Financial Statements for the year ended March 31, 2013

Table of Contents

Statement of Management Responsibility Including Internal Control over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2013, and all information contained in these statements rests with the management of Citizenship and Immigration Canada (CIC). These financial statements have been prepared by management using the Government's accounting policies, which are based on Canadian public sector accounting standards.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgment, and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of CIC's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in CIC's Departmental Performance Report, is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting (ICFR) designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training, and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout CIC and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.

The system of ICFR is designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

A risk-based assessment of the system of ICFR for the year ended March 31, 2013 was completed in accordance with the Treasury Board Policy on Internal Control and the results and action plans are summarized in the annex.

The effectiveness and adequacy of CIC's system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of CIC's operations, and by the Departmental Audit Committee, which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting, and which recommends the financial statements to the Deputy Minister of Citizenship and Immigration Canada.

The financial statements of Citizenship and Immigration Canada have not been audited.

original signed by Neil Yeates

Neil Yeates

Deputy Minister

original signed by Amipal Manchanda

Amipal Manchanda, CPA, CA

Assistant Deputy Minister

Chief Financial Officer

Ottawa, Canada
August 12, 2013

Citizenship and Immigration Canada
Statement of Financial Position (Unaudited)

As at March 31
(in thousands of dollars)

  2013 2012
Restated
(note 17)
Liabilities
Accounts payable and accrued liabilities (note 4) $256,160 $317,224
Immigrant Investor Program (note 5) 176,668 191,520
Vacation pay and compensatory leave 17,363 18,495
Deferred revenue (note 6) 253,015 257,176
Employee future benefits (note 7b) 39,175 38,024
Total gross liabilities 742,381 822,439
Liabilities held on behalf of Government
Deferred revenue (note 6) (253,015) (257,176)
Total liabilities held on behalf of Government (253,015) (257,176)
Total net liabilities 489,366 565,263
Financial assets
Due from Consolidated Revenue Fund 317,109 387,022
Accounts receivable and advances (note 8) 22,930 27,339
Loans receivable (note 9) 36,857 37,845
Total gross financial assets 376,896 452,206
Financial assets held on behalf of Government
Accounts receivable and advances (note 8) (14,962) (19,532)
Total financial assets held on behalf of Government (14,962) (19,532)
Total net financial assets 361,934 432,674
Departmental net debt 127,432 132,589
Non-financial assets
Prepaid expenses 2,856 9,126
Inventory (note 10) 4,032 4,138
Tangible capital assets (note 11) 134,465 145,656
Total non-financial assets 141,353 158,920
Departmental net financial position $13,921 $26,331

Contractual obligations (note 12)

The accompanying notes form an integral part of these financial statements

original signed by Neil Yeates

Neil Yeates

Deputy Minister

original signed by Amipal Manchanda

Amipal Manchanda, CPA, CA

Assistant Deputy Minister

Chief Financial Officer

Ottawa, Canada
August 12, 2013

Citizenship and Immigration Canada
Statement of Operations and Net Financial Position (Unaudited)

For the Year ended March 31
(in thousands of dollars)

  2013
Planned
Results
2013 2012
Restated
(note 17)
Expenses
Settlement and Integration of Newcomers $994,643 $955,406 $970,790
Migration Control and Security Management 159,380 176,871 145,414
Permanent Economic Residents 88,058 79,500 73,357
Family and Discretionary Immigration 80,718 83,109 76,250
Citizenship for Newcomers and all Canadians 63,819 65,839 64,250
Health Management 59,456 61,105 93,570
Refugee Protection 47,613 47,663 47,786
Temporary Economic Residents 41,656 58,233 54,375
Multiculturalism for Newcomers and all Canadians 30,523 17,317 18,722
Canadian Influence in International Migration and Integration Agenda 2,861 4,422 3,963
Internal Services 252,707 258,600 271,143
Total expenses 1,821,434 1,808,065 1,819,620
Revenues
Immigration service fees 305,077 347,950 337,575
Right of permanent residence 86,346 67,827 95,383
Citizenship service fees 28,387 17,458 25,696
Right of citizenship 17,779 6,708 16,977
Interest on loans 600 441 451
Other 3,749 5,308 353
Revenues earned on behalf of Government (441,938) (445,686) (476,422)
Total revenues 6 13
Net cost from continuing operations 1,821,434 1,808,059 1,819,607
Transferred operations (note 15)
Expenses 15,484
Net cost of transferred operations 15,484
Net cost of operations before government funding and transfers 1,821,434 1,808,059 1,835,091
Government funding and transfers
Net cash provided by Government   1,552,401 1,362,251
Change in due from the Consolidated Revenue Fund   (69,913) 108,650
Services provided without charge by other government departments (note 14a)   313,228 261,238
Transfer of assets and liabilities from (to) other government departments (note 15) (67) (6,426)
Net cost (revenue) of operations after government funding and transfers   12,410 109,378
Departmental net financial position – Beginning of year   26,331 135,709
Departmental net financial position – End of year $ – $13,921 $26,331

