Consolidated Statement of Administrative Costs Charged to the CPP Account by ESDC, March 31, 2018

From: Employment and Social Development Canada

Official title: Consolidated Statement of Administrative Costs Charged to the Canada Pension Plan Account, for the period from April 1, 2017 to March 31, 2018

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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 period from April 1, 2017 to March 31, 2018 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 2017 to 2018 Memorandum of Understanding between the CPP and ESDC dated March 29, 2018 ("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 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.

Opinion

In our opinion, the financial information for the period from April 1, 2017 to March 31, 2018 is prepared, in all material respects, in accordance with the financial reporting provisions of the MoU.

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 MoU 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

Service area as per the Memorandum of Understanding 2018 cost in thousands of dollars 2017 cost in thousands of dollars
Deputy Minister's Office (Schedule 2) 451 275
Chief Operating Officer (Schedule 3) 224 204
Income Security and Social Development Branch (Schedule 4) 14,262 13,810
Corporate Secretariat (Schedule 5) 1,857 1,610
Public Affairs and Stakeholder Relations Branch (Schedule 6) 3,096 2,510
Human Resources Services Branch (Schedule 7) 12,487 8,615
Legal Services Branch (Schedule 8) 3,924 3,946
Internal Audit Services Branch (Schedule 9) 833 645
Strategic and Service Policy Branch (Schedule 10) 4,684 3,791
Transformation and Integrated Service Management Branch and Benefits Delivery Services (Schedule 11) 204,958 185,728
Citizen Service Branch (Schedule 12) 22,346 20,565
Integrity Services Branch (Schedule 13) 7,840 6,371
Social Insurance Register (Schedule 14) 4,723 5,306
Innovation, Information and Technology Branch (Schedule 15) 59,479 54,915
Chief Financial Officer Branch (Schedule 16) 45,250 39,159
Strategic Services Bureau and Regional Assistant Deputy Ministers (Schedule 17) 3,419 2,581
Canada School of Public Service 515 515
Provision of pay administration services 319 319
Back office transformation 353 353
Total administrative costs charged to the Canada Pension Plan account 391,020 351,218

Schedule 1: Notes to the 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) 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, the CPP Investment Board, and the Administrative Tribunal Support Service of Canada (ATSSC).

The 2017 to 2018 Memorandum of Understanding (MoU) between the CPP and ESDC was signed on March 29, 2018. This fiscal year 2017 to 2018 MOU is comprised of two 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: Canada Pension Plan enhancement

The fiscal year 2017 to 2018 consolidated statement of administrative costs charged to the CPP is reflective of the total amount invoiced to the CPP by ESDC, and includes approximately $697,000 in project costs associated with the implementation of CPP enhancement.

Note 3: Subsequent event

Due to the nature of its operations, ESDC as a department within the Government of Canada is sometimes subject to grievances filed by its employees. A grievance has been raised that may result in a change of classification, which may impact charges relating to the CPP Account for future periods beyond the period ended March 31, 2018. The resolution of this grievance could have a material effect on the expenses included in the Consolidated Statement of Administrative Costs Charged to the CPP Account, however the outcome is not determinable at this time.

Note 4: Comparative information

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

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

Cost description 2018 cost in thousands of dollars 2017 cost in thousands of dollars
Deputy Minister's Office 368 223
Contributions to employee benefit plans 50 32
Management insurance plan 33 20
Total 451 275

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

Cost description 2018 cost in thousands of dollars 2017 cost in thousands of dollars
Chief Operating Officer 184 166
Contributions to employee benefit plans 24 23
Management insurance plan 16 15
Total 224 204

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

Cost description 2018 cost in thousands of dollars 2017 cost in thousands of dollars
Income Security and Social Development Branch 11,676 11,226
Contributions to employee benefit plans 1,556 1,579
Management insurance plan 1,030 1,005
Total 14,262 13,810

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

Cost description 2018 cost in thousands of dollars 2017 cost in thousands of dollars
Corporate Secretariat 1,520 1,319
Contributions to employee benefit plans 203 178
Management insurance plan 134 113
Total 1,857 1,610

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

Cost description 2018 cost in thousands of dollars 2017 cost in thousands of dollars
Public Affairs and Stakeholder Relations Branch 2,556 2,057
Contributions to employee benefit plans 325 277
Management insurance plan 215 176
Total 3,096 2,510

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

Cost description 2018 cost in thousands of dollars 2017 cost in thousands of dollars
Human Resources Services Branch 10,478 7,167
Contributions to employee benefit plans 1,209 885
Management insurance plan 800 563
Total 12,487 8,615

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

Cost description 2018 cost in thousands of dollars 2017 cost in thousands of dollars
Legal Services Branch 3,665 3,674
Contributions to employee benefit plans 156 166
Management insurance plan 103 106
Total 3,924 3,946

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

Cost description 2018 cost in thousands of dollars 2017 cost in thousands of dollars
Internal Audit Services Branch 709 545
Contributions to employee benefit plans 75 61
Management insurance plan 49 39
Total 833 645

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

Cost description 2018 cost in thousands of dollars 2017 cost in thousands of dollars
Strategic and Service Policy Branch 4,372 3,504
Contributions to employee benefit plans 188 175
Management insurance plan 124 112
Total 4,684 3,791

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

Cost description 2018 cost in thousands of dollars 2017 cost in thousands of dollars
Benefits Delivery Services - NHQ 43,288 41,794
Benefits Delivery Services - Regions 114,116 99,533
Call Centers - NHQ 1,530 1,162
Call Centers - Regions 11,397 12,209
Contributions to employee benefit plans 20,836 18,966
Management insurance plan 13,791 12,064
Total 204,958 185,728

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

Cost description 2018 cost in thousands of dollars 2017 cost in thousands of dollars
Citizen Service Branch - NHQ 1,486 1,595
Citizen Service Branch - Regions 17,015 15,278
Contributions to employee benefit plans 2,314 2,257
Management insurance plan 1,531 1,435
Total 22,346 20,565

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

Cost description 2018 cost in thousands of dollars 2017 cost in thousands of dollars
Integrity Services Branch - NHQ 1,162 1,050
Integrity Services Branch - Regions 5,383 4,270
Contributions to employee benefit plans 779 642
Management insurance plan 516 409
Total 7,840 6,371

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

Cost description 2018 cost in thousands of dollars 2017 cost in thousands of dollars
Social Insurance Register 3,791 4,167
Contributions to employee benefit plans 561 750
Management insurance plan 371 389
Total 4,723 5,306

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

Cost description 2018 cost in thousands of dollars 2017 cost in thousands of dollars
Innovation, Information and Technology Branch - Regular Operating 33,060 28,897
Shared Services Canada 21,588 21,523
Contributions to employee benefit plans 2,907 2,747
Management insurance plan 1,924 1,748
Total 59,479 54,915

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

Cost description 2018 cost in thousands of dollars 2017 cost in thousands of dollars
Chief Financial Officer Branch - Regular Operating 11,386 9,360
National Accommodation Plan 31,672 28,046
Contributions to E employee benefit plans 1,319 1,071
Management insurance plan 873 682
Total 45,250 39,159

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

Cost description 2018 cost in thousands of dollars 2017 cost in thousands of dollars
Strategic Services Bureau & Regional Assistant Deputy Ministers 2,829 2,123
Contributions to employee benefit plans 355 280
Management insurance plan 235 178
Total 3,419 2,581
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