The Provincial Judges Pension Board (the “Board” or “PJPB”) was established in 1992 and is continued by Ontario Regulation 290/13 as amended (the “Regulation”) under the Courts of Justice Act.  The Board is the successor to the Provincial Judges Benefit Board established in 1984 by Ontario Regulation 332/84 under the Provincial Courts Act.

The Board is classified as a Trust Agency and operates at arm’s length from the Government. Treasury Board Secretariat (“TBS”) is responsible for Sponsor related activities such as regulatory reporting, plan expenses and the implementation of plan design changes. The Board reports to the President of Treasury Board. 

Members of the Board are appointed by the Lieutenant Governor in Council. For the period April 1, 2018 through March 31, 2019, the Board’s members were:

Item

Date first appointed

Current term expiry date footnote 1

Deborah Anne Oakley, Chair

Former Sr. Vice-President Corporate Affairs
OMERS Pension Plan

October 22, 2009

November 14, 2018

Elizabeth Boyd, Member

Partner
Blake, Cassels & Graydon LLP

April 10, 2013

April 10, 2019

Lisa Philipps, Member

Provost
York University

February 26, 2014

February 26, 2020

The Board administers the Provincial Judges Pension Plan (the “Plan” or “PJPB”); overseeing pension payments and refunds from the fund ensuring they are made in accordance with the Regulation.

The Ontario Pension Board (“OPB”) provided pension administration and secretarial services to the Board in accordance with the Service Level Agreement.

The Board formally met four times during the period April 1, 2018 through March 31, 2019, each occasion representing a regular quarterly Board meeting.

Cost of administration

Administrative support cost for the operation of the Board was subsumed in the estimates of the Centre for Public Sector Labour Relations and Compensation at TBS.

The Chair and Board members are all private sector appointees and received per diem fees of $200 for the Chair and $150 for the members.  Fees totalling a maximum of $5,000 for attendance at Board meetings and preparation time were chargeable as at March 31, 2019. The Board incurred no other direct costs.

Plan activity

Plan membership and pensioner changes

Item

@ March 31, 2018

Increase

Decrease

@ March 31, 2019

Members (participants) - Active

296

16

(22)

290

Members (participants) - LTIP

2

3

(1)

4

Total Membership

298

19

(23)

294

Pensionersfootnote 2 - Normal

216

19

(8)

227

Pensionersfootnote 2 - Survivors

81

6

(5)

82

Total Pensioners

297

25

(13)

309

Deferred Pensionersfootnote 3

1

0

0

1

Description of the year’s activities

The year’s activities are described in the Analysis of Operational Performance under Section IV.

Analysis of financial performance

Financial statement as at March 31, 2019

Item

2019

2018

 

($ 000)

($ 000)

Deposits

  

Contributions

  

Participants

5,098

4,870

Province of Ontario (Note 4)             

34,512

34,512

Interest earned (note 1 (l))

48,344

48,144

 

87,954

87,526

Payments

  

Pension payments and survivor allowances

46,708

44,341

Refund of contributions

125

765

 

46,833

45,106

Net increase in the Fund

41,121

42,420

Fund Balance with the Minister of Finance

  

Beginning of year

985,067

942,647

End of year

1,026,188

985,067

See accompanying notes to the financial statement.

Approved on behalf of the Board:

_____________________________________                                            ____________________________________  
Chair                                                                                                                          Member

Notes to financial statement

1.  Description and administration of the Fund    

The Treasury Board Secretariat is responsible for overall oversight of the Provincial Judges Pension Fund [Fund] including administration of all contributions to the funds and interest earned.  The Provincial Judges Pension Board [Board], as originally designated by Ontario Regulation 67/92 of the Courts of Justice Act, is responsible for the administration of pension payments and survivor allowances.

On Oct 31, 2013, Ontario Regulation 67/92 was repealed and was replaced by Ontario Regulation 290/13 under the same legislation.  The new Regulation splits the Provincial Judges Pension Fund into two plans, the Provincial Judges Pension Fund and the Provincial Judges Supplementary Pension Account.

The Fund is registered for income tax purposes and provides for pension benefits up to the limit permitted under the Income Tax Act.  The Provincial Judges Supplementary Pension Account provides for pension benefits above the limit prescribed by the Income Tax Act for post-1991 service.

On December 20, 2013, a Court Order was issued, based on an agreement among parties to the litigation challenging the constitutionality of the Provincial Judges Supplementary Pension Account, that effectively ordered management to administer the Fund as one plan with the same administrative practices as were in place under Ontario Regulation 67/92, until the litigation is resolved (Memorandum of Agreement called the “Standstill Agreement”).  Pursuant to the direction of the Canada Revenue Agency, the administrative practices for the Provincial Judges Pension Plan were and continue to be to administer the Plan in a manner consistent with the requirements of the Federal Income Tax Act and related Income Tax Act Regulations.

As a result, this financial statement continues to be presented as one Fund.

The Fund is held within the Consolidated Revenue Fund of the Province of Ontario and is included as an employee future benefit liability within the consolidated financial statements of the Province.

The Fund is not subject to the reporting requirements under the Pension Benefits Act and Regulations.

The following brief description of the Fund is provided for general purposes only.  For more complete information, reference should be made to the Regulations.

(a)  General

The purpose of the Fund is to provide pension payments to retired Provincial Judges who are members of the Plan or survivor allowances to the eligible dependents of these Judges.

(b)  Funding policy

Participants are required to contribute 7% of their salary up to the earlier occurrence of either meeting their basic service requirement or attaining age 70 years.

The contribution required from the Province is determined by an actuarial valuation as described in note 4.

(c)  Pension payments

A pension payment is available based on the age and the number of years of full-time service for which the participant has credit upon ceasing to hold office and is based on the salary of a full-time judge of the highest judicial rank held by the participant while in office.  The participant is entitled to these payments during his/her lifetime.

(d)  Disability pension payments

A full pension is available at age 65 for participants with a minimum of five years of full-time service who are unable to serve in office due to injury or chronic illness.

(e)  Survivor allowances

A survivor allowance equal to 60% of the qualifying judge’s pension payment is paid to the spouse during the spouse’s lifetime or to children who meet the age, custody, education or disability criteria defined by Regulation.

(f)  Death refunds

A death refund can be payable to the personal representative of a participant where there is no further entitlement to a survivor allowance.  The amount of the refund is equal to the participant’s contributions in the Fund plus interest, less entitlements already paid out.

(g)  Withdrawal refunds

Upon ceasing to hold office for a reason other than death, participants not eligible to receive pension payments are entitled to receive a refund of their contributions to the Fund plus interest.

(H)  Annual inflationary escalation of entitlements

Judges Retired Before June 1, 2007:

The annual inflationary increase for judges who retired before June 1, 2007 is based on changes in the Average Weekly Earnings published by Statistics Canada and subject to a maximum of 7% in any one year, and is effective on April 1 in every year.  In addition, the pensions are adjusted based on the salary increases of sitting judges as recommended by the Provincial Judges Remuneration Commission.

Judges Retired On Or After June 1, 2007:

The annual inflationary increase for judges who retired on or after June 1, 2007 and elected to be paid under the plan provisions effective on that date is based on changes in the Consumer Price Index, and is effective on January 1 in every year.

(I)  Interest revenue

Interest is credited to the account for the Fund, held in the Consolidated Revenue Fund of the Province of Ontario, at the average of the monthly Ontario Borrowing Rates for a 25-year maturity as follows:

  • on the net monthly increases to the account accumulating during the fiscal year at the interest rate for the fiscal year; and
  • on the net increases to the account for each of the preceding 25 years at the interest rates applicable to those years, providing the funds remain on deposit with the Consolidated Revenue Fund.

2.  Significant accounting policy – basis of accounting

The financial statement is prepared by management in accordance with the Memorandum of Agreement between the Ontario Conference of Judges and the Lieutenant Governor in Council, the then-Minister of Government Services and the Provincial Judges Pension Board (the Standstill Agreement).  The basis of accounting prescribed by the Standstill Agreement is consistent with both the repealed Regulation 67/92 and the current Regulation 290/13 under the Courts of Justice Act and consists of contributions and money paid, transferred or credited to the Fund, less money paid out, except for the fact no Supplementary Pension Account was established.

The Standstill Agreement requires that the Provincial Judges Pension Plan be administered and solely funded through the Provincial Judges Pension Fund as it was on October 30, 2013, notwithstanding that Regulation 290/13 requires that the Provincial Judges Pension Plan be funded through the Provincial Judges Pension Fund and a separate Provincial Judges Supplemental Pension Account.

3.  Administrative expenses

Administrative expenses are paid by the Province of Ontario and are not reflected in this financial statement.

4.  Liability for future benefits

The Provincial Judges Remuneration Commission (Commission) was established under the Courts of Justice Act to conduct an independent review of the salary, pension and benefits for all provincial judges.  The Commission’s salary and non-pension benefits recommendations are binding; recommendations on pension benefits are non-binding.  The most recent report of the Commission was the Ninth and Tenth Provincial Judges Remuneration Commission released on April 18, 2018, covering the periods of April 1, 2014 to March 31, 2018 and April 1, 2018 to March 31, 2022 respectively.  For the period of April 1, 2014 to March 31, 2018, the report did not recommend any salary increases in addition to the annual inflationary increases already received. The report recommendations for the period April 1, 2018 to March 31, 2022 are included in note 5.

The Province is responsible for the unfunded liability of the Provincial Judges Pension Fund and funds this liability in amounts recommended by periodic actuarial valuations of the Plan. The Provincially determined contribution for fiscal 2019 was $34,512,000, which maintained contributions consistent with recommendations in the March 31, 2011 actuarial funding valuation, as a current actuarial valuation had yet to be performed. Any required adjustments to contributions, as a result of performing a current actuarial valuation when the litigation is resolved, will be accounted for in the period the valuation is performed.  Management has estimated that the amount of additional government contributions is approximately $55 million as at March 31, 2018. Estimates as at March 31, 2019 are not available.

Significant assumptions in the March 31, 2011 actuarial funding valuation and the March 31, 2018 estimate are as follows:

Assumption

March 2011 Valuation

March 2018 Estimate

Expected Return on Plan Assets

4.60%

3.20%

Discount Rate on Future Cash Inflows

4.60%

3.20%

Salary Rate Increases

4.00%

2.70%

Age of Retirement

graduated scale from age 60 to 75

graduated scale from age 60 to 75

Method of Valuation

Aggregate Cost Method

Projected Unit Credit Method

5.  Ninth and Tenth Provincial Judges Remuneration Commission

The Ninth and Tenth Provincial Judges Remuneration Commission recommended that judicial salaries be fixed at 95.27% of federal judicial salaries, to be phased in over the four-year period from April 1, 2018 to March 31, 2022.

In addition to the salary recommendations, the report recommended a new pension plan funding design consisting of a fully funded registered pension plan, a partially funded (3 – 5 years worth of benefits) retirement compensation arrangement, and a supplemental plan funded through a special purpose account in the Consolidated Revenue Fund.  While the plan funding design is different, the report did not recommend any changes to the benefits accruals or other pension benefits provided by the pension plan.  Commission recommendations on pensions are not binding on the Province of Ontario but the Province of Ontario has agreed to make the necessary plan changes.

As a result of these changes, the Standstill Agreement has been extended to May 1, 2020 to permit time to implement the new design.

6.  Subsequent events

Increased Government Contributions:
Effective April 1, 2019, the government increased its contributions to approximately $49 million per year made in equal monthly installments.  Prior to June 12, 2019, a total of $8,166,670 has been contributed to the Fund.

Analysis of operational performance

The 2018/19 business plan cautioned that changes to the Plan’s funding model, would dramatically shift the Board’s priorities for the remaining period of the business plan.  With the Government’s approval of pension recommendations in May 2018, that contingency became reality as demand to support implementation of the Plan fund redesign steadily increased over the balance of the year for the Board, our service provider and stakeholders. A successful transition to the new design requires smooth operation of the existing arrangement in the interim; thoughtful planning respecting the new governance framework; and effective execution of the new arrangement. While the demands of implementation have been challenging, the Board has successfully met all of its operational commitments for the 2018/2019 plan year.

Delivery of pensions

  • In the 12 months ending March 31, 2019, the PJPB continued delivering high quality, cost effective services to 309 beneficiaries receiving pensions or survivor allowances from the PJPB
  • The Board met four times in the reporting period to conduct business, including oversight of service delivery, agency compliance and consideration of applications for approval of payments from the Fund. 
  • The Board monitors its service performance through reports on outstanding work at its regular meetings. This combined with summary presentation of facts supporting pension applications ensure timely and high-quality service.
  • The PJPB met or exceeded its client service standards over the period of this report which requires that no application for pension or other benefit from the Plan, or pension estimates, take longer than 60 days in total to process. 
  • There were no requests for adjudication or appeals of decisions made during the reporting period.
  • At its regular quarterly meetings, PJPB reviewed and approved 25 new annual pensions and survivor allowances, representing six fewer applications when compared to the prior year.
  • In the 2018/2019 plan year there were no applications for lump sum payments in respect of family law settlements, however the Board approved 3 refunds of contributions on resignation.
  • The corresponding annual value of new pensions approved for the year was $4.0 million.
  • All pension payments commenced on time and within service commitments.
  • The PJPB also approved payments totalling just over $282K representing a retroactive 2.4% cost of living increase under the “old plan” rules plus additional adjustment for salary recommendations of the 9th and 10th Provincial Judges Remuneration Commission for Provincial Judges. The Board also approved slightly over $50K under a 1.6% Consumer Price Index (CPI) adjustment for escalation in January 2019.

Accurate payments and entitlement calculations

  • Calculation materials and entitlement information were provided in a timely manner by OPB to PJPB for its review and approval at PJPB meetings.
  • OPB staff was available at all PJPB meetings to clarify and explain payments when necessary.  All calculations bear evidence of managerial review and verification by OPB staff.
  • The Fund is audited annually by the Office of the Auditor General of Ontario (the Provincial Auditor).  There were no findings in the current audit relating to either pension payment accuracy or entitlement calculations.

Strengthening stakeholder relations

  • The Board continued to build on its efforts to engage key stakeholders in discussion about issues affecting the Plan.  Board interaction with senior leadership of both the Sponsor and the Association of Ontario Judges (AOJ) increased and these relationships continue to strengthen. The Board also met with Ontario’s Chief Justice in October 2018. We value the Chief Justice’ perspective on the service needs of both sitting and retiring judges and we are committed to meeting with her before the end of each calendar year.
  • We firmly believe these interactions contribute to greater transparency around the Plan and its operations, and reinforced the Board’s status as a trust agency that performs its role independently and in the best interests of the Plan’s beneficiaries.
  • Stakeholders continue to be supportive of the Board’s efforts to build stronger relations and have grown even more receptive to the meetings in spite of the challenges of on-going litigation and regular leadership changes within the AOJ.

