Notes to the Financial Statements - Year ended March 31, 1998

Note 1 Authority

The Legislative Assembly Office (the "Office") is operated under the authority of the Legislative Assembly Act. The net cost of the operations of the Office is borne by the general revenue fund of the Province of Alberta. Annual operating budgets are approved by the Special Standing Committee on Members' Services.

Note 2 Purpose

Within the traditions of parliamentary democracy as constitutionally established in Alberta, the Legislative Assembly:

Supports the Speaker of the Legislative Assembly in carrying out the duties of the office.
Supports members in carrying out their roles as elected representatives of the people of Alberta.
Records the proceedings and maintains the records of the Legislative Assembly.
Informs and educates the public on behalf of members and the institution of parliament.
Supports the Assembly in protecting its institutions and privileges.
Supports the exchange of information and ideas among Legislatures.
Supports the Officers of the Legislature as required.

Note 3 Summary of Significant Accounting Policies and Reporting Practices

These financial statements are prepared in accordance with the following accounting policies:

a) Reporting Entity

The reporting entity is the Legislative Assembly Office, for which the Clerk of the Legislative Assembly is responsible.

The Office operates within the general revenue fund (the "Fund"). The Fund is administrated by the Provincial Treasurer. All receipts of the Office are deposited into the Fund and all disbursements made by the Office are paid from the Fund.

b) Basis of Financial Reporting

Revenues

All revenues are reported on the accrual basis of accounting.

Expenses

Expenses represent the costs of resources consumed during the year on the Office's operations.

Pension expense included as part of the employer's share of employee benefits, or as a valuation adjustment to record the change in pension liability, comprises:

(i) the cost of pension benefits earned by employees during the year,
(ii) interest on the Office's share of the unfunded pension liability,
(iii) amortization of deferred adjustments over the expected average remaining service life of employees,
(iv) adjustments to the pension obligation in the event that there is reasonable assurance that a gain or loss has been realized, and
(v) the effect of the change in the ratio used to allocate the plan's total unfunded liability to participating entities.

Valuation Adjustments

Valuation adjustments include changes in the valuation allowances used to reflect financial assets and liabilities at their net recoverable or other appropriate value.

Assets

Financial assets of the Office are limited to financial claims such as advances to and receivables from other organizations, employers, and other individuals.

Inventory held for resale is reported at the lower of cost and net realizable value.

Amortization is calculated on a straight-line basis, over the estimated useful lives of the assets as follows:

Computer hardware and software - 3 years

The Office follows government budgetary practices which allow funds from an operating budget to be used to purchase capital assets. These purchases are included in expenses on the statement of operations, but are then removed from expenses through a valuation adjustment and are capitalized and amortized over their useful lives.

Liabilities

Liabilities include all financial claims payable by the Office at fiscal year end, including long-term disability benefits and certain pension benefits.

Net Liabilities

Net liabilities represents the difference between the value of assets held by the Office and its liabilities.

Note 4 Accounts Receivable and Advances

The fair value of accounts receivable and advances are estimated to approximate their book values.

The Office is responsible for paying the remuneration of Members of the Legislative Assembly. A portion of the remuneration relates to allowances for service as a minister of a government department or on a committee that a particular ministry is responsible for. These payments are not expenses of the Office and are recovered from the appropriate government departments.

Note 5 Capital Assets

Note 6 Accounts Payable and Accrued Liabilities

The fair values of accounts payable and accrued liabilities are estimated to approximate their book values.

Note 7 Members' Transitional Allowance

Effective during the 1997-98 fiscal period as per the Members' Allowances Order (RMSC 1992, c.M-1, as amended) section 9:

Where a Member resigns from office as a Member, or an ex-Member chooses not to contest or is not elected in an election immediately following a period of service as a Member, the Member or ex-Members shall receive a transitional allowance in the amount of one month's indemnity allowance and one month's expense allowance at the highest level attained multiplied by the years or part years of service as Member, whether continuously or in separate periods with a minimum of 6 and a maximum of 12 years.

Note 8 Long-Term Disability Insurance Liability

The Office participates with government departments in long-term disability insurance. The Office's portion of this liability was based on the Office's percentage of the total salaries of all government departments in the plan. During the current year the Province paid approximately $102 million into the long-term disability insurance fund and, as a result, there was a significant reduction in the liability at March 31, 1998.

Note 9 Pension Liability

The Office participates with other employers in the Public Service Pension Plan and the Management Employees Pension Plan. These plans provide pensions for the Office's employees based on years of service and earnings. The Office had an unfunded pension liability for each plan as at March 31, which was estimated as follows:

The total unfunded pension liability for each plan as at March 31, 1998, was determined by actuarial valuation as at December 31, 1995, for the Public Service Pension Plan and December 31, 1996, for the Management Employees Pension Plan, both extrapolated to March 31, 1998. The 1997, comparatives were determined by extrapolation to March 31, 1997, of actuarial valuations as at December 31, 1995 for the Public Service Pension Plan and as at December 31, 1994, for the Management Employees Pension Plan.

The actuarial valuations were determined using the projected benefit method prorated on service. Assumptions used in the valuation are based on each Pension Board's best estimate of future events. Each plan's future experience will inevitably vary, perhaps significantly, from the assumptions. Any differences between the actuarial assumptions and future experience will emerge as gains or losses in future valuations. Gains and losses which relate to the long-term are amortized over the expected average remaining service life of the employee group. Gains and losses for which there is reasonable assurance regarding their measurement and realization are recognized as income immediately.

The Public Sector Pension Plans Act specifies the basis to determine the amount of the total liability for each plan which will be funded by employers. The Office's portion of these employers' liabilities was based on the Office's percentage of the total pensionable payroll of all employers in the Plans.

Note 10 Budget

New Democrat Opposition services budget had $148,343 transferred to it from the MLA administration budget as per the Special Standing Committee on MembersÕ Services (April 30, 1997); this occurred after the Legislative Assembly Estimates were tabled in the Legislature.

Note 11 Valuation Adjustments

Valuation adjustments include changes in the valuation allowances used to reflect assets and liabilities at their appropriate value.

Note 12 Uncertainty Due to Year 2000

The year 2000 issue is the result of some computer programs being written using two digits rather than four to define the applicable year. Computer programs that have date sensitive software may recognize a date of "00" as the year 1900 rather than the year 2000 which could result in miscalculations or system failures. In addition, similar problems may arise in some systems if certain dates in 1999 are not recognized as a valid date or are recognized to represent something other than a date. The effects of the year 2000 issue may be experienced before, on, or after January 1, 2000.

The Office is currently working to resolve the potential effect of the year 2000 on the processing of date sensitive information by the Office's computerized information systems in a timely manner. The costs of addressing potential problems by modifying, replacing, or retiring significant portions of computerized information systems are not expected to have a materially adverse effect on the Office's financial condition. Despite the Office's efforts to address this issue, it is not possible to be certain that all aspects of the year 2000 problem affecting the Office, including those related to the efforts of customers, suppliers, and other third parties, will be fully resolved.

Note 13 Approval of Financial Statements

These financial statements were approved by the Clerk of the Legislative Assembly.

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The electronic copy of the Legislative Assembly Office Annual Report is UNOFFICIAL and is provided for information purposes only. The printed version is the OFFICIAL Annual Report.