Consolidated Financial Statements for the year ended March 31, 2014

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, 2014, 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 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 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 (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 CIC 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 ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustment.

A risk-based assessment of the system of ICFR for the year ended March 31, 2014 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 CIC’s system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of CIC’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 recommends the financial statements to the Deputy Minister of CIC.

The financial statements of CIC have not been audited.

original signed by Anita Biguzs

Anita Biguzs

Deputy Minister

original signed byTony Matson

Tony Matson, CPA, CMA

Assistant Deputy Minister

Chief Financial Officer

Ottawa, Canada
August 15, 2014

Citizenship and Immigration Canada – Consolidated Statement of Financial Position (Unaudited)

As at March 31
(in thousands of dollars)

  2014 2013
Restated
(note 17)
Liabilities
Accounts payable and accrued liabilities (note 4) $265,132 $256,160
Immigrant Investor Program (note 5) 112,420 176,668
Vacation pay and compensatory leave 19,659 17,363
Deferred revenue (note 6) 206,356 253,015
Employee future benefits (note 7b) 25,592 39,175
Total gross liabilities 629,159 742,381
Liabilities held on behalf of Government
Deferred revenue (note 6) (206,356) (253,015)
Total liabilities held on behalf of Government (206,356) (253,015)
Total net liabilities 422,803 489,366
Financial assets
Due from Consolidated Revenue Fund 217,763 317,109
Accounts receivable and advances (note 8) 81,443 22,930
Loans receivable (note 9) 37,531 36,857
Inventory held for resale (note 10) 11,799 -
Total gross financial assets 348,536 376,896
Financial assets held on behalf of Government
Accounts receivable and advances (note 8) (25,777) (14,962)
Total financial assets held on behalf of Government (25,777) (14,962)
Total net financial assets 322,759 361,934
Departmental net debt 100,044 127,432
Non-financial assets
Prepaid expenses 3,682 2,856
Consumable inventory (note 10) 5,957 4,032
Tangible capital assets (note 11) 165,239 143,314
Total non-financial assets 174,878 150,202
Departmental net financial position $74,834 $22,770

Contractual obligations (note 12)
note 13)

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

original signed by Anita Biguzs

Anita Biguzs

Deputy Minister

original signed by Tony Matson

Tony Matson, CPA, CMA

Assistant Deputy Minister

Chief Financial Officer

Ottawa, Canada
August 15, 2014

Citizenship and Immigration Canada – Consolidated Statement of Operations and Departmental Net Financial Position (Unaudited)

For the year ended March 31
(in thousands of dollars)

  2014
Planned
Results
2014 2013
Restated
(note 17)
Expenses
Settlement and Integration of Newcomers $973,769 $972,931 $955,406
Passport Canada 250,929
Migration Control and Security Management 167,860 187,573 169,867
Permanent Economic Residents 78,939 92,412 79,500
Family and Discretionary Immigration 73,120 85,165 83,109
Citizenship for Newcomers and all Canadians 54,961 84,890 65,839
Temporary Economic Residents 49,389 61,257 58,233
Refugee Protection 46,970 46,468 47,663
Health Management 61,723 38,988 61,105
Multiculturalism for Newcomers and all Canadians 14,982 10,212 17,317
Canadian Influence in International Migration and Integration Agenda 3,822 5,993 4,422
Internal Services 285,963 256,256 258,244
Total expenses 1,811,498 2,093,074 1,800,705
Revenues
Passport fees earned 462,482
Immigration service fees 374,313 370,542 347,950
Right of permanent residence 85,052 83,367 67,827
Citizenship service fees 27,143 28,963 17,458
Right of citizenship 19,105 13,667 6,708
International Experience Canada 6,096
Interest on loans 500 477 441
Passport miscellaneous revenues 326
Other revenues 400 290 5,308
Revenues earned on behalf of Government (506,498) (497,287) (445,686)
Total revenues 15 468,923 6
Net cost of operations before government funding and transfers 1,811,483 1,624,151 1,800,699
Government funding and transfers
Net cash provided by Government 1,695,686 1,407,987 1,552,401
Change in due from the Consolidated Revenue Fund (134,655) (99,346) (69,913)
Services provided without charge by other government departments (note 14a) 245,671 316,967 313,228
Transfer of tangible capital assets from/to other government departments (35)
Transfer of assets and liabilities from other government departments (note 15) 50,642 (67)
Net cost (revenue) of operations after government funding and transfers 4,781  (52,064) 5,050
Departmental net financial position – Beginning of year 140,336  22,770 27,820
Departmental net financial position – End of year $ 135,555 $74,834 $22,770

Segmented information (note 16)
The accompanying notes form an integral part of these financial statements.