Communications with Pensioners and Stakeholders

  • PJPB continues to review and approve all communication plans and products prior to distribution. 
  • The bulk of the Board’s written communications with Plan beneficiaries are prepared to convey information about personal entitlements.  Communication highlights for 2018/2019 include:
    • 401 letters describing annual escalation adjustments
    • 76 pension estimates including 50, delivered in-person at the pre-retirement seminar offered in January 2019.   
    • 16 initial communications to new retirees
    • Development of content for the Industrial Aggregate Index (IAI) escalation mailing explaining salary changes (i.e. 9th and 10 Provincial Judges Remuneration Commission) and pension impacts for affected retirees.  OPB staff also received special training to support related high-quality telephone services for clients.
    • Development of a new member communication in 2018. The new “Welcome Letter” will introduce new plan members to the Plan and our service offerings.    
  • Since 2016, the Board has taken advantage of new telephone call reporting functionality that allows OPB to collect data on our behalf and report on service performance. It was reported that for the plan year ending March 31, 2019 the Board made 237 service offerings through the dedicated line representing a 7% increase over the prior year’s results. We have been pleased with the performance results throughout the year. The Board has been able to gain better insight on the client experience through service statistics such as the average delay on pick up, maximum wait time and number of abandoned calls.
  • We are pleased that the Sponsor has adopted a new funding model that will expand the Board’s communication mandate to include active members. This represents important progress toward our goal of establishing annual member pension statements. The Board will continue to look for opportunities to improve communications to pensioners and advise on communications to other key stakeholders. 

Performance targets

In its 2018-2021 Business Plan the Board adopted three strategic themes that would define its performance in executing its responsibilities under its mandate. Our accomplishments relative to each theme follow below:

Deliver high-quality cost-effective client service

Like any pension administrator, we are acutely aware that our clients expect quick access to reliable information from the Plan to support personal financial decision making. Over the years the small size of the Plan has contributed to limited investment in IT solutions and a heavy reliance on manual processes for pension administration services. Addressing the lack of automation is expected to yield improvements not just in cost effectiveness but also in risk mitigation and quality. 

A systems modernization initiative is currently underway at OPB. While the Board’s goal of delivering a pension automation solution is “on hold”; we continue to monitor OPB’s progress very closely through regular updates from senior leadership.

With the introduction of a new form of transaction reporting, the Board made important progress on two of its high-level strategies. In March 2019, a new report was introduced that will support improved monitoring and evaluation of its service delivery. In fact, during the 2018/2019 plan year we were pleased to learn that not only were we meeting service commitments, but raw data suggested responsiveness was measurable in days for most service requests.

We continue to receive the traditional “60/61 day reports” however, we expect the new reporting will better serve our needs and will become our reporting standard in the future.

The Board is receiving regular reporting on telephone call trends and 2018/2019 marks the first year over year comparison of call statistics. Reports suggest call volumes are manageable and OPB’s responsiveness to incoming calls has been excellent. Call data suggests that calls concerning insurance benefits are a growing trend.

A key deliverable for the Board under the Minister’s mandate letter was to review and make recommendations on the introduction of an annual pension statement for active plan members. To do so, we needed to first understand the quality of member data within the Plan and we commissioned a report on “Membership Data Mapping”. The final report was presented at our quarterly meeting in October 2018. The Report assessed three things: 1) the reliability of the existing member data; 2) the feasibility of providing pension statements for Plan members; and 3) the Plan’s readiness for the new administrative demands resulting from the plan funding redesign.  

Based on the report’s findings, we concluded that moving forward with a pension statement at this time was not feasible; processes for mapping data across organizations would need to be developed and data verified with members before it could be put into production. We expect the data verification to be introduced in the third quarter of 2020; once that project is complete, we are committed to introducing a statement in 2021.

Foster effective stakeholder relations

Effective stakeholder relations play a vital role in the delivery of high-quality client service.  We believe positive relations with our stakeholders create an environment where interests, issues and concerns are identified early so they can be resolved to the mutual benefit of all. Establishing open and regular communications with our stakeholders was again a priority for us in 2018/2019.

The Board maintained regular contact with key stakeholders throughout 2018/2019. Regular meetings with the AOJ now occur quarterly and we continue to meet annually with the Chief Justice. Consultation with Sponsor representatives has also increased. As we move toward plan fund redesign, we believe these frequent interactions will play an integral role in building a strong and effective governance framework.   

In the Fall of 2018, we concluded that salary recommendations of the 9th and 10th Provincial Judges Remuneration Commission required a written communication to affected retirees explaining changes. The Board approved a communication plan prepared by OPB which recommended adding the explanation to an existing mailing to save cost. The plan included a commitment to deliver advance briefings with key stakeholders through regular meetings prior to distribution.    

Early in 2018, we fulfilled a key commitment by adopting our foundational stakeholder engagement strategy.  The engagement strategy formally documents the Board’s approach to collecting information (e.g. satisfaction with services) from stakeholders and how it will use those perspectives to inform Board strategy and operation. This is an important step forward for the Board and we expect the strategy will become an indispensable resource during implementation of the Plan Fund Redesign.

Strengthen plan governance

Strong governance is a priority for any fiduciary and is essential for the Board to ensure it is meeting its obligations and acting in the best interests of the members and beneficiaries of the Plan.  In its business plan, the Board committed to focus on strengthening its governance by building structure and processes that are grounded in the following principles: Access to information; Increasing transparency; Improving Accountability; Performance of fiduciary duties; and Monitoring compliance.

The Board continues to pursue best practices on governance through annual self-assessment and we met that commitment again at the end of 2018.

  • Access to information- In order to mitigate the accidental loss or destruction of its historical meeting records (1985 – 2011), the Board intended to convert old meeting minutes from paper to electronic form by the first quarter of 2020. We are pleased to report this commitment was completed November 30, 2018, 16 months ahead of schedule. This is an important milestone in our effort to enhance the Plan’s governance framework.
  • Increasing Transparency - Disclosure and transparency are often cited as best practices in a governance framework. In effect, transparency brings another independent level of oversight to bear on Board business which, in turn, enhances its credibility with stakeholders.

Reaching active members has been challenging for the PJPB and we have attempted to keep them informed by working with the Chief Justice Office to maintain plan information hosted on their intranet site. Since the Board expects to introduce new and updated communication products to support the Plan funding redesign, we’ve decided not to maintain existing products. Instead, our service provider will refresh PJPB communications to ensure they are accurate and current when the new program is rolled out in 2020. We remain committed to engagement strategy and consulting our stakeholders on these products and initiatives.

  • Improving Accountability - During the plan year we continued to improve our reporting capabilities by refining the information we receive at quarterly meetings. We now have more detailed reports on service delivery from several perspectives and are pleased with the level of service the members and retirees are receiving. Our priority during this reporting period was the implementation of the fund redesign but we continue to look for opportunities for periodic internal audit that will fit into the Plan’s new governance structure. 
  • Performance of Fiduciary Duties– The members and beneficiaries of the Plan depend on the Board to act in their best interests, so we believe we have an obligation to participate in discussions relating to future plan design and governance changes. The Remuneration Commission made its report in April 2018, and since then we have continued to leverage our regular interactions with key stakeholders throughout the year to ensure they are consulted and can help shape the future PJPB governance.

Board members are informed of conflict of interest rules that govern our service and as mentioned earlier we participate in agency appointee learning and development opportunities including on-line offerings.

  • Monitoring Compliance– As a provincial Trust Agency, the Board is subject to the rules and accountability framework within the Agencies and Appointments Directive and as a pension plan, we are regulated by Canada Revenue Agency and must comply with tax rules under the ITA.

Any support or advice the Board may seek from OPB or TBS regarding compliance relates to its obligations as a provincial agency. In the 2018/2019 plan year the Board obtained support respecting government requests that included: market research contract information; a freedom of information request; and reporting on consulting services. 

While the Plan Sponsor is responsible for the bulk of the Plan’s tax filing and compliance requirements, there are operational tax requirements that are the responsibility of the Board in its role as administrator (e.g. PAR reporting, T4A Slips and Information Return). The Board monitors compliance with these operational tax rules through special status reporting at its Quarterly meetings. In the 2018/2019 fiscal year the Board can confirm it was compliant with the applicable tax rules.

The 2018/2019 plan year was busy with respect to the Board’s compliance with guidelines for agency accountability. The Board received 8 notices relating to new or changing agency guidelines and other related information. Each one was tabled for discussion at our quarterly meetings and action taken as required. In addition, the Board completed its regular disclosure and assurance reporting.

The Board continues to obtain regular quarterly reports from its service provider, OPB, concerning its compliance with regulatory (CRA) and provincial agency requirements. We are satisfied that we met all identified obligations in the review period.

Chair’s comments

The Board is responsible for administering the pension and survivor allowance benefits provided under the Provincial Judges Pension Plan.  As a trust agency of the Crown, the PJPB oversees the delivery of an annual pension payroll that now exceeds $46.6 million.  As a board, we are committed to delivering cost-effective high-quality service to the plan’s beneficiaries.  A summary of operational achievements from the past year appears in Section IV.

The 12 months covered by this report represent a significant year of planning for change in the Plan’s design and governance. As a Board, we have endeavoured to contribute our insights and expertise to these two reform initiatives throughout the period while maintaining regular oversight of the current plan and governance model to ensure stability and ongoing standards of high-quality services.

The Board wishes to express its appreciation for the assistance rendered by the management and staff of the Total Compensation Strategies Branch of TBS, the Pay and Benefits Operations Branch of the Ministry of Government and Consumer Services, and the OPB and staff.

Appendix

Appendix A:  independent auditors report

To the Provincial Judges Pension Board and to the Minister of Finance

Opinion

I have audited the financial statement of the Provincial Judges Pension Fund (the Fund), which comprise the statement of changes in fund balance for the year ending March 31, 2019, and notes to the financial statement, including a summary of significant accounting policies (together “the financial statement”).

In my opinion, the accompanying financial statement is prepared, in all material respects, in accordance with the financial reporting provisions prescribed by the Memorandum of Agreement between the Ontario Conference of Judges and the Lieutenant Governor in Council, the then Minister of Government Services and the Provincial Judges Pension Board dated December 20, 2013 (the Standstill Agreement).

Basis for opinion

I conducted my audit in accordance with Canadian generally accepted auditing standards. My responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statement section of my report. I am independent of the Fund in accordance with the ethical requirements that are relevant to my audit of the financial statement in Canada, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Emphasis of matter — basis of accounting

I draw attention to Note 2 to the financial statement, which describes the basis of accounting. The financial statement is prepared to assist the Fund in complying with the financial reporting provisions of the Standstill Agreement. As a result, the financial statement may not be suitable for another purpose. My opinion is not modified in respect of this matter.

Responsibilities of management and those charged with Governance for the Financial Statement 

Management is responsible for the preparation of the financial statement in accordance with the financial reporting provisions prescribed by the Standstill Agreement, and for such internal control as management determines is necessary to enable the preparation of financial statement that is free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Funds’ ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Fund either intends to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Fund’s financial reporting process.

Auditor’s responsibilities for the audit of the financial statement

My objectives are to obtain reasonable assurance about whether the financial statement as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statement.

As part of an audit in accordance with Canadian generally accepted auditing standards, I exercise professional judgment and maintain professional skepticism throughout the audit. I also:

  • Identify and assess the risks of material misstatement of the financial statement, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
  • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Fund’s internal control.
  • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
  • Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Fund’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statement or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the Fund to cease to continue as a going concern.

I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

Toronto, Ontario                                                  Susan Klein, CPA, CA, LPA
June 12, 2019                                                      Assistant Auditor General