Consolidated Financial Statements for the year ended March 31, 2021

Statement of Management Responsibility Including Internal Control Over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying consolidated financial statements for the year ended March 31, 2021, and all information contained in these consolidated statements rests with the management of Immigration, Refugees and Citizenship Canada (IRCC). These consolidated financial statements have been prepared by management using the Government of Canada'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 consolidated financial statements. Some of the information in the consolidated 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 IRCC's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in IRCC's Departmental Results Report, is consistent with these consolidated 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 consolidated 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 IRCC 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, 2021 was completed in accordance with the Treasury Board Policy on Financial Management and the results and action plans are summarized in the annex.

The effectiveness and adequacy of IRCC's system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of IRCC'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 consolidated financial statements to the Deputy Minister of IRCC.

The consolidated financial statements of IRCC have not been audited.

Ottawa, Canada
August 30, 2021

Immigration, Refugees and Citizenship Canada
Consolidated Statement of Financial Position (unaudited)

As at March 31
(in thousands of dollars)

Contractual obligations (note 12)
Contingent liabilities (note 13)

The accompanying notes form an integral part of these consolidated financial statements.

Ottawa, Canada
August 30, 2021

Immigration, Refugees and Citizenship Canada
Consolidated Statement of Operations and Departmental Net Financial Position (unaudited)

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

Segmented information (note 15)

The accompanying notes form an integral part of these consolidated financial statements.

Immigration, Refugees and Citizenship Canada
Consolidated Statement of Change in Departmental Net Financial Asset (unaudited)

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

The accompanying notes form an integral part of these consolidated financial statements.

Immigration, Refugees and Citizenship Canada
Consolidated Statement of Cash Flows (unaudited)

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

The accompanying notes form an integral part of these consolidated financial statements.

Immigration, Refugees and Citizenship Canada
Notes to the Consolidated Financial Statements (unaudited)

For the Year Ended March 31

1. Authority and objectives

Immigration, Refugees and Citizenship Canada (IRCC) was established under the Department of Citizenship and Immigration Act. It is a department named in Schedule I of the Financial Administration Act and reports to Parliament through the Minister of Immigration, Refugees and Citizenship.

IRCC administers the Citizenship Act of 1977 and shares responsibility with the Canada Border Services Agency for the Immigration and Refugee Protection Act (IRPA).

Jurisdiction over immigration is a shared responsibility between the federal and the provincial and territorial governments under section 95 of the Constitution Act, 1867. Under s. 91(25) of the Constitution Act, 1867, the federal government has jurisdiction over naturalization and aliens.

IRCC's priorities in 2020-21 were:

• Meeting regional economic needs;
• Enhancing efficiencies in the asylum system;
• Providing high-quality and targeted settlement and resettlement services;
• Modernizing citizenship;
• Delivering a superior client experience; and
• Transforming to respond to increased demand.

These six priorities were delivered with the following core responsibilities:

Immigrant and Refugee Selection and Integration: IRCC facilitates the admission and economic and social integration of immigrants and refugees who intend to stay in Canada permanently, while protecting the health, safety and security of Canadians. IRCC selects economic immigrant applicants to contribute to the Canadian economy, processes family member applicants to reunite families, and processes refugee and protected person applicants to provide a safe haven for those facing persecution. IRCC works with partners to verify that individuals meet admissibility requirements before they enter Canada. In order to support immigrants and refugees in integrating into Canadian society, IRCC offers a variety of settlement support services through a network of service providers.

Visitors, International Students and Temporary Workers: IRCC facilitates the entry of migrants who wish to come to Canada temporarily, while protecting the health, safety and security of Canadians. IRCC works with partners to verify that individuals meet admissibility requirements. IRCC processes visas, electronic travel authorizations, and work and study permits for tourists, business travelers, international students and temporary workers, whose spending and presence in Canada benefit the economy.

Citizenship and Passports: IRCC promotes the rights and responsibilities of Canadian citizenship, and issues secure and internationally recognized Canadian citizenship and travel documents so that Canadians can participate fully in civic society and so that travel is facilitated across borders while contributing to international and domestic security.

Internal Services: Internal Services are those groups of related activities and resources that the federal government considers to be services in support of programs and/or required to meet corporate obligations of an organization. Internal Services refers to the activities and resources of the 10 distinct service categories that support Program delivery in the organization, regardless of the Internal Services delivery model in a department. The 10 service categories are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Management Services; Materiel Management Services; and Acquisition Management Services.

2. Summary of significant accounting policies

These consolidated financial statements are prepared using IRCC'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:

(a) Parliamentary authorities

IRCC is mainly financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to IRCC 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 Consolidated Statement of Operations and Departmental Net Financial Position and in the Consolidated 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 “Expenses” and “Revenues” sections of the Consolidated Statement of Operations and Departmental Net Financial Position are the amounts reported in the Consolidated Future-Oriented Statement of Operations included in the 2020-21 Departmental Plan. Planned results are not presented in the “Government funding and transfers” section of the Consolidated Statement of Operations and Departmental Net Financial Position and in the Consolidated Statement of Change in Departmental Net Financial Asset because these amounts were not included in the 2020-21 Departmental Plan.

(b) Consolidation

These consolidated financial statements include the accounts of the Passport Canada Revolving Fund, for which the Deputy Minister is accountable. The accounts of the Passport Canada Revolving Fund have been consolidated with those of IRCC, and all inter-organizational balances and transactions have been eliminated.

(c) Net cash provided by Government

IRCC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by IRCC is deposited to the CRF, and all cash disbursements made by IRCC 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.

(d) Amount due from the CRF

Amounts due from 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 IRCC is entitled to draw from the CRF without further authorities to discharge its liabilities.

(e) Revenues

The recognition of revenues from immigration and citizenship service fees and rights and privileges is deferred until a final decision has been rendered. Revenues from passport fees are recognized upon request for a passport service, which is upon receipt of payment and verification of the passport application for completeness. Other revenues, including International Experience Canada, 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 IRCC's liabilities. While the Deputy Minister is expected to maintain accounting control, she 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 as a reduction of IRCC's gross revenues.

Revenues that are respendable are mainly available to discharge the liabilities of the Passport and International Experience Canada programs.

(f) Expenses

Expenses are recorded on an accrual basis.

Transfer payments are recorded as an expense in the year the transfer is authorized and all eligibility criteria have been met by the recipient.

Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment. For the last five fiscal years, excess hours of vacation and compensatory leave earned were not automatically cashed out on March 31, but only when specifically requested by employees.

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

(g) Employee future benefits

1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. IRCC's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. IRCC'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: The accumulation of severance benefits for voluntary departures ceased for applicable employee groups. The remaining obligation for employees who did not withdraw benefits is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

(h) Accounts and loans receivable

Accounts and loans receivable are stated at the lower of cost and net recoverable value. 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, 1994.

(i) Non-financial assets

The costs of acquiring land, buildings, equipment and other capital property are capitalized as tangible capital assets and, except for land, are amortized to expense over the estimated useful lives of the assets, as described in Note 11. All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Tangible capital assets do not include immovable assets located on reserves as defined in the Indian Act, works of art, museum collection and Crown land to which no acquisition cost is attributable, and intangible assets. Inventory held for consumption consists of forms, informatics equipment and passport material held for future program delivery and not intended for resale. All passport material is valued at the lower of cost (using the average cost method) or net realizable value. Informatics equipment and forms are valued at cost using the first in, first out method.

(j) Contingent liabilities

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

(k) Transactions involving foreign currencies

Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in foreign currencies are translated in Canadian dollars using the rate of exchange in effect at March 31. Gains and losses resulting from foreign currency translation are reported on the Consolidated Statement of Operations and Departmental Net Financial Position according to the activities to which they relate.

(l) Measurement uncertainty

The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses reported in the consolidated financial statements and accompanying notes at March 31. The estimates are based on facts and circumstances, historical experience, general economic conditions and reflect the Government's best estimate of the related amount at the end of the reporting period. 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 the allowance for doubtful accounts.

Management assessed the impact of the COVID-19 pandemic on its significant estimates such as the calculation of the allowance for doubtful accounts on loans receivable and accounts receivable. Although the COVID-19 pandemic might have increased the financial pressure of debtors, the facilitative measures put in place by IRCC have mitigated the risk of loans and accounts receivable not being reimbursed and the allowances being significantly understated.

Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the consolidated financial statements in the year they become known.

(m) Related party transactions

Related party transactions, other than inter-entity transactions, are recorded at the exchange amount.

Inter-entity transactions are transactions between commonly controlled entities. Inter-entity transactions, other than restructuring transactions, are recorded on a gross basis and are measured at the carrying amount, except for the following:

1. Services provided on a recovery basis are recognized as revenues and expenses on a gross basis and measured at the exchange amount.
2. Certain services received on a without charge basis are recorded for consolidated financial statements purposes at the carrying amount.

3. Parliamentary authorities

IRCC receives most of its funding through annual parliamentary authorities. IRCC is also responsible for the management of the Passport Canada Revolving Fund, a continuing non-lapsing authority from Parliament to make payments out of the CRF for working capital, capital acquisitions and temporary financing of accumulated operating deficits. The International Experience Canada program is managed through a budgetary authority. Employee benefits are authorized by a statutory authority. IRCC issues immigration loans through a non-budgetary non-lapsing authority.

Revenues related to immigration and citizenship, including fees, rights and privileges, are deposited to the CRF and are not available for use by IRCC. Fees, rights and privileges are collected through the Immigration and Refugee Protection Regulations as well as through the Citizenship Regulations.

Items recognized in the Consolidated Statement of Operations and Departmental Net Financial Position and the Consolidated Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, IRCC 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

(b) Authorities provided and used

4. Accounts receivable and advances

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

5. Loans receivable

In accordance with the IRPA, IRCC can issue immigration loans up to a maximum of $126,600 thousand. The Immigration Loans Program provides eligible immigrants, who are mainly refugees selected for resettlement to Canada, with access to funding that would otherwise not be available to them. Loans are used to cover a number of expenses, including travel to Canada and other costs associated with resettlement, specifically:

• defraying the cost of transportation to Canada;
• assisting with the establishment in Canada;
• defraying the cost of the right of permanent residence fees.

Starting February 28, 1995, all immigration loans bore interest at a rate determined by the Minister of Finance at the beginning of each calendar year. Regulations provided for a period of up to six years for the repayment of the loans and the interest rate on outstanding interest-bearing loans varied from 0.76% to 9.06%. Since February 21, 2018, loans are non-interest bearing and are repayable over one to eight years with a possible deferment of two years. The closing balance of the immigration loans only includes the outstanding principal balance. An allowance for uncollectible loans is recorded when recovery is considered uncertain.

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

6. Inventory

The following table presents details of the inventory, measured at cost or net realizable value:

The cost of consumed inventory recognized as an expense in the Consolidated Statement of Operations and Departmental Net Financial Position is $7,084 thousand in 2020-21 ($33,747 thousand in 2019-20).

7. Accounts payable and accrued liabilities

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