Consolidated Financial Statements for the year ended March 31, 2016

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, 2016, and all information contained in these statements rests with the management of Immigration, Refugees and Citizenship Canada (IRCC). 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 IRCC’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in IRCC’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 IRCC 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, 2016 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 IRCC’s system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of IRCC’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 IRCC.

The consolidated financial statements of IRCC have not been audited.

Original signed by Marta Morgan
Marta Morgan
Deputy Minister

Original signed by Daniel Mills
Daniel Mills, CPA, CMA
A/Assistant Deputy Minister-Chief
Financial Officer

Ottawa, Canada
August 31, 2016

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

As at March 31

(in thousands of dollars)

  2016 2015
Liabilities
Accounts payable and accrued liabilities (note 4) $ 279,394 $ 291,904
Immigrant Investor Program (note 5) 23,364 61,240
Vacation pay and compensatory leave 25,660 21,216
Deferred revenue (note 6) 222,232 193,703
Employee future benefits (note 7b) 27,705 27,920
Total gross liabilities 578,355 595,983
Liabilities held on behalf of Government
Deferred revenue (note 6) (222,232) (193,703)
Total liabilities held on behalf of Government (222,232) (193,703)
Total net liabilities 356,123 402,280
Financial assets
Due from Consolidated Revenue Fund 261,853 259,963
Accounts receivable and advances (note 8) 37,378 44,779
Loans receivable (note 9) 41,248 38,144
Inventory held for resale (note 10) 15,679 17,978
Total gross financial assets 356,158 360,864
Financial assets held on behalf of Government
Accounts receivable and advances (note 8) (19,052) (27,960)
Total financial assets held on behalf of Government (19,052) (27,960)
Total net financial assets 337,106 332,904
Departmental net debt 19,017 69,376
Non-financial assets
Prepaid expenses 3,973 2,942
Consumable inventory (note 10) 5,810 2,658
Tangible capital assets (note 11) 156,201 160,075
Total non-financial assets 165,984 165,675
Departmental net financial position $ 146,967 $ 96,299

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

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

Original signed by Marta Morgan
Marta Morgan
Deputy Minister

Original signed by Daniel Mills
Daniel Mills, CPA, CMA
A/Assistant Deputy Minister-Chief
Financial Officer

Ottawa, Canada
August 31, 2016

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

For the Year Ended March 31

(in thousands of dollars)

  2016
Planned results
2016 2015
Expenses
Newcomer Settlement and Integration $ 1,018,515 $ 1,113,651 $ 1,009,804
Passport 443,888 357,122 355,035
Migration Control and Security Management 222,103 231,230 202,203
Refugee Protection 45,110 128,676 46,116
Citizenship for Newcomers and All Canadians 84,906 105,265 110,542
Permanent Economic Residents 103,385 90,332 103,161
Temporary Economic Residents 66,528 78,649 73,829
Family and Discretionary Immigration 77,337 75,452 79,481
Health Protection 65,159 47,782 31,215
Canadian Influence in International Migration and Integration Agenda 5,666 9,386 6,405
Internal Services 215,268 234,402 245,300
Total expenses 2,347,865 2,471,947 2,263,091
Revenues
Passport fees earned 639,372 610,207 644,865
Immigration service fees 429,478 425,076 405,258
Right of permanent residence 87,703 121,000 81,179
Citizenship service fees 172,582 51,466 71,983
Right of citizenship 30,000 19,237 22,732
International Experience Canada 9,938 9,694 5,038
Interest on loans 450 254 388
Passport miscellaneous revenues - 252 283
Other revenues 285 301 279
Revenues earned on behalf of Government (720,498) (617,311) (581,809)
Total revenues 649,310 620,176 650,196
Net cost from continuing operations 1,698,555 1,851,771 1,612,895
Transferred operations (note 16)
Multiculturalism for Newcomers and All Canadians 13,850 4,602 7,214
Net cost of transferred operations 13,850 4,602 7,214
Net cost of operations before government funding and transfers 1,712,405 1,856,373 1,620,109
Government funding and transfers
Net cash provided by Government   1,572,979 1,306,363
Change in due from Consolidated Revenue Fund   1,890 42,200
Services provided without charge by other government departments (note 14a)   331,151 307,586
Transfer of the transition payments for implementing salary payments in arrears (note 15)   (123) (14,055)
Transfer of assets and liabilities to other government departments (note 16)   1,144 (520)
Net revenue of operations after government funding and transfers   (50,668) (21,465)
Departmental net financial position - Beginning of year   96,299 74,834
Departmental net financial position - End of year   $ 146,967 $ 96,299

