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

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

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.