Correctional Service Canada Consolidated Financial Statements (Unaudited) for the year ended March 31, 2024

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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, 2024, and all information contained in these statements rests with the management of the Correctional Service of Canada (CSC). These consolidated financial statements have been prepared by management using the Government of Canada’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 CSC’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in CSC’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 CSC 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, 2024 was completed in accordance with the Treasury Board Policy on Financial Management and the results and action plans are summarized in the annex.

The effectiveness and adequacy of CSC's system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of CSC'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 consolidated financial statements to the Commissioner.

The consolidated financial statements of CSC have not been audited.

Original signed by



Anne Kelly,
Commissioner

Original signed by



Tony Matson,
Chief Financial Officer

Ottawa, Canada
August 19, 2024

Consolidated statement of financial position (unaudited)

Table 1:
Consolidated statement of financial position (unaudited) at March 31 (in thousands of dollars)

Detail 2024 2023

Liabilities
Accounts payable and accrued liabilities (note 4) 1,312,850 725,649
Environmental liabilities and asset retirement obligations (note 5) 129,605 126,733
Vacation pay and compensatory leave 91,803 92,583
Employee future benefits (note 6) 37,300 39,187
Inmate Trust Fund (note 7) 32,326 33,983
Deferred revenue (note 8) 694 675
Total net liabilities 1,604,578 1,018,810

Assets
Financial assets
Due from Consolidated Revenue Fund 337,902 298,463
Accounts receivable, advances and loans (note 9) 71,465 102,074
Inventories held for resale (note 10) 12,218 12,410
Total gross financial assets 421,585 412,947

Financial assets held on behalf of Government
Accounts receivable, advances and loans (note 9) (1,452) (1,130)
Total financial assets held on behalf of Government (1,452) (1,130)

Total net financial assets

420,133

411,817

Organizational net debt

1,184,445

606,993

Non-financial assets
Inventories not for resale (note 10) 52,677 65,753
Tangible capital assets (note 11) 2,522,955 2,401,877
Total non-financial assets 2,575,632 2,467,630

Organizational net financial position

1,391,187

1,860,637


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

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

Original signed by



Anne Kelly,
Commissioner

Original signed by



Tony Matson,
Chief Financial Officer

Ottawa, Canada
August 19, 2024

Consolidated statement of operations and organizational net financial position (unaudited)

Table 2:
Consolidated statement of operations and organizational net financial position (unaudited), for the Year Ended March 31 (in thousands of dollars)

Detail 2024 Planned results 2024 Actual 2023 Actual

Expenses
Care and Custody 1,870,575 2,661,621 1,941,677
Correctional Interventions 613,976 692,555 575,510
Community Supervision 187,597 222,672 191,014
Internal Services 428,730 513,149 441,484
Expenses incurred on behalf of Government 0 (20,089) (9)
Total expenses 3,100,878 4,069,908 3,149,676

Revenues
Sales of goods and services 54,574 57,997 47,111
Miscellaneous revenues 3,858 9,591 7,564
Revenues earned on behalf of Government (3,858) (5,037) (2,643)
Total revenues 54,574 62,551 52,032

Net cost of operations before government funding and transfers

3,046,304

4,007,357

3,097,644

Government funding and transfers
Net cash provided by Government 0 3,300,524 2,977,425
Change in due from Consolidated Revenue Fund 0 39,439 6,122
Services provided without charge by other government departments (note 14a) 0 197,967 179,660
Transfer of tangible capital assets (to) other government departments (note 14c) 0 (32) 0
Other transfers of assets and liabilities from (to) other government departments (note 14c) 0 9 (174)
Total Government Funding and Transfers 0 3,537,907 3,163,033
(Revenue from) net cost of operations after government funding and transfers 0 469,450 (65,389)

Organizational net financial position – Beginning of year

0

1,860,637

1,795,248

Organizational net financial position – End of year

0

1,391,187

1,860,637


Segmented information (note 15)

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

Consolidated statement of change in organizational net debt (unaudited)

Table 3:
Consolidated statement of change in organizational net debt (unaudited), for the year ended March 31 (in thousands of dollars)

Detail 2024 2023
(Revenue from) net cost of operations after government funding and transfers 469,450 (65,389)

Change due to tangible capital assets
Acquisition of tangible capital assets (note 11) 258,664 199,699
Amortization of tangible capital assets (note 11) (130,703) (129,475)
Proceeds from disposal of tangible capital assets (2,086) (2,319)
(Loss) on disposal of tangible capital assets (4,333) (9,555)
Tangible capital assets adjustments (note 11) (432) (242)
Transfer to other government departments (note 14) (32) 0
Total change due to tangible capital assets 121,078 58,108

Change due to inventories not for resale

(13,076)

(6,747)

Increase (decrease) in organizational net debt

577,452

(14,028)

Organizational net debt – Beginning of year

606,993

621,021

Organizational net debt – End of year

1,184,445

606,993


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

Consolidated statement of cash flows (unaudited)

Table 4:
Consolidated statement of cash flows (unaudited), for the year ended March 31 (in thousands of dollars)

Detail 2024 2023

Operating activities
Net cost of operations before government funding and transfers 4,007,357 3,097,644

Non-cash items
Amortization of tangible capital assets (note 11) (130,703) (129,475)
Net (loss) on disposal of tangible capital assets (4,333) (9,555)
Tangible capital assets adjustments (note 11) (432) (242)
Services provided without charge by other government departments (note 14a) (197,967) (179,660)

Variations in Consolidated Statement of Financial Position
(Increase) in accounts payable and accrued liabilities (note 4) (587,201) (5,336)
Decrease in vacation pay and compensatory leave 780 11,092
(Increase) in environmental liabilities and asset retirement obligations (note 5) (2,872) (2,633)
Decrease in employee future benefits (note 6) 1,887 6,386
Decrease (increase) in Inmate Trust Fund (note 7) 1,657 (10,040)
(Increase) decrease in deferred revenue (note 8) (19) 126
(Decrease) increase in accounts receivable, advances and loans (note 9) (30,931) 10,537
(Decrease) in inventories (note 10) (13,268) (8,973)
Transfer of assets (from) to other government departments (note 14c) (9) 174

Cash used in operating activities

3,043,946

2,780,045

Capital investing activities
Acquisitions of tangible capital assets (note 11) 258,664 199,699
Proceeds from disposal of tangible capital assets (2,086) (2,319)

Cash used in capital investing activities

256,578

197,380

Net cash provided by Government of Canada

3,300,524

2,977,425


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

Notes to the consolidated financial statements (unaudited) for the year ended March 31

1. Authority and objectives

The constitutional and legislative framework that guides the Correctional Service of Canada (CSC) is set out by the Constitution Act 1982 and the Corrections and Conditional Release Act (CCRA).

The purpose of the federal correctional system, as defined by law, is to contribute to the maintenance of a just, peaceful and safe society by carrying out sentences imposed by courts through the safe and humane custody and supervision of offenders; and by assisting the rehabilitation of offenders and their reintegration into the community as law-abiding citizens through the provision of programs in penitentiaries and in the community (Corrections and Conditional Release Act, s.3).

It delivers its mandate under the following core responsibilities:

Care and Custody: CSC provides for the safety, security and humane care of offenders, including day-to-day needs of offenders such as food, clothing, accommodation, mental health services, and physical health care. It also includes security measures within institutions such as drug interdiction, and appropriate control practices to prevent incidents;

Correctional Interventions: CSC conducts assessment activities and program interventions to support federal offenders' rehabilitation and facilitate their reintegration into the community as law-abiding citizens. CSC also engages Canadian citizens as partners in its correctional mandate, and provides services to victims of crime;

Community Supervision: CSC supervises offenders in the community and provides structure and services to support their safe and successful reintegration into the community. Services include accommodation options, community health services, and the establishment of community partnerships. CSC manages offenders on parole, statutory release, and long-term supervision orders; and

Internal Services: Internal Services are those groups of related activities and resources that the federal government considers to be services in support of programs and/or required to meet corporate obligations of an organization. Internal Services refers to the activities and resources of the 10 distinct service categories that support program delivery in the organization, regardless of the Internal Services delivery model in a department. The 10 service categories are: Management and Oversight Services; Communications Services; Legal Services; Human Resource Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Management Services; Materiel Management Services; and Acquisition Management Services.

2. Summary of significant accounting policies

These consolidated financial statements are prepared using CSC’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

CSC is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to CSC 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 Organizational 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 Organizational Net Financial Position are the amounts reported in the Consolidated Future-Oriented Statement of Operations included in the 2023 to 2024 Departmental Plan. Planned results are not presented in the "Government funding and transfers" section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2023 to 2024 Departmental Plan.

b) Consolidation

These consolidated financial statements include the accounts of the sub-entity for which the Commissioner is accountable. The accounts of this sub-entity, the CORCAN Revolving Fund, have been consolidated with those of CSC and all intra-organizational balances and transactions have been eliminated.

c) Net cash provided by Government

CSC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by CSC is deposited to the CRF and all cash disbursements made by CSC 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) Amounts 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 CSC is entitled to draw from the CRF without further authorities to discharge its liabilities.

e) Revenues

f) Expenses

Expenses are recorded on an accrual basis:

g) Employee future benefits

h) Financial instruments

A contract establishing a financial instrument creates, at its inception, rights, and obligations to receive or deliver economic benefits. The financial assets and financial liabilities portray these rights and obligations in the financial statements. CSC recognizes a financial instrument when it becomes a party to a financial instrument contract.