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

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

For the Year Ended March 31

(in thousands of dollars)

  2016 2015
Net revenue of operations after government funding and transfers $ (50,668) $ (21,465)
Change due to tangible capital assets
Acquisition of tangible capital assets 28,260 24,246
Amortization of tangible capital assets (29,075) (26,967)
Proceeds from disposal of tangible capital assets (13) (1)
Net loss on disposal of tangible capital assets including adjustments (3,028) (1,922)
Transfer to other government departments (18) (520)
Total change due to tangible capital assets (3,874) (5,164)
Change due to consumable inventory 3,152 (3,299)
Change due to prepaid expenses 1,031 (740)
Net decrease in departmental net debt (50,359) (30,668)
Departmental net debt - Beginning of year 69,376 100,044
Departmental net debt - End of year $ 19,017 $ 69,376

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

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

For the Year Ended March 31

(in thousands of dollars)

Operating activities 2016 2015
Net cost of operations before government funding and transfers $ 1,856,373 $ 1,620,109
Non-cash items:
Amortization of tangible capital assets (29,075) (26,967)
Net loss on disposal of tangible capital assets including adjustments (3,028) (1,922)
Services provided without charge by other government departments (note 14a) (331,151) (307,586)
Transition payments for implementing salary payments in arrears (note 15) 123 14,055
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances 1,507 (38,847)
Increase (decrease) in prepaid expenses 1,031 (740)
Increase (decrease) in inventory held for resale (2,299) 6,179
Increase (decrease) in consumable inventory 3,152 (3,299)
Increase in loans receivable 3,104 613
Decrease (increase) in accounts payable and accrued liabilities 12,510 (26,772)
Decrease in Immigrant Investor Program 37,876 51,180
Increase in vacation pay and compensatory leave (4,444) (1,557)
Decrease (increase) in employee future benefits 215 (2,328)
Transfer of liabilities to other government departments (note 16) (1,162) -
Cash used in operating activities 1,544,732 1,282,118
Capital investing activities
Acquisitions of tangible capital assets 28,260 24,246
Proceeds from disposal of tangible capital assets (13) (1)
Cash used in capital investing activities 28,247 24,245
Net cash provided by Government of Canada $ 1,572,979 $ 1,306,363

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

Immigration, Refugees and Citizenship Canada
Notes to the Consolidated Financial Statements (Unaudited)

1. Authority and objectives

Immigration, Refugees and Citizenship Canada (IRCC) 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 Immigration, Refugees and Citizenship.

IRCC 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, IRCC also received responsibility from Canadian Heritage (PCH) to implement the Canadian Multiculturalism Act of 1988. On November 4, 2015, pursuant to Orders in Council 2015-1247 and 2015-1248, the responsibility for the Canadian Multiculturalism Act was transferred back to PCH.

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 Global Affairs Canada (GAC) to IRCC, while passport service delivery is provided through Service Canada – Employment and Social Development Canada (ESDC).

In August 2013, IRCC assumed responsibility for International Experience Canada (IEC) from GAC. 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:

These four strategic outcomes are delivered with the following programs.

Permanent Economic Residents: Rooted in objectives outlined in IRPA, 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 of applications 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 IRPA, the focus of this program is to establish and apply the rules governing entry into Canada of foreign nationals authorized for temporary work 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 and national interests. 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: IRCC’s family and discretionary programs support the Government of Canada’s social goals for immigration. The program’s objectives are to reunite family members in Canada, and to allow for the processing of exceptional cases. Family Class provisions of IRPA 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. Eligibility assessment and processing involve the granting of permanent or temporary 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 IRPA, 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. IRCC 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: In accordance with the Canadian Multiculturalism Act, the Multiculturalism Program seeks to: build an integrated, socially cohesive society; improve the responsiveness of institutions to the needs of a diverse population; and engage in discussions on multiculturalism, integration and diversity at the international level. To advance these objectives, the Multiculturalism Program: provides grants and contributions to not-for-profit organizations, the private sector, non-federal public institutions, and individuals; conducts direct public outreach and promotional activities; helps federal institutions to meet their obligations under the Act; supports the annual tabling in Parliament of a report on the operation of the Act; and engages non-federal public institutions seeking to respond to diversity. The Multiculturalism Program also supports Canada’s participation in international agreements and institutions.

Health Protection: This program aims to provide effective immigration health services to manage the health aspect of migrant entry 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 risks posed by 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: IRCC 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 through the establishment of visa and other document entry requirements and otherwise maintaining the policy framework for terms and conditions of entry, admissibility criteria, anti-fraud measures, negotiations of bilateral and multilateral information-sharing agreements and treaties, as well as setting 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, IRCC 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.

IRCC 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.

IRCC 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; annual assessed contributions for the International Organization for Migration; and annual assessed contributions for the International Holocaust Remembrance Alliance (IHRA) formerly called the Task Force for International Cooperation on Holocaust Education, Remembrance and Research (ITF).

Passport: IRCC is accountable for the Passport Program, and collaborates with Service Canada (ESDC) and Global Affairs 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. Internal services include only those activities and resources that apply across an organization, and not those provided to a specific program. The groups of activities are:

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:

(a) Parliamentary authorities

IRCC 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 2015-16 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 2015-16 Report on Plans and Priorities.

(b) 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 IRCC, and all inter-organizational balances and transactions have been eliminated.

(c) Net Cash Provided by Government

IRCC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by IRCC is deposited to the CRF, and all cash disbursements made by IRCC 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.

(d) 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.

(e) Revenues

Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.

The recognition of revenues from immigration service fees and citizenship service fees is considered deferred until the application is processed, while the recognition of revenues from rights (right of citizenship and right of permanent residence) is deferred until the right is granted. Revenues from passport fees are recognized upon request for a passport service, which is upon receipt of payment and verification of the passport application for completeness. Other revenues, including International Experience Canada, 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 IRCC’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 IRCC’s gross revenues.

Revenues that are respendable are available to discharge the liabilities of the Passport and International Experience Canada programs.

(f) 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 and citizenship 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.

(g) Employee future benefits

  1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. IRCC’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. IRCC’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.

(h) 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.

(i) 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.

(j) 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.

(k) 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.

(l) 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. IRCC 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 15 years
Informatics hardware 5 years
Software (purchased and developed) 3 to 10 years
Office furniture 10 years
Vehicles 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.

(m) 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

IRCC receives most of its funding through annual parliamentary authorities. IRCC 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. Employee benefits are authorized by a statutory authority. IRCC issues immigration loans through a non-budgetary non-lapsing authority.

Revenues related to immigration and citizenship, 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.

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, IRCC 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)

  2016 2015
Net cost of operations before government funding and transfers $ 1,856,373 $ 1,620,109
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (29,075) (26,967)
Net loss on disposal of tangible capital assets including adjustments (3,028) (1,922)
Services provided without charge by other government departments (331,151) (307,586)
Increase in vacation pay and compensatory leave (4,444) (1,557)
Decrease (increase) in employee future benefits not charged to authorities 111 (2,328)
Decrease in accrued liabilities not charged to authorities 583 4,296
Bad debt expense (1,064) (711)
Refund of previous year’s expenditures 1,154 4,708
Expenses for claims and pending threatened litigation (155) -
Other 210 (127)
Total items affecting net cost of operations but not affecting authorities (366,859) (332,194)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets 28,260 24,246
Increase in loans issued on behalf of Government 3,722 613
Transition payments for implementing salary payments in arrears (note 15) 123 14,055
Increase (decrease) in inventory held for resale (2,299) 6,179
Increase (decrease) in consumable inventory 3,152 (3,299)
Increase (decrease) in prepaid expenses 1,031 (740)
Federal Skilled Worker, Immigrant Investor Program and Entrepreneur Program returned fees 11,359 28,132
Refunds of previous years’ revenues 5,380 4,768
Other (23) 84
Total items not affecting net cost of operations but affecting authorities 50,705 74,038
Current year authorities used $ 1,540,219 $ 1,361,953

(b) Authorities provided and used

(in thousands of dollars)

  2016 2015
Authorities Provided:
Vote 1 - Operating expenditures $ 761,276 $ 612,180
Vote 5 - Grants and contributions 1,133,160 1,000,063
Vote 7 - Debt write off - 1,145
Statutory amounts 543,814 273,556
Non-budgetary items 67,167 68,368
Less:
Lapsed Vote 1 - Operating expenditures (134,996) (51,342)
Lapsed Vote 5 - Grants and contributions (49,715) (10,166)
Lapsed Vote 7 - Debt write off - (28)
Lapsed - Statutory Amounts - (29)
Authorities available for future years (780,487) (531,794)
Current year authorities used $ 1,540,219 $ 1,361,953

4. Accounts payable and accrued liabilities

The following table presents details of IRCC’s accounts payable and accrued liabilities:

(in thousands of dollars)

  2016 2015
Accounts payable - Other government departments and agencies $ 41,087 $ 52,884
Accounts payable - External parties 92,365 72,028
Total accounts payable 133,452 124,912
Accrued liabilities Footnote 1 145,611 166,816
Contingent liabilities 331 176
Total accounts payable and accrued liabilities $ 279,394 $ 291,904

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. As of March 31, 2016, the IIP and EN applicant fees reimbursed amounted to $19,506,705.

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 allowed 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. IRCC 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, 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 IRCC quarterly, and after the five-year holding period, remit the full amount investment back to IRCC. Within 30 days of receipt of the full amount from the participating funds, IRCC returns this investment to the investor (without interest).

The Northwest Territories refunded $113,120,093 after retracting from the IIP program in 2012. All funds have now been repaid to the individual investors.

New Brunswick retracted from the program in 2015-16 but is only repaying investments as they become due. However, they are not accepting further investments.

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

(in thousands of dollars)

  2016 2015
Opening balance $ 61,240 $ 112,420
Receipts 665,369 738,963
Payments (703,245) (790,143)
Closing balance $ 23,364 $ 61,240

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 by the Department.

The following table presents details of the deferred revenue account:

(in thousands of dollars)

  2016 2015
Opening balance $ 193,703 $ 206,356
Amounts received 650,027 572,477
Revenue recognizedFootnote 2 (621,495) (585,130)
Remissions - reduction of the right of permanent residence (3) -
Gross closing balance 222,232 193,703
Deferred revenues held on behalf of Government (222,232) (193,703)
Net Closing balance $ - $ -

7. Employee future benefits

a) Pension benefits

IRCC’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 2015-2016 expense amounts to $48,479,797 ($48,052,620 in 2014-2015). For Group 1 members, the expense represents approximately 1.25 times (1.41 times in 2014-2015) the employee contributions and, for Group 2 members, approximately 1.24 times (1.39 times in 2014-2015) 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.

b) Severance benefits

IRCC 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)

  2016 2015
Accrued benefit obligation, beginning of year $ 27,920 $ 25,592
Expense for the year 3,559 11,590
Benefits paid during the year (3,774) (9,262)
Accrued benefit obligation, end of year $ 27,705 $ 27,920

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 IRCC’s accounts receivable and advances balances:

(in thousands of dollars)

  2016 2015
Receivables - Other government departments and agencies $ 34,324 $ 41,907
Receivables - External parties 2,973 3,685
Employee advances 543 250
Subtotal 37,840 45,842
Allowance for doubtful accounts on receivables from external parties (462) (1,063)
Gross accounts receivable and advances 37,378 44,779
Accounts receivable held on behalf of Government (19,052) (27,960)
Net accounts receivable and advances $ 18,326 $ 16,819

9. Loans receivable

In accordance with the IRPA, IRCC 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 0.76% 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 IRCC’s immigration loans balances:

(in thousands of dollars)

  2016 2015
Immigration loans - Opening balance $ 42,833 $ 41,632
Add: New loans issued 17,302 13,389
Less: Repayments of loans (13,580) (11,356)
Less: Loans balance written-off during the year - (832)
Immigration loans - Closing balance 46,555 42,833
Less: Allowance for uncollectibility (5,307) (4,689)
Total loans receivable $ 41,248 $ 38,144

10. Inventory

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

(in thousands of dollars)

  2016 2015
Passport material $13,314 $15,459
Forms 2,365 2,519
Inventories for resale 15,679 17,978
Passport material 3,678 1,922
Informatics equipment 2,021 614
Forms 111 122
Inventories held for consumption 5,810 2,658
Total inventory $ 21,489 $ 20,636

The cost of consumed inventory recognized as an expense in the Consolidated Statement of Operations and Departmental Net Financial Position is $56,276,443 in 2015-2016 ($62,240,128 in 2014-2015).

11. Tangible capital assets

Cost
(in thousands of dollars)
  Opening balance Acquisitions Adjustments Footnote 3 Disposals and write-offs Closing balance
Machinery and equipment $ 2,037 $ - $ - $ - $ 2,037
Informatics hardware 5,825 44 - - 5,869
Software (purchased and developed) 325,026 2,305 22,413 (20,594) 329,150
Office furniture 1,496 189 (63) (66) 1,556
Vehicles 723 - - (56) 667
Assets under construction 9,318 25,722 (22,413) - 12,627
Leasehold improvements 35,840 - - (28,581) 7,259
Total costs $ 380,265 $ 28,260 $ (63) $ (49,297) $ 359,165
Accumulated amortization
(in thousands of dollars)
  Opening balance Amortization Adjustments Footnote 3 Disposals and write-offs Closing balance
Machinery and equipment $ 1,560 $ 46 $ - $ - $ 1,606
Informatics Hardware 2,431 985 - - 3,416
Software (purchased and developed) 181,951 26,926 - (19,545) 189,332
Office Furniture 803 124 (45) (64) 818
Vehicles 551 38 - (56) 533
Assets under construction - - - - -
Leasehold improvements 32,894 956 - (26,591) 7,259
Total accumulated amortization $ 220,190 $ 29,075 $ (45) $ (46,256) $ 202,964
Net book value
(in thousands of dollars)
  2016 2015
Machinery and equipment $ 431 $ 477
Informatics hardware 2,453 3,394
Software (purchased and developed) 139,818 143,075
Office furniture 738 693
Vehicles 134 172
Assets under construction 12,627 9,318
Leasehold improvements - 2,946
Total Net Book Value $ 156,201 $ 160,075

12. Contractual obligations

The nature of IRCC’s activities can result in some large multi-year contracts and obligations whereby IRCC 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)

  2017 2018 2019 2020 2021
and thereafter
Total
Transfer payments $ 917,369 $ 345,474 $ 345,131 $ 345,059 $ 345,059 $ 2,298,092
Operating and maintenance 51,793 13,779 258 175 - 66,005
Passport - Operating and maintenance 47,165 43,921 2,988 314 - 94,388
Total $ 1,016,327 $ 403,174 $ 348,377 $ 345,548 $ 345,059 $ 2,458,485

13. Contingent liabilities

Claims have been made against IRCC 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, most of their outcomes are not determinable and a reasonable estimate of the loss cannot be made by management. IRCC 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

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

a) Common services provided without charge by other government departments

During the year, IRCC 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, Global Affairs Canada provides international immigration and citizenship services at missions abroad, for which IRCC 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)

  2016 2015
International immigration and citizenship services $ 214,447 $ 203,090
Accommodation 42,472 39,095
Employers’ contributions to health and dental insurance plans 38,795 35,955
Legal services 35,248 29,263
Workers’ compensation 189 183
Total $ 331,151 $ 307,586

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 Services and Procurement Canada, audit services provided by the Office of the Auditor General are not included in IRCC’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 IRCC’s Consolidated Statement of Operations and Departmental Net Financial Position.

b) Other transactions with related parties

(in thousands of dollars)

  2016 2015
Expenses - Other Government departments and agencies $ 317,242 $ 312,718

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. Employees that were on leave without pay when the initial one-time transition payments were issued will receive the transition payment shortly after their return to work from their leave without pay. 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 Services and Procurement Canada, who is responsible for the administration of the Government pay system.

16. Transfers to other government departments

  1. Effective November 1, 2015, IRCC moved from an office space shared with Canada Border Services Agency (CBSA). CBSA accepted responsibility for some office furniture deemed surplus to IRCC.
  2. Effective November 4, 2015, IRCC transferred the responsibility for the Multiculturalism Program to the Department of Canadian Heritage (PCH), in accordance with Orders in Council 2015-1247 and 2015-1248, including the stewardship responsibility for the assets and liabilities related to the program. Accordingly, the Department transferred the following liabilities related to the Multiculturalism program to PCH on March 31, 2016.

(in thousands of dollars)

  a) CBSA b) PCH Total 2016 Total 2015
Assets:
Tangible capital assets (net book value) (note 11) $ 18 $ – $ 18 $ 520
Total assets transferred $ 18 $ – $ 18 $ 520
Liabilities:
Accounts payable and Accrued Liabilities $ – $ 1,058 $ 1,058 $ –
Vacation Pay and Compensatory Leave 104 104
Total liabilities transferred $ – $ 1,162 $ 1,162
Adjustment to departmental net financial position $ 18 $ (1,162) $ (1,144) $ 520

In addition, the 2015 comparative figures have been reclassified on the Statement of Operations and Departmental Net Financial Position to present the expenses of the transferred operations.

During the transition period, the Department continued to administer the transferred activities on behalf of PCH. The administered expenses amounted to $3,788 for the year. These expenses are not recorded in these consolidated financial statements.

17. Segmented information

Presentation by segment is based on IRCC’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)

  SettlementFootnote 4 PassportFootnote 5 MigrationFootnote 6 RefugeeFootnote 7 CitizenshipFootnote 8 PermanentFootnote 9 TemporaryFootnote 10
Transfer payments
Non-profit organization $ 630,454 $ - $ - $ -  $ - $ - $ -
Other levels of government within Canada 345,058 - - - - - -
Individuals 80,570 - - - - - -
Other countries and international organizations 21,267 - 670 - - - -
Total transfer payments 1,077,349 - 670 - - - -
Operations and administration
Salaries and employees benefits 29,757 62,444 167,776 58,304 84,942 77,519 63,277
Professional and special services 2,463 207,934 34,140 60,786 8,898 5,462 8,396
Transportation and communication 595 33,427 3,595 4,765 2,206 2,347 1,303
Accommodation 2,448 4,363 7,073 3,660 7,793 4,065 2,911
Utilities, materials and supplies 111 33,345 1,425 533 721 696 112
Amortization of tangible capital assets - 4,032 15,242 429 54 19 2,386
Rentals of equipment 61 5,700 129 93 453 100 43
Information services 135 2,192 1,116 86 76 104 214
Repairs and maintenance 13 1,681 62 11 120 16 7
Other 719 2,004 2 9 2 4 -
Total Operations and administration 36,302 357,122 230,560 128,676 105,265 90,332 78,649
Total Expenses 1,113,651 357,122 231,230 128,676 105,265 90,332 78,649
Revenues
Passport Fees earned - 610,207 - - - - -
Immigration service fees - - 199,915 7,703 - 73,807 94,529
Right of permanent residence - - - - - 71,124 31,477
Citizenship service fees - - - - 51,466 - -
Right of Citizenship - - - - 19,237 - -
International Experience Canada - - - - - - 9,694
Interest on Loans 254 - - - - - -
Passport miscellaneous revenues - 252 - - - - -
Other revenues 8 - 2 - - - -
Revenues earned on behalf of Government (262) - (199,917) (7,703) (70,703) (144,931) (126,006)
Total Revenues - 610,459 - - - - 9,694
Net cost of operations before government funding and transfers $ 1,113,651 $ (253,337) $ 231,230 $ 128,676 $ 105,265 $ 90,332 $ 68,955
  FamilyFootnote 11 HealthFootnote 12 InfluenceFootnote 13 MultiFootnote 14 InternalFootnote 15 2016 2015 (note 18)
Transfer payments
Non-profit organization $ - $ - $ - $ 2,137 $ - $ 632,591 $ 593,200
Other levels of government within Canada - - - - - 345,058 337,491
Individuals - - - - - 80,570 44,233
Other countries and international organizations - - 2,351 - - 24,288 8,758
Total transfer payments - - 2,351 2,137 - 1,082,507 983,682
Operations and administration
Salaries and employees benefits 66,578 12,808 6,306 1,892 142,332 773,935 748,489
Professional and special services 3,495 33,941 299 221 38,908 404,943 323,640
Transportation and communication 1,647 159 123 33 3,142 53,342 53,923
Accommodation 3,237 539 251 250 13,299 49,889 46,041
Utilities, materials and supplies 313 77 49 12 7,536 44,930 55,062
Amortization of tangible capital assets 3 214 - - 6,696 29,075 26,967
Rentals of equipment 68 12 4 5 10,585 17,253 15,294
Information services 91 27 1 52 5,797 9,891 10,579
Repairs and maintenance 20 1 2 - 4,516 6,449 3,118
Other - 4 - - 1,591 4,335 3,510
Total Operations and administration 75,452 47,782 7,035 2,465 234,402 1,394,042 1,286,623
Total Expenses 75,452 47,782 9,386 4,602 234,402 2,476,549 2,270,305
Revenues
Passport Fees earned - - - - - 610,207 644,865
Immigration service fees 49,122 - - - - 425,076 405,258
Right of permanent residence 18,399 - - - - 121,000 81,179
Citizenship service fees - - - - - 51,466 71,983
Right of Citizenship - - - - - 19,237 22,732
International Experience Canada - - - - - 9,694 5,038
Interest on Loans - - - - - 254 388
Passport miscellaneous revenues - - - - - 252 283
Other revenues - 8 - - 283 301 279
Revenues earned on behalf of Government (67,521) (8) - - (260) (617,311) (581,809)
Total Revenues - - - - 23 620,176 650,196
Net cost of operations before government funding and transfers $ 75,452 $ 47,782 $ 9,386 $ 4,602 $ 234,379 $ 1,856,373 $ 1,620,109

18. Comparative information

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

Date Modified: