Consolidated Financial Statements for the year ended March 31, 2015

Table of Contents

Statement of Management Responsibility Including Internal Control Over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying consolidated financial statements for the year ended March 31, 2015, and all information contained in these statements rests with the management of Citizenship and Immigration Canada (CIC). These consolidated 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 consolidated financial statements. Some of the information in the consolidated 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 consolidated 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 adjustments.

A risk-based assessment of the system of ICFR for the year ended March 31, 2015 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 consolidated financial statements of CIC have not been audited.

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 21, 2015

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

As at March 31

(in thousands of dollars)

2015 2014
Liabilities
Accounts payable and accrued liabilities (note 4) $ 291,904 $ 265,132
Immigrant Investor Program (note 5) 61,240 112,420
Vacation pay and compensatory leave 21,216 19,659
Deferred revenue (note 6) 193,703 206,356
Employee future benefits (note 7b) 27,920 25,592
Total gross liabilities 595,983 629,159
Liabilities held on behalf of Government
Deferred revenue (note 6) (193,703) (206,356)
Total liabilities held on behalf of Government (193,703) (206,356)
Total net liabilities 402,280 422,803
Financial assets
Due from Consolidated Revenue Fund 259,963 217,763
Accounts receivable and advances (note 8) 44,779 81,443
Loans receivable (note 9) 38,144 37,531
Inventory held for resale (note 10) 17,978 11,799
Total gross financial assets 360,864 348,536
Financial assets held on behalf of Government
Accounts receivable and advances (note 8) (27,960) (25,777)
Total financial assets held on behalf of Government (27,960) (25,777)
Total net financial assets 332,904 322,759
Departmental net debt 69,376 100,044
Non-financial assets
Prepaid expenses 2,942 3,682
Consumable inventory (note 10) 2,658 5,957
Tangible capital assets (note 11) 160,075 165,239
Total non-financial assets 165,675 174,878
Departmental net financial position $ 96,299 $ 74,834

Contractual obligations (note 12)
Contingent liabilities (note 13)

The accompanying notes form an integral part of these consolidated 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 21, 2015

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

For the year ended March 31

(in thousands of dollars)

2015
Planned
results
2015 2014
Expenses
Newcomer Settlement and Integration $ 1,005,061 $ 1,009,804 $ 972,931
Passport 405,863 355,035 250,929
Migration Control and Security Management 185,041 202,203 187,573
Citizenship for Newcomers and All Canadians 133,534 110,542 84,890
Permanent Economic Residents 128,277 103,161 92,412
Family and Discretionary Immigration 86,083 79,481 85,165
Temporary Economic Residents 86,129 73,829 61,257
Refugee Protection 50,972 46,116 46,468
Health Protection 59,466 31,215 38,988
Multiculturalism for Newcomers and All Canadians  13,841 7,214 10,212
Canadian Influence in International Migration
and Integration Agenda
9,927 6,405  5,993
Internal Services 198,548 245,300 256,256
Total expenses 2,362,742 2,270,305 2,093,074
Revenues
Passport fees earned 673,741 644,865 462,482
Immigration service fees 374,736 405,258 370,542
Right of permanent residence 84,347 81,179 83,367
Citizenship service fees 74,917 71,983 28,963
Right of citizenship 21,721 22,732 13,667
International Experience Canada 9,938 5,038 6,096
Interest on loans 450 388 477
Passport miscellaneous revenues - 283 326
Other revenues 283 279 290
Revenues earned on behalf of Government (556,443) (581,809) (497,287)
Total revenues 683,690 650,196 468,923 
Net cost of operations before government funding and transfers 1,679,052 1,620,109 1,624,151
Government funding and transfers
Net cash provided by Government 1,306,363 1,407,987
Change in due from Consolidated Revenue Fund 42,200 (99,346)
Services provided without charge by other government
departments (note 14a)
307,586 316,967
Transfer of the transition payments for implementing
salary payments in arrears (note 15)
(14,055) -
Transfer of assets and liabilities from (to) other government
departments (note 16)
(520) 50,607
Net revenue of operations after government funding and transfers (21,465) (52,064)
Departmental net financial position - Beginning of year 74,834 22,770
Departmental net financial position - End of year   $ 96,299 $ 74,834

