ARCHIVED – Financial Statements for the year ended March 31, 2010

• Statement of Management Responsibility
• Statement of Operations
• Statement of Financial Position
• Statement of Equity of Canada
• Statement of Cash Flows
• Notes to the Financial Statements
• Annex to the Statement of Management Responsibility

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, 2010, and all information contained in these statements rests with the management of Citizenship and Immigration Canada (CIC). These financial statements have been prepared by management in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector.

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 CIC’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in CIC’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 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 CIC; and through conducting an annual assessment of the effectiveness of the system of internal control over financial reporting.

An assessment for the year ended March 31, 2010 was completed in accordance with the Policy on Internal Control and the results and action plans are summarized in the annex.

The system of internal control over financial reporting 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.

The Audit Committee ensures that the Deputy Minister has independent objective advice and assurance on the adequacy of CIC’s risk management, control and accountability processes. It ensures that there are effective arrangements in place to monitor and follow-up on management action plans responding to recommendations from internal audits, the Office of the Auditor General of Canada, or other sources. It reviews CIC’s corporate risk profile. It also reviews the arrangements established by management to promote public service values and to ensure compliance with laws, regulations, policies, and standards of ethical conduct.

The financial statements of Citizenship and Immigration Canada have not been audited.

Citizenship and Immigration Canada
Statement of Operations (Unaudited)

For the Year Ended March 31
(in thousands of dollars)

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

Citizenship and Immigration Canada
Statement of Financial Position (Unaudited)

At March 31
(in thousands of dollars)

Contingent Liabilities (Note 12)
Contractual Obligations (Note 13)

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

Citizenship and Immigration Canada
Statement of Equity of Canada (Unaudited)

At March 31
(in thousands of dollars)

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

Citizenship and Immigration Canada
Statement of Cash Flows (Unaudited)

For the Year Ended March 31
(in thousands of dollars)

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

Citizenship and Immigration Canada
Notes to the Financial Statements (Unaudited)
For the Year Ended March 31

1. Authority and Objectives

Citizenship and Immigration Canada (CIC) was established on June 23, 1994 by the Department of Citizenship and Immigration Act.  It is a Department named in Schedule I of the Financial Administration Act and currently reports to Parliament through the Minister of Citizenship, Immigration and Multiculturalism. 

CIC administers the Citizenship Act of 1977 and shares responsibility with the Canada Border Services Agency (CBSA) for the Immigration and Refugee Protection Act (IRPA), which was enacted following a major legislative reform in 2002. On October 30, 2008, CIC also received responsibility from Canadian Heritage to implement the Canadian Multiculturalism Act of 1988. Assets and liabilities related to the program were transferred to CIC as of April 1, 2009.

The Department’s key strategic outcomes are:

• Migration that significantly benefits Canada’s economic, social and cultural development, while protecting the health, safety and security of Canadians
• International recognition and acceptance of the principles of managed migration consistent with Canada’s broader foreign policy agenda, and protection of refugees in Canada
• Successful integration of newcomers into society and promotion of Canadian citizenship.

These three strategic outcomes are delivered with the following program activities.

• Integration Program: Develop policies and programs to support the settlement, resettlement, adaptation and integration of newcomers into Canadian society by delivering orientation, adaptation and language programs for newcomers.
• Immigration Program: Design, develop and implement policies and programs to facilitate the entry of permanent residents in a way that contributes to the economic, social and cultural development of Canada while protecting the health, safety and security of Canadians.
• Refugee Program: Fulfil Canada’s international obligations by coming to the aid of persons in need of protection in Canada, and maintaining its humanitarian tradition by protecting refugees abroad through resettlement to Canada.
• Temporary Resident Program: Design, develop and implement policies and programs to facilitate the entry of temporary workers, students and visitors in a way which contributes to Canada’s economic, social and cultural development, while protecting the health, safety and security of Canadians.
• Citizenship Program: Design, develop and implement policies and programs to administer the acquisition of Canadian citizenship, and to enhance the values and promote the rights and responsibilities of Canadian citizenship.
• Canada’s Role in International Migration and Protection: Advance Canada’s interests in the context of international migration consistent with Canada’s legal and international obligations; steer and influence the international agenda on  migration management issues, ensuring consistency with Canada’s foreign and other public policy approaches; contribute to managing migration internationally; and support development of Canada’s image abroad.

Internal Services support the needs of the above programs and other corporate obligations of the organization. Internal services include only activities and resources that apply across the Department and not those provided specifically to a program.

CIC is funded by a budgetary lapsing authority.  Revenues, including fees and rights, are deposited to the Consolidated Revenue Fund and are not available for use by the Department.  Fees and rights are collected through the Immigration and Refugee Protection Regulations as well as through the Citizenship Regulations. Employee benefits are authorized by a statutory authority.  CIC issues immigration loans through a non-budgetary non-lapsing authority.

2. Summary of Significant Accounting Policies

These financial statements have been prepared in accordance with the Treasury Board accounting policies stated below, which are based on Canadian generally accepted accounting principles for the public sector. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian generally accepted accounting principles.

Significant accounting policies are as follows:

(a) Parliamentary authorities – the Department is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Department 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 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. 

(b) Net Cash Provided by Government – The Department operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada.  All cash received by the Department is deposited to the CRF and all cash disbursements made by the Department are paid from the CRF.  The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.

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

(d) Revenues

• Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.
• Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenues takes place.
• Deferred revenues are revenues that have been received but not yet earned. The recognition of revenues from fees is considered deferred until the application is processed, while the recognition of revenues from rights (right of citizenship and right of permanent residence) is deferred until the right is granted.

(e) Expenses – Expenses are recorded on the accrual basis.

• Grants are recognized in the year in which the conditions for payment are met.
• Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement.
• 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, workers’ compensation costs, legal services and international immigration services are recorded as operating expenses, using estimated costs supplied by the respective other government departments.

(f) Employee future benefits

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

(ii) Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment.  These benefits are accrued as employees render the services necessary to earn them.  The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole. 

(g) Accounts and loans receivables are stated at amounts expected to be ultimately realized. Interest revenue is recognized on a receivable when earned. A provision is made for receivables where recovery is considered uncertain.  Loans that cannot be recovered are written off after receiving Parliamentary approval in accordance with the Debt Write-off Regulations.

(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) Inventories – Inventories consist of forms and informatics equipment held for future program delivery and not intended for resale. They are valued at cost. 

(j) Foreign currency transactions – Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in a foreign currency are translated into Canadian dollars using the rate of exchange in effect on March 31.  Gains and losses resulting from foreign currency transactions are included in other revenues or other expenses.

(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. 

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

Assets under construction are recorded in the applicable capital asset class and amortized when they become available for use.

(l) 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, the liability for employee severance benefits, the useful life of tangible capital assets and deferred revenues.  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

Citizenship and Immigration Canada receives all of its funding through annual Parliamentary authorities.  Items recognized in the statement of operations and the statement of financial position in one year may be funded through Parliamentary authorities in prior, current or future years.  Accordingly, the Department has different net results of operations for the year on a government funding basis than on an accrual accounting basis.  The differences are reconciled in the following tables.

(a) Reconciliation of net cost of operations to current year authorities used
(in thousands of dollars)

(b) Authorities provided and used
(in thousands of dollars)

(c) Reconciliation of net cash provided by Government to current year authorities used
(in thousands of dollars)

4. Expenses

The following presents details of expenses by category.

5. Revenues

The following presents details of revenues by category.

6. Accounts Receivable and Advances

The following presents details of accounts receivable and advances.

7. Loans Receivable

In accordance with the Immigration and Refugee Protection Act, CIC can issue immigration loans up to a maximum of $110,000,000.  Since February 28, 1995, all immigration loans bear interest at a rate determined by the Minister of Finance at the beginning of each calendar year.  Regulations provide for a period of up to 6 years for the repayment of the loans.  The interest rate on outstanding interest-bearing loans varies from 1.75% to 10.733%.  The closing balance of the immigration loans, only includes the outstanding principal balance.  An allowance for doubtful accounts is made for loans when recovery is considered uncertain.

There were no write-offs in 2008–2009.

8. Tangible Capital Assets

(in thousands of dollars)

Amortization expense for the year ended March 31, 2010 is $17,283 (2009: $17,332 restated).

9. Deferred Revenues

The deferred revenue account was established to record fees and rights derived from the Citizenship Act and Regulations, and the Immigration and Refugees Protection Act and Regulations. Fees are deferred until the application is deemed processed, while rights (right of citizenship and right of permanent residence) are deferred until the right is granted.

(in thousands of dollars)

10. Immigrant Investor Program

The Immigrant Investor Program allows qualified immigrants to gain permanent residence in Canada by making an investment of $400,000 in the Canadian economy.  The investment is returned to the investor, without interest, five years and two months after payment.

After meeting other immigration requirements, applicants are then required to pay their $400,000 investment to the Receiver General for Canada.  CIC acts as an agent for the approved provincial funds by collecting the investments and distributing them to the approved funds according to a prescribed allocation formula (50 percent divided equally and 50 percent distributed according to provincial gross domestic product).  The investment is distributed to the participating provinces and territories (Ontario, British Columbia, Prince Edward Island, Northwest Territories, Manitoba, Newfoundland and Labrador, and Nova Scotia) on the first day of the second month following receipt from the investor.

The participating provinces and territories are responsible for investing their allocations to strengthen their economies and to create or continue employment.  They report to CIC quarterly, and after the five-year holding period, remit the $400,000 investment back to CIC.  CIC, within 30 days of receipt of the $400,000 from the participating funds, returns the $400,000 investment to the investor (without interest).

The value of financial transactions processed during the year is as follows.

11. Employee Future Benefits

(a) Pension benefits: The Department’s 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/Québec Pension Plans benefits and they are indexed to inflation.

Both the employees and the Department contribute to the cost of the Plan.  The 2009-2010 expense amounts to $39,577,358 ($31,782,375 in 2008-2009), which represents approximately 1.9 times (2.0 in 2008-2009) the contributions by employees.

The Department’s responsibility with regard to the Plan is limited to its contributions.  Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan’s sponsor.

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

12. Contingent Liabilities

Claims and litigation

Claims have been made against the Department in the normal course of operations.  Some of these potential liabilities may become actual liabilities when one or more future events occur or fail to occur.  To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded in the financial statements.  Based on the Department's legal assessment of potential liability, no allowance was recorded at March 31, 2010 ($175,000 in 2008-2009).

13. Contractual Obligations

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

14. Related Party Transactions

The Department is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations.  The Department enters into transactions with these entities in the normal course of business and on normal trade terms.  Also, during the year, the Department received services that were obtained without charge from other government departments as presented in part (a).

(a) Services provided without charge by other government departments

During the year, the Department received services without charge from common service organizations, related to accommodation, legal services, the employer’s contribution to the health and dental insurance plans and workers' compensation coverage. Additionally, the Department received international immigration services from Department of Foreign Affairs and International Trade’s staff and facilities at missions abroad.  These services provided without charge have been estimated by the respective other government departments, and are recognized in the Department’s Statement of Operations as follows.

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 the 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 as an expense in the Department’s Statement of Operations.

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

15. Transfer from Canadian Heritage

Order in Council 2008-1733 designated the Minister of Citizenship and Immigration as the Minister for the purposes of the Canadian Multiculturalism Act effective October 30, 2008. As a result, budgets, assets and liabilities pertaining to the Multiculturalism program were transferred from Canadian Heritage to Citizenship and Immigration Canada as of April 1, 2009.

All transactions for the year ended March 31, 2010 are reflected in the figures presented in the financial statements of CIC.  All transactions for the year ended March 31, 2009 are reflected in the financial statements of Canadian Heritage.

16. Restatement

During the year, the department reviewed the valuation and the date of availability for use of in-house developed software. As a result of the review, the department concluded that two adjustments were required, one regarding the acquisition cost, and the other for the accumulated amortization.  It was determined that the asset was overvalued as a result of a change in scope of the project, and as significant components of the asset had been implemented and in use at the end of the 2005 fiscal year, amortization should have commenced.  As a result, the comparative financial statements presented for the year ended March 31, 2009 have been restated, including equity opening balance for those adjustments pertaining to prior fiscal years.

The effect of these adjustments is presented in the table below.

(a) Write off for change in scope for the in-house developed software: $63,367

(b) Amortization expense for the in-house developed software used since 2005: $45,857

17. Comparative Information

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