Financial instruments consist of accounts and loans receivable. Accounts and loans receivable are initially recorded at cost. When necessary, an allowance for valuation is recorded to reduce the carrying value of accounts and loans receivable to amounts that approximate their net recoverable value.

i) Inventories 

j) Tangible capital assets

The costs of acquiring land, buildings, equipment and other capital property are capitalized as tangible capital assets and, except for land, are amortized to expense over the estimated useful lives of the assets, as described in note 11. All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Tangible capital assets do not include immovable assets located on reserves as defined in the Indian Act, works of art, museum collections and Crown land to which no acquisition cost is attributable; and intangible assets. 

k) Contingent liabilities and contingent assets

Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, a provision is accrued and an expense recorded to other expenses. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the consolidated financial statements.

Contingent assets are possible assets which may become actual assets when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, the contingent asset is disclosed in the notes to the financial statements.

l) Environmental liabilities and asset retirement obligations

An environmental liability for the remediation of contaminated sites is recognized when all of the following criteria are satisfied: an environmental standard exists, contamination exceeds the environmental standard, CSC is directly responsible or accepts responsibility, it is expected that future economic benefits will be given up and a reasonable estimate of the amount can be made. The liability reflects CSC’s best estimate of the amount required to remediate the sites to the current minimum standard for its use prior to contamination.

An asset retirement obligation is recognized when all of the following criteria are satisfied: there is a legal obligation to incur retirement costs in relation to a tangible capital asset, the past event or transaction giving rise to the retirement liability has occurred, it is expected that future economic benefits will be given up and a reasonable estimate of the amount can be made. The costs to retire an asset are normally capitalized and amortized over the asset’s estimated remaining useful life. An asset retirement obligation may arise in connection with a tangible capital asset that is not recognized or no longer in productive use. In this case, the asset retirement cost would be expensed. The measurement of the liability is CSC’s best estimate of the amount required to retire a tangible capital asset.

When the future cash flows required to settle or otherwise extinguish a liability are estimable, predictable and expected to occur over extended future periods, a present value technique is used. The discount rate used reflects the CSC’s cost of borrowing, associated with the estimated number of years to complete remediation.

The recorded liabilities are adjusted each year, as required, for inflation, new obligations, changes in management estimates and actual costs incurred. 

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 and accompanying notes at March 31. The estimates are based on facts and circumstances, historical experience, general economic conditions and reflect the Government's best estimate of the related amount at the end of the reporting period. The most significant areas where estimates are used are contingent and settled claim liabilities, environmental liabilities, the liability for employee future benefits, the fair value of non-monetary transactions related to leased tangible capital assets and the useful life of tangible capital assets. 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.

Environmental liabilities and asset retirement obligations as discussed in note 5 are subject to measurement uncertainty due to the evolving technologies used in the estimation of the costs for remediation of contaminated sites, the use of future estimated costs, and the fact that not all sites have had a complete assessment of the extent and nature of remediation. Changes to underlying assumptions, the timing of the expenditures, the technology employed, or the revisions to environmental standards or changes in regulatory requirements could result in significant changes to the environmental liabilities recorded.

n) Related party transactions

Related party transactions, other than inter-entity transactions, are recorded at the exchange amount.

Inter-entity transactions are transactions between commonly controlled entities. Inter-entity transactions, other than restructuring transactions, are recorded on a gross basis and are measured at the carrying amount, except for the following: 

  1. Services provided on a recovery basis are recognized as revenues and expenses on a gross basis and measured at the exchange amount.
  2. Certain services received on a without charge basis are recorded for departmental financial statement purposes at the carrying amount. 

3. Parliamentary Authorities

CSC receives most of its funding through annual Parliamentary authorities. Items recognized in the Consolidated Statement of Operations and Organizational 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, CSC 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

Table 5:
Reconciliation of net cost of operations to current year authorities used for the year ended March 31 (in thousands of dollars)

Detail 2024 2023
Net cost of operations before government funding and transfers 4,007,357 3,097,644

Adjustments for items affecting net cost of operations but not affecting authorities:
Add (Less):
Amortization of tangible capital assets (note 11) (130,703) (129,475)
Net loss on disposal of tangible capital assets and other adjustments (9,662) (20,490)
Services provided without charge by other government departments (note 14a) (197,967) (179,660)
Decrease in vacation pay and compensatory leave 780 11,092
Decrease in employee future benefits 1,887 6,386
(Increase) in environmental liabilities and asset retirement obligations (2,872) (2,633)
Refund of prior years’ expenditures 6,083 9,754
Other (549,955) 28,383
Subtotal (882,409) (276,643)

Adjustments for items not affecting net cost of operations but affecting authorities:
Add (Less):
Acquisitions of tangible capital assets (note 11) 258,664 199,699
(Decrease) in inventories (13,268) (8,973)
Other 4,618 3,709
Subtotal 250,014 194,435
Current year authorities used 3,374,962 3,015,436

b) Authorities provided and used

Table 6:
Authorities provided and used for the year ended March 31 (in thousands of dollars)

Detail 2024 2023
Vote 1 - Operating expenditures 3,127,665 2,809,900
Vote 5 – Capital expenditures 269,046 255,499
Statutory items:
CORCAN Revolving Fund 19,532 13,225
Other Statutory Items 281,865 253,535
Subtotal 3,698,108 3,332,159

Less:
Authorities available for future years (excluding CORCAN) 141 2,319
CORCAN Revolving Fund available authority 21,670 22,532
Lapsed authorities: Vote 1 – Operating expenditures 288,652 235,730
Lapsed authorities: Vote 5 – Capital expenditures 12,683 56,142

Current year authorities used

3,374,962

3,015,436

4. Accounts payable and accrued liabilities

Table 7:
CSC's accounts payable and accrued liabilities for the year ended March 31 (in thousands of dollars)

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

Detail 2024 2023
Accounts payable - Other government departments and agencies 66,423 50,163
Accounts payable - External parties 101,107 88,400
Total accounts payable 167,530 138,563

Accrued liabilities Footnote 1

1,145,320

587,086

Total accounts payable and accrued liabilities

1,312,850

725,649

5. Environmental liabilities and asset retirement obligations

Table 8:
Environmental liabilities and asset retirement obligations for the year ended March 31 (in thousands of dollars)

Detail 2024 2023
Remediation liability for contaminated sites 1,794 2,008
Asset retirement obligations 127,811 124,725
Total environmental liabilities and asset retirement obligations 129,605 126,733

a) Remediation of contaminated sites

The Government’s “Federal Approach to Contaminated Sites” sets out a framework for management of contaminated sites using a risk-based approach. Under this approach the Government has inventoried the contaminated sites identified on federal lands, allowing them to be classified, managed and recorded in a consistent manner. This systematic approach aids in identification of the high-risk sites in order to allocate limited resources to those sites which pose the highest risk to human health and the environment.

CSC has identified a total of 29 sites (32 sites in 2023) where contamination may exist and assessment, remediation and monitoring may be required. Of these, CSC has identified 12 sites (14 sites in 2023) where action is required and for which a gross liability of $1,045 thousand ($1,249 thousand in 2023) has been recorded. This liability estimate has been determined based on-site assessments performed by environmental experts.

In addition, a statistical model based upon a projection of the number of sites that will proceed to remediation and upon which current and historical costs are applied is used to estimate the liability for a group of unassessed sites. As a result, 6 sites are projected to have a liability (6 sites in 2023) where a liability estimate of $749 thousand ($759 thousand in 2023) has been recorded using this model.

These two estimates combined, totalling $1,794 thousand ($2,008 thousand in 2023), represents management’s best estimate of the costs required to remediate the sites to the current minimum standard for its use prior to contamination, based on information available at the financial statement date.

For the remaining 14 sites (12 sites in 2023), no liability for remediation has been recognized. Some of these sites are at various stages of testing and evaluation and if remediation is required, liabilities will be reported as soon as a reasonable estimate can be determined. For these sites, CSC does not expect to give up any future economic benefit (there is likely no significant environmental impact or human health threats). These sites will be re-examined and a liability for remediation will be recognized if future economic benefits will be given up.

The following table presents the total estimated amounts of these liabilities by nature and source and the total undiscounted future expenditures as at March 31, 2024 and March 31, 2023. When the liability estimate is based on a future cash requirement, the amount is adjusted for inflation using a forecast CPI rate of 2.0% (2.0% in 2023). Inflation is included in the undiscounted amount.

Table 9:
Remediation of contaminated sites liabilities by nature and by source for the year ended March 31 (in thousands of dollars)

Nature and source of liability 2024 2023
Total number of sites Number of sites with a liability Estimated liability and total undiscounted expendituresFootnote 4 Total number of sites Number of sites with a liability Estimated liability and total undiscounted expendituresFootnote 4
Fuel related practicesFootnote 1 12 5 568 12 5 509
Landfills / Waste sitesFootnote 2 9 6 765 11 7 902
OtherFootnote 3 8 7 461 9 8 597
Totals 29 18 1,794 32 20 2,008

Also, during the year 3 sites (7 sites in 2023) were closed as they were either remediated or assessed to confirm that they no longer meet all the criteria required to record a liability for contaminated sites and no sites (no sites in 2023) were re-opened as additional remediation strategies are taking place.

b) Asset retirement obligations

CSC has recorded asset retirement obligations for the removal of asbestos and other hazardous materials in buildings, closure and post-closure obligations associated with other works and infrastructure, retirement activities linked to machinery and equipment, and other asset retirement obligations.

The changes in asset retirement obligations during the year are as follows:

Table 10:
Changes in asset retirement obligations for the year ended March 31 (in thousands of dollars)

Detail 2024 Asbestos and other hazardous material in buildings 2024 Storage tanks 2024 Closure and post-closure obligations - other works and infrastructure Total 2024 Total 2023
Opening balance 122,986 1,471 268 124,725 121,748
Accretion expenseFootnote 1 3,043 36 7 3,086 2,977
Closing balance 126,029 1,507 275 127,811 124,725

The undiscounted future expenditures, adjusted for inflation, for the planned projects comprising the liability are $153,640 thousand ($153,640 thousand as at March 31, 2023). There were no new liabilities nor settlement of liabilities in 2023 to 2024.

Key assumptions used in determining the provision are as follows: 

Table 11:
Key assumptions

Detail 2024 2023
Discount rate 2.45% 2.45%
Discount period and timing of settlement 10 years 10 years
Long-term rate of inflation 2.00% 2.00%

CSC’s ongoing efforts to assess contaminated sites and asset retirement obligations may result in additional environmental liabilities and asset retirement obligations.

6. Employee future benefits

a) Pension benefits

CSC'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 CSC 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 2023 to 2024 expense amounts to $168,828 thousand ($167,478 thousand in 2022 to 2023). For Group 1 members, the expense represents approximately 1.02 times (1.02 times in 2022 to 2023) the employee contributions and, for Group 2 members, approximately 1.00 times (1.00 times in 2022 to 2023) the employee contributions.

CSC's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the Consolidated Financial Statements of the Government of Canada, as the Plan's sponsor.

b) Severance benefits

Severance benefits provided to CSC’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, 2024, 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:

Table 12:
Changes in the obligations

Detail 2024 2023
Accrued benefit obligation - beginning of year 39,187 45,573
Expenses for the year (145) (4,434)
Benefits paid during the year (1,742) (1,952)
Accrued benefit obligation - end of year 37,300 39,187

7. Inmate Trust Fund

Pursuant to section 111 of the Corrections and Conditional Release Regulations, this account is credited with all moneys brought into the institution by an inmate on admission or readmission, and all moneys that are received on the inmate’s behalf while in custody, including, monetary gifts from a third party, payments for program participation, pay earned while on work release or conditional release in the community, moneys received from a third party for work performed in an institution or a CSC approved inmate operated business enterprise, sale of hobby craft or custom work, a  payment, allowance or income paid by either a private or government source. Deductions may be made from this account for issues such as debts to the Crown, the Inmate Welfare Fund, canteen expenditures, telephone calls, payments to assist in the reformation and rehabilitation of the inmate, and any other payments for which the inmate is liable.

Table 13:
Inmate Trust Fund for the year ended March 31 (in thousands of dollars)

Detail 2024 2023
Beginning of year 33,983 23,943
Receipts 49,004 58,166
Disbursements (50,661) (48,126)
End of year 32,326 33,983

8. Deferred revenue

Deferred revenue represents the balance at year-end of unearned revenues stemming from amounts received from external parties which are restricted to fund the expenditures related to specific projects, and amounts received for fees prior to services being performed. Revenue is recognized in the period that these expenditures are incurred or in which the service is performed. Details of the transactions related to this account are as follows:

Table 14:
Deferred revenue for the year ended March 31 (in thousands of dollars)

Detail 2024 2023
Opening balance 675 801
Amounts received 7,676 13,332
Revenue recognized (7,657) (13,458)
Ending balance 694 675

9. Accounts receivable, advances and loans

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

Table 15:
CSC’s accounts receivable and advances balances for the year ended March 31 (in thousands of dollars)

Detail 2024 2023

Receivables - Other government departments and agencies

10,752

19,922
Receivables - External parties 78,226 79,812
Employee advances 2,393 2,759
Parolee loans and advances to individuals other than employees 193 115
Subtotal 91,564 102,608

Allowance for doubtful accounts on receivables from external parties

(20,094)

(529)
Allowance for doubtful accounts for parolee loans (5) (5)

Gross accounts receivable and advances

71,465

102,074

Accounts receivable held on behalf of Government

(1,452)

(1,130)

Net accounts receivable and advances

70,013

100,944

The following table provides an aging analysis of accounts receivable from external parties and the associated valuation allowances used to reflect their net recoverable value. 

Table 16:
Aging analysis of accounts receivable from external parties and the associated valuation allowances for the year ended March 31 (in thousands of dollars)

Detail 2024 2023
Not past due 73,949 77,282
Number of days past due:
1 to 30 303 199
31 to 60 378 328
61 to 90 11 5
91 to 365 1,681 292
Over 365 1,904 1,706
Subtotal 78,226 79,812
Less: Valuation allowance for accounts receivable (20,094) (529)

Total

58,132

79,283

10. Inventories

The following table presents details of CSC’s inventories:

Table 17:
CSC’s inventories for the year ended March 31 (in thousands of dollars)

Detail 2024 2023
Inventories held for resale:
Raw materials 8,816 9,791
Work in progress 199 171
Finished goods 4,723 4,960
Subtotal 13,738 14,922
Provision for obsolete inventory (1,520) (2,512)
Total inventories held for resale 12,218 12,410
Inventories not for resale:
Pharmaceuticals and health care supplies 12,742 28,914
Other supplies 19,261 14,993
Clothing 10,877 11,386
Building materials 4,780 5,023
Utilities 917 892
Other Inventory 4,100 4,545
Total inventories not for resale 52,677 65,753
Total inventories 64,895 78,163

The cost of consumed inventories not for resale recognized as an expense in the Consolidated Statement of Operations and Organizational Net Financial Position is $155,979 thousand in 2024 ($139,620 thousand in 2023).

11. Tangible capital assets

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

 

Table 18:
Tangible capital assets

Asset class Amortization period
Buildings 25 to 40 years
Works and infrastructure 20 to 25 years
Machinery and equipment 10 years
Informatics hardware and software 3 to 10 years
Vehicles 5 to 10 years
Leasehold improvements Straight line over the lesser of useful life of improvement or lease term
Assets under capital leases Straight line over the lesser of useful life of improvement or lease term

Assets under construction are recorded in the applicable asset class in the year they are put into service and are not amortized until they are put into service.

Table 19:
Tangible capital assets: Net book value (in thousands of dollars)

Capital Asset Class Cost Accumulated amortization Net book value
Opening balance Acquisitions AdjustmentsFootnote 1 Disposals and write-offs Closing balance Opening balance Amortization AdjustmentsFootnote 1 Disposals and write-offs Closing balance 2024 2023
Land 14,545 0 0 0 14,545 0 0 0 0 0 14,545 14,545
Buildings 2,975,000 0 64,093 (126) 3,038,967 1,670,050 87,180 (657) (6) 1,756,567 1,282,400 1,304,950
Works and infrastructure 861,620 0 14,324 (7) 875,937 574,816 19,261 657 (7) 594,727 281,210 286,804
Machinery and equipment 138,212 8,791 (408) (3,712) 142,883 92,840 4,169 (174) (3,231) 93,604 49,279 45,372
Informatics hardware and software 122,897 35 15,335 (3,003) 135,264 100,377 6,226 0 (2,968) 103,635 31,629 22,520
Vehicles 108,195 10,210 324 (5,067) 113,662 64,968 7,964 280 (4,483) 68,729 44,933 43,227
Leasehold improvements 73,825 0 9,003 (10) 82,818 50,402 5,903 0 (10) 56,295 26,523 23,423
Assets under construction 661,036 239,628 (103,029) (5,199) 792,436 0 0 0 0 0 792,436 661,036
Total 4,955,330 258,664 (358) (17,124) 5,196,512 2,553,453 130,703 106 (10,705) 2,673,557 2,522,955 2,401,877


In April 2012, the Government of Canada announced it would close three institutions (Kingston Penitentiary, Ontario Regional Treatment Centre (ORTC) and Leclerc Institution). The closures were completed in September 2013 as planned.  In December 2019, CSC received a market appraisal for the Kingston Penitentiary and ORTC.  In accordance with PSAS 3150, this appraisal triggered an analysis of CSC’s valuation of the properties and whether any adjustments to the net book values were required.  In 2019, it was determined that Kingston Penitentiary and ORTC assets should be written-down to their combined net realizable value of $4,688 thousand, which resulted in a write-down of $40,512 thousand.  This assessment of Kingston Penitentiary and ORTC’s residual value was based on the market appraisal provided to CSCCSC will continue to assess Kingston Penitentiary and ORTC yearly to determine if any future write-downs or other adjustments are required.  There is no change from 2021-2022 to the Ontario RHQ net book value of $789 thousand.  Should a further change in the Kingston Penitentiary’s, ORTC’s, or Ontario RHQ's net book values become known, any applicable amounts will be recorded at that time. Leclerc Institution remains a tangible capital asset of CSC and has been leased under a long-term operating agreement with the Province of Quebec.

CSC also has Buildings and Works and Infrastructure located on reserves as defined in the Indian Act which are not recognized above.

12. Contractual obligations

The nature of the CSC's activities can result in some large multi-year contracts and obligations whereby the organization 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:

Table 20:
Contractual obligations for the year ended March 31 (in thousands of dollars)

Detail 2025 2026 2027 2028 2029 and
thereafter
Total
Acquisition of goods and services 203,692 5,218 3,686 2,397 1,287 216,280
Operating leases 320 320 320 320 293 1,573
Total 204,012 5,538 4,006 2,717 1,580 217,853

13. Contingent liabilities and contingent assets

a) Contingent liabilities

Claims and litigation

Claims have been made against CSC in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. CSC 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 litigation for which the outcome is not determinable and a reasonable estimate can be made by management, amount to approximately $25,469 thousand as at March 31, 2024 ($29,454 thousand in 2022 to 2023). 

b) Contingent assets

CSC may bring a claim as part of its normal course of operations which could result in a contingent asset, however no claims with a likely outcome are known to exist as at March 31, 2024. 

14. Related party transactions

CSC is related as a result of common ownership to all government departments, agencies, and Crown corporations. Related parties also include individuals who are members of key management personnel or close family members of those individuals, and entities controlled by, or under shared control of, a member of key management personnel or a close family member of that individual.

CSC enters into transactions with these entities in the normal course of business and on normal trade terms.

During the year, CSC did not enter into material transactions at a value different from that which would have been arrived at if the parties were unrelated.

a) Common services provided without charge by other government departments

During the year, CSC received services without charge from certain common services organizations related to accommodation, legal services, the employer's contribution to the health and dental insurance plans, and worker's compensation coverage. These services without charge have been recorded at their carrying value in CSC's Consolidated Statement of Operations and Organizational Net Financial Position as follows:

Table 21:
Common services provided without charge by other government departments for the year ended March 31 (in thousands of dollars)

Detail 2024 2023
Employer’s contribution to the health and dental insurance plans 174,542 154,031
Accommodation 19,091 18,581
Workers’ compensation 2,770 2,872
Legal services 1,564 4,176
Total 197,967 179,660

The Government has centralized some of its administrative activities for efficient, cost-effective, 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, and information technology services provided by Shared Services Canada, are not included in CSC's Consolidated Statement of Operations and Organizational Net Financial Position.

b) Other transactions with other government departments

Table 22:
Other transactions with other government departments for the year ended March 31 (in thousands of dollars)

Detail 2024 2023
Accounts receivable 10,752 19,922
Accounts payable 66,423 50,163
Expenses 556,396 482,953
Revenues 126,916 112,016

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

c) Transfers of assets and liabilities from (to) other government departments

During the year, CSC transferred in amounts related to salary overpayments receivable to other government departments for a net amount of $9 thousand ($174 thousand transferred to other government departments in 2023).

There was a $32 thousand capital asset transfer to another government department in 2024 (nil in 2023).

15. Segmented information

Presentation by segment is based on CSC’s departmental results framework. 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 objects of expense and by major types of revenue. The segment results for the period are as follows:

Table 23:
Segmented information

Detail Care and Custody Correctional Interventions Community Supervision Internal Services Intra-entity Transactions
(with CORCAN)
Total 2024 Total 2023

Transfer payments

Organizations and municipalities 787 219 4,565 0 0 5,571 4,962
Total transfer payments 787 219 4,565 0 0 5,571 4,962

Operating expenses

Salaries and employee benefits 1,517,268 568,308 32,175 362,172 0 2,479,923 2,224,418
Professional and special services 191,633 77,593 162,275 66,830 (42,433) 455,898 401,854
Utilities, materials and supplies 177,356 39,395 3,508 5,409 (6,599) 219,069 205,973
Amortization of tangible capital assets 118,470 1,426 2,620 8,187 0 130,703 129,475
Payment in lieu of taxes 35,279 0 0 0 0 35,279 33,435
Rentals 2,242 3,738 4,059 28,902 (4) 38,937 32,354
Machinery and equipment 22,288 3,036 274 12,259 (5,193) 32,664 28,488
Repairs and maintenance 32,223 7,061 1,165 847 (15,941) 25,355 13,774
Accommodation 0 0 9,988 9,103 0 19,091 18,581
Inmate pay 0 17,041 0 0 0 17,041 16,971
Travel 6,123 3,677 311 6,427 (4) 16,534 13,795
Damages and claims against the Crown 4,978 48 28 175 0 5,229 5,784
Loss (gain) on disposal of tangible capital assets (1,392) 42 100 5,616 0 4,366 9,554
Telecommunications 175 12 584 2,878 0 3,649 3,164
Relocation 0 8 0 3,276 0 3,284 3,840
Environmental liabilities and asset retirement obligations 2,856 0 16 0 0 2,872 2,633
Other subsidies and expenses 576,761 13,122 1,457 3,281 (89) 594,532 630
Intra-entity Transactions (with CORCAN) (25,426) (42,171) (453) (2,213) 70,263 0 0
Total operating expenses 2,660,834 692,336 218,107 513,149 0 4,084,426 3,144,723
Sub-total expenses 2,661,621 692,555 222,672 513,149 0 4,089,997 3,149,685
Expenses incurred on behalf of Government (10,797) (3,693) (1,205) (4,394) 0 (20,089) (9)
Total expenses 2,650,824 688,862 221,467 508,755 0 4,069,908 3,149,676

Revenues

Sales of goods and services 0 87,042 0 0 (29,045) 57,997 47,111
Miscellaneous revenues 4,366 41,270 0 5,173 (41,218) 9,591 7,564
Revenues earned on behalf of Government (4,366) (47) 0 (624) 0 (5,037) (2,643)
Intra-entity Transactions (with CORCAN) 0 (70,263) 0 0 70,263 0 0

Total revenues

0

58,002

0

4,549

0

62,551

52,032
Net cost of operations before government funding and transfers 2,650,824 630,860 221,467 504,206 0 4,007,357 3,097,644

16. Comparative information

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

Annex to the Statement of Management Responsibility including internal control over financial reporting (unaudited)

Summary of the assessment of effectiveness of the systems of internal control over financial reporting for fiscal year 2023 to 2024 and the action plan of Correctional Service of Canada

1. Introduction

This document provides summary information on the measures taken by Correctional Service of Canada (CSC) to maintain an effective system of internal control over financial reporting (ICFR) including information on internal control management, assessment results and related action plans.

Detailed information on CSC’s authority, mandate, and program activities can be found in the Departmental Plan and the Departmental Results Report.

2. Departmental system of internal control over financial reporting

CSC recognizes the importance of setting the tone from the top to ensure that employees throughout the organization understand their roles and responsibilities in maintaining an effective system of ICFR. CSC’s focus is to ensure that risks are well managed through a responsive and risk-based control environment that enables continuous improvement and innovation. 

2.1 Internal control management

CSC has a well-established governance and accountability structure to support organizational assessment efforts and oversight of its system of internal control. CSC’s Internal Controls over Financial Reporting (ICFR) Framework, approved by the Commissioner in May 2018, is in place and includes:

The Departmental Audit Committee provides advice to the Commissioner on the adequacy and functioning of the department’s risk management, control and governance frameworks and processes.

2.2 Service arrangements relevant to financial statements

CSC relies on other organizations for the processing of certain transactions that are recorded in its financial statements as follows:

Readers of this annex may refer to the annexes of the above-noted departments for a greater understanding of the system of internal control over financial reporting related to these specific services. 

3. CSC’s assessment results for the 2023 to 2024 fiscal year

The following table summarizes the status of the ongoing monitoring activities according to the previous fiscal year’s rotational plan. Due to operational and risk considerations, some scheduling modifications were made to the plan:

Table 24:
Work performed during the 2023 to 2024 fiscal year based off the previous year’s plan, unless stated otherwise

Processes Status as at March 31, 2024
Financial close and reporting Testing is ongoing.
Revenues, Receivables, Receipts (RRR) Process mapping and risk assessment updates completed; testing to be completed in 2024 to 2025.

Purchases, Payables, and Payments:

  • Contracting and Procurement (C&P), and
  • Government Acquisition Cards (GAC).

Purchases, Payables, and Payments:

  • C&P: Completed as planned; remedial actions started.
  • GAC: Testing fully completed and report is being finalized.
Pay administration Testing is ongoing.
Inmate Trust Fund Testing is ongoing.

Inventory:

  • Not for Resale - Food
  • Not for resale: Consumables and Personal Protective Equipment

Inventory:

  • Food Inventory: Completed as planned; remedial actions started.
  • Consumables and Personal Protective Equipment: Completed as planned; remedial actions started.

Capital assets:

  • Real property
  • Real property and non-real property

Capital assets:

  • Real property: Completed as planned; remedial actions started.
  • Real property and non-real property retirements and transfer ins or outs (covering fiscal 2022 to 2023): Not tested due to low dollar value of transactions related to sub-process.
Costing Testing is ongoing.
Forecasting Completed as planned; remedial actions started.
Food Services Information Management System (FSIMS) - Information Technology General Controls (ITGC) Completed as planned; remedial actions started.

The key findings and significant adjustments required from the current year’s assessment activities are summarized below.

New or significantly amended key controls

CSC re-assesses key controls affected by new or significantly amended processes identified in its ongoing risk-based monitoring plan. CSC will monitor the impacts of the changing work environment on key controls and adapt ongoing monitoring activities accordingly. There were no significantly amended key controls in existing processes that required a reassessment.

Ongoing risk-based monitoring plan

As part of its ongoing risk-based monitoring plan, CSC completed reassessments of the processes listed in the table above. For the most part, the key controls that were tested performed as intended with some opportunities for improvement, and management action plans addressing recommendations were developed by process owners as required.

4. CSC’s action plan for the next fiscal year and subsequent fiscal years

CSC’s rotational ongoing risk-based monitoring plan over the next 5 years, based on an annual validation of the high-risk processes and controls and related adjustments to the ongoing monitoring plan as required, is shown in the following table.

Table 25:
Rotational ongoing risk-based monitoring plan

Key control areas - Process 2024 to 2025 2025 to 2026 2026 to 2027 2027 to 2028 2028 to 2029
Entity Level Controls (ELC):
Entity Level Controls no yes no no no
Financial management processes:
Forecasting no no yes no no
Planning and budgeting (including investment planning) no yes no no yes
Costing no no yes no no
CFO Attestation yes no no no no
Internal Control over Financial Reporting (ICFR):
Financial close and reporting no no yes no no
Revenues, Receivables, and Receipts (RRR) yes no no no no
Purchases, Payables, and Payments yes no no no yes
Pay Administration no yes no yes no
Inmate Trust Fund no no yes no no
Inventory no yes no yes no
Capital Assets and Asset Retirement Obligations (AROs) yes no yes no yes
Information Technology General Controls (ITGC):
IT general controlsFootnote 1 yes yes yes yes no

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2024-12-17