Segmented information (note 17)
The accompanying notes form an integral part of these consolidated 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)

2015 2014

Net revenue of operations after government funding and transfers

$ (21,465) $  (52,064)

Change due to tangible capital assets

Acquisition of tangible capital assets 24,246 25,493
Amortization of tangible capital assets (26,967) (24,979)
Proceeds from disposal of tangible capital assets (1) (11)

Adjustments to tangible capital assets
including loss on disposal

(1,922) 2,839
Transfer from (to) other government departments (520) 18,583
Total change due to tangible capital assets (5,164) 21,925
Change due to consumable inventory (3,299) 1,925
Change due to prepaid expenses (740) 826
Net decrease in departmental net debt (30,668) (27,388)
Departmental net debt - Beginning of year 100,044 127,432
Departmental net debt - End of year $ 69,376 $ 100,044

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

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

For the year ended March 31

(in thousands of dollars)

Operating activities 2015 2014
Net cost of operations before government funding and transfers $ 1,620,109 $ 1,624,151
Non-cash items:
Amortization of tangible capital assets (26,967) (24,979)
Adjustments to tangible capital assets including loss on disposal (1,922) 2,839
Services provided without charge by other government departments (note 14a) (307,586) (316,967)
Transition payments for implementing salary payments in arrears (note 15) 14,055 -
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances (38,847) 47,698
Increase (decrease) in prepaid expenses (740) 826
Increase in inventory held for resale 6,179 11,799
Increase (decrease) in consumable inventory (3,299) 1,925
Increase in loans receivable 613 674
Increase in accounts payable and accrued liabilities (26,772) (8,972)
Decrease in Immigrant Investor Program 51,180 64,248
Increase in vacation pay and compensatory leave (1,557) (2,296)
Decrease (increase) in employee future benefits (2,328) 13,583
Transfer of liabilities and non-capital assets from other government departments - (32,024)
Cash used in operating activities 1,282,118 1,382,505
Capital investing activities
Acquisitions of tangible capital assets 24,246 25,493
Proceeds from disposal of tangible capital assets (1) (11)
Cash used in capital investing activities 24,245 25,482
Net cash provided by Government of Canada $  1,306,363 $ 1,407,987

The accompanying notes form an integral part of these consolidated 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 is 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 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 work force, addressing immediate and longer-term labour market needs, and supporting national and regional labour force growth. The selection and processing involve the granting of a permanent residence to qualified applicants, as well as the refusal of unqualified applicants.

Temporary Economic Residents: Rooted in objectives outlined in Immigration and Refugee Protection Act, the focus of this program is to establish and apply the rules governing 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 family reunification 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 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 protected person status when a positive decision is rendered by the Immigration and Refugee Board of Canada.

Newcomer Settlement and Integration: 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.

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 across Canada. 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, socially cohesive society (through increasing intercultural and interfaith understanding, civic memory and pride, respect for core democratic values, and equality of opportunity to full participation in society and the economy); improve the responsiveness of institutions to the needs of a diverse population; and actively engage in discussions on multiculturalism, integration and diversity at the international level. Direct public outreach and promotional activities by the program primarily target young people. Further,the program assists federal partners to meet their obligations under the Act through its annual report to Parliament on its operation and the federal Multiculturalism Champions Network. It also engages with non-federal public institutions seeking to respond to diversity through the Federal-Provincial-Territorial Officials Responsible for Multiculturalism Issues. The program is the locus for Canada’s participation in international agreements and institutions with respect to anti-Semitism and Holocaust remembrance (through the International Holocaust Remembrance Alliance).

Health Protection: 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.  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 Immigration and Refugee Protection Act 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: As part of its mandate, CIC 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 and contributions to such organizations as the International Organization for Migration, Regional Conference on Migration, the UNHCR, Global Forum on Migration and Development, and Intergovernmental Consultations on Migration, Asylum and Refugees. The program uses transfer payment funding from the following programs: grant for Migration Policy Development; International Organization for Migration; and International Holocaust Remembrance Alliance.

Passport: 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 a 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: Internal services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These groups are: management and oversight services; communications services; legal services; human resources management services; financial management services; information management services; information technology services; real property services; materiel services; acquisition services; and travel and other administrative services. Internal services include only those activities and resources that apply across an organization and not those provided specifically to a program.

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 mainly 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 “Expenses” and “Revenues” sections of the Consolidated Statement of Operations and Departmental Net Financial Position are the amounts reported in the Consolidated Future-oriented Statement of Operations included in the 2014-15 Report on Plans and Priorities. Planned results are not presented in the “Government funding and transfers” section of the Consolidated Statement of Operations and Departmental Net Financial Position and in the Consolidated Statement of Change in Departmental Net Debt because these amounts were not included in the 2014-15 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 for. 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 or to 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, accommodation, employers' contributions to the health and dental insurance plans, legal services, and workers’ compensation costs are recorded as operating expenses at their estimated costs.

  7. Employee future benefits
    1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. CIC'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.
    2. 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 that 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 forms and passport material held for resale. All passport material is valued at the lower of cost (using the average cost method) or net realizable value. Informatics equipment and forms are 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 in the year that they become available for use and are not amortized until 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)

2015 2014
Net cost of operations before government funding and transfers $1,620,109 $ 1,624,151
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (26,967) (24,979)
Adjustments to tangible capital assets including loss on disposal (1,922) 2,839
Services provided without charge by other government departments (307,586) (316,967)
Increase in vacation pay and compensatory leave (1,557) (2,296)
Decrease (increase) in employee future benefits (2,328) 13,583
Decrease in accrued liabilities not charged to authorities 4,296 4,504
Bad debt expense (711) (859)
Refund of previous year's expenditures 4,708 1,545
Other (127) (4,272)
Total items affecting net cost of operations but not affecting
authorities
  (332,194)   (326,902)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets 24,246 25,493
Increase in loans issued on behalf of Government 613 674
Transition payments for implementing salary payments in arrears 14,055 -
Increase in inventory held for resale 6,179 11,799
Increase (decrease) in consumable inventory (3,299) 1,925
Increase (decrease) in prepaid expenses (740) 826
Federal Skilled Worker, Immigrant Investor Program and Entrepreneur Program returned fees 28,132 38,322
Refunds of previous years' revenues 4,768 7,676
Other 84 (4,465)
Total items not affecting net cost of operations but affecting
authorities
74,038 82,250
Current year authorities used 1,361,953 $ 1,379,499

(b) Authorities provided and used

(in thousands of dollars)

2015 2014
Authorities Provided:
Vote 1 - Operating expenditures $ 612,180 $ 592,987
Vote 5 - Grants and contributions 1,000,063 983,148
Vote 7 - Debt write off 1,145 806
Statutory amounts 273,556 77,258
Non-budgetary items 68,368 69,171
Less:
Lapsed Vote 1 - Operating expenditures (51,342) (71,242)
Lapsed Vote 5 - Grants and contributions (10,166) (26,968)
Lapsed Vote 7 - Debt write off (28) (7)
Lapsed - Statutory Amounts (29) (27)
Authorities available for future years (531,794)  (245,627)
Current year authorities used $  1,361,953 $ 1,379,499

4. Accounts payable and accrued liabilities

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

(in thousands of dollars)

2015 2014
Accounts payable - Other government departments and agencies $ 52,884 $ 32,919
Accounts payable - External parties 72,028 58,250
Total accounts payable 124,912 91,169
Accrued liabilities Footnote 1 166,816 173,787
Contingent liabilities 176 176
Total accounts payable and accrued liabilities $291,904 $265,132

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)

2015 2014
Opening balance $112,420 $176,668
Receipts 738,963 1,222,496
Payments (790,143) (1,286,744)
Closing balance $ 61,240 $ 112,420