Segmented information (note 16)
The accompanying notes form an integral part of these financial statements

Citizenship and Immigration Canada
Statement of Change in Departmental Net Debt (Unaudited)

For the Year ended March 31
(in thousands of dollars)

  2013 2012
Restated
(note 17)
Net cost (revenue) of operations after government funding and transfers $12,410 $109,378
Change due to tangible capital assets
Acquisition of tangible capital assets 8,411 6,088
Amortization of tangible capital assets (19,034) (20,338)
Proceeds from disposal of tangible capital assets (22) (11)
Net (loss) or gain on disposal of tangible capital assets including adjustments (109) (1,610)
Transfers to other government departments (437) (7,794)
Total change due to tangible capital assets (11,191) (23,665)
Change due to inventories (106) (3,108)
Change due to prepaid expenses (6,270) 4,676
Net increase (decrease) in departmental net debt (5,157) 87,281
Departmental net debt - Beginning of year 132,589 45,308
Departmental net debt - End of year $127,432 $132,589

The accompanying notes form an integral part of these financial statements

Citizenship and Immigration Canada
Statement of Cash Flows (Unaudited)

For the Year ended March 31
(in thousands of dollars)

  2013 2012
Operating activities
Net cost of operations before government funding and transfers $1,808,059 $1,835,091
Non-cash items:
Amortization of tangible capital assets (19,034) (20,338)
Loss on disposal of tangible capital assets including adjustments (109) (1,610)
Services provided without charge by other government departments (note 14a) (313,228) (261,238)
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances 161 (7,408)
Increase (decrease) in prepaid expenses (6,270) 4,676
Increase (decrease) in inventory (106) (3,108)
Increase (decrease) in loans receivable (988) 3,511
Decrease (increase) in accounts payable and accrued liabilities 61,064 (100,889)
Decrease (increase) in Immigrant Investor Program 14,852 (125,920)
Decrease (increase) in vacation pay and compensatory leave 1,132 680
Decrease (increase) in employee future benefits (1,151) 34,095
Transfer of liabilities to other government departments (note 15) (370) (1,368)
Cash used in operating activities 1,544,012 1,356,174
Capital investment activities
Acquisitions of tangible capital assets 8,411 6,088
Proceeds from disposal of tangible capital assets (22) (11)
Cash used in capital investing activities 8,389 6,077
Net cash provided by Government of Canada $1,552,401 $1,362,251

The accompanying notes form an integral part of these financial statements

Citizenship and Immigration Canada
Notes to the Financial Statements (Unaudited)

For the Year Ended March 31

1. Authority and objectives

Citizenship and Immigration Canada (CIC) was established on June 23, 1994 by the Department of Citizenship and Immigration Act. It is a Department named in Schedule I of the Financial Administration Act and currently reports to Parliament through the Minister of Citizenship, Immigration and Multiculturalism.

CIC administers the Citizenship Act of 1977 and shares responsibility with the Canada Border Services Agency (CBSA) for the Immigration and Refugee Protection Act (IRPA), which was enacted following a major legislative reform in 2002. On October 30, 2008, CIC also received responsibility from Canadian Heritage to implement the Canadian Multiculturalism Act (CMA) of 1988.

The Department's key strategic outcomes are:

  • Migration of permanent and temporary residents that strengthens Canada's economy;
  • Family and humanitarian migration that reunites families and offers protection to the displaced and persecuted;
  • Newcomers and citizens participate to their full potential in fostering an integrated society;
  • Managed migration that promotes Canadian interests and protects the health, safety and security of Canadians.

These four strategic outcomes are delivered with the following program activities.

Permanent Economic Residents: Rooted in legislative requirements outlined in the IRPA, the focus of this program activity is on the selection and processing of immigrants who can become permanent residents and contribute to Canada's economic development. The acceptance of qualified permanent residents helps the government meet its economic objectives, such as building a skilled work force, by addressing immediate and longer term labour market needs. The selection and processing involve the issuance of permanent resident visas to qualified applicants, as well as the refusal of unqualified applicants.

Temporary Economic Residents: Rooted in legislative requirements outlined in the IRPA, the focus of this program activity is on processing and facilitating the entry into Canada of temporary workers and students. Temporary economic migration benefits Canada's economic growth. The selection and processing involve the issuance of temporary resident visas, work permits and study permits to qualified applicants, as well as the refusal of unqualified applicants.

Family and Discretionary Immigration: CIC facilitates family reunification by enabling eligible foreign nationals to be sponsored by family members in Canada who are Canadian citizens or permanent residents. Spouses and partners, dependent children (including adopted children), and other eligible relatives such as parents and grandparents are welcomed to Canada under this program. CIC may also grant permanent resident or other status to persons who would not otherwise qualify in any immigration category, in cases where there are strong humanitarian and compassionate considerations, or for public policy reasons. Such exceptional and discretionary immigration measures provide the flexibility to approve deserving cases not anticipated in the legislation.

Refugee Protection: The Refugee Protection program activity is in the first instance about saving lives and offering protection to the displaced and persecuted. One arm of the program starts overseas where refugees and persons in refugee-like situations are selected by Canadian visa officers to be resettled as permanent residents to Canada. Flowing from Canada's international and domestic legal obligations, the in-Canada asylum system evaluates the claims of individuals seeking asylum in Canada and grants permanent residence when a positive decision is rendered by the Immigration and Refugee Board of Canada.

Settlement and Integration of Newcomers: In accordance with the CMA, the Employment Equity Act and the IRPA, CIC develops policies and programs to support the settlement, resettlement, adaptation and integration of newcomers into Canadian society focused on information/orientation, language/skills, labour market access and welcoming communities. All permanent residents are eligible for settlement and integration programs. Programming is delivered by third parties (including provincial and municipal governments, school boards and post-secondary institutions, settlement service organizations and other non-governmental actors, and the private sector) across the country. However, accountability for expended funds and attaining outcomes remains with CIC.

Citizenship for Newcomers and all Canadians: The purpose of the Citizenship Program is to administer citizenship legislation and promote the rights and responsibilities of Canadian citizenship. CIC administers the acquisition of Canadian citizenship by developing, implementing and applying legislation, regulations and policies that protect the integrity of Canadian citizenship and allow eligible applicants to be granted citizenship or be provided with a proof of citizenship. In addition, the program promotes citizenship, to both newcomers and the Canadian-born, through various events, materials and projects. Promotional activities focus on enhancing knowledge of Canada's history, institutions and values, as well as fostering an understanding of the rights and responsibilities of Canadian citizenship.

Multiculturalism for Newcomers and all Canadians: The Multiculturalism Program is the principal means of carrying out the Minister's responsibilities under the CMA for promoting the full and equitable participation of individuals and communities of all origins. Grants and contributions to not-for-profit organizations, the private sector, provincial and municipal governments, non-federal public institutions and individuals seek to advance overarching program objectives. These objectives are to: build an integrated, cohesive society (through intercultural understanding, civic memory and pride, democratic values, and equality of opportunity); improve the responsiveness of institutions to the needs of a diverse population; and actively engage in discussions on multiculturalism and diversity at the international level. Direct public outreach and promotional activities by the program primarily target young people. The program assists federal partners to meet their obligations under the Act and ensures annual reporting to Parliament on its operation. It also engages with non-federal public institutions seeking to respond to diversity. The program provides a forum for cooperation with provinces and territories and is the locus for Canada's participation in international agreements and institutions with respect to multiculturalism, anti-racism and related issues.

Health Management: This program activity aims to provide effective immigration health services to manage the health aspect of migrant access and settlement to Canada, and facilitate the arrival of resettled refugees to Canada and their integration while contributing to the protection of the health and safety of all Canadians and contributing to the maintenance of sustainable Canadian health and social services.

The program activity aims to evaluate health risks related to immigration and coordinate with international and Canadian health partners to develop risk management strategies and processes to assess the health of applicants wishing to immigrate to Canada and develop pre-departure, in-transit, and post arrival interventions. The strategies, processes and interventions are intended to reduce the impact of the risks identified on the health of Canadians and on Canada's health and social services.

Migration Control and Security Management: In accordance with the IRPA and Regulations, this program activity aims to ensure the managed migration of people to Canada in order to protect the health, safety and security of Canadians. Even as CIC facilitates the travel of bona fide permanent residents, visitors, students and temporary workers, it also deploys an array of policy interventions to manage access and entry to Canada, including visas, admissibility, information sharing, travel document, and identity management policies. Effective partnerships with public safety-related departments and organizations are an essential component of this program activity.

Under IRPA, all visitors to Canada require a temporary resident visa except where an exemption has been granted under the Regulations. The Temporary Resident Visa requirement is Canada's primary means of controlling migration and allows for the screening of individuals for health, safety and security risks before they begin travel to Canada. CIC also aims to ensure that admissibility policy continues to provide flexibility to address compelling circumstances that warrant a foreign national's presence in Canada, while maintaining the integrity of Canada's immigration system. Information sharing agreements and mechanisms support immigration management and provide security advantages. This program activity supports CIC's policy initiatives related to identity management and entry document requirements, including the expansion of biometrics to accurately identify foreign nationals entering Canada and the provision of a highly secure proof of status document to all permanent residents. The Permanent Resident Card also serves as a travel document and is required for all commercial travel to Canada.

Canadian Influence in International Migration and Integration Agenda: As part of its mandate, CIC aims to influence the international migration and integration policy agenda. This is done by developing and promoting, together with other public policy sectors, Canada's position on international migration, integration and refugee protection issues, and through participation in multilateral, regional and bilateral forums. CIC works closely with partner countries to ensure the effective administration of immigration laws through the exchange of information, including biometric data. This international migration policy development helps Canada advance its interests in the context of international migration as well as meet its international obligations and commitments. CIC supports international engagement and partnerships through membership in the International Organization for Migration (IOM), and contribution arrangements with other international migration policy organizations.

Internal Services are groups of activities and resources that help the Department achieve its strategic outcomes. Internal services apply across CIC and are not linked to a specific program. These services include management and oversight, communications, legal, human resources management, financial management, information management, information technology, real property, materiel, acquisition, and travel and other administrative services.

CIC receives most of its funding through annual Parliamentary authorities. Revenues, including fees and rights, are deposited to the Consolidated Revenue Fund and are not available for use by the Department. Fees and rights are collected through the IRPA as well as through the Citizenship Regulations. Employee benefits are authorized by a statutory authority. CIC issues immigration loans through a non-budgetary non-lapsing authority.

2. Summary of significant accounting policies

These financial statements have been prepared using the Government's accounting policies stated below, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

  1. Parliamentary authorities
    • CIC is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Department do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. The planned results amounts in the Statement of Operations and Departmental Net Financial Position are the amounts reported in the future-oriented financial statements included in the 2012-13 Report on Plans and Priorities.

  2. Net cash provided by Government
    • CIC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by CIC is deposited to the CRF, and all cash disbursements made by CIC are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements, including transactions between departments of the Government.

  3. Amount due from the Consolidated Revenue Fund (CRF)
    • Amounts due from or to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that the Department is entitled to draw from the CRF without further authorities to discharge its liabilities.

  4. Revenues
    • Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.

      Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in which the related expenses are incurred.

      The recognition of revenues from fees is considered deferred until the application is processed, while the recognition of revenues from rights (right of citizenship and right of permanent residence) is deferred until the right is granted.

      Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenues takes place.

      Revenues that are non-respendable are not available to discharge the Department's liabilities. While the Deputy Minister is expected to maintain accounting control, he has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of CIC's gross revenues.

  5. Expenses
    • Expenses are recorded on an accrual basis.

      Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being, are recorded as a reduction to transfer payment expense and as a receivable. As of 2012-2013, transfer payment advances are recorded directly as expenses in the period they are incurred.

      Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.

      Services provided without charge by other government departments for international immigration services, legal services, accommodation, employer's contributions to the health and dental insurance plans and workers' compensation costs are recorded as operating expenses at their estimated costs.

  6. Employee future benefits
    • Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. The Department's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Current legislation does not require the Department to make contributions for any actuarial deficiencies of the Plan.
    • Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.
  7. Accounts and loans receivable
    • Accounts and loans receivable are stated at the lower of cost and net recoverable value. Interest is recognized as revenue and recorded as a receivable when earned. A valuation allowance is recorded for accounts and loans receivable where recovery is considered uncertain. Loans that cannot be recovered are written off after receiving Parliamentary approval in accordance with the Debt Write-off Regulations.

  8. Contingent liabilities
    • Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or if an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

  9. Inventory
    • Inventory consists of forms and informatics equipment held for future program delivery and not intended for resale. Inventory is valued at cost using the first in, first out method.

  10. Foreign currency transactions
    • Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Gains and losses resulting from foreign currency transactions are included in other revenues or other expenses in the Statement of Operations and Departmental Net Financial Position.

  11. Tangible capital assets
    • All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost.

      Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:

      Asset class Amortization period
      Machinery and equipment 15 years
      Informatics hardware 5 years
      Software (purchased and developed) 3 to 10 years
      Office furniture 10 years
      Vehicles 8 years
      Leasehold improvements Lesser of remaining term of the lease or useful life of the improvement

      Assets under construction are recorded in the applicable capital asset class and amortized when they become available for use.

  12. Measurement uncertainty
    • The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are the deferred revenues, the liability for employee future benefits, the useful life of tangible capital assets, contingent liabilities and allowance for doubtful accounts. Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3. Parliamentary authorities

Citizenship and Immigration Canada receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Departmental Net Financial Position and the Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, CIC has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

(a) Reconciliation of net cost of operations to current year authorities used
  2013 2012
(in thousands of dollars)
Net cost of operations before government funding
and transfers
$1,808,059 $1,835,091
Adjustments for items affecting net cost of operations
but not affecting authorities:
Services provided without charge by other government departments (313,228) (261,238)
Amortization of tangible capital assets (19,034) (20,338)
Decrease (increase) in accrued liabilities not charged to authorities 27,406 (18,287)
Bad debt expense (73) 968
Gain (loss) on disposal of tangible capital assets (109) (1,610)
Refund of previous year's expenditures 1,593 2,178
Decrease (increase) in employee future benefits (1,151) 33,003
Decrease (increase) in vacation pay and compensatory leave 1,132 404
Other 1,328 (120)
Total items affecting net cost of operations but not affecting authorities (302,136) (265,040)
Adjustments for items not affecting net cost of operations
but affecting authorities:
(Decrease) in inventory (106) (3,108)
Refunds of previous year's revenues 9,768 5,504
Foreign Skilled Worker reimbursed fees 5,710
Net acquisition of tangible capital assets 8,411 6,088
(Decrease) increase in prepaid expenses and advances (6,270) 4,676
(Decrease) increase in loans issued (980) 2,722
Other (111) 281
Total items not affecting net cost of operations
but affecting authorities
16,422 16,163
Current year authorities used $1,522,345 $1,586,214
(b) Authorities provided and used
  2013 2012
(in thousands of dollars)
Authorities Provided
Vote 1 - Operating expenditures $581,485 $604,916
Vote 5 - Grants and Contributions 961,604 966,286
Vote 7 - Loan Write-Offs 442 1,709
Non-Budgetary Items 73,753 70,915
Statutory Amounts 68,191 63,700
Less:
Lapsed Vote 1 - Operating Expenditures (65,515) (35,385)
Lapsed Vote 5 - Grants and Contributions (28,402) (17,696)
Lapsed Vote 7 - Debt Write-Offs (2) (25)
Lapsed - Non-Budgetary Items (28)
Appropriations available for future years (69,183) (68,206)
Current year authorities used $1,522,345 $1,586,214

4. Accounts payable and accrued liabilities

The following table presents details of CIC's accounts payable and accrued liabilities:

  2013 2012
(in thousands of dollars)
Accounts payable - Other government departments and agencies $5,002 $9,846
Accounts payable - External parties 59,087 83,295
Total accounts payable 64,089 93,141
Accrued liabilitiesNote A 192,071 224,083
Total accounts payable and accrued liabilities $256,160 $317,224

In Canada's Economic Action Plan 2012, the Government announced savings measures to be implemented by departments over the next three fiscal years starting in 2012-2013. As a result, the Department has recorded at March 31, 2013 an obligation for termination benefits for an amount of $2,795,000 as part of accrued liabilities to reflect the estimated workforce adjustment costs.

5. Immigrant Investor Program

The Immigrant Investor Program allows qualified immigrants to gain permanent residence in Canada by making an investment of $800,000 ($400,000 prior to December 1, 2010) in the Canadian economy. The investment is returned to the investor, without interest, five years and two months after payment.

After meeting other immigration requirements, applicants are then required to pay their $800,000 ($400,000 prior to December 1, 2010) investment to the Receiver General for Canada. CIC acts as an agent for the approved provincial funds by collecting the investments and distributing them to the approved funds according to a prescribed allocation formula (50 percent divided equally and 50 percent distributed according to provincial gross domestic product). The investment is distributed to the participating provinces (Ontario, British Columbia, Saskatchewan, Manitoba, Nova Scotia, Newfoundland and Labrador, New Brunswick and Prince Edward Island) on the first day of the second month following receipt from the investor.

The participating provinces are responsible for investing their allocations to strengthen their economies and to create or continue employment. They report to CIC quarterly, and after the five-year holding period, remit the full amount investment back to CIC. Within 30 days of receipt of the full amount from the participating funds, CIC returns this investment to the investor (without interest).

The Northwest Territories refunded $113,120,093 after retracting from the IIP program in 2012. CIC will keep these funds until such time as the funds are due to be repaid to the individual investors. This increase in funds is reflected in the opening and closing balances below.

The value of financial transactions processed during the year is as follows:

  2013 2012
(in thousands of dollars)
Opening balance $191,520 $65,600
Entries 842,720 937,892
Payments (857,572) (811,972)
Closing balance $176,668 $191,520

6. Deferred revenue

The deferred revenue account was established to record fees and rights derived from the Citizenship Act and Regulations and the IRPA and Regulations. Fees are deferred until the application is deemed processed, while rights (right of citizenship and right of permanent residence) are deferred until the right is granted.

The following table presents details of the deferred revenue account:

  2013 2012
(in thousands of dollars)
Opening balance $257,176 $398,146
Amounts received 444,250 458,611
Revenue recognizedNote B (448,389) (480,186)
Remissions - reduction of the right of permanent residence (22) (49)
Accrued liability for the Federal Skilled Workers initiative (119,346)
Gross closing balance 253,015 257,176
Deferred revenues held on behalf of Government (253,015) (257,176)
Net Closing balance $ – $ –

7. Employee future benefits

  1. Pension benefits
    • CIC's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plans benefits and they are indexed to inflation.

      Both the employees and the Department contribute to the cost of the Plan. The 2012-2013 expense amounts to $41,497,673 ($41,679,400 in 2011-2012) which represents approximately 1.7 times (1.8 times in 2011-2012) the contributions by employees.

      The Department's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

  2. Severance benefits
    • CIC provides severance benefits to its employees based on eligibility, years of service and salary at termination of employment. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, measured as at March 31, is as follows:

        2013 2012
      (in thousands of dollars)
      Accrued benefit obligation, beginning of year $38,024 $72,119
      Transferred to other government department (1,092)
      Subtotal 38,024 71,027
      Expense for the year 18,880 4,589
      Benefits paid during the year (17,729) (37,592)
      Accrued benefit obligation, end of year $39,175 $38,024

      As part of collective agreement negotiations with certain employee groups, and changes to conditions of employment for executives and certain non-represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.

8. Accounts receivable and advances

The following table presents details of the Department's accounts receivable and advances balances:

  2013 2012
(in thousands of dollars)
Receivables - Other government departments and agencies $18,383 $21,277
Receivables - External parties 4,586 5,820
Employee advances 179 396
Subtotal 23,148 27,493
Allowance for doubtful accounts on receivables from external parties (218) (154)
Gross accounts receivable and advances 22,930 27,339
Accounts receivable held on behalf of Government (14,962) (19,532)
Net accounts receivable and advances $7,968 $7,807

9. Loans receivable

In accordance with the IRPA, CIC can issue immigration loans up to a maximum of $110,000,000. Since February 28, 1995, all immigration loans bear interest at a rate determined by the Minister of Finance at the beginning of each calendar year. Regulations provide for a period of up to 6 years for the repayment of the loans. The interest rate on outstanding interest-bearing loans varies from 1.26% to 10.718%. The closing balance of the immigration loans only includes the outstanding principal balance. An allowance for doubtful accounts is made for loans when recovery is considered uncertain.

The following table presents details of the Department's immigration loans balances:

  2013 2012
(in thousands of dollars)
Immigration loans - Opening balance $41,809 $39,087
Add: New loans issued 11,273 14,884
Less: Repayments of loans (11,886) (10,817)
Less: Loans balance written-off during the year (367) (1,345)
Immigration loans - Closing balance 40,829 41,809
Less: Allowance for uncollectibility (3,972) (3,964)
Total loans receivable $36,857 $37,845

10. Inventory

The following table presents details of the inventory, measured at cost using the first in, first out method.

  2013 2012
(in thousands of dollars)
Forms $2,729 $3,282
Informatics equipment 1,303 856
Total inventory $4,032 $4,138

11. Tangible capital assets

Cost
(in thousands of dollars)
  Opening balance Acquisitions AdjustmentsFootnote 1 Disposals and write-offs Closing balance
Machinery and equipment $2,006 $ – $ – $(394) $1,612
Informatics hardware 1,477 (486) 991
Software (purchased and developed) 245,763 1,996 3,696 (46) 251,409
Office furniture 1,169 36 (59) 1,146
Vehicles 924 (148) 776
Assets under construction 978 6,379 (3,696) 3,661
Total cost $252,317 $8,411 $(486) $(647) $259,595
Accumulated amortization
(in thousands of dollars)
  Opening amount Amortization AdjustmentsFootnote 1 Disposals and write-offs Closing balance
Machinery and equipment $1,400 $125 $ – $(278) $1,247
Informatics hardware 505 150 (49) 606
Software (purchased and developed) 103,440 18,600 (44) 121,996
Office furniture 631 92 (46) 677
Vehicles 685 67 (148) 604
Assets under construction
Total accumulated amortization $106,661 $19,034 $(49) $(516) $125,130
Net book value
(in thousands of dollars)
  2013 2012
Machinery and equipment $365 $606
Information hardware 385 972
Software (purchased and developed) 129,413 142,323
Office furniture 469 538
Vehicles 172 239
Assets under construction 3,661 978
Net book value $134,465 $145,656

Effective December 15, 2012 CIC transferred informatics hardware with a net book value of $437,000 to Shared Services Canada. This transfer is included in the adjustments columns (refer to note 15 for further details on the transfer).

12. Contractual obligations

The nature of CIC's activities can result in some large multi-year contracts and obligations whereby CIC will be obligated to make future payments in order to carry out its transfer payment programs or when the services/goods are received.

Significant contractual obligations that can be reasonably estimated are summarized as follows:

Fiscal Year
(in thousands of dollars)
  2014 2015 2016 2017 2018 and
thereafter
Total
Transfer Payments $777,576 $643,881 $631,969 $284,501 $284,501 $2,622,428
Operating and Maintenance 55,368 27,501 20,812 16,188 9,107 128,976
Total $832,944 $671,382 $652,781 $300,689 $293,608 $2,751,404

13. Contingent liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown.

Claims and litigation

Claims have been made against the Department in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. Based on the Department's legal assessment of potential liability, no allowance was recorded at March 31, 2013 (no allowance was recorded in 2011-2012). Some of these potential liabilities may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded in the financial statements.

14. Related party transactions

CIC is related as a result of common ownership to all government departments, agencies, and Crown corporations. CIC enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the Department received common services which were obtained without charge from other government departments as disclosed below.

  1. Common services provided without charge by other government departments
    • During the year, the Department received services without charge from certain common service organizations, related to accommodation, legal services, the employer's contributions to the health and dental insurance plans, and workers' compensation coverage. Additionally, the Department of Foreign Affairs and International Trade (DFAIT) provides international immigration services at missions abroad, for which CIC has transferred funding. These services provided without charge have been recorded in the Department's Statement of Operations and Departmental Net Financial Position as follows:

        2013 2012
      (in thousands of dollars)
      International immigration services $214,709 $160,345
      Accommodation provided by Public Works and Government Services Canada 37,205 35,992
      Employer's contributions to health and dental insurance plans 30,893 31,514
      Legal services 30,260 33,230
      Workers' compensation 161 157
      Total $313,228 $261,238

      The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as the payroll and cheque issuance services provided by PWGSC and audit services provided by the Office of the Auditor General are not included as an expense in the Department's Statement of Operations and Departmental Net Financial Position.

  2. Other transactions with related parties
    •   2013 2012
      (in thousands of dollars)
      Expenses - Other Government
      departments and agencies
      $79,236 $85,752

    Expenses disclosed in (b) exclude common services provided without charge, which are already disclosed in (a).

15. Transfers to other government departments

Effective November 15, 2011, CIC transferred responsibility for IT infrastructure to Shared Services Canada in accordance with Order-in-Council 2011-1297, including the stewardship responsibility for the assets and liabilities related to the program. Accordingly, CIC continues to transfer any remaining assets and liabilities related to IT infrastructure to Shared Services Canada

  2013 2012
(in thousands of dollars)
Assets:
Tangible capital assets (net book value) (note 11) $437 $7,794
Total assets transferred 437 7,794
Liabilities:
Accounts payable ongoing 370 276
Employee future benefits (note 7b) 1,092
Total liabilities transferred 370 1,368
Adjustment to the departmental net financial position $67 $6,426

In addition, the 2012 comparative figures have been reclassified on the Statement of Operations and Departmental Net Financial Position to present the transferred expenses of $15 million.

16. Segmented information

Presentation by segment is based on the Department's program activity architecture. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 2. The following table presents the expenses incurred and revenues generated for the main program activities, by major object of expenses and by major type of revenues. The segment results for the period are as follows:

  SettlementFootnote 2 MigrationFootnote 3 PermanentFootnote 4 FamilyFootnote 5 CitizenshipFootnote 6 HealthFootnote 7
(in thousands of dollars)
Transfer payments
Non-profit organisations $442,866 $(1,000) $ – $ – 643 $ –
Other levels of government within Canada 444,282
Individuals 35,047
Other countries and international organizations 244
Total transfer payments 922,439 (1,000) 643
Operations and administration
Salaries and employee benefits 26,820 140,802 68,963 68,162 50,643 8,934
Professional and special services 2,410 21,241 3,008 4,671 4,301 51,014
Accommodation 2,411 4,865 2,422 3,965 4,488 728
Amortization of tangible capital assets 4,688 2,756 2,735 2,938
Transportation and communication 595 3,434 1,764 2,778 1,784 385
Utilities, materials and supplies 79 2,518 409 586 609 35
Rentals of equipment 75 211 117 175 267 1
Repairs and maintenance 2 56 21 30 28
Information services 52 55 41 7 30 8
Other 523 1 (1) 108
Total Operations and administration 32,967 177,871 79,500 83,109 65,196 61,105
Total Expenses 955,406 176,871 79,500 83,109 65,839 61,105
Revenues
Immigration service fees 138,689 52,750 66,491
Right of permanent residence 46,898 20,929
Citizenship service fees 17,458
Right of citizenship 6,708
Other 5 2 5,074 14
Interest on loans 441
Revenues earned on behalf of Government (446) (138,689) (99,650) (92,494) (24,166) (14)
Total Revenues
Net cost of operations $955,406 $176,871 $79,500 $83,109 $65,839 $61,105

  RefugeeFootnote 8 TemporaryFootnote 9 MultiFootnote 10 CanadianFootnote 11 InternalFootnote 12 2013 2012
(in thousands of dollars)
Transfer payments
Non-profit organisations $ – $ – $12,273 $39 $ – $454,821 $466,2216
Other levels of government within Canada 444,282 433,290
Individuals (86) 34,961 38,413
Other countries and international organizations 1,823 2,067 1,845
Total transfer payments 12,187 1,862 936,131 939,769
Operations and administration
Salaries and employee benefits 38,722 51,407 4,302 2,293 173,755 634,803 610,381
Professional and special services 3,058 2,237 326 94 42,485 134,845 167,389
Accommodation 2,884 1,910 269 97 13,167 37,206 35,992
Amortization of tangible capital assets 1,929 1,158 2,830 19,034 18,380
Transportation and communication 765 977 192 75 5,561 18,310 13,122
Utilities, materials and supplies 226 502 19 1 8,131 13,115 14,363
Rentals of equipment 75 28 19 8,954 9,922 8,644
Repairs and maintenance 5 9 2,717 2,868 2,616
Information services 6 5 3 766 973 6,405
Other (7) 234 858 2,559
Total Operations and administration 47,663 58,233 5,130 2,560 258,600 871,934 879,851
Total Expenses 47,663 58,233 17,317 4,422 258,600 1,808,065 1,819,620
Revenues
Immigration service fees 5,730 84,290 347,950 337,575
Right of permanent residence 67,827 95,383
Citizenship service fees 17,458 25,696
Right of citizenship 6,708 16,977
Other 213 5,308 353
Interest on loans 441 451
Revenues earned on behalf of Government (5,730) (84,290) (207) (445,686) (476,422)
Total Revenues 6 6 13
Net cost of operations $47,663 $58,233 $17,317 $4,422 $258,594 $1,808,059 $1,819,607

17. Restatement

The Department operates within the CRF, which is administered by the Receiver General for Canada. All cash received by the Department is deposited to the CRF, and all cash disbursements made by the Department are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements, including transactions between departments of the Government. In 2012, the Government, by law, terminated Federal Skills Workers applications made before February 27th, 2008 and for which an immigration officer had not made a selection decision before March 29th, 2012. This decision resulted in the Department reporting an accrued liability of $119 million. The Department erroneously included this amount in its CRF calculation in 2011-2012.

CIC's financial statements have therefore been restated as described below.

  2012
As previously
stated
Effect of change 2012 Restated
(in thousands of dollars)
Statement of Financial Position:
Due from Consolidated Revenue Fund $506,368 $(119,346) $387,022
Total net financial assets 552,020 (119,346) 432,674
Departmental net debt 13,243 119,346 132,589
Departmental net financial position 145,677 (119,346) 26,331
Statement of Operations and Departmental Net Financial Position:
Change in due from Consolidated Revenue Fund $227,996 $(119,346) $108,650

18. Subsequent events

On May 7, 2013, the government announced its intention to transfer responsibilities for Passport Canada from DFAIT to CIC and Human Resources and Skills Development Canada (HRSDC). This transfer is effective July 2, 2013. As a result, the assets and liabilities of Passport Canada were transferred from DFAIT to CIC and HRSDC. An estimate of the financial effect of this transfer of responsibilities could not be made in time for the finalization of the 2012-2013 financial statements.

19. Comparative information

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

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