Consolidated statement of administrative costs charged to the CPP Accounts by ESDC, March 31, 2022

Official title: Consolidated Statement of Administrative Costs Charged to the Canada Pension Plan Accounts by Employment and Social Development Canada, for the period from April 1, 2021 to March 31, 2022

List of abbreviations

BDS
Benefits Delivery Services
BISB
Benefits and Integrated Services Branch
CPP
Canada Pension Plan
ESDC
Employment and Social Development Canada
ISSDB
Income Security and Social Development Branch
MoU
Memorandum of Understanding
NHQ
National Headquarters
TISMB
Transformation and Integrated Service Management Branch
TMB
Transformation Management Branch

List of tables

Independent auditor’s report

To the Internal Audit and Enterprise Risk Management Branch of Employment and Social Development Canada

Our opinion

In our opinion, the accompanying financial information of Employment and Social Development Canada (ESDC) for the period from April 1, 2021 to March 31, 2022 is prepared, in all material respects, in accordance with the financial reporting provisions of the 2021 to 2022 Memorandum of Understanding (MoU) between the Canada Pension Plan (CPP) Accounts and ESDC dated March 22, 2022.

What we have audited

The financial information of ESDC comprises the consolidated statement of administrative costs charged to the CPP Accounts by ESDC for the period from April 1, 2021 to March 31, 2022 and the related notes and schedules, which include significant accounting policies and other explanatory information.

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial information section of our report.

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

Independence

We are independent of ESDC in accordance with the ethical requirements that are relevant to our audit of the financial information in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.

Emphasis of matter, basis of accounting and restriction on use

We draw attention to note 1 to the financial information, which describes the basis of accounting. The financial information is prepared to assist ESDC to comply with the financial reporting requirements of the 2021 to 2022 MoU between ESDC and the CPP Accounts. As a result, the financial information may not be suitable for another purpose. Our report is intended solely for ESDC in accordance with the terms of our engagement and should not be used by parties other than ESDC and the Office of the Auditor General of Canada. Our opinion is not modified in respect of this matter.

Responsibilities of management and those charged with governance for the financial information

Management is responsible for the preparation of the financial information in accordance with the financial reporting provisions of the 2021 to 2022 MoU between ESDC and the CPP Accounts, and for such internal control as management determines is necessary to enable the preparation of financial information that is free from material misstatement, whether due to fraud or error.

Those charged with governance are responsible for overseeing ESDC’s financial reporting process.

Auditor’s responsibilities for the audit of the financial information

Our objectives are to obtain reasonable assurance about whether the financial information as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial information.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

  • identify and assess the risks of material misstatement of the financial information, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control
  • obtain an understanding of internal control relevant to the audit 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
  • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates, if any, and related disclosures made by management

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

PricewaterhouseCoopers LLP/limited liability company/professional services firms

Chartered Professional Accountants, Licensed Public Accountants

Ottawa, Ontario

August 9, 2022

Table 1: Consolidated statement of administrative costs charged to the CPP Accounts by ESDC

Table 1: Consolidated statement of administrative costs charged to the CPP Accounts by ESDC
Service area as per the Memorandum of Understanding 2022 cost in thousands of dollars 2021 cost in thousands of dollars
Deputy Minister’s Office (Schedule 1) 668 694
Chief Operating Officer (Schedule 2) 412 419
Income Security and Social Development Branch (Schedule 3) 17,022 15,384
Corporate Secretariat (Schedule 4) 2,176 2,503
Public Affairs and Stakeholder Relations Branch (Schedule 5) 3,557 3,685
Human Resources Services Branch (Schedule 6) 19,741 20,591
Legal Services Branch (Schedule 7) 2,817 3,944
Internal Audit and Enterprise Risk Management Branch (Schedule 8) 1,062 1,192
Strategic and Service Policy Branch (Schedule 9) 4,596 4,743
Transformation Management Branch (Schedule 10) 22,495 23,074
Benefits and Integrated Services Branch (Schedule 11) 284,431 271,468
Citizen Service Branch (Schedule 12) 23,461 24,311
Integrity Services Branch (Schedule 13) 16,335 13,314
Social Insurance Register (Schedule 14) 6,758 6,279
Innovation, Information and Technology Branch (Schedule 15) 114,658 104,790
Chief Financial Officer Branch (Schedule 16) 51,763 56,223
Strategic Services Bureau and Regional Assistant Deputy Ministers (Schedule 17) 4,794 4,890
Corporate Reserve (Schedule 18) 457 0
Canada School of Public Service 515 515
Provision of Pay Administration Services 350 350
Financial Management Transformation 57 165
Total administrative costs charged to the Canada Pension Plan Accounts 578,124 558,534

The accompanying notes form an integral part of the consolidated statement of administrative costs charged to the Canada Pension Plan Accounts.

Notes to the consolidated statement of administrative costs charged to the Canada Pension Plan Accounts

Note 1: Introduction

Under the Canada Pension Plan (CPP) Act, 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), that pertains to 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 Services and Procurement Canada, the Office of the Superintendent of Financial Institutions, the Royal Canadian Mounted Police, the CPP Investment Board, and the Administrative Tribunals Support Service of Canada.

The 2021 to 2022 Memorandum of Understanding (MoU) between the CPP and ESDC was signed on March 22, 2022. This MoU 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 Accounts, in accordance with the costing principles approved by Treasury Board in January 1988.

The framework and basic principles for the comparative figures shown in the consolidated statement of administrative costs under the 2021 header are set out in a 2020 to 2021 Memorandum of Understanding which was signed on March 26, 2021.

The consolidated statement of administrative costs charged to the CPP Accounts focuses on authority for payments in a fiscal year and is prepared for on a modified cash basis.

Note 2: Canada Pension Plan enhancement

On December 15, 2016, legislation to enact the CPP enhancement received Royal Assent. The CPP represents 2 separate accounts, the CPP Account (base or existing CPP), and the Additional CPP Account (enhanced CPP), where the financial activities of each account are accounted for separately. For the purpose of the MoU and the consolidated statement of administrative costs, CPP refers to the whole of the Canada Pension Plan, which includes both the base and enhanced components of the CPP.

Based on benefit projections at maturity, a fixed percentage cost allocation ratio (entitled “fair share” under section 3.0, Part B of the MoU) was determined, where 27% of the indirect costs would be paid by the Additional CPP Account, and the remaining 73% by the CPP Account. This ratio was determined to accurately reflect the scope of the enhancement relative to the base CPP while considering the volume and the complexity of work being done by ESDC.

The 2021 to 2022 consolidated statement of administrative costs of $578,124,209 (2020 to 2021 $558,534,913), including Contributions to Employee Benefit Plans and Public Service Insurance, charged to the CPP Accounts includes costs of $420,852,471 ($400,927,690 in 2020 to 2021) associated with the CPP Account and $157,271,738 ($157,607,223 in 2020 to 2021) associated with the Additional CPP Account (enhanced CPP).

Note 3: Comparative Information

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

The previous Transformation and Integrated Service Management Branch (TISMB) and Benefits Delivery Services (BDS) has been re-structured into 2 distinct branches – the Transformation Management Branch (TMB) (consult Schedule 10) and the Benefits and Integrated Services Branch (BISB) (consult Schedule 11) to improve the delivery of services to Canadians. The changes in the departmental financial system to reflect the 2 new branches came into effect on April 1, 2021.

A Corporate Reserve section (consult Schedule 18) was introduced in 2021 to 2022 to allocate CPP's share of specific expenditures. These expenditures are charged at the departmental level and can include Payables at Year End and year-end adjustments.

Note 4: Contingencies

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 will result in a change of classification, which may impact charges relating to the CPP Accounts for future periods beyond the period ended March 31, 2022. 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 Accounts; however, the financial impact is not determinable at this time.

Schedules to the consolidated statement of administrative costs charged to the Canada Pension Plan Accounts

Schedule 1: Administrative costs charged to the CPP Accounts by the Deputy Minister’s Office

Schedule 1: Administrative costs charged to the CPP Accounts by the Deputy Minister’s Office
Cost description 2022 cost in thousands of dollars 2021 cost in thousands of dollars
Deputy Minister’s Office 542 563
Contributions to Employee Benefit Plans 76 82
Public Service Insurance 50 49
Total 668 694

Schedule 2: Administrative costs charged to the CPP Accounts by the Chief Operating Officer

Schedule 2: Administrative costs charged to the CPP Accounts by the Chief Operating Officer
Cost description 2022 cost in thousands of dollars 2021 cost in thousands of dollars
Chief Operating Officer 335 341
Contributions to Employee Benefit Plans 47 49
Public Service Insurance 30 29
Total 412 419

Schedule 3: Administrative costs charged to the CPP Accounts by the Income Security and Social Development Branch

Schedule 3: Administrative costs charged to the CPP Accounts by the Income Security and Social Development Branch
Cost description 2022 cost in thousands of dollars 2021 cost in thousands of dollars
Income Security and Social Development Branch 14,008 12,611
Contributions to Employee Benefit Plans 1,829 1,741
Public Service Insurance 1,185 1,032
Total 17,022 15,384

Schedule 4: Administrative costs charged to the CPP Accounts by the Corporate Secretariat

Schedule 4: Administrative costs charged to the CPP Accounts by the Corporate Secretariat
Cost description 2022 cost in thousands of dollars 2021 cost in thousands of dollars
Corporate Secretariat 1,789 2,048
Contributions to Employee Benefit Plans 235 286
Public Service Insurance 152 169
Total 2,176 2,503

Schedule 5: Administrative costs charged to the CPP Accounts by the Public Affairs and Stakeholder Relations Branch

Schedule 5: Administrative costs charged to the CPP Accounts by the Public Affairs and Stakeholder Relations Branch
Cost description 2022 cost in thousands of dollars 2021 cost in thousands of dollars
Public Affairs and Stakeholder Relations Branch 2,952 3,018
Contributions to Employee Benefit Plans 367 419
Public Service Insurance 238 248
Total 3,557 3,685

Schedule 6: Administrative costs charged to the CPP Accounts by the Human Resources Services Branch

Schedule 6: Administrative costs charged to the CPP Accounts by the Human Resources Services Branch
Cost description 2022 cost in thousands of dollars 2021 cost in thousands of dollars
Human Resources Services Branch 16,409 17,106
Contributions to Employee Benefit Plans 2,022 2,188
Public Service Insurance 1,310 1,297
Total 19,741 20,591

Schedule 7: Administrative costs charged to the CPP Accounts by the Legal Services Branch

Schedule 7: Administrative costs charged to the CPP Accounts by the Legal Services Branch
Cost description 2022 cost in thousands of dollars 2021 cost in thousands of dollars
Legal Services Branch 2,670 3,648
Contributions to Employee Benefit Plans 89 186
Public Service Insurance 58 110
Total 2,817 3,944

Schedule 8: Administrative costs charged to the CPP Accounts by the Internal Audit and Enterprise Risk Management Branch

Schedule 8: Administrative costs charged to the CPP Accounts by the Internal Audit and Enterprise Risk Management Branch
Cost description 2022 cost in thousands of dollars 2021 cost in thousands of dollars
Internal Audit and Enterprise Risk Management Branch 903 1,013
Contributions to Employee Benefit Plans 96 112
Public Service Insurance 63 67
Total 1,062 1,192

Schedule 9: Administrative costs charged to the CPP Accounts by the Strategic and Service Policy Branch

Schedule 9: Administrative costs charged to the CPP Accounts by the Strategic and Service Policy Branch
Cost description 2022 cost in thousands of dollars 2021 cost in thousands of dollars
Strategic and Service Policy Branch 4,272 4,393
Contributions to Employee Benefit Plans 197 220
Public Service Insurance 127 130
Total 4,596 4,743

Schedule 10: Administrative costs charged to the CPP Accounts by the Transformation Management Branch

Schedule 10: Administrative costs charged to the CPP Accounts by the Transformation Management Branch
Cost description 2022 cost in thousands of dollars 2021 cost in thousands of dollars
Transformation Management Branch 20,046 20,577
Contributions to Employee Benefit Plans 1,486 1,568
Public Service Insurance 963 929
Total 22,495 23,074

Schedule 11: Administrative costs charged to the CPP Accounts by the Benefits and Integrated Services Branch

Schedule 11: Administrative costs charged to the CPP Accounts by the Benefits and Integrated Services Branch
Cost description 2022 cost in thousands of dollars 2021 cost in thousands of dollars
Processing and Payments - NHQ 40,299 34,940
Processing and Payments - Regions 173,186 168,926
Call Centers - NHQ 1,527 1,740
Call Centers - Regions 18,803 17,837
Contributions to Employee Benefit Plans 30,716 30,154
Public Service Insurance 19,900 17,871
Total 284,431 271,468

Schedule 12: Administrative costs charged to the CPP Accounts by the Citizen Service Branch

Schedule 12: Administrative costs charged to the CPP Accounts by the Integrity Services Branch
Cost description 2022 cost in thousands of dollars 2021 cost in thousands of dollars
Citizen Service Branch - NHQ 2,394 2,027
Citizen Service Branch - Regions 16,765 17,806
Contributions to Employee Benefit Plans 2,611 2,812
Public Service Insurance 1,691 1,666
Total 23,461 24,311

Schedule 13: Administrative costs charged to the CPP Accounts by the Integrity Services Branch

Schedule 13: Administrative costs charged to the CPP Accounts by the Integrity Services Branch
Cost description 2022 cost in thousands of dollars 2021 cost in thousands of dollars
Integrity Services Branch - NHQ 3,635 3,278
Integrity Services Branch - Regions 10,501 8,119
Contributions to Employee Benefit Plans 1,334 1,204
Public Service Insurance 865 713
Total 16,335 13,314

Schedule 14: Administrative costs charged to the CPP Accounts by the Social Insurance Register

Schedule 14: Administrative costs charged to the CPP Accounts by the Social Insurance Register
Cost description 2022 cost in thousands of dollars 2021 cost in thousands of dollars
Social Insurance Register 7,215 6,810
Contributions to Employee Benefit Plans 745 719
Public Service Insurance 482 426
Total Administrative Costs 8,442 7,955
Less: Funding from Treasury Board (1,684) (1,676)
Total 6,758 6,279

Schedule 15: Administrative costs charged to the CPP Accounts by the Innovation, Information and Technology Branch

Schedule 15: Administrative costs charged to the CPP Accounts by the Innovation, Information and Technology Branch
Cost description 2022 cost in thousands of dollars 2021 cost in thousands of dollars
Innovation, Information and Technology Branch - Regular Operating 79,418 72,800
Shared Services Canada 26,233 23,726
Contributions to Employee Benefit Plans 5,466 5,189
Public Service Insurance 3,541 3,075
Total 114,658 104,790

Schedule 16: Administrative costs charged to the CPP Accounts by the Chief Financial Officer Branch

Schedule 16: Administrative costs charged to the CPP Accounts by the Chief Financial Officer Branch
Cost description 2022 cost in thousands of dollars 2021 cost in thousands of dollars
Chief Financial Officer Branch - Regular Operating 14,607 15,238
National Accommodation Plan 34,332 38,053
Contributions to Employee Benefit Plans 1,714 1,841
Public Service Insurance 1,110 1,091
Total 51,763 56,223

Schedule 17: Administrative costs charged to the CPP Accounts by the Strategic Services Bureau and Regional Assistant Deputy Ministers

Schedule 17: Administrative costs charged to the CPP Accounts by the Strategic Services Bureau and Regional Assistant Deputy Ministers
Cost description 2022 cost in thousands of dollars 2021 cost in thousands of dollars
Strategic Services Bureau and Regional Assistant Deputy Ministers 3,923 4,033
Contributions to Employee Benefit Plans 528 538
Public Service Insurance 343 319
Total 4,794 4,890

Schedule 18: Administrative costs charged to the CPP Accounts by the Corporate Reserve

Schedule 18: Administrative costs charged to the CPP Accounts by the Corporate Reserve
Cost description 2022 cost in thousands of dollars 2021 cost in thousands of dollars
Corporate Reserve 362 0
Contributions to Employee Benefit Plans 58 0
Public Service Insurance 37 0
Total 457 0

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