
Machinery and Equipment	135,595	14,232	1,198	658	150,367
Computer Hardware	280,967	20,586	-	-	301,553
Computer Software	189,805	24,524	233	-	214,562
Vehicles	304,189	51,356	(281)	33,033	322,231
Leasehold Improvements	21,129	5,828	192	110	27,039
Capital Leases	1,549	651	-	-	2,200
Assets under Construction	-	-	-	-	-
Total	$ 1,456,479	$ 157,620	$ 534	$ 38,173	$1,576,460

Net Book Value

Capital Assets Class	2013	2012
Land	$ 55,605	$ 53,122
Buildings	537,417	470,622
Works and Infrastructure	88,961	96,161
Machinery and Equipment	78,385	78,600
Computer Hardware	31,221	45,913
Computer Software	119,989	65,962
Vehicles	275,970	258,700
Leasehold Improvements	44,722	43,396
Capital Leases	14,064	13,944
Assets under Construction	132,612	232,523
Total	$ 1,378,946	$ 1,358,943

13. Contractual Obligations

The nature of the RCMP's activities can result in some large multi-year contracts and obligations whereby the RCMP 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:

($ thousands)

	2014	2015	2016	2017	2018 & thereafter	Total
Capital assets	$ 33,717	$ -	$ -	$ -	$ -	$ 33,717
Services	6,639	6,016	6,108	1,787	-	20,550
Other	14,230	-	-	-	-	14,230
Total	$ 54,586	$ 6,016	$ 6,108	$ 1,787	$ -	$ 68,497

14. Contingent Liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown. They are grouped into four categories as follows:

(a) Contaminated sites

Liabilities are accrued to record the estimated costs related to the management and remediation of contaminated sites where the RCMP is obligated or likely to be obligated to incur such costs. The RCMP has identified approximately 18 sites (15 sites in 2011-12) where such action is possible and for which a liability of $3.9 million ($2.2 million in 2011-12) has been recorded in accrued liabilities. The RCMP'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 RCMP in the year in which they become likely and are reasonably estimable.

(b) Claims and litigation

Claims have been made against the RCMP in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. The RCMP has recorded an allowance for claims and litigations where it is likely that there will be a future payment and a reasonable estimate of the loss can be made. Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amount to approximately $23 million ($34 million in 2011-2012) at March 31, 2013.

(c) Pension litigation

The Public Sector Pension Investment Board Act amended the RCMPSA to enable the Federal Government to deal with excess amounts in the RCMP Superannuation Account and the RCMP Pension Fund. The legal validity of these provisions was challenged in the Ontario Superior Court of Justice. On November 20, 2007, the Court rendered its decision and dismissed all of the plaintiffs' claims. The decision was appealed to the Ontario Court of Appeal and the hearing took place in April, 2010. The Ontario Court of Appeal dismissed the appeals on October 8, 2010. The plaintiffs applied for leave to appeal to the Supreme Court of Canada in December, 2010. On May 5, 2011, the Supreme Court of Canada granted the application for leave to appeal. The appeal was heard on February 9, 2012. On December 19, 2012, the Supreme Court of Canada dismissed the plaintiffs' appeal.

(d) Contract policing agreements

The contract policing agreements entitle the contract partner to receive proceeds on the disposal of contract policing assets equivalent to the cost-sharing ratio established by the agreement. While it is likely that a contract policing asset will be disposed of at some point in the future, the amount of the liability cannot be reasonably estimated as payment to the contract partner is contingent on the proceeds (if any) from disposal of the asset.

15. Related Party Transactions

The RCMP is related as a result of common ownership to all Government departments, agencies, and Crown corporations. The RCMP enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the RCMP received common services, which were obtained from other government departments as disclosed below.

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

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

($ thousands)

	2013	2012
Employer's contributions to the health and dental plans paid by Treasury Board Secretariat	$ 244,389	$ 229,268
Accommodation provided by Public Works and Government Services	84,825	67,338
Legal services provided by Department of Justice	1,535	1,682
Workers' compensation cost provided by Human Resources and Skills Development Canada	369	393
Total	$ 331,118	$ 298,681

The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General are not included in the RCMP's Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties

($ thousands)

	2013	2012
Accounts receivable - Other government departments and agencies	$ 204,715	$ 217,276
Accounts payable - Other government departments and agencies	26,936	35,385
Expenses - Other government departments and agencies	527,643	557,485
Revenues - Other government departments and agencies	16,515	13,440
	$ 775,809	$ 823,586

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

16. Transfers to Other Government Departments

Effective November 15, 2011, the RCMP transferred responsibility for the federal public administration of email, data centre and network services to Shared Services Canada in accordance with Order-in-Council 2011-1297, including stewardship responsibility for the related assets and liabilities. Accordingly, the RCMP transferred the following assets and liabilities to Shared Services Canada on November 15, 2011:

($ thousands)

	2013	2012
Assets:
Tangible capital assets (net book value) (Note 12)	$ -	$ 31,809
Total assets transferred	-	31,809
Liabilities:
Vacation pay and compensatory leave	-	1,466
Employee future benefits (Note 8)	-	6,007
Total liabilities transferred	-	7,473
Adjustment to the departmental net financial position	$ -	$ 24,336

During the transition period, the RCMP continued to administer the transferred activities on behalf of Shared Services Canada. The administered revenues and expenses amounted to $1,367,000 and $56,605,000 respectively for the year. These revenues and expenses are not recorded in these financial statements.

17. Segmented Information

Presentation by segment is based on the RCMP's Program Alignment Architecture. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 2. The following table presents the expenses incurred and revenues generated for the main Programs, by major object of expenses and by major type of revenues. The segment results for the period are as follows:

($ thousands)

	Policing Operations	Internal Services	Canadian Law Enforcement Services	International Policing Operations	Canadian Police Culture and Heritage
Transfer payments
Compensatory grants to individuals	$ -	$ 1,634	$ -	$ -	$ -
Transfers to other levels of governments	-	-	14,315	-	-
Payments to or on behalf of First Nations	-	-	165	-	-
Other	-	-	863	-	-
Total transfer payments	-	1,634	15,453	-	-
Operating Expenses
Salaries and employee benefits	2,926,371	218,443	212,138	35,759	10,472
Professional and special services	307,302	109,086	20,303	22,775	880
Travel and relocation	122,038	16,920	5,159	5,311	1,470
Amortization of tangible capital assets	90,964	52,132	13,791	320	413
Utilities, material and supplies	97,517	11,468	7,887	459	541
Accommodation	132,686	22,055	6,502	1,208	260
Repair and maintenance	57,473	25,898	2,593	284	55
Telecommunications	1,047	98	70	20	(1)
Rentals	16,467	3,601	332	47	292
Loss on disposal and write-off of tangible capital assets	10,470	5,810	379	-	10
Loss on inventory	576	459	4	-	-
Information	552	538	1,225	9	37
Other operating expenses	161,379	12,268	9,652	271	203
Expenses incurred on behalf of Government	(204)	(508)	(49)	-	-
Total operating expenses	3,924,638	478,268	279,986	66,463	14,632
Total expenses	3,924,638	479,902	295,329	66,463	14,632
Revenues
Policing services	$ 1,890,994	$ 39,408	$ 6,487	$ 416	$ 157
Firearms registration fees	573	10	13,553	-	-
Gain on disposal of tangible capital assets	890	10	-	5	-
Other revenues	4,003	2,420	4,038	5	22
Revenues earned on behalf of Government	(170,890)	(11,461)	(17,261)	(426)	(166)
Total revenues	1,725,570	30,387	6,817	-	13
Net cost of operations before government funding and transfers	$ 2,199,068	$ 449,515	$ 288,512	$ 66,463	$ 14,619

($ thousands)

	Statutory Payments	2013 Total	2012 Total Restated (Note 18)
Transfer payments
Compensatory grants to individuals	$ 130,895	$ 132,619	$ 123,101
Transfers to other levels of governments	-	14,315	14,376
Payments to or on behalf of First Nations	-	165	110
Other	-	863	668
Total transfer payments	130,895	147,962	138,255
Operating Expenses
Salaries and employee benefits	3,638	3,406,821	3,363,040
Professional and special services	-	460,346	435,292
Travel & relocation	-	150,898	171,259
Amortization of tangible capital assets	-	157,620	168,344
Utilities, material & supplies	-	117,872	116,606
Accommodation	-	162,711	133,317
Repair & maintenance	-	86,303	86,752
Telecom	-	1,234	31,906
Rentals	-	20,739	23,225
Loss on disposal and write-off of tangible capital assets	-	16,669	12,247
Loss on inventory	-	1,039	2,322
Information	-	2,361	5,142
Other operating expenses	-	183,773	176,183
Expenses incurred on behalf of Government	-	(761)	(2,347)
Total operating expenses	3,638	4,767,625	4,723,288
Total expenses	134,623	4,915,587	4,861,543
Revenues
Policing services	$ -	$ 1,937,462	$ 1,821,806
Firearms registration fees	-	14,136	7,436
Gain on disposal of tangible capital assets	-	905	899
Other revenues	-	10,488	14,432
Revenues earned on behalf of Government	-	(200,204)	(123,625)
Total revenues	-	1,762,787	1,720,948
Net cost of operations before government funding and transfers	$ 134,623	$ 3,152,800	$ 3,140,595

18. Adjustments to Prior Year's Results

Parliamentary Authorities - Reconciliation of net cost of operations to current year authorities used (Note 3a)

The amounts for 2012 were restated in this note, as follows:

(a) Loss on disposal of tangible capital assets - The previous amount for "loss on disposal of tangible capital assets" included adjustments to tangible capital assets as well as the loss on inventory. The amount was restated to exclude the adjustments and the loss on inventory.

(b) Vacation pay and compensatory leave - The previous amount stated was taken directly from the Statement of Cash Flows. Usually, this amount is equal to the amount found in the Statement of Cash Flows as it is normally expensed using non-appropriated amounts. However, in 2012 the amount was not the same due to the transfer of liabilities to other government departments and was therefore restated.

(c) Employee future benefits - The previous amount stated was taken directly from the Statement of Cash Flows. Usually, this amount is equal to the amount found in the Statement of Cash Flows as it is normally expensed using non-appropriated amounts. However, in 2012 the amount was not the same due to the transfer of liabilities to other government departments and was therefore restated.

(d) Services of regulatory nature and miscellaneous revenue - This amount consists of non-respendable revenue which is deducted from the net cost of operations as "revenues earned on behalf of government". The amount should not be deducted again from the net cost of operations and has therefore been removed from the note.

Deferred revenue - Contract policing arrangements on tangible capital assets (Note 6)

On March 31, 2012, the 20-year contract policing agreements between the RCMP and provinces expired. A new 20-year agreement came into effect April 1, 2012. While performing a comparative analysis to identify accounting implications of the new agreement, RCMP management discovered that revenues received for capital assets purchases from contract partners under the expired agreement were incorrectly deferred.

Policing services to provinces are provided on a cost-recovery basis. Both the expired and new contract policing agreement includes recovery of costs for purchased assets required to provide those services. The RCMP does not have a present obligation to the partner when revenues are received to recover costs. Performance has already been achieved. Additionally, the RCMP retains control and ownership of these assets at all times and has no liability to the contract partner until the asset is disposed of under the terms of both the expired and new contract policing agreement. This liability is limited to the partner's share of the cost for providing policing services.

Consequently, the comparative financial statements presented for the year ended March 31, 2012 have been restated. The effect of this adjustment is presented in the table below.

($ thousands)

2011-12	As previously stated	Effect of adjustment	Revised Amounts
Statement of Financial Position:
Deferred revenue (Gross Liabilities)	$ 138,207	$ (136,947)	$ 1,260
Departmental net financial position	903,166	136,947	1,040,113
Departmental net debt	520,700	(136,947)	383,753
Statement of Operations and Departmental Net Financial Position:
Departmental net financial position - End of year	903,166	136,947	1,040,113
Statement of Change in Departmental Net Debt:
Departmental Net Debt - End of year	520,700	(136,947)	383,753
Statement of Cash Flows:
Decrease (increase) in deferred revenue	(15,461)	136,947	121,486
Net cash provided by Government of Canada	2,750,847	136,947	2,887,794

Deferred revenue - Firearms registration fees (Note 6)

The note disclosure in prior periods for Deferred Revenue of firearms registration fees was incorrectly reporting registration fees received and revenue recognized. The figures reported only reflected the net change in deferred revenue. This error was limited to the note disclosure and did not affect any items in the financial statements. A correction has been made to the note disclosure in the comparative financial statements for 2012-13; comparative information has been restated.

Contingent Liabilities - Contaminated Sites (Note 14a)

The 2012 amounts for the number of sites as well as the dollar figure of the liability were restated.

Segmented Information - Expenses (Note 17)

The loss on disposal of tangible capital assets was restated for 2012 as it included an amount for the loss on inventory. This loss on inventory was removed from the loss on disposal of tangible capital assets and presented separately.