Citizenship and Immigration Canada – Consolidated Statement of Change in Departmental Net Debt (Unaudited )

For the year ended March 31
(in thousands of dollars)

  2014
Planned
Results
2014 2013
Restated
(note 17)
Net cost (revenue) of operations after government funding and transfers $4,781 $(52,064) $5,050
Change due to tangible capital assets
Acquisition of tangible capital assets 6,665 25,493 15,774
Amortization of tangible capital assets (19,733) (24,979) (19,037)
Proceeds from disposal of tangible capital assets (15) (11) (22)
Adjustments to tangible capital assets including loss on disposal (34) 2,839 (109)
Transfer from other government departments 18,583 (437)
Total change due to tangible capital assets (13,117) 21,925 (3,831)
Change due to consumable inventory (283) 1,925 (106)
Change due to prepaid expenses 73 826 (6,270)
Net decrease in departmental net debt (8,546) (27,388) (5,157)
Departmental net debt - Beginning of year (884) 127,432 132,589
Departmental net debt - End of year $(9,430) $100,044 $127,432

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

Citizenship and Immigration Canada – Consolidated Statement of Cash Flows (Unaudited )

For the year ended March 31
(in thousands of dollars)

  2014 2013
Restated
(note 17)
Operating activities
Net cost of operations before government funding and transfers $1,624,151 $1,800,699
Non-cash items:
Amortization of tangible capital assets (24,979) (19,037)
Adjustments to tangible capital assets including loss on disposal 2,839 (109)
Services provided without charge by other government departments (Note 14a) (316,967) (313,228)
Variations in Statement of Financial Position:
Increase in accounts receivable and advances 47,698 161
Increase in inventory held for resale 11,799
Increase (decrease) in prepaid expenses 826 (6,270)
Increase (decrease) in consumable inventory 1,925 (106)
Increase (decrease) in loans receivable 674 (988)
Decrease (increase) in accounts payable and accrued liabilities (8,972) 61,064
Decrease in Immigrant Investor Program 64,248 14,852
Decrease (increase) in vacation pay and compensatory leave (2,296) 1,132
Decrease (increase) in employee future benefits 13,583 (1,151)
Transfer of liabilities and non-capital assets from other government departments (note 15) (32,024) (370)
Cash used in operating activities 1,382,505 1,536,649
Capital investing activities
Acquisitions of tangible capital assets 25,493 15,774
Proceeds from disposal of tangible capital assets (11) (22)
Cash used in capital investing activities 25,482 15,752
Net cash provided by Government of Canada $1,407,987 $1,552,401

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

Citizenship and Immigration Canada – Notes to the Consolidated 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.

Jurisdiction over immigration is a shared responsibility between the federal and the provincial and territorial governments under section 95 of the Constitution Act, 1867. Under s. 91(25) of the Constitution Act 1867, the federal government has jurisdiction over naturalization and aliens.

In July 2013, the primary responsibility for the Passport Program was transferred from the Department of Foreign Affairs, Trade and Development Canada (DFATD) to CIC, while passport service delivery will be provided through Service Canada.

In August 2013, CIC assumed responsibility for International Experience Canada (IEC) from DFATD. This transfer allowed the program to better align with government priorities and labour market demands in Canada by linking IEC to other immigration programs.

The Department's key strategic outcomes are:

  • Migration of permanent and temporary residents that strengthens Canada’s economy;
  • Family and humanitarian migration that reunites families and offers protection to the displaced and persecuted;
  • Newcomers and citizens participate to their full potential in fostering an integrated society;
  • Managed migration that promotes Canadian interests and protects the health, safety and security of Canadians.

These four strategic outcomes are delivered with the following programs.

Permanent Economic Residents: Rooted in objectives outlined in the Immigration and Refugee Protection Act, the focus of this Program is on the selection and processing of immigrants who can support the development of a strong and prosperous Canada, in which the benefits of immigration are shared across all regions of Canada.  The acceptance of qualified permanent residents helps the government meet its economic objectives, such as building a skilled workforce, addressing immediate and longer term labour market needs, and supporting national and regional labour force growth. The selection and processing involve the issuance of a permanent resident visa to qualified applicants, as well as the refusal of unqualified applicants.

Temporary Economic Residents: Rooted in objectives outlined in the Immigration and Refugee Protection Act, the focus of this Program is on processing and facilitating the entry into Canada of temporary foreign workers and international students. Temporary economic migration enhances Canada’s trade, commerce, cultural, educational and scientific activities, in support of our overall economic and social prosperity. The selection and processing involve the issuance of temporary resident visas, work permits and study permits to qualified applicants, as well as the refusal of unqualified applicants.