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)

2015 2014
Opening balance $206,356 $253,015
Amounts received 572,477 456,572
Revenue recognized Footnote 1 (585,130) (503,227)
Remissions - reduction of the right of permanent residence - (4)
Gross closing balance 193,703 206,356
Deferred revenues held on behalf of Government (193,703) (206,356)
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 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 2014-2015 expense amounts to $48,052,620 ($46,595,928 in 2013-2014). For Group 1 members, the expense represents approximately 1.41 times (1.6 times in 2013-2014) the employee contributions and, for Group 2 members, approximately 1.39 times (1.5 times in 2013-2014) the employee contributions.

    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.

  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)

    2015 2014
    Accrued benefit obligation, beginning of year $25,592 $39,175
    Transferred from other government department - 2,720
    Subtotal 25,592 41,895
    Expense for the year 11,590 (802)
    Benefits paid during the year (9,262) (15,501)
    Accrued benefit obligation, end of year $27,920 $25,592

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)

2015 2014
Receivables - Other government departments and agencies $41,907 $ 78,362
Receivables - External parties 3,685 3,959
Employee advances 250 150
Subtotal 45,842 82,471
Allowance for doubtful accounts on receivables from external parties (1,063) (1,028)
Gross accounts receivable and advances 44,779 81,443
Accounts receivable held on behalf of Government (27,960) (25,777)
Net accounts receivable and advances $ 16,819 $  55,666

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)

2015 2014
Immigration loans - Opening balance $41,632 $40,829
Add: New loans issued 13,389 13,965
Less: Repayments of loans (11,356) (12,553)
Less: Loans balance written-off during the year (832) (609)
Immigration loans - Closing balance 42,833 41,632
Less: Allowance for uncollectibility (4,689) (4,101)
Total loans receivable $38,144 $37,531

10. Inventory

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

(in thousands of dollars)

2015 2014
Passport material - for resale $15,459 $11,799
Forms – for resale 2,519
Passport material consumable 1,922 1,650
Informatics equipment - consumable 614 1,420
Forms – consumable 122 2,887
Total inventory $20,636 $17,756

The cost of consumed inventory recognized as an expense in the Consolidated Statement of Operations and Departmental Net Financial Position is $62,240,128 in 2014-2015 ($40,903,803 in 2013-2014).

11. Tangible capital assets

Cost

(in thousands of dollars)

Opening
balance
Restated
(note 18)
Acquisitions
Adjustments
Footnote 1
Disposals and write-offs Closing balance
Machinery and equipment $3,835 $17 $(187) $(1,628) $2,037
Informatics hardware 11,726 650 (504) (6,047) 5,825
Software (purchased and developed) 302,752 2,237 20,302 (265) 325,026
Office furniture 1,286 265 32 (87) 1,496
Vehicles 687 56 (20) 723
Assets under construction 9,468 21,021 (20,302)  (869) 9,318
Leasehold improvements 39,203 (1,189) (2,174) 35,840
Total costs $368,957 $24,246 $(1,848) $(11,090) $380,265

Accumulated amortization

(in thousands of dollars)

Opening
balance
Restated
(note 18)
Amortization Adjustments
Footnote 1
Disposals and write-offs Closing balance
Machinery and equipment $3,046 $197 $(87) $ (1,596) $1,560
Informatics hardware 6,398 1,399 (262) (5,104) 2,431
Software (purchased and developed) 157,880 24,261 (190) 181,951
Office furniture 766 97 23 (83) 803
Vehicles 528 43 (20) 551
Assets under construction
Leasehold improvements 35,100 970 (1,002) (2.174) 32,894
Total accumulated amortization $203,718 $26,967 $(1,328) $(9,167) $220,190

Net book value

(in thousands of dollars)

2015 2014
Restated
(note 18)
Machinery and equipment $477 $798
Informatics hardware 3,394 5,328
Software (purchased and developed) 143,075 144,872
Office furniture 693 520
Vehicles 172 159
Assets under construction 9,318 9,468
Leasehold improvements 2,946 4,103
Net Book Value $160,075 $165,239

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:

(in thousands of dollars)

2016 2017 2018 2019 2020 and thereafter Total
Transfer Payments $ 953,422 $ 356,906 $ 340,642 $ 340,568 $ 340,568 $ 2,332,106
Operating and Maintenance 65,556 20,711 9,246 19 12 95,544
Passport - Operating and Maintenance 44,202 5,494 4,380 2,679 56,755
Total 1,063,180 383,111 354,268 343,266 340,580 2,484,405

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, CIC 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, CIC received services without charge from certain common service organizations, related to accommodation, the employers' contributions to the health and dental insurance plans, legal services, 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)

      2015 2014
    International immigration services $203,090 $213,504
    Accommodation 39,095 38,424
    Employers' contributions to health and dental insurance plans 35,955 33,441
    Legal services 29,263 31,419
    Workers' compensation 183 179
    Total $307,586 $316,967

    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)

    2015 2014
    Expenses - Other Government
    departments and agencies
    $312,718 $237,796

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

15. Transfer of the transition payments for implementing salary payments in arrears

The Government of Canada implemented salary payments in arrears in 2014-15. As a result, a one-time payment was issued to employees and will be recovered from them in the future. The transition to salary payments in arrears forms part of the transformation initiative that replaces the pay system and also streamlines and modernizes the pay processes. This change to the pay system had no impact on the expenses of the Department. However, it did result in the use of additional spending authorities by the Department. Prior to year end, the transition payments for implementing salary payments in arrears were transferred to a central account administered by Public Works and Government Services Canada, who is responsible for the administration of the Government pay system.

16. Transfers from/to 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 some remaining assets related to information technologies infrastructure to Shared Services Canada.
  2. 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 some remaining assets to ESDC.

(in thousands of dollars)

a) SSC b) ESDC Total 2015 Total 2014
Assets:
Tangible capital assets (net book value) (note 11) $333 $187 $520 $18,618
Accounts receivable 28,341
Inventory 13,104
Other assets 6,350
Total assets transferred $333 $187 $ 520 $66,413
Liabilities:
Accounts payable $ – $ – $– $(1,654)
Employee future benefits (note 7b) (2,720)
Other liabilities (11,397)
Total liabilities transferred (15,771)
Adjustment to departmental net financial position $ 333 $ 187 $ 520 $50,642

17. Segmented information

Presentation by segment is based on CIC’s program aligment 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 revenue. The segment results for the period are as follows:

(in thousands of dollars)

Settlement
Footnote 1
Passport
Footnote 2
Migration
Footnote 3
Citizenship
Footnote 4
Permanent
Footnote 5
Family
Footnote 6
Temporary
Footnote 7
Transfer payments
Non-profit organization $ 588,579 $ - $ (200) $ 777 $ - $ - $ -
Other levels of government within Canada 337,491 - - - - - -
Individuals 44,233 - - - - - -
Other countries and international organizations 4,000 - 2,494 - - - -
Total transfer payments 974,303 - 2,294 777 - - -
Operations and administration
Salaries and employees benefits 28,655 56,300 147,115 89,744 80,197 70,147 61,983
Professional and special services 2,043 203,931 27,442 7,382 8,440 3,219 6,278
Utilities, materials and supplies 151 40,474 2,064 881 645 835 236
Transportation and communication 565 34,681 3,792 2,589 3,586 1,916 1,410
Accommodation 2,270 - 5,898 7,417 3,654 3,156 2,445
Amortization of tangible capital assets - 5,415 12,056 979 5,583 3 1,325
Rentals of equipment 48 10,146 306 560 357 108 79
Information services 199 2,957 1,149 101 623 79 65
Repairs and maintenance (1) 1,122 87 112 57 17 7
Other 1,571 9 - - 19 1 1
Total Operations and administration 35,501 355,035 199,909 109,765 103,161 79,481 73,829
Total Expenses 1,009,804 355,035 202,203 110,542 103,161 79,481 73,829
Revenues
Passport Fees earned - 644,865 - - - - -
Immigration service fees - - 183,776 - 90,978 31,835 95,994
Right of permanent residence - - - - 53,783 23,615 3,781
Citizenship service fees - - - 71,983 - - -
Right of Citizenship - - - 22,732 - - -
International Experience Canada - - - - - - 5,038
Interest on Loans 388 - - - - - -
Passport miscellaneous revenues - 283 - - - - -
Other revenues 3 - - - - - -
Revenues earned on behalf of Government (391) - (183,776) (94,715) (144,761) (55,450) (99,775)
Total Revenues - 645,148 - - - - 5,038
Net cost of operations before government funding and transfers $1,009,804 $ (290,113) $ 202,203 $ 110,542 $ 103,161 $ 79,481 $ 68,791
Refugee
Footnote 8
Health
Footnote 9
Multi
Footnote 10
Influence
Footnote 11
Internal
Footnote 12
2015 2014
Transfer payments
Non-profit organization $ - $ - $ 4,044 $ - $ - $ 593,200 $ 489,691
Other levels of government within Canada - - - - - 337,491 424,093
Individuals - - - - - 44,233 33,446
Other countries and international organizations - - - 2,264 - 8,758 6,038
Total transfer payments - - 4,044 2,264 - 983,682 953,268
Operations and administration
Salaries and employees benefits 40,138 6,109 2,714 3,613 165,816 752,531 701,060
Professional and special services 2,437 24,581 165 229 35,360 321,507 263,152
Utilities, materials and supplies 192 19 5 6 9,554 55,062 39,401
Transportation and communication 794 117 86 87 4,300 53,923 44,415
Accommodation 2,443 380 200 206 11,026 39,095 38,424
Amortization of tangible capital assets - - - - 1,606 26,967 24,979
Rentals of equipment 63 7 - - 10,566 22,240 17,005
Information services 35 2 - - 5,369 10,579 5,798
Repairs and maintenance 14 - - - 1,703 3,118 3,380
Other - - - - - 1,601 2,192
Total Operations and administration 46,116 31,215 3,170 4,141 245,300 1,286,623 1,139,806
Total Expenses 46,116 31,215 7,214 6,405 245,300 2,270,305 2,093,074
Revenues
Passport Fees earned - - - - - 644,865 462,482
Immigration service fees 2,675 - - - - 405,258 370,542
Right of permanent residence - - - - - 81,179 83,367
Citizenship service fees - - - - - 71,983 28,963
Right of Citizenship - - - - - 22,732 13,667
International Experience Canada - - - - - 5,038 6,096
Interest on Loans - - - - - 388 477
Passport miscellaneous revenues - - - - - 283 326
Other revenues - 12 - - 264 279 290
Revenues earned on behalf of Government (2,675) (12) - - (254) (581,809) (497,287)
Total Revenues - - - - 10 650,196 468,923
Net cost of operations before government funding and transfers $ 46,116 $ 31,215 $ 7,214 $ 6,405 $ 245,290 $1,620,109 $1,624,151

18. Restatement of Previous Year’s Result

CIC records all tangible capital assets and leasehold improvements with an acquisition cost of $10,000 or more, amortizes them on a straight-line basis over the estimated useful life and proceeds to their disposal and write off when these are no longer used. Capital assets, related to the passport transition, should have been written-off in 2013-2014. As a result, a total adjustment of $40,863,221 was required to the notes to the consolidated financial statements. This adjustment has no impact on the Consolidated Statement of Financial Position and the Consolidated Statement of Operations and Departmental Net Financial Position since these assets were fully amortized.

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

Notes to the Consolidated Financial Statements:
Tangible capital assets (note 11)
(in thousands of dollars)

2014 as previously stated Effect of change 2014 Restated
Cost
Leasehold improvements $ 80,046 $ (40,843) $ 39,203
Informatics hardware 11,746 (20) 11,726
Accumulated Amortization
Leasehold improvements 75,943 (40,843) 35,100
Informatics hardware $6,418 (20) $6,398
Date Modified: