PROTECTING NPF ASSETS

The Consolidated Insurance Program (CIP) provides coverage on NPF furniture and effects, buildings, automobiles, as well as general liability insurance and director and officers’ insurance. It also provides insurance coverage to NPF employees on travel status. The CIP carries commercial insurance with a $100,000 deductible; however, the program provides bases with a $5,000 deductible and stations and ships with a $500 deductible per incident. The Central Fund absorbs the difference in deductibles between commercial insurance and that provided to bases, stations, and ships.

• The value of property insured in fiscal year 2001/02 increased to $297 million from $250 million. Eighteen claims—which cost the CFCF $106,339— were settled. Additionally, the cost of operating the CIP in fiscal year 2001/02 totaled $669,801.

• The Non-Public Property (NPP) Board of Directors approved the National Appraisal Project in March 2002. American Appraisal Canada Limited has been engaged to visit all bases to provide up-to-date, accurate appraisals of all high-value NPF assets.

• Total expenditures for fiscal year 2001/02 amounted to $99,307. This project, which will cost $350,000 over three years, will enable us to accurately insure these holdings, and provide us with valuable information to improve our risk management.

• Trenton, Kingston, and Comox were completed during fiscal year 2001/02. Work has also commenced at a number of other bases.

WORKING TOGETHER TO STREAMLINE PAYROLL PROCESSES

Every two weeks, approximately 4,000 payments totaling $2 million are made to NPF employees, most directly to their bank accounts. Additionally, union dues, United Way donations, Canada Savings Bond purchases, and RRSP contributions on behalf of employees are made directly from their pay account. In Ottawa, the Human Resources Division successfully established a relationship with OC Transpo enabling employees to purchase their bus passes by payroll deduction at a savings of approximately 15 per cent. In conjunction with the Human Resources Division, the Finance Division is examining the potential of processing other payments through the pay account such as CANEX credit plans, mess dues, and recreation fees.

Streamlining the national pay process is another joint venture with the Human Resources Division. The objectives of this project include reducing the amount of effort required to process payroll information, and shortening the payroll processing time. During 2001, the procedures required to support streamlining were tested at CFB Kingston.

PROVIDING ALL REQUIRED NPF FINANCIAL SERVICES

	In fiscal year 2001/02: The Help Desk successfully managed over 5,500 inquiries. An IM/IT presence was established in each region. A user enhancement survey determined that 93 per cent of the 248 respondents were either satisfied or more than satisfied with the Help Desk service. As shown below, the internal IM/IT capabilities in support of SISIP have been significantly enhanced over the past year: E-commerce developments are being closely monitored. A Customer Relationship Management (CRM) trial has been underway at CFB Borden since October 2001. Excellent progress has been made in standardizing operating systems for base funds (PSP facilities management and program registration) and mess management.

We operate the Consolidated Bank Account (CBA), which provides banking services to all base and wing funds. This year, base funds and messes earned three per cent interest on the $35 million on deposit with CBA. In fiscal year 2001/02:

• 110 bank accounts were consolidated daily; average weekly transfers totaled $2.5 million.

• 2,500 cheques worth $3.25 million were cleared each week.

• The CBA cost $300,000 to operate.

This year, in terms of Capital Expenditure Requests and CFCF loans:

• 47 new CFCF loans worth $4 million were approved.

• At the end of the fiscal year, 184 loans were outstanding; the current value is approximately $16.5 million, and the monthly repayments total $260,000.

• Loans for deployed operations, including deployed ships, are interest free.

EFFICIENTLY AND EFFECTIVELY PROVIDE REQUIRED NPF ACCOUNTING SERVICES

Since the national NPF accounting approach was implemented with the creation of the CFPSA in 1996:

• Accounting costs have been reduced by more than 25 per cent.
• The accounting product is superior in terms of accuracy, quality, and timeliness.

The average financial statement preparation times (in days) by region for fiscal year 2001/02 were:

During fiscal year 2001/02, the national accounting office transferred processing to the Ontario region. This restructuring further reduced internal costs.

PROVIDING EXCELLENT INFORMATION MANAGEMENT AND INFORMATION TECHNOLOGY (IM/IT) CUSTOMER SERVICES

We rely on technology to help us in “Serving Those Who Serve.” This is why we place special emphasis on responsive software, hardware troubleshooting, and assistance to all users.

The CFPSA embraces technology, and the Finance Division helps to provide IM/IT capabilities that facilitate the making of strategic and operational decisions. NPF operates several legacy business systems and specialty business applications. All of these systems are data rich and have some information reporting capability. Over the past three years, a capability was developed—using PowerPlay software—that taps into these systems to create a data mart. During fiscal year 2001/02 this capability was expanded to include base funds and messes. A PowerPlay-enabled report for Base Commanders was developed on sources of funding and the amount of CFCF support.

By developing in-house programs and acquiring off-the-shelf software, we are taking active steps in providing an IM/IT environment that is capable of supporting such business initiatives as • Human Resource Information Upgrade Project • Payroll Streamlining • Business Case Analysis Software • NPF Travel Claims Program • CFPAF Loans Program • Insurance Inventory Program.

COMMUNICATING SEAMLESSLY

	"PROGRESS HAS BEEN MADE IN ESTABLISHING SEAMLESS COMMUNICATIONS..."

Progress has been made in establishing seamless communications throughout CFPSA, and with DND and NPF suppliers, customers, and clients. The NPF wide area network and the Defence Wide Area Network (DWAN) can now communicate via the Internet. Additionally, a private network has been established that provides secure communications within the regions, the Canadian Forces Personnel Assistance Fund (CFPAF), NATEX, Europe, and other remote users. In December, a trial video e-mail capability was successfully demonstrated in Bosnia. If implemented, this system will enable deployed soldiers to not only send, but also receive video e-mails from their families and friends in Canada.

GENERATING FUNDING THROUGH CFCF INVESTMENT PORTFOLIO

FIGURE 1

Figure 1: As a result of a difficult financial market, CFCF investment revenues fell to just over $2 million in fiscal year 2001/02. However, the fund performed very well, achieving a 4.01 per cent investment rate of return versus the benchmark of 1.86 per cent.

FIGURE 2

Figure 2: This figure illustrates the CFCF cumulative performance over the past three years – the period of time in which the investments have been managed on a fullportfolio basis. During this period, the CFCF outperformed the benchmark by approximately four per cent, a performance that represents about $5 million in extra investment income.

THE FUTURE

The next fiscal year promises to be challenging. There is still a great deal of uncertainty in financial markets, uncertainty that will impact the investment management activities for the Canadian Forces Central Fund. The September 11th tragedy has had an adverse effect on insurance premiums, further complicating the provision of cost-effective risk management and the operation of the Consolidated Insurance Program.

In fiscal year 2002/03, the Finance Division will be involved in the following projects:

• Continue working with the other divisions, bases, and wings to develop a comprehensive approach to Customer Relationship Management.

• Introduce a group-banking package for both current and former members of the Canadian Forces, their families, NPF employees, DND public servants, and other authorized patrons. The NPP Board of Directors initiated this project in September 2001.

• Complete the Accounting Policies and Procedures manual that replaces CFP 105.

• Propose and implement a new accounting structure for Europe in response to increased NPF activity.

• Complete a comprehensive review of the regional accounting structure to determine if there are opportunities to achieve further economies from consolidation.

• Conduct a trial, in conjunction with the Chief of Maritime Staff Comptroller branch, using the Consolidated Bank Account for all navy ships and reserve units.

• In partnership with the Chief Land Staff – Comptroller and Land Forces Area HQs, effect the regularization of Reserve NPF accounting under the regional concept, so as to comply with NPP Board of Directors June 1999 direction with regard to the visibility of all things NPF. In essence, NPF financial records and reports will be produced and maintained by the Finance Division of the CFPSA. This process will take place over the next two to three years.

R.J. Smith
Chief Financial Officer and
Vice-President