Consolidated Financial Statements for the year ended March 31, 2017

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, 2017, 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 Results 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, 2017 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
Assistant Deputy Minister and Chief Financial Officer

Ottawa, Canada
August 31, 2017

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

As at March 31

(in thousands of dollars)

Table : Consolidated Statement of Financial Position (Unaudited) As at March 31 (in thousands of dollars)
  2017 2016 Restated (note 16)
Financial assets
Due from Consolidated Revenue Fund $ 333,929 $ 261,853
Accounts receivable and advances (note 4) 58,053 37,378
Loans receivable (note 5) 44,741 41,248
Inventory held for resale (note 6) 11,435 15,679
Total gross financial assets 448,158 356,158
Financial assets held on behalf of Government
Accounts receivable and advances (note 4) (22,194) (19,052)
Total financial assets held on behalf of Government (22,194) (19,052)
Total net financial assets 425,964 337,106
Liabilities
Accounts payable and accrued liabilities (note 7) 309,038 279,394
Immigrant Investor Program (note 8) 59,200 23,364
Vacation pay and compensatory leave 23,329 25,660
Deferred revenue (note 9) 390,694 410,727
Employee future benefits (note 10b) 20,731 27,705
Total gross liabilities 802,992 766,850
Liabilities held on behalf of Government
Deferred revenue (note 9) (390,694) (410,727)
Total liabilities held on behalf of Government (390,694) (410,727)
Total net liabilities 412,298 356,123
Departmental net financial asset (net debt) 13,666 (19,017)
Non-financial assets
Prepaid expenses 3,853 3,973
Inventory held for consumption (note 6) 7,082 5,810
Tangible capital assets (note 11) 153,326 156,201
Total non-financial assets 164,261 165,984
Departmental net financial position $ 177,927 $ 146,967

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
Assistant Deputy Minister and Chief Financial Officer

Ottawa, Canada
August 31, 2017

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)

Table: Operations and Departmental Net Financial Position (Unaudited) For the Year Ended March 31
  2017 Planned results 2017 2016 Restated (note 16)
Expenses
Newcomer Settlement and Integration $ 1,179,185 $ 1,213,015 $ 1,113,651
Passport 480,005 351,748 357,122
Migration Control and Security Management 268,271 242,897 231,230
Family and Discretionary Immigration 74,160 94,871 75,452
Health Protection 83,063 90,097 47,782
Citizenship for Newcomers and All Canadians 79,679 88,415 105,265
Refugee Protection 44,089 80,107 128,676
Permanent Economic Residents 93,149 77,590 90,332
Temporary Economic Residents 102,393 76,786 78,649
Canadian Influence in International Migration and Integration Agenda 8,566 9,497 9,386
Internal Services 213,435 241,302 234,402
Total expenses 2,625,995 2,566,325 2,471,947
Revenues
Passport fees earned 665,859 658,246 610,207
Immigration service fees 438,084 531,775 457,831
Right of permanent residence 88,500 145,064 121,000
Citizenship service fees 93,817 54,387 123,541
Right of citizenship 22,800 8,417 19,237
International Experience Canada 9,938 10,015 9,694
Interest on loans 200 280 254
Passport miscellaneous revenues 359 271 252
Other revenues 296 410 301
Revenues earned on behalf of Government (643,684) (740,307) (722,141)
Total revenues 676,169 668,558 620,176
Net cost from continuing operations 1,949,826 1,897,767 1,851,771
Transferred operations
Multiculturalism for Newcomers and All Canadians 12,653 - 4,602
Net cost of transferred operations 12,653 - 4,602
Net cost of operations before government funding and transfers 1,962,479 1,897,767 1,856,373
Government funding and transfers
Net cash provided by Government   1,516,655 1,572,979
Change in due from Consolidated Revenue Fund   72,076 1,890
Services provided without charge by other government departments (note 14a)   340,001 331,151
Transfer of the transition payments for implementing salary payments in arrears   (5) (123)
Transfer of assets and liabilities to other government departments   - 1,144
Net revenue of operations after government funding and transfers   (30,960) (50,668)
Departmental net financial position - Beginning of year   146,967 96,299
Departmental net financial position - End of year   $ 177,927 $ 146,967

Segmented information (note 15)
The accompanying notes form an integral part of these consolidated financial statements.

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

For the Year Ended March 31

(in thousands of dollars)

Table: Consolidated Statement of Change in Departmental Net Financial Assets (Unaudited) (in thousands of dollars)
  2017 2016
Net revenue of operations after government funding and transfers $ (30,960) $ (50,668)
Change due to tangible capital assets
Acquisition of tangible capital assets 29,133 28,260
Amortization of tangible capital assets (31,717) (29,075)
Proceeds from disposal of tangible capital assets (15) (13)
Net loss on disposal of tangible capital assets (276) (3,028)
Transfer to other government departments - (18)
Total change due to tangible capital assets (2,875) (3,874)
Change due to inventory held for consumption 1,272 3,152
Change due to prepaid expenses (120) 1,031
Net decrease in departmental net debt (32,683) (50,359)
Departmental net debt - Beginning of year 19,017 69,376
Departmental net debt (net financial assets) - End of year $ (13,666) $ 19,017

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)

Table: Consolidated Statement of Cash Flows (Unaudited) For the Year Ended March 31 (in thousands of dollars)
Operating activities 2017 2016
Net cost of operations before government funding and transfers $ 1,897,767 $ 1,856,373
Non-cash items:
Amortization of tangible capital assets (31,717) (29,075)
Net loss on disposal of tangible capital assets (276) (3,028)
Services provided without charge by other government departments (note 14a) (340,001) (331,151)
Transition payments for implementing salary payments in arrears 5 123
Variations in Statement of Financial Position:
Increase in accounts receivable and advances 17,533 1,507
Increase (decrease) in prepaid expenses (120) 1,031
Decrease in inventory held for resale (4,244) (2,299)
Increase in inventory held for consumption 1,272 3,152
Increase in loans receivable 3,493 3,104
Decrease (increase) in accounts payable and accrued liabilities (29,644) 12,510
Decrease (increase) in Immigrant Investor Program (35,836) 37,876
Decrease (increase) in vacation pay and compensatory leave 2,331 (4,444)
Decrease in employee future benefits 6,974 215
Transfer of liabilities to other government departments - (1,162)
Cash used in operating activities 1,487,537 1,544,732
Capital investing activities
Acquisitions of tangible capital assets 29,133 28,260
Proceeds from disposal of tangible capital assets (15) (13)
Cash used in capital investing activities 29,118 28,247
Net cash provided by Government of Canada $ 1,516,655 $ 1,572,979

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

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

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.

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).

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 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 study. 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. Overseas, 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 (IRB), an independent, quasi-judicial tribunal.

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. Ultimately, the goal of integration is to encourage newcomers to contribute to Canada’s economic, social, political and cultural development. 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.

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. 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. IRCC also provides assistance to illegal migrants who are deemed destined to Canada, to return them to their home country of origin. Strategic partnership engagements with security and public safety-related departments and international organizations 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 through meetings with multilateral and bilateral partners, membership in international organizations, and participation in regional forums.

IRCC works closely with bilateral partners to ensure the effective management of migration and administration of immigration laws through an exchange of information, including biometric data. This international migration policy development helps Canada advance its interests with respect to 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 United Nations High Commissioner for Refugees (UNHCR), the Five Country Conference, the Global Forum on Migration and Development, and the Intergovernmental Consultations on Migration, Asylum and Refugees. The program uses transfer payment funding for the following: Migration Policy Development Program (grants), and membership in the International Organization for Migration (annual assessed contributions) and the International Holocaust Remembrance Alliance (IHRA) (annual assessed contributions) 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 and Global Affairs Canada to provide passport services that enable eligible Canadian travellers to access other countries. Through an extensive service delivery network in Canada and abroad, the program disseminates information, collects and processes Canadian travel document applications, authenticates applicants’ identity and determines eligibility, and issues secure Canadian travel documents. The program also performs activities to ensure that fraud and misuse of travel documents are prevented and detected. The Canadian passport is an internationally recognized and respected travel and identification document for Canadians who travel abroad, and is relied upon in Canada and by foreign governments to support the bearer’s claim to Canadian citizenship. The program operates on a full cost-recovery basis from fees charged for travel document services. Fees are collected in the Passport Program Revolving Fund and are efficiently managed to ensure value-for-money for Canadians.

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 : 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; and Acquisition Services.

2. Summary of significant accounting policies

These consolidated financial statements have been prepared using the Government's accounting policies stated below, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

(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 2016-2017 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 / Net Financial Assets because these amounts were not included in the 2016-2017 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

The recognition of revenues from immigration service fees, citizenship service fees, rights and privileges is deferred until a final decision has been rendered. 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 mainly 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:

Table: 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 and amortized in the applicable capital asset class in the year that 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. The International Experience Canada program is managed through a budgetary authority. 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)

Table: Consolidated Statement of Financial Position (Unaudited) As at March 31 (in thousands of dollars)
  2017 2016
Net cost of operations before government funding and transfers $ 1,897,767 $ 1,856,373
Adjustments for items affecting net cost of operations but not affecting  authorities:
Amortization of tangible capital assets (31,717) (29,075)
Net loss on disposal of tangible capital assets (276) (3,028)
Services provided without charge by other government departments (340,001) (331,151)
Decrease (increase) in vacation pay and compensatory leave 2,331 (4,444)
Decrease in employee future benefits not charged to authorities 6,974 111
Decrease in accrued liabilities not charged to authorities 2,274 583
Decrease (increase) in bad debt allowance 1,281 (1,064)
Refund of previous year's expenditures 5,631 1,154
Decrease (increase) in allowance for claims and pending threatened litigation 151 (155)
Decrease in program expenditures not charged to authorities 11,682 73
Other 7 137
Total items affecting net cost of operations but not affecting authorities (341,663) (366,859)
Adjustments for items not affecting net cost of operations but  affecting authorities:
Acquisition of tangible capital assets 29,133 28,260
Loans issued on behalf of Government 1,894 3,722
Salary overpayments related to pay system implementation 6,936 -
Transition payments for implementing salary payments in arrears 5 123
Decrease in inventory held for resale (4,244) (2,299)
Increase in inventory held for consumption 1,272 3,152
Increase (decrease) in prepaid expenses (120) 1,031
Refunds of previous years' revenues 10,615 16,739
Other 349 (23)
Total items not affecting net cost of operations but affecting authorities 45,840 50,705
Current year authorities used $ 1,601,944 $ 1,540,219

(b) Authorities provided and used

(in thousands of dollars)

Table: Authorities provided and used (in thousands of dollars)
  2017 2016
Authorities provided:
Vote 1 - Operating expenditures $ 704,637 $ 761,276
Vote 5 - Capital 24,875 -
Vote 7 - Debt write off 1,992 -
Vote 10 - Grants and contributions 1,301,132 1,133,160
Statutory amounts 789,781 543,814
Non-budgetary items 63,445 67,167
Less:
Lapsed Vote 1 - Operating expenditures (81,819) (134,996)
Lapsed Vote 5 - Capital (4,090) -
Lapsed Vote 7 - Debt write off (29) -
Lapsed Vote 10 - Grants and contributions

(113,867) (49,715)
Authorities available for future years

(1,084,113) (780,487)
Current year authorities used $ 1,601,944 $ 1,540,219

4. Accounts receivable and advances

The following table presents details of IRCC’s accounts receivable and advances balances:

(in thousands of dollars)

Table: The following table presents details of IRCC’s accounts receivable and advances balances (in thousands of dollars)
  2017 2016
Receivables - Other government departments and agencies $ 41,868 $ 34,324
Receivables - Salary overpayments 13,812 -
Receivables - Other external parties 2,636 2,973
Employee advances 494 543
Subtotal 58,810 37,840
Allowance for doubtful accounts on receivables from external parties (757) (462)
Gross accounts receivable and advances 58,053 37,378
Accounts receivable held on behalf of Government (22,194) (19,052)
Net accounts receivable and advances $ 35,859 $ 18,326

5. 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)

Table: The following table presents details of the IRCC’s immigration loans balances (in thousands of dollars)
  2017 2016
Immigration loans - Opening balance $ 46,555 $ 42,833
Add: New loans issued 18,714 17,302
Less: Repayments of loans (15,207) (13,580)
Less: Loans balance written-off during the year (1,613) -
Immigration loans - Closing balance 48,449 46,555
Less: Allowance for uncollectibility (3,708) (5,307)
Total loans receivable $ 44,741 $ 41,248

Due to other government priorities, IRCC did not seek authority from Treasury Board to write-off loans in 2015-16.

6. Inventory

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

(in thousands of dollars)

Table: The following table presents details of the IRCC’s immigration loans balances (in thousands of dollars)
  2017 2016
Passport material $ 9,415 $ 13,314
Forms 2,020 2,365
Inventory held for resale 11,435 15,679
Passport material 3,444 3,678
Informatics equipment 3,407 2,021
Forms 231 111
Inventory held for consumption 7,082 5,810
Total inventory $ 18,517 $ 21,489

The cost of consumed inventory recognized as an expense in the Consolidated Statement of Operations and Departmental Net Financial Position is $60,072,031 in 2016-2017 ($56,276,443 in 2015-2016).

7. Accounts payable and accrued liabilities

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

(in thousands of dollars)

Table: The following table presents details of IRCC's accounts payable and accrued liabilities (in thousands of dollars)
  2017 2016
Accounts payable - Other government departments and agencies $ 38,846 $ 41,087
Accounts payable - External parties 89,282 92,365
Total accounts payable 128,128 133,452
Accrued liabilities 180,730 145,611
Contingent liabilities 180 331
Total accounts payable and accrued liabilities $ 309,038 $ 279,394

8. 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, 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).

Nova Scotia retracted from the program in 2016-2017 and New Brunswick in 2015-2016 but are 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)

Table: The value of financial transactions processed during the year is as follows (in thousands of dollars)
  2017 2016
Opening balance $ 23,364 $ 61,240
Receipts 614,624 665,369
Payments (578,788) (703,245)
Closing balance $ 59,200 $ 23,364

9. Deferred revenue

The deferred revenue account was established to record immigration service fees, citizenship services fees, rights and privileges 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)

Table: The following table presents details of the deferred revenue account (in thousands of dollars)
  2017 2016 Restated (note 16)
Opening balance $ 410,727 $ 524,463
Amounts received 920,350 650,027
Revenue recognizedFootnote * (940,383) (763,760)
Remissions - reduction of the right of permanent residence - (3)
Gross closing balance 390,694 410,727
Deferred revenues held on behalf of Government (390,694) (410,727)
Net Closing balance $ - $ -

10. 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 2016-2017 expense amounts to $48,155,935 ($48,479,797 in 2015-2016). For Group 1 members, the expense represents approximately 1.12 times (1.25 times in 2015-2016) the employee contributions and, for Group 2 members, approximately 1.08 times (1.24 times in 2015-2016) 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

Severance benefits provided to IRCC’s employees were previously based on an employee’s eligibility, years of service and salary at termination of employment.  However, since 2011 the accumulation of severance benefits for voluntary departures progressively ceased for substantially all employees.  Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service.  By March 31, 2017, substantially all settlements for immediate cash out were completed.  Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities.

The changes in the obligations during the year were as follows:

(in thousands of dollars)

Table: The changes in the obligations during the year were as follows (in thousands of dollars)
  2017 2016
Accrued benefit obligation, beginning of year $ 27,705 $ 27,920
Expense for the year (5,426) 3,559
Benefits paid during the year (1,548) (3,774)
Accrued benefit obligation, end of year $ 20,731 $ 27,705

11. Tangible capital assets

Cost
(in thousands of dollars)
  Opening balance Acquisitions AdjustmentsFootnote 1 Disposals and write-offs Closing balance
Machinery and equipment $ 2,037 $ - $ - $ (44) $1,993
Informatics hardware 5,869 21 12 (114) 5,788
Software (purchased and developed) 329,150 - 40,333 (1,352) 368,131
Office furniture 1,556 21 - (112) 1,465
Vehicles 667 32 - (118) 581
Assets under construction 12,627 29,059 (40,579) - 1,107
Leasehold improvements 7,259 - - - 7,259
Total cost $ 359,165 $ 29,133 $ (234) $ (1,740) $ 386,324
Accumulated amortization
(in thousands of dollars)
  Opening balance Amortization Adjustments Footnote 1 Disposals and write-offs Closing balance
Machinery and equipment $ 1,606 $ 45 $ - $ (21) $ 1,630
Informatics Hardware 3,416 982 - (114) 4,284
Software (purchased and developed) 189,332 30,543 (234) (1,104) 218,537
Office Furniture 818 114 - (92) 840
Vehicles 533 33 - (118) 448
Assets under construction - - - - -
Leasehold improvements 7,259 - - - 7,259
Total accumulated amortization $ 202,964 $ 31,717 $ (234) $ (1,449) $ 232,998
Net book value
(in thousands of dollars)
  2017 2016
Machinery and equipment $ 363 $ 431
Informatics hardware 1,504 2,453
Software (purchased and developed) 149,594 139,818
Office furniture 625 738
Vehicles 133 134
Assets under construction 1,107 12,627
Leasehold improvements - -
Net Book Value $ 153,326 $ 156,201

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)

Table: Significant contractual obligations that can be reasonably estimated are summarized as follows (in thousands of dollars)
  2018 2019 2020 2021 2022 and thereafter Total
Transfer payments $ 1,040,555 $ 926,163 $ 877,955 $ 378,213 $ 378,213 $ 3,601,099
Capital 4,458 - - - - 4,458
Operating and maintenance 44,590 1,785 613 268 235 47,491
Passport - Operating and maintenance 59,326 4,598 4,548 4,566 42 73,080
Total $ 1,148,929 $ 932,546 $ 883,116 $ 383,047 $ 378,490 $ 3,726,128

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. Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amount to $180,000 at March 31,  2017.

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)

Table: 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)
  2017 2018
International immigration and citizenship services $ 218,172 $ 214,447
Accommodation 43,322 42,472
Employers’ contributions to health and dental insurance plans 41,049 38,795
Legal services 37,314 35,248
Workers’ compensation 144 189
Total $ 340,001 $ 331,151

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)

Table: Other transactions with related parties (in thousands of dollars)
  2017 2016
Expenses - Other Government departments and agencies $ 313,524 $ 317,242
Revenues - Other Government departments and agencies $ 3,946 $ 3,575

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

15. 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)

Table: 1 of 2 Segment results for the period (in thousands of dollars)
  SettlementFootnote 1 PassportFootnote 2 MigrationFootnote 3 FamilyFootnote 4 HealthFootnote 5 CitizenshipFootnote 6
Transfer payments
Non-profit organization $ 686,994 $ - $ - $ - $ - $ -
Other levels of government within Canada 378,171 - - - - -
Individuals 95,377 - - - - -
Other countries and international organizations 12,955 - 543 - - -
Total transfer payments 1,173,497 - 543 - - -
Operations and administration
Salaries and employees benefits 31,576 58,051 180,653 80,177 13,584 70,810
Professional and special services 2,920 206,539 32,982 4,712 75,628 6,927
Transportation and communication 818 35,476 2,626 3,702 201 1,576
Accommodation 2,719 4,427 7,783 4,571 598 6,507
Utilities, materials and supplies 115 33,288 2,583 623 38 632
Amortization of tangible capital assets 942 3,085 15,400 943 - 1,461
Rentals of equipment 24 6,331 119 60 22 249
Information services 32 2,488 140 65 17 132
Repairs and maintenance 7 2,171 59 16 9 113
Other 365 (108) 9 2 - 8
Total Operations and administration 39,518 351,748 242,354 94,871 90,097 88,415
Total Expenses 1,213,015 351,748 242,897 94,871 90,097 88,415
Revenues
Passport Fees earned - 658,246 - - - -
Immigration service fees - - 245,117 57,072 - -
Right of permanent residence - - - 55,059 - -
Citizenship service fees - - - - - 54,387
Right of Citizenship - - - - - 8,417
International Experience Canada - - - - - -
Interest on Loans 280 - - - - -
Passport miscellaneous revenues - 271 - - - -
Other revenues 64 - 4 - 9 -
Revenues earned on behalf of Government (344) - (245,121) (112,131) (6) (62,804)
Total Revenues - 658,517 - - 3 -
Net cost of operations before government funding and transfers $ 1,213,015 $ (306,769) $ 242,897 $ 94,871 $ 90,094 $ 88,415
  RefugeeFootnote 7 PermanentFootnote 8 TemporaryFootnote 9 InfluenceFootnote 10 InternalFootnote 11 2017 2016 Restated (note 16)
Transfer payments
Non-profit organization $ - $ - $ - $ - $ - $ 686,994 $ 632,591
Other levels of government within Canada - - - - - 378,171 345,058
Individuals - - - - - 95,377 80,570
Other countries and international organizations - - - 2,489 - 15,987 24,288
Total transfer payments - - - 2,489 - 1,176,529 1,082,507
Operations and administration
Salaries and employees benefits 53,477 65,733 56,752 6,244 150,086 767,143 773,935
Professional and special services 17,692 4,879 9,498 336 41,654 403,767 404,943
Transportation and communication 3,905 1,568 1,554 126 3,205 54,757 53,342
Accommodation 3,184 3,613 2,555 251 15,148 51,356 49,889
Utilities, materials and supplies 1,254 439 763 27 6,926 46,688 44,930
Amortization of tangible capital assets 470 1,190 5,430 - 2,796 31,717 29,075
Rentals of equipment 36 106 68 23 10,108 17,146 17,253
Information services 54 55 227 1 5,186 8,397 9,891
Repairs and maintenance 32 6 20 - 5,947 8,380 6,449
Other 3 1 (81) - 246 445 4,335
Total Operations and administration 80,107 77,590 76,786 7,008 241,302 1,389,796 1,394,042
Total Expenses 80,107 77,590 76,786 9,497 241,302 2,566,325 2,476,549
Revenues
Passport Fees earned - - - - - 658,246 610,207
Immigration service fees 14,759 112,058 102,769 - - 531,775 457,831
Right of permanent residence - 58,145 31,860 - - 145,064 121,000
Citizenship service fees - - - - - 54,387 123,541
Right of Citizenship - - - - - 8,417 19,237
International Experience Canada - - 10,015 - - 10,015 9,694
Interest on Loans - - - - - 280 254
Passport miscellaneous revenues - - - - - 271 252
Other revenues - - 5 - 328 410 301
Revenues earned on behalf of Government (14,759) (170,203) (134,634) - (305) (740,307) (722,141)
Total Revenues - - 10,015 - 23 668,558 620,176
Net cost of operations before government funding and transfers $ 80,107 $ 77,590 $ 66,771 $ 9,497 $ 241,279 $ 1,897,767 $ 1,856,373

16. Accounting changes

During fiscal year 2016-2017, IRCC changed its revenue recognition accounting policy to improve financial reporting. With the new policy, recognition of earned revenue related to immigration and citizenship service fees is now deferred from when an application is deemed in process to when a final decision has been rendered. As for the recognition of earned revenue from rights and privileges, these are now deferred from when the right is granted to when a final decision has been rendered. The amendments are effective for financial reporting of fiscal years ending March 31, 2017, and later. The significant changes to the Consolidated financial statements are described below. These changes have been applied retroactively, and comparative information for 2015-2016 has been restated to comply with Canadian public sector accounting standards.

As a result, an adjustment of $188,495,000 was required to the deferred revenue and an adjustment of $104,830,000 to the earned revenue. Those adjustments have impacts on the Consolidated Statement of Financial Position, the Consolidated Statement of Operations and Departmental Net Financial Position and Notes to the Consolidated Financial Statements.

(in thousands of dollars)

Table: Those adjustments have impacts on the Consolidated Statement of Financial Position, the Consolidated Statement of Operations and Departmental Net Financial Position and Notes to the Consolidated Financial Statements (in thousands of dollars)
  2016 as previously stated Effect of change 2016 Restated
Consolidated Statement of Financial Position
Deferred revenue (note 9) $ 222,232 $ 188,495 $ 410,727
Liabilities held on behalf of Government (222,232) (188,495) (410,727)
Consolidated Statement of Operations and Departmental Net Financial Position and Segmented information (note 15)
Revenues 1,237,487 104,830 1,342,317
Revenues earned on behalf of Government (617,311) (104,830) (722,141)
Notes to the Consolidated Financial Statements
Deferred revenue (note 9)
Opening balance 193,703 330,760 524,463
Revenue recognized (621,495) (142,265) (763,760)
Deferred revenues held on behalf of Government (222,232) (188,495) (410,727)

17. Comparative information

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

Date Modified: