ARCHIVED - 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.

Ottawa, Canada
August 31, 2017

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

As at March 31

(in thousands of dollars)

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

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

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)

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)

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)

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:

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

These four strategic outcomes are delivered with the following programs.

Permanent Economic Residents: Rooted in objectives outlined in 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:

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)

(b) Authorities provided and used

(in thousands of dollars)

4. Accounts receivable and advances

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

(in thousands of dollars)

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)

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)

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)

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)

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)

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)

11. Tangible capital assets

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)

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)

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)

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)

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)

17. Comparative information

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