Family and Discretionary Immigration: CIC’s Family and Discretionary programs support the Government of Canada’s social goals for immigration.  The Program objectives are to reunite family members and to allow for the processing of exceptional cases. Family Class provisions of the Immigration and Refugee Protection Act enable Canadian citizens and permanent residents of Canada to apply to sponsor eligible members of the family class, including spouses and partners, dependent children, and parents and grandparents. Discretionary provisions in the legislation are used in cases where there are humanitarian and compassionate considerations or for public policy reasons. These discretionary provisions provide the flexibility to approve exceptional and deserving cases not anticipated in the legislation and to support the Government of Canada in its humanitarian response to world events and crises. The selection and processing involve the issuance of a permanent resident visa or granting of permanent residence to qualified applicants, as well as the refusal of unqualified applicants

Refugee Protection: The Refugee Protection program is in the first instance about saving lives and offering protection to the displaced and persecuted.  One arm of the program starts overseas where refugees and persons in refugee-like situations are selected by Canadian visa officers to be resettled as permanent residents to Canada.  Flowing from Canada's international and domestic legal obligations, the in-Canada asylum system evaluates the claims of individuals seeking asylum in Canada and grants permanent residence when a positive decision is rendered by the Immigration and Refugee Board of Canada.

Settlement and Integration of Newcomers: In accordance with the Canadian Multiculturalism Act, the Employment Equity Act and the Immigration and Refugee Protection Act, programming is developed based on policies that support the settlement, resettlement, adaptation and integration of newcomers into Canadian society. All permanent residents are eligible for settlement and integration programs. Programming is delivered by third parties (including provincial and municipal governments, school boards and post-secondary institutions, settlement service organizations and other non-governmental actors, and the private sector) across the country.  However, accountability for expended funds and attaining outcomes remains with Citizenship and Immigration Canada.

Citizenship for Newcomers and all Canadians: The purpose of the Citizenship Program is to administer citizenship legislation and promote the rights and responsibilities of Canadian citizenship.  CIC administers the acquisition of Canadian citizenship by developing, implementing, and applying legislation, regulations and policies that protect the integrity of Canadian citizenship and allow eligible applicants to be granted citizenship or be provided with a proof of citizenship.  In addition, the program promotes citizenship, to both newcomers and the Canadian-born, through various events, materials and projects.  Promotional activities focus on enhancing knowledge of Canada’s history, institutions, and values, as well as fostering an understanding of the rights and responsibilities of Canadian citizenship.

Multiculturalism for Newcomers and all Canadians: The Multiculturalism Program is the principal means of carrying out the Minister’s responsibilities under the Canadian Multiculturalism Act for promoting the full and equitable participation of individuals and communities of all origins. Grants and contributions to not-for-profit organizations, the private sector, provincial and municipal governments, non-federal public institutions and individuals seek to advance overarching Program objectives. These objectives are to: build an integrated, cohesive society (through intercultural understanding, civic memory and pride and democratic values, and equality of opportunity); improve the responsiveness of institutions to the needs of a diverse population; and, actively engage in discussions on multiculturalism and diversity at the international level. Direct public outreach and promotional activities by the Program primarily target young people.  The Program assists federal partners to meet their obligations under the Act and ensures annual reporting to Parliament on its operation. It also engages with non-federal public institutions seeking to respond to diversity. The Program provides a forum for cooperation with provinces and territories and is the locus for Canada’s participation in international agreements and institutions with respect to multiculturalism, anti-racism and related issues.

Health Management: This program aims to provide effective immigration health services to manage the health aspect of migrant access and settlement to Canada, and facilitate the arrival of resettled refugees to Canada and their integration while contributing to the protection of the health and safety of all Canadians and contributing to the maintenance of sustainable Canadian health and social services.

The program aims to evaluate health risks related to immigration and coordinate with international and Canadian health partners to develop risk management strategies and processes to assess the health of applicants wishing to immigrate to Canada and develop pre-departure, in-transit, and post arrival interventions.  The strategies, processes and interventions are intended to reduce the impact of the risks identified on the health of Canadians and on Canada’s health and social services.

Migration Control and Security Management: This Program aims to ensure the managed migration of foreign nationals and newcomers to Canada. As such, in accordance with IRPA and accompanying Regulations, CIC facilitates the travel of bona fide permanent residents, visitors, students and temporary workers while protecting the health, safety and security of Canadians by effectively managing migration access and controlling entry. This is accomplished through a variety of policy and operational measures, including visa policy interventions, anti-fraud measures, eligibility and admissibility criteria, negotiations of bilateral and multilateral information sharing agreements and treaties, security updates to travel and immigration status documents, as well as revisions to identity management practices. Strategic partnership engagements with security and public safety-related departments are another essential component of this Program.

Canadian Influence in International Migration and Integration Agenda: Reflecting part of CIC’s mandate, this Program aims to influence the international migration and integration policy agenda.  This is done by developing and promoting, together with other public policy sectors, Canada’s position on international migration, integration, and refugee protection issues and through participation in multilateral, regional and bilateral forums.

CIC works closely with partner countries to ensure the effective administration of immigration laws through the exchange of information, including biometric data. This international migration policy development helps Canada advance its interests in the context of international migration as well as meet its international obligations and commitments.

CIC supports international engagement and partnerships through membership in the International Organization for Migration, and contributions to other international migration policy organizations.

Passport Canada: CIC is accountable for the Passport Program, and collaborates with Service Canada and Foreign Affairs, Trade and Development Canada for the delivery of passport services. The Program is managed through the Passport Canada Revolving Fund. The Program enables the issuance of secure Canadian travel documents through authentication of identity and entitlement, facilitates travel and contributes to international and domestic security.

Internal Services: CIC’s internal services are groups of activities and resources that help the Department achieve its strategic outcomes. Internal services apply across CIC and are not linked to a specific program. These services include management and oversight, communications, legal services, human resources management, financial management, IM, IT, real property, materiel, acquisition, and travel and other administrative services.

2. Summary of significant accounting policies

These consolidated 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:

  1. Parliamentary authorities
    • CIC 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 Consolidated Statement of Operations and Departmental Net Financial Position and in the Consolidated 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 Consolidated Statement of Operations and Departmental Net Financial Position and Consolidated Statement of Change in Departmental Net Debt are the amounts reported in the future-oriented financial statements included in the 2013-14 Report on Plans and Priorities.

  2. Consolidation
    • These consolidated financial statements include the accounts of the Passport Canada Revolving Fund for which the deputy head (DH) is accountable. The accounts of the Passport Canada Revolving Fund have been consolidated with those of CIC, and all inter-organizational balances and transactions have been eliminated.

  3. Net Cash Provided by Government
    • CIC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada.  All cash received by CIC is deposited to the CRF, and all cash disbursements made by CIC 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.

  4. Amount due from the Consolidated Revenue Fund (CRF)
    • 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 Department is entitled to draw from the CRF without further authorities to discharge its liabilities.

  5. 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.

      The recognition of revenues from fees is considered deferred until the application is processed, while the recognition of revenues from rights (right of permanent residence and right of citizenship) is deferred until the right is granted.

      Revenues from passport fees are recognized upon receipt of payment and verification of the passport application for completeness.

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

      Revenues that are non-respendable are not available to discharge CIC’s liabilities.  While the DH is expected to maintain accounting control, she 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 CIC’s gross revenues.

  6. Expenses
    • Expenses are recorded on an 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 to the completion of the consolidated 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 international immigration services, legal services, accommodation, employers' contributions to the health and dental insurance plans and workers’ compensation costs are recorded as operating expenses at their estimated costs.

  7. Employee future benefits
    • Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension 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. CIC’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.
    • Severance benefits: Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. 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.
  8. Accounts and loans receivable
    • Accounts and loans receivable are stated at the lower of cost and net recoverable value. Interest is recognized as revenue and recorded as a receivable when earned. A valuation allowance is recorded for accounts and loans receivable 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.

  9. 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 if an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the consolidated financial statements.

  10. Inventory
    • Inventory consists of forms, informatics equipment, and passport material held for future program delivery and not intended for resale, as well as passport material held for resale.  All passport material is valued at the lower of cost (using the average cost method) or net realizable value.  Forms and informatics equipment not intended for resale is valued at cost using the first in, first out method.

  11. 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. Gains and losses resulting from foreign currency transactions are included in other revenues or other expenses in the Consolidated Statement of Operations and Departmental Net Financial Position.

  12. 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.  CIC does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Aboriginal reserves and museum collections.

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

      Asset class Amortization period
      Machinery and equipment 5 to 15 years
      Informatics hardware 3 to 5 years
      Software (purchased and developed) 3 to 10 years
      Office furniture 10 years
      Vehicles 5 to 8 years
      Leasehold improvements Lesser of remaining term of the lease or useful life of the improvement

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

  13. Measurement uncertainty
    • The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the consolidated 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 the deferred revenues, the liability for employee future benefits, the useful life of tangible capital assets, contingent liabilities and allowance for doubtful accounts. Actual results could significantly differ from those estimated.  Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the consolidated financial statements in the year they become known.

3. Parliamentary authorities

CIC receives most of its funding through annual parliamentary authorities. 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. CIC is also responsible for the management of the Passport revolving fund, a continuing non-lapsing authority from Parliament to make payments out of the Consolidated Revenue Fund for working capital, capital acquisitions and temporary financing of accumulated operating deficits.

Items recognized in the Consolidated Statement of Operations and Departmental Net Financial Position and the Consolidated Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, CIC 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)
  2014 2013
Restated
(note 17)
Net cost of operations before government funding
and transfers
$1,624,151 $1,800,699
Adjustments for items affecting net cost of operations
but not affecting authorities:
Services provided without charge by other government departments (316,967) (313,228)
Amortization of tangible capital assets (24,979) (19,037)
Decrease in accrued liabilities not charged to authorities 4,504 27,406
Bad debt expense (859) (73)
Adjustments to tangible capital assets including loss on disposal 2,839 (109)
Refund of previous year's expenditures 1,545 1,593
Decrease (increase) in employee future benefits 13,583 (1,151)
Decrease (increase) in vacation pay and compensatory leave (2,296) 1,132
Other (4,272) 1,328
Total items affecting net cost of operations but not affecting authorities (326,902) (302,139)
Adjustments for items not affecting net cost of operations
but affecting authorities:
Increase (decrease) in consumable inventory 1,925 (106)
Refunds of previous years' revenues 7,676 9,776
Federal Skilled Worker returned fees 38,322 5,710
Acquisition of tangible capital assets 25,493 15,774
Increase (decrease) in prepaid expenses 826 (6,270)
Increase in inventory held for resale 11,799
Increase (decrease) in loans issued on behalf of Government 674 (988)
Other (4,465) (111)
Total items not affecting net cost of operations
but affecting authorities
82,250 23,785
Current year authorities used $1,379,499 $1,522,345
(b) Authorities provided and used
(in thousands of dollars)
  2014 2013
Authorities Provided:
Vote 1 - Operating expenditures $592,987 $581,485
Vote 5 - Grants and contributions 983,148 961,604
Vote 9 - Debt write off 806 442
Statutory amounts 77,258 73,753
Non-budgetary items 69,171 68,191
Less:
Lapsed Vote 1 - Operating expenditures (71,242) (65,515)
Lapsed Vote 5 - Grants and contributions (26,968) (28,402)
Lapsed Vote 9 - Debt write off (7) (2)
Lapsed - Statutory amounts (27) (12)
Authorities available for future years (245,627) (69,199)
Current year authorities used $1,379,499 $1,522,345

4. Accounts payable and accrued liabilities

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

(in thousands of dollars)
  2014 2013
Accounts payable - Other government departments and agencies $32,919 $5,002
Accounts payable - External parties 58,250 59,087
Total accounts payable 91,169 64,089
Accrued liabilities Footnote 1 173,787 192,071
Contingent liabilities 176
Total accounts payable and accrued liabilities $265,132 $256,160

The Economic Action Plan (EAP) 2014 Act, no.1 (Bill C-31) terminated applications in the backlog of the federal Immigrant Investor Program (IIP) and Entrepreneur Program (EN) for which a selection decision was not made before February 11, 2014. EAP 2014 allotted $34,470,128 to facilitate the return of fees to affected IIP and EN applicants. This would be to return fees previously collected by the Government of Canada for applications that have not been processed. CIC is absorbing the expected administration costs. This will affect 63,000 people in the IIP and 7,700 people in the EN, including spouses and dependents. CIC will return fees paid by applicants on those terminated files, without interest

In Canada’s Economic Action Plan 2012, the Government announced savings measures to be implemented by departments over the next three fiscal years starting in 2012-2013. CIC recorded an obligation for termination benefits at March 31, 2013 ($2,795,000) as part of accrued liabilities to reflect the estimated workforce adjustment costs. As of March 31, 2014, the balance of this accrued liability is estimated at zero.

5. Immigrant Investor Program

The Economic Action Plan 2014 Act, no.1 (Bill C-31) terminated applications in the backlog of the federal Immigrant Investor Program (IIP) and Entrepreneur Program (EN) for which a selection decision was not made before February 11, 2014. While the program has been terminated, outstanding investments will continue to be returned to investors approximately over the next 5 years. The IIP allows qualified immigrants to gain permanent residence in Canada by making an investment of $800,000 ($400,000 prior to December 1, 2010) 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 $800,000 ($400,000 prior to December 1, 2010) 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 organizations 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 (Ontario, British Columbia, Saskatchewan, Manitoba, Nova Scotia, Newfoundland and Labrador, New Brunswick and Prince Edward Island) on the first day of the second month following receipt from the investor.

The participating provinces 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 full amount investment back to CIC.  Within 30 days of receipt of the full amount from the participating funds, CIC returns this investment to the investor (without interest).

The Northwest Territories refunded $113,120,093 after retracting from the IIP program in 2012. CIC will keep these funds until such time as the funds are due to be repaid to the individual investors.

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

(in thousands of dollars)
  2014 2013
Opening balance $176,668 $191,520
Receipts 1,222,496 842,720
Payments (1,286,744) (857,572)
Closing balance $112,420 $176,668

6. Deferred revenue

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 for services that have yet to be rendered to the Department.

The following table presents details of the deferred revenue account:

(in thousands of dollars)
  2014 2013
Opening balance $253,015 $257,176
Amounts received 456,572 444,250
Revenue recognized Footnote 1 (503,227) (448,389)
Remissions - reduction of the right of permanent residence (4) (22)
Gross closing balance 206,356 253,015
Deferred revenues held on behalf of Government (206,356) (253,015)
Net Closing balance $ – $ –

7. Employee future benefits

  1. Pension benefits
    • CIC's employees participate in the public service pension plan (the “Plan”), which is sponsored and administered by the Government of Canada. 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 Plan benefits and they are indexed to inflation.

      Both the employees and the Department contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Canada’s Economic Action Plan 2012, employee contributors have been divided into two groups – Group 1 relates to existing plan members as of December 31, 2012 and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.

      The 2013-2014 expense amounts to $46,595,928 ($41,497,673 in 2012-2013). For Group 1 members, the expense represents approximately 1.6 times (1.7 times in 2012-2013) the employees’ contributions and for Group 2 members, approximately 1.5 times (1.6 times for 2012-2013) the employees’ contributions.

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

  2. Severance benefits
    • CIC provides severance benefits to some of its employees 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 severance benefits, calculated as at March 31, is as follows:

      (in thousands of dollars)
        2014 2013
      Accrued benefit obligation, beginning of year $39,175 $38,024
      Transferred from other government department (note 15) 2,720
      Subtotal 41,895 38,024
      Expense for the year (802) 18,880
      Benefits paid during the year (15,501) (17,729)
      Accrued benefit obligation, end of year $25,592 $39,175

      As part of collective agreement negotiations with most employee groups, 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 on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.

8. Accounts receivable and advances

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

(in thousands of dollars)
  2014 2013
Receivables - Other government departments and agencies $78,362 $18,383
Receivables - External parties 3,959 4,586
Employee advances 150 179
Subtotal 82,471 23,148
Allowance for doubtful accounts on receivables from external parties (1,028) (218)
Gross accounts receivable and advances 81,443 22,930
Accounts receivable held on behalf of Government (25,777) (14,962)
Net accounts receivable and advances $55,666 $7,968

9. Loans receivable

In accordance with the IRPA, 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 1.26% to 9.06%.  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.

The following table presents details of the CIC’s immigration loans balances:

(in thousands of dollars)
  2014 2013
Immigration loans - Opening balance $40,829 $41,809
Add: New loans issued 13,965 11,273
Less: Repayments of loans (12,553) (11,886)
Less: Loans balance written-off during the year (609) (367)
Immigration loans - Closing balance 41,632 40,829
Less: Allowance for uncollectibility (4,101) (3,972)
Total loans receivable $37,531 $36,857

10. Inventory

The following table presents details of the inventory, measured at cost or net realizable value.

(in thousands of dollars)
  2014 2013
Forms – consumable $2,887 $2,729
Informatics equipment - consumable 1,420 1,303
Passport material - consumable 1,650
Passport material - for resale 11,799
Total inventory $17,756 $4,032

The cost of consumed inventory recognized as an expense in the Consolidated Statement of Operations and Departmental Net Financial Position is $40,903,803 in 2013-2014 ($4,033,924 in 2012-2013).

11. Tangible capital assets

Cost
(in thousands of dollars)
  Opening
balance
Restated
(note 17)
Acquisitions
Footnote 1
Adjustments
Footnote 2
Disposals and write-offs Closing balance
Machinery and equipment $1,612 $235 $1,988 $ – $3,835
Informatics hardware 1,011 1,266 9,469 11,746
Software (purchased and developed) 251,570 2,204 49,028 (50) 302,752
Office furniture 1,171 102 97 (84) 1,286
Vehicles 776 45 (91) (43) 687
Assets under construction 12,327 21,287 (24,146) 9,468
Leasehold improvements 45,483 354 34,209 80,046
Total costs $313,950 $25,493 $70,554 $(177) $409,820
Accumulated amortization
(in thousands of dollars)
  Opening
balance
Restated
(note 17)
Amortization Adjustments
Footnote 2
Disposals and write-offs Closing balance
Machinery and equipment $1,247 $185 $1,614 $ – $3,046
Informatics hardware 626 1,192 4,600 6,418
Software (purchased and developed) 121,999 22,666 13,265 (50) 157,880
Office furniture 677 90 77 (78) 766
Vehicles 604 58 (91) (43) 528
Assets under construction
Leasehold improvements 45,483 788 29,672 75,943
Total accumulated amortization $170,636 $24,979 $49,137 $(171) $244,581
Net book value
(in thousands of dollars)
  2014 2013
Restated
note(17)
Machinery and equipment $789 $365
Informatics hardware 5,328 385
Software (purchased and developed) 144,872 129,571
Office furniture 520 494
Vehicles 159 172
Assets under construction 9,468 12,327
Leasehold improvements 4,103
Net Book Value $165,239 $143,314

12. Contractual obligations

The nature of CIC’s activities can result in some large multi-year contracts and obligations whereby CIC will be obligated to make future payments in order to carry out its transfer payment programs or when the services/goods are received.

Significant contractual obligations that can be reasonably estimated are summarized as follows:

Fiscal Year
(in thousands of dollars)
  2015 2016 2017 2018 2019 and
thereafter
Total
Transfer Payments $808,114 $740,466 $320,167 $319,967 $319,967 $2,508,681
Operating and Maintenance 68,577 24,768 16,353 9,131 9 118,838
Passport - Operating and Maintenance 43,872 37,040 80,912
Passport - Operating Lease 4,715 436 611 5,762
Total $925,278 $802,710 $337,131 $329,098 $319,976 $2,714,193

13. Contingent liabilities

Claims have been made against CIC 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 and a reasonable estimate of the loss cannot be made by management.  CIC has recorded an allowance for claims and litigation where it is likely that there will be a future payment and a reasonable estimate of the loss can be made.

14. Related party transactions

CIC is related as a result of common ownership to all government departments, agencies, and Crown corporations.  CIC enters into transactions with these entities in the normal course of business and on normal trade terms.  During the year, the Department received common services which were obtained without charge from other government departments as disclosed below.

  1. Common services provided without charge by other government departments
    • During the year, the Department received services without charge from certain common service organizations, related to accommodation, legal services, the employers' contributions to the health and dental insurance plans, and workers' compensation coverage. Additionally, the Department of Foreign Affairs, Trade and Development provides international immigration services at missions abroad, for which CIC has transferred funding. These services provided without charge have been recorded in the Department’s Consolidated Statement of Operations and Departmental Net Financial Position as follows:

      (in thousands of dollars)
        2014 2013
      International immigration services $213,504 $214,709
      Accommodation 38,424 37,205
      Employers' contributions to health and dental insurance plans 33,441 30,893
      Legal services 31,419 30,260
      Workers' compensation 179 161
      Total $316,967 $313,228

      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, audit services provided by the Office of the Auditor General are not included in CIC’s Consolidated Statement of Operations and Departmental Net Financial Position.  The costs of information technology infrastructure services provided by Shared Services Canada, following the transfer of responsibilities in November 2011 and April 2013, are also not included in CIC’s Consolidated Statement of Operations and Departmental Net Financial Position.

  2. Other transactions with related parties
    (in thousands of dollars)
      2014 2013
    Expenses - Other Government
    departments and agencies
    $237,796 $79,236

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

15. Transfers to/from other government departments

  1. On April 3, 2013, CIC transferred responsibility for the acquisition and provision of hardware and software, including security software, for workplace technology devices to Shared Services Canada (SSC) pursuant to Order-in-Council 2013-0368, including the stewardship responsibility for the assets and liabilities related to the program. Accordingly, CIC transferred the following assets related to the acquisition and provision of software, including security software, for workplace technology devices to Shared Services Canada. During the transition period, CIC continued to administer the transferred activities on behalf of SSC.  The administered expenses amounted to $983,000 for the year.  These expenses are not recorded in these financial statements.
  2. Effective July 2, 2013, responsibility for Passport Canada was transferred from DFATD to CIC and ESDC in accordance with Order-in-Council 2013-0540, including the stewardship responsibility for the assets and liabilities related to Passport Canada.  Accordingly, CIC received the following assets and liabilities related to Passport Canada from DFATD on July 2, 2013.
  3. Following the July 2, 2013 transfer of Passport Canada from DFATD to CIC and ESDC pursuant to Order-in-Council 2013-0540, CIC administered the transferred activities on behalf of ESDC during the transition period.  Accordingly, CIC transferred the following assets and liabilities to ESDC in April and May of 2014.
(in thousands of dollars)
  a) SSC b) DFATD c) ESDC Total
2014
Assets:
Tangible capital assets (net book value) (note 11) $ – $18,622 $(4) $18,618
Accounts receivable 28,341 28,341
Inventory 13,104 13,104
Other assets (3) 6,378 (25) 6,350
Total assets transferred $ (3) $66,445 $(29) $66,413
Liabilities:
Accounts payable $ – $(4,691) $3,037 $(1,654)
Employee future benefits (note 7b) (5,587) 2,867 (2,720)
Other liabilities (11,678) 281 (11,397)
Total liabilities transferred (21,956) 6,185 (15,771)
Adjustment to the departmental net financial position $(3) $44,489 $6,156 $50,642

16. Segmented information

Presentation by segment is based on the Department'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:

(in thousands of dollars)
  Settlement
Footnote 1
Passport
Footnote 2
Migration
Footnote 3
Permanent
Footnote 4
Family
Footnote 5
Citizenship
Footnote 6
Temporary
Footnote 7
Transfer payments
Non-profit organisations $482,148 $ – $ – $ – $ – $1,059 $ –
Other levels of government within Canada 424,099 (2)
Individuals 33,446
Other countries and international organizations 835 3,088
Total transfer payments 940,528 3,086 1,059
Operations and administration
Salaries and employee benefits 26,432 46,266 142,270 75,000 71,140 61,708 50,876
Professional and special services 2,163 143,816 20,271 7,180 5,619 7,968 5,010
Accommodation 2,165 5,669 2,990 3,637 5,623 2,313
Amortization of tangible capital assets 4,730 4,704 4,435 2,038 3,184 1,328
Transportation and communication 544 23,957 5,700 2,054 2,033 2,851 1,293
Utilities, materials and supplies 75 22,401 5,254 351 480 1,236 296
Rentals of equipment 97 6,217 378 289 106 437 40
Repairs and maintenance 3 1,643 104 42 90 696 14
Information services 133 1,581 129 70 21 107 80
Other 791 318 8 1 1 21 7
Total Operations and administration 32,403 250,929 184,487 92,412 85,165 83,831 61,257
Total Expenses 972,931 250,929 187,573 92,412 85,165 84,890 61,257
Revenues
Immigration service fees 162,217 77,490 31,101 90,943
Right of permanent residence 54,704 28,663
Citizenship service fees 28,963
Right of citizenship 13,667
Passport Fees earned 462,482
Other revenues 20 3
Interest on loans 477
International Experience Canada 6,096
Passport miscellneous revenues 326
Revenues earned on behalf of Government (497) (162,217) (132,194) (59,767) (42,630) (90,943)
Total Revenues 462,808 6,096
Net cost of operations before government funding and tranfers $972,931 $(211,879) $187,573 $92,412 $85,165 $84,890 $55,161

(in thousands of dollars)
  Refugee
Footnote 8
Health
Footnote 9
Multi
Footnote 10
Canadian
Footnote 11
Internal
Footnote 12
2014 2013
(Restated note 17)
Transfer payments
Non-profit organisations $ – $ – $6,484 $ – $ – $489,691 $454,821
Other levels of government within Canada (4) 424,093 444,282
Individuals 33,446 34,961
Other countries and international organizations 2,115 6,038 2,067
Total transfer payments 6,484 2,111 953,268 936,131
Operations and administration
Salaries and employee benefits 37,872 7,799 3,070 2,724 175,903 701,060 634,771
Professional and special services 3,773 30,536 253 422 36,141 263,152 134,845
Accommodation 2,399 537 226 180 12,685 38,424 37,206
Amortization of tangible capital assets 1,451 3,109 24,979 19,037
Transportation and communication 617 90 167 368 4,741 44,415 10,979
Utilities, materials and supplies 217 20 4 28 9,039 39,401 13,115
Rentals of equipment 64 3 8 59 9,307 17,005 9,922
Repairs and maintenance 8 780 3,380 2,868
Information services 67 2 101 3,507 5,798 973
Other 1 1,044 2,192 858
Total Operations and administration 46,468 38,988 3,728 3,882 256,256 1,139,806 864,574
Total Expenses 46,468 38,988 10,212 5,993 256,256 2,093,074 1,800,705
Revenues
Immigration service fees 8,791 370,542 347,950
Right of permanent residence 83,367 67,827
Citizenship service fees 28,963 17,458
Right of citizenship 13,667 6,708
Passport Fees earned 462,482
Other revenues 17 250 290 5,308
Interest on loans 477 441
International Experience Canada 6,096
Passport miscellaneous revenues 326
Revenues earned on behalf of Government (8,791) (17) (231) (497,287) (455,686)
Total Revenues 19 468 923 6
Net cost of operations before government funding and transfers $46,468 $38,988 $10,212 $5,993 $256,237 $1,624,151 $1,800,699

17. Restatement of Previous Year’s Result

CIC records all tangible capital assets and leasehold improvements having an initial cost of $10,000 or more at their acquisition cost when assets under construction are transferred into the applicable capital asset class.  These assets are amortized when they become available for use.  Expenses incurred in fiscal years 2011-12 and 2012-13 were not transferred to assets under construction in the appropriate year.  In fiscal year 2013-14, these assets have been put into service and amortization started.  As a result, an adjustment of $8,849,069 was required to the departmental net financial position.

CIC’s consolidated financial statements have therefore been restated as described below.

(in thousands of dollars)
  2013
As previously
stated
Effect of change 2013 Restated
Consolidated Statement of Financial Position:
Tangible capital assets (note 11) $134,465 $8,849 $143,314
Total non-financial assets 141,353 8,849 150,202
Departmental Net Financial Position 13,921 8,849 22,270
Consolidated Statement of Operations and Departmental Net Financial Position:
Migration Control and Security Management 176,871 (7,004) 169,867
Internal Services 258,600 (356) 258,244
Total expenses 1,808,065 (7,360) 1,800,705
Net cost of operations before government funding and transfers 1,808,059 (7,360) 1,800,699
Net cost (revenue) of operations after government funding and transfers 12,410 (7,360) 5,050
Departmental net financial position - Beginning of year 26,331 1,489 27,820
Departmental net financial position - End of year 13,921 8,849 22,770
Consolidated Statement of Change in Departmental Net Debt:
Net cost (revenue) of operations after government funding and transfers 12,410 (7,360) 5,050
Acquisition of tangible capital assets 8,411 7,363 15,774
Amortization of tangible capital assets (19,034) (3) (19,037)
Total change due to tangible capital assets (11,191) 7,360 (3,831)
Consolidated Statement of Cash Flows:
Amortization of tangible capital assets (19,034) (3) (19,037)
Cash used in operating activities 1,544,012 (7,363) 1,536,649
Acquisitions of tangible capital assets 8,411 7,363 15,774
Cash used in capital investing activities 8,389 7,363 15,752
Date Modified: