Consolidated Statement of Administrative Costs Charged to the CPP Account by ESDC, March 31, 2017

From: Employment and Social Development Canada

Official title: Consolidated Statement of Administrative Costs Charged to the Canada Pension Plan Account by Employment and Social Development Canada for the period from April 1, 2016 to March 31, 2017

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Independent auditor’s report

To the Internal Audit Services Branch of Employment 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) for the year ended March 31, 2017 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 fiscal year 2016 to 2017 Memorandum of Understanding between the CPP and ESDC dated March 31, 2017 and the June 2017 addendum (together, “the Memorandum of Understanding”).

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 Memorandum of Understanding, and for such internal control as management 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, 2017 is prepared, in all material respects, in accordance with the financial reporting provisions of the Memorandum of Understanding.

Basis of accounting and restriction on use

Without modifying our opinion, we draw attention to Schedule 1 - Note 1 of the financial information, which describes the basis of accounting. The financial information has been prepared to assist ESDC to comply with the financial reporting requirements of the Memorandum of Understanding between ESDC and the CPP. As a result, the financial information may not be suitable for another purpose. Our report is intended solely for ESDC and should not be used by parties other than ESDC and the CPP.

Chartered professional accountants, licensed public accountants

Consolidated Statement of Administrative Costs Charged to the Canada Pension Plan Account by Employment and Social Development Canada for the period from April 1, 2016 to March 31, 2017

Service area as per Memorandum of Understanding 2017 cost in thousands of dollars 2016 cost in thousands of dollars
Deputy Minister’s Office (Schedule 2) 275 285
Chief Operating Officer (Schedule 3) 204 223
Income Security and Social Development Branch (Schedule 4) 13,810 14,407
Corporate Secretariat (Schedule 5) 1,610 1,628
Public Affairs and Stakeholder Relations Branch (Schedule 6) 2,510 2,712
Human Resources Services Branch (Schedule 7) 8,615 10,397
Legal Services Branch (Schedule 8) 3,946 4,539
Internal Audit Services Branch (Schedule 9) 645 635
Strategic and Service Policy Branch (Schedule 10) 3,791 4,352
Transformation and Integrated Service Management Branch and Benefits Delivery Services (Schedule 1 and 11) 185,728 172,598
Citizen Service Branch (Schedule 12) 20,565 16,287
Integrity Services Branch (Schedule 13) 6,371 6,935
Social Insurance Register (Schedule 14) 5,306 5,357
Innovation, Information and Technology Branch (Schedule 15) 54,915 56,622
Chief Financial Officer Branch (Schedule 16) 39,159 38,830
Strategic Services Bureau and Regional Assistant Deputy Ministers (Schedule 17) 2,581 2,528
Canada School of Public Service 515 0
Provision of pay administration services 319 163
Back office transformation 353 324
Total administrative costs charged to Canada Pension Plan account 351,218 338,822

Schedule 1: Notes to Consolidated Statement of Administrative Costs Charged to the Canada Pension Plan Account

Note 1: Introduction

Under the Canada Pension Plan (CPP) Legislation, the Minister of Employment and Social Development Canada (ESDC or the “Department”) 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), Department of Finance, the Canada Revenue Agency, Public Services and Procurement Canada, the Office of the Superintendent of Financial Institutions, the Royal Canadian Mounted Police and the CPP Investment Board.

The fiscal year 2016 to 2017 Memorandum of Understanding between the CPP and ESDC was approved on March 31, 2017 and was revised in June 2017 by way of an addendum. This fiscal year 2016 to 2017 Memorandum of Understanding is comprised of 2 parts: the first part (Part A) sets out the framework and basic principles regarding the services to be provided 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.

Note 2: Comparative information

Expenditures for the period from April 1, 2015 to March 31, 2016 of the Processing and Payments Services Branch are included in the Consolidated Statement of Administrative Costs Charged to the Canada Pension Plan Account by ESDC under the Transformation and Integrated Service Management Branch and Benefits Delivery Services line item as 2016 comparative financial information.

During the fiscal year 2016 to 2017 period, ESDC expanded the mandate of the Processing and Payments Services Branch and it is now known as the Transformation and Integrated Service Management Branch (TISMB). TISMB helps ESDC drive the Service Strategy and a multi-year action plan, provides oversight over the Department’s transformation work and design, and leads key transformation initiatives. TISMB is also responsible for ensuring continuing and consistent delivery of core benefits to Canadians through the newly created Benefits Delivery Services group.

Schedule 2: Administrative costs charged to the Canada Pension Plan account by Deputy Minister’s Office

Cost description 2017 cost in thousands of dollars 2016 cost in thousands of dollars
Deputy Minister’s Office 223 230
Contributions to employee benefit plans 32 35
Management insurance plan 20 20
Total 275 285

Schedule 3: Administrative costs charged to the Canada Pension Plan account by Chief Operating Officer

Cost description 2017 cost in thousands of dollars 2016 cost in thousands of dollars
Chief Operating Officer 166 180
Contributions to employee benefit plans 23 28
Management insurance plan 15 15
Total 204 223

Schedule 4: Administrative costs charged to the Canada Pension Plan account by Income Security and Social Development Branch

Cost description 2017 cost in thousands of dollars 2016 cost in thousands of dollars
Income Security and Social Development Branch 11,226 11,753
Contributions to employee benefit plans 1,579 1,709
Management insurance plan 1,005 945
Total 13,810 14,407

Schedule 5: Administrative costs charged to the Canada Pension Plan account by Corporate Secretariat

Cost description 2017 cost in thousands of dollars 2016 cost in thousands of dollars
ESDC Corporate Secretariat 1,319 1,321
Contributions to employee benefit plans 178 198
Management insurance plan 113 109
Total 1,610 1,628

Schedule 6: Administrative costs charged to the Canada Pension Plan account by Public Affairs and Stakeholder Relations Branch

Cost description 2017 cost in thousands of dollars 2016 cost in thousands of dollars)
Public Affairs and Stakeholder Relations Branch 2,057 2,224
Contributions to employee benefit plans 277 314
Management insurance plan 176 174
Total 2,510 2,712

Schedule 7: Administrative costs charged to the Canada Pension Plan account by Human Resources Services Branch

Cost description 2017 cost in thousands of dollars 2016 cost in thousands of dollars
Human Resources Services Branch 7,167 8,611
Contributions to employee benefit plans 885 1,150
Management insurance plan 2014 563 636
Total 8,615 10,397

Schedule 8: Administrative costs charged to the Canada Pension Plan account by ESDC Legal Services Branch

Cost description 2017 cost in thousands of dollars 2016 cost in thousands of dollars
ESDC Legal Services Branch 3,674 4,157
Contributions to employee benefit plans 166 246
Management insurance plan 106 136
Total 3,946 4,539

Schedule 9: Administrative costs charged to the Canada Pension Plan account by Internal Audit Services Branch

Cost description 2017 cost in thousands of dollars 2016 cost in thousands of dollars
Internal Audit Services Branch 545 536
Contributions to employee benefit plans 61 64
Management insurance plan 39 35
Total 645 635

Schedule 10: Administrative costs charged to the Canada Pension Plan account by Strategic and Service Policy Branch

Cost description 2017 cost in thousands of dollars 2016 cost in thousands of dollars
Strategic and Service Policy Branch 3,504 4,012
Contributions to employee benefit plans 175 219
Management insurance plan 112 121
Total 3,791 4,352

Schedule 11: Administrative costs charged to the Canada Pension Plan account by Transformation and Integrated Service Management Branch and Benefits Delivery Services

Cost description 2017 cost in thousands of dollars 2016 cost in thousands of dollars
Processing and payment (Regions) 99,533 100,162
Processing and payment (National Headquarters) 41,794 29,747
Call Centers (Regions and National Headquarters) 13,371 12,042
Contributions to employee benefit plans 18,966 19,733
Management insurance plan 12,064 10,914
Total 185,728 172,598

Schedule 12: Administrative costs charged to the Canada Pension Plan account by Citizen Service Branch

Cost description 2017 cost in thousands of dollars 2016 cost in thousands of dollars
Citizen Services (Regions) 15,278 11,697
Citizen Services (National Headquarters) 1,595 1,547
Contributions to employee benefit plans 2,257 1,959
Management insurance plan 1,435 1,084
Total 20,565 16,287

Schedule 13: Administrative costs charged to the Canada Pension Plan account by Integrity Services Branch

Cost description 2017 cost in thousands of dollars 2016 cost in thousands of dollars
Integrity Services Branch 5,320 5,701
Contributions to employee benefit plans 642 795
Management insurance plan 409 439
Total 6,371 6,935

Schedule 14: Administrative costs charged to the Canada Pension Plan account by Social Insurance Register

Cost description 2017 cost in thousands of dollars 2016 cost in thousands of dollars
Personnel cost 4,298 4,361
Contributions to employee benefit plans 750 733
Central government services 575 601
Transportation and communication 423 420
Professional and special services 407 400
Management insurance plan 389 379
Indirect expenses 86 94
Other services 21 1
Travel 18 16
Rental, repairs and maintenance 6 1
Construction or acquisition of machinery and equipment 6 3
Utilities, material and supplies 3 3
Training and educational services 2 14
Information 1 1
Total administrative costs 6,985 7,027
Less: Funding from Treasury Board (1,679) (1,670)
Total 5,306 5,357

Schedule 15: Administrative costs charged to the Canada Pension Plan account by Innovation, Information and Technology Branch

Cost description 2017 cost in thousands of dollars 2016 cost in thousands of dollars
Innovation, Information and Technology Branch 50,420 51,689
Contributions to employee benefit plans 2,747 3,176
Management insurance plan 1,748 1,757
Total 54,915 56,622

Schedule 16: Administrative costs charged to the Canada Pension Plan account by Chief Financial Officer Branch

Cost description 2017 cost in thousands of dollars 2016 cost in thousands of dollars
Regular operating 9,360 9,969
National accommodation plan 28,046 26,956
Contributions to employee benefit plans 1,071 1,227
Management insurance plan 682 678
Total 39,159 38,830

Schedule 17: Administrative costs charged to the Canada Pension Plan account by Strategic Services Bureau and Regional Assistant Deputy Ministers

Cost description 2017 cost in thousands of dollars 2016 cost in thousands of dollars
Strategic Services Bureau and Regional Assistant Deputy Ministers 2,123 2,075
Contributions to employee benefit plans 280 292
Management insurance plan 178 161
Total 2,581 2,528
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