Year-End Financial Statements
Fiscal Year 2023-2024

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, 2024, and all information contained in these financial statements rests with the management of the Impact Assessment Agency of Canada (IAAC). These 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 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 IAAC’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada and included in IAAC’s Departmental Results 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 IAAC 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, 2024 was completed in accordance with the Treasury Board Policy on Financial Management and the results and action plans are summarized in the annex.

The financial statements of IAAC have not been audited.

Impact Assessment Agency of Canada
Notes to the Financial Statements (Unaudited)

1. Authorities and objectives

IAAC is a federal body reporting to the Minister of Environment and Climate Change Canada. The Impact Assessment Act (IAA) came into force on August 28, 2019, expanding IAAC’s mandate and responsibilities as the single federal organization responsible for impact assessment and the Crown coordinator for Indigenous consultation on designated projects.

IAAC provides high-quality assessments of environmental, economic, social, health and gender effects to support government decision-making in the public interest. Assessments are evidence-based and ensure that positive and negative effects and impacts on Indigenous groups and their rights are considered in order to foster sustainability.

IAAC delivers four funding programs with the objective of supporting better informed decision making through the active participation of the public and Indigenous groups; effective engagement of the public and Indigenous peoples in the development of guidance, regulations and legislation; stronger evidence-based policy and guidance for impact assessments through an enhanced and more diverse knowledge base; and increased capacity of Indigenous communities to engage in and lead consultations.

In addition, IAAC’s President is the federal administrator responsible for reviewing projects of a federal nature under the environmental and social protection regimes set out in sections 22 and 23 of the 1975 James Bay and Northern Quebec Agreement.

IAAC’s activities are carried out under two different programs: Impact Assessment and Internal Services.

IAAC is responsible for delivering high quality environmental and impact assessments based on science, Indigenous knowledge, and other evidence. This includes conducting assessments and supporting assessments led by review panels, ensuring they are informed by the best available evidence, and promote positive effects while minimizing adverse impacts through mitigation measures. Evidence includes economic, environmental, social, health, Indigenous knowledge, gender-based analysis plus (GBA+), and/or cumulative effects, as appropriate.

To support the delivery of these assessments and provide certainty and clarity to proponents, other jurisdictions, Indigenous peoples and the public, IAAC develops and promotes legislative and policy frameworks, tools, guidance, and best practices.

Internal Services comprises related activities and resources to support the needs of programs and other corporate obligations of IAAC. These include: Management and Oversight Services, Communications Services, Legal Services, Human Resources Management Services, Financial Management Services, Information Management Services, Information Technology Services, the Access to Information and Privacy Office, Real Property Services, Materiel Management Services, Acquisition Services, and Travel and Other Administrative Services. Internal Services includes activities and resources that apply across an organization, not those provided specifically to a program.

2. Summary of significant accounting policies

These financial statements are prepared using IAAC’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

   IAAC is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to IAAC does 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 IAAC 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 “Expenses” and “Revenues” sections of the Statement of Operations and IAAC Net Financial Position are the amounts reported in the Future-Oriented Statement of Operations included in the 2023-2024 Departmental Plan. Planned results are not presented in the “Government funding and transfers” section of the Statement of Operations and IAAC Net Financial Position and in the Statement of Change in IAAC Net Debt because these amounts were not included in the 2023-2024 Department Plan.

2. Net cash provided by the Government of Canada

   IAAC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by IAAC is deposited to the CRF, and all cash disbursements made by IAAC 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. 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 IAAC is entitled to draw from the CRF without further authorities to discharge its liabilities.

4. Financial assets held on behalf of the Government of Canada

   Accounts receivable and advances held on behalf of the Government of Canada are presented as a reduction to the financial assets on the Statement of Financial Position because they are not available to discharge IAAC’s liabilities.

5. Revenues

   Revenues are comprised of revenues earned from non-tax sources. They include exchange transactions where goods or services are provided for consideration where a performance obligation exists, and non-exchange transactions where no performance obligations exist to provide a good or service. These transactions can be recurring or non-recurring in nature. Recurring transactions are viewed as ongoing, routine activities that form part of the normal course of operations and can be used to indicate if they can be reasonably expected to be earned again in future years.

   Environmental assessment and training services are recorded when they are earned. Miscellaneous revenues are recognized in the period the event giving rise to the revenues occurred and are non-recurring in nature.

   Revenues that are non-respendable are not available to discharge IAAC’s liabilities. While IAAC’s President is expected to maintain accounting control, he has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are earned on behalf of the Government of Canada and are therefore presented as a reduction of the entity’s gross revenues. Revenues earned on behalf of the Government consist of the reception of a settlement following a legal decision.

6. Expenses

   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. Services provided without charge by other government departments for accommodation, employer contributions to the health and dental insurance plans, and legal services are recorded as operating expenses at their carrying value.

7. Employee future benefits
   1. Pension benefits

      Eligible employees participate in the Public Service Pension Plan (the Plan), a multiemployer pension plan administered by the Government. IAAC’s contributions to the Plan are charged to expenses in the year incurred and represent IAAC’s total obligation to the Plan. IAAC’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.

8. 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 an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

9. Financial instruments

   A contract establishing a financial instrument creates, at its inception, rights, and obligations to receive or deliver economic benefits. The financial assets and financial liabilities portray these rights and obligations in the financial statements. IAAC recognizes a financial instrument when it becomes a party to a financial instrument contract.

   Financial instruments consist of accounts receivable and advances, and accounts payable and accrued liabilities.

   All financial assets and liabilities are recorded at cost. When necessary, an allowance for valuation is recorded to reduce the carrying value of accounts receivable and advances to amounts that approximate their net recoverable value.

   See Note 8 Risk Management for risks related to IAAC’s financial instruments.

10. Tangible Capital Assets

    The costs of acquiring equipment and other capital property are capitalized as tangible capital assets and are amortized to expense over the estimated useful lives of the assets, as described in Note 9. All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. The costs associated with the development of software used internally, such as professional service contract costs and salary costs of employees directly associated with these projects, are capitalized. The costs of software maintenance, project management and administration, data conversion, and training and development are expensed in the year incurred.

    When conditions indicate that a tangible capital asset no longer contributes to IAAC’s ability to provide future services, or that the value of future economic benefits associated with the tangible capital asset is less than its net book value, the cost of the tangible capital asset is reduced to reflect the decline in the asset’s value. Any write-downs of tangible capital assets are accounted for as expenses in the Statement of Operations and are not subsequently reversed.

11. Measurement uncertainty

    The preparation of these financial statements requires management to make estimates and assumptions that affect the reported and disclosed amounts of assets, liabilities, revenues and expenses reported in the financial statements and accompanying notes at March 31. The estimates are based on facts and circumstances, historical experience, general economic conditions and reflect IAAC’s best estimate of the related amount at the end of the reporting period. The most significant items where estimates are used are contingent liabilities, the liability for employee future benefits, the allowance for doubtful accounts on receivable from external parties and the useful life of tangible capital assets.

    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.

12. 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 departmental financial statement purposes at the carrying amount.

3. Parliamentary authorities

IAAC receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and 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, IAAC 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
(in dollars)

(b) Authorities provided and used
(in dollars)

4. Accounts payable and accrued liabilities

The following table presents details of IAAC’s accounts payable and accrued liabilities:
(in dollars)

5. Employee future benefits

a) Pension benefits

IAAC’s employees participate in the Public Service Pension Plan (the Plan) which is sponsored and administered by the Government of Canada. 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 IAAC contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Economic Action Plan 2012, employee contributors have been divided into two groups – Group 1 relates to existing plan members as of December 31, 2012, and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.

The 2023-2024 expense amounts to $5,249,856 ($4,017,991 in 2022-2023). For Group 1 members, the expense represents approximately 1.02 times (1.02 times in 2022-2023) the employee contributions, and for Group 2 members, approximately 1.00 (1.00 times in 2022-2023) the employee contributions.

IAAC’s responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the Consolidated Financial Statements of the Government of Canada, as the Plan’s sponsor.

b) Severance benefits

Severance benefits provided to IAAC’s employees were previously based on an employee’s eligibility, years of service and salary at termination of employment. However, since 2011 the accumulation of severance benefits for voluntary departures progressively ceased for substantially all employees. Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service. By March 31, 2024, substantially all settlements for immediate cash out were completed. Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities.

The changes in the obligations during the year were as follows:
(in dollars)

6. Contingent liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown. There are grouped into two categories as follows:

(a) Transfer payments

IAAC expects to meet all near-term liabilities relating to transfer payments. However, a change in economic conditions could result in the resumption of several environmental assessments currently on hold as well as new assessments which could increase the demand for transfer payments. IAAC would request support from the Government of Canada through central agencies to cover any potential funding shortfall.

(b) Claims and litigation

Claims have been made against IAAC in the normal course of operations. These claims include items with pleading amounts. IAAC has recorded an allowance for claims and litigations where it is likely that there will be a future payment, and a reasonable estimate of the loss can be made

7. Accounts receivable and advances

The following table presents details of IAAC’s accounts receivable and advances balances:
(in dollars)

The following table provides an aging analysis of accounts receivable from external parties and the associated valuation allowances used to reflect their net recoverable value:
(in dollars)

8. Risk Management

IAAC has exposure to the following risks from its use of financial instruments: credit risk and liquidity risk.

(a) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss.

IAAC’s maximum exposure to credit risk at March 31, 2024 and March 31, 2023 is the carrying amount of its financial assets.

IAAC has determined that there is no significant concentration of credit risk related to accounts receivable from external parties. An analysis of the age of these financial assets and the associated valuation allowances used to reflect these accounts at their net recoverable value is disclosed in Note 7.

(b) Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting its obligations associated with financial liabilities.

As the funding for IAAC’s financial liabilities is drawn from the Consolidated Revenue Fund, its exposure to liquidity risk is fully mitigated.

9. Tangible Capital Assets

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

Assets under construction are recorded in the applicable asset class in the year they are put into service and are not amortized until they are put into service.
(in dollars)

10. Contractual obligations

The nature of IAAC’s activities may result in some large multi-year contracts and obligations whereby IAAC 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:
(in dollars)

11. Related party transactions

IAAC is related as a result of common ownership to all government departments, agencies, and Crown corporations. Related parties also include individuals who are members of key management personnel or close family members of those individuals, and entities controlled by, or under shared control of, a member of key management personnel or a close family member of that individual.

IAAC enters into transactions with these entities in the normal course of business and on normal trade terms.

(a) Common services provided without charge by other government departments

During the year, IAAC received services without charge from certain common service organizations, related to accommodation, legal services, the employer’s contribution to the health and dental insurance plans. These services provided without charge have been recorded at the carrying value in IAAC’s Statement of Operations and Net Financial Position as follows:
(in dollars)

The Government of Canada 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 of Canada 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 Public Services and Procurement Canada and audit services provided by the Office of the Auditor General are not included in IAAC’s Statement of Operations and Net Financial Position.

IAAC also obtains selected financial services, material management, informatics, and compensation and benefits services under a shared services agreement with Environment and Climate Change Canada.

(b) Other transactions with other government departments and agencies
(in dollars)

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

12. Segmented information

Presentation by segment is based on IAAC’s core responsibility. 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 core responsibilities, by major object of expense and by major type of revenue. The segment results for the period are as follows:
(in dollars)

13. Adjustments to prior year’s results

In 2023-2024, IAAC conducted a review of its financial statements. As a result of the review, IAAC identified $4,332,000 in contingent liabilities, $403,826 in amounts due to the CRF, $392,954 in financial assets held on behalf of the Government of Canada, $905,880 in bad debt expense, $10,392 in refunds of program expenditures and $114 in revenues earned on behalf of the Government of Canada that should have been included in the financial statements while $110,280 in program expenditures and $269,584 of miscellaneous revenues that should have been excluded. These corrections have been applied retroactively and comparative information for 2022-2023 has been restated. The effect of these adjustments is presented in the table below.

A reconciliation of the restatement for the significant financial statement line items follows:
(in dollars)

14. Comparative information

Certain comparative figures have also been reclassified to conform to the current year’s presentation.

Annex to the Statement of Management Responsibility Including Internal Control Over Financial Reporting for Fiscal Year 2024

1. Introduction

In support of an effective system of internal control, IAAC conducted core control self-assessments of key control areas that were identified to be assessed in the 2024 fiscal year. A summary of the assessment results and action plan is provided in subsection 2.

2. Assessment results for the 2024 fiscal year

IAAC completed the assessment of key control areas as indicated in the following table. A summary of the results, action plans, and additional details are also provided.

The key controls assessed during 2023-2024 were part of the Office of the Comptroller General’s (OCG) core control self-assessment for small departments and agencies. IAAC will continue to adhere to the OCG’s five-year self-assessment plan as outlined below. Additionally, after three years of collaboration with an external partner, IAAC completed an initial internal control over financial management (ICFM) framework. Initial findings have been shared with relevant stakeholders, and key controls will be reassessed in 2026 to establish action plans and determine a new baseline.

3. Assessment plan

IAAC will assess the performance of its system of internal control by focusing on key control areas over a cycle of fiscal years as shown in the following table: