Consolidated Statement of Administrative Costs Charged to the CPP Account by ESDC

To the Internal Audit Services Branch of Employment Services and Social Development Canada

We have audited the accompanying Consolidated Statement of Administrative Costs Charged to the Canada Pension Plan (CPP) Account by Employment and Social Development Canada (ESDC), formerly Human Resources and Skills Development Canada (HRSDC), for the year ended March 31, 2014 and the related schedules (together “the financial information”). The financial information has been prepared by management of ESDC based on the financial reporting provisions established in the 2010 - 2014 Memorandum of Understanding between the CPP and ESDC dated June 21, 2010 , and its amendments dated March 29, 2011 , March 30, 2012 , March 11, 2013 , and March 31, 2014 respectively (collectively, “the MoU”).

Management’s responsibility for the financial information

Management of ESDC is responsible for the preparation of the financial information in accordance with the financial reporting provisions of the MoU, and for such internal control as management of ESDC determines is necessary to enable the preparation of the financial information that is free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial information based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial information is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial information. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial information, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to ESDC’s preparation of the financial information in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of ESDC’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial information.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial information for the year ended March 31, 2014 is prepared, in all material respects, in accordance with the financial reporting provisions of the MoU.

Basis of accounting and restriction on distribution and use

Without modifying our opinion, we draw attention to the fact that the financial information has been prepared in accordance with the financial reporting provisions of the above noted MoU. The financial information has been prepared to assist ESDC to meet the requirements of Part A of the MoU. As a result, the financial information may not be suitable for another purpose. Our report is intended solely for ESDC and the CPP and should not be distributed to or used by parties other than ESDC and the CPP.

Chartered Professional Accountants, Licensed Public Accountants

1. Introduction

Under the Canada Pension Plan (CPP) Legislation, the Minister of Employment and Social Development Canada (ESDC) has the responsibility for the administration of Parts II and III (except for some sections of Part III), which concern the general administration of the CPP. The CPP is administered by ESDC, with support from the Income Security and Social Development Branch (ISSDB), the Department of Finance, the Canada Revenue Agency, Public Works and Government Services Canada, the Office of the Superintendent of Financial Institutions, the Royal Canadian Mounted Police and the CPP Investment Board.

The 2010 - 2014 Memorandum of Understanding (MoU) is comprised of two parts: the first part (Part A) sets out the framework and basic principles regarding the services to be provided by ESDC to the CPP. The second part (Part B) specifies the cost allocation methodologies used by ESDC to calculate the charges for its services to the CPP, in accordance with the costing principles approved by Treasury Board in January 1988 .

The Consolidated Statement of Administrative costs charged to the CPP focuses on authority for payments in a fiscal year and is prepared for on a near-cash basis.

2. Social Security Tribunal

The Social Security Tribunal (SST) is an independent administrative tribunal that provides independent appeal processes for Employment Insurance (EI), the Canada Pension Plan (CPP), and Old Age Security (OAS) decisions. As of April 1, 2013 , the SST replaced the Pension Appeals Board (PAB) and the Office of the Commissioner of Review Tribunals (OCRT) which previously handled appeals. The three organizations have been combined in Schedule 3 for comparative purposes.