Shared Services Canada Financial Statements - March 31, 2022

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, 2022, and all information contained in these statements rests with the management of Shared Services Canada. 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 Shared Services Canada’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in Shared Services Canada’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 Shared Services Canada 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, 2022 was completed in accordance with the Treasury Board Policy on Financial Management and the results and action plans are summarized in the annex.

The annex also provides information on the status of the risk-based assessment of the controls over common services provided by the department that have a bearing on a recipient’s departmental financial statements.

The effectiveness and adequacy of Shared Services Canada’s system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of Shared Services Canada’s operations, and by the Departmental Audit Committee, which advises the President regarding management’s responsibilities for maintaining adequate control systems, the quality of financial reporting, and the financial statements.   

The financial statements of Shared Services Canada have not been audited.

Ottawa, Canada
August 25, 2022

Shared Services Canada statement of financial position (unaudited) as at March 31 (in thousands of dollars)

	2022	2021

Liabilities

Liabilities	2022	2021
Accounts payable and accrued liabilities (note 4)	465,123	627,673
Vacation pay and compensatory leave	75,549	82,718
Lease obligations for tangible capital assets (note 5)	198,172	119,273
Obligation under public private partnership (note 6)	113,358	116,988
Employee future benefits (note 7)	25,738	27,914
Total liabilities	877,940	974,566

Financial assets

Financial assets	2022	2021
Due from the Consolidated Revenue Fund	260,145	425,061
Accounts receivable and advances (note 8)	272,506	474,254
Total gross financial assets	532,651	899,315

Financial assets held on behalf of Government

Financial assets held on behalf of Government	2022	2021
Accounts receivable and advances (note 8)	(8,572)	(6,824)
Total financial assets held on behalf of Government	(8,572)	(6,824)

Total net financial asset

	2022	2021
Total net financial assets	524,079	892,491

Departmental net debt

	2022	2021
Departmental net debt	353,861	82,075

Financial assets held on behalf of Government

Non-financial assets	2022	2021
Prepaid expenses	91,396	93,836
Inventory (note 9)	6,105	-
Tangible capital assets (note 10)	1,144,425	1,227,606
Total non-financial assets	1,241,926	1,321,442

Departmental net financial position

	2022	2021
Departmental net financial position	888,065	1,239,367

Contractual obligations and contractual rights (note 11)

Contingent liabilities and contingent assets (note 12)

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

Ottawa, Canada
August 26, 2022

Shared Services Canada statement of operations and departmental net financial position (unaudited) for the year ended March 31 (in thousands of dollars)

	2022 - Planned Results	2022	2021

Expenses

Expenses	2022 - Planned Results	2022	2021
Common Government of Canada IT Operations	2,489,634	3,026,314	2,916,216
Internal Services	259,843	316,386	322,761
Total expenses	2,749,477	3,342,700	3,238,977

Revenues

Revenues	2022 Planned Results	2022	2021
Sale of goods and services	676,547	988,674	896,994
Miscellaneous revenues	386	155	573
Revenues earned on behalf of Government	(11,568)	(41,395)	(29,993)
Total revenues	665,365	947,434	867,574

Net cost of operations before government funding and transfers

	2022 - Planned Results	2022	2021
Net cost of operations before government funding and transfers	2,084,112	2,395,266	2,371,403

Government funding and transfers

Government funding and transfers	2022 - Planned Results	2022	2021
Net cash provided by Government of Canada		2,096,216	2,370,987
Change in due from the Consolidated Revenue Fund		(164,916)	156,909
Services provided without charge by other government departments (note 13)		111,776	120,779
Net transfer of salary overpayments from other government departments		146	396
Transfer of tangible capital assets from other government departments		2,449	-
Transfer of tangible capital assets to other government departments		(1,707)	-
Net cost of operations after government funding and transfers		351,302	(277,668)

Departmental net financial position – Beginning of year

	2022 - Planned Results	2022	2021
Departmental net financial position – Beginning of year		1,239,367	961,699

Departmental net financial position – End of year

	2022 - Planned Results	2022	2021
Departmental net financial position – End of year		888,065	1,239,367

Segmented information (note 14)

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

Shared Services Canada statement of change in departmental net debt (unaudited) for the year ended March 31 (in thousands of dollars)

	2022	2021

Net cost of operations after government funding and transfers

	2022	2021
Net cost of operations after government funding and transfers	351,302	(277,668)

Change due to tangible capital assets

Change due to tangible capital assets	2022	2021
Acquisitions of tangible capital assets	355,342	384,011
Amortization of tangible capital assets	(425,698)	(389,364)
Net loss on disposal of tangible capital assets including adjustments	516	(3,876)
Loss on disposal of tangible capital assets due to the termination of lease obligations	(14,083)	-
Transfers from other government departments	2,449	-
Transfers to other government departments	(1,707)	-
Total change due to tangible capital assets	(83,181)	(9,229)

Change due to inventory

	2022	2021
Change due to inventory	6,105	-

Change due to prepaid expenses

	2022	2021
Change due to prepaid expenses	(2,440)	29,131

Net increase (decrease) in departmental net debt

	2022	2021
Net increase (decrease) in departmental net debt	271,786	(257,766)

Departmental net debt – Beginning of year

	2022	2021
Departmental net debt – Beginning of year	82,075	339,841

Departmental net debt – End of year

	2022	2021
Departmental net debt – End of year	353,861	82,075

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

Shared Services Canada statement of cash flows (unaudited) for the year ended March 31 (in thousands of dollars)

	2022	2021

Operating activities

Operating activities	2022	2021
Net cost of operations before government funding and transfers	2,395,266	2,371,403
Non-cash items:
Amortization of tangible capital assets	(425,698)	(389,364)
Net loss on disposal of tangible capital assets including adjustments	516	(3,876)
Net loss on the termination of lease obligations for tangible capital assets	(3,939)	-
Services provided without charge by other government departments (note 13)	(111,776)	(120,779)
Net transfer of salary overpayments from other government departments	(146)	(396)
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances	(203,496)	210,427
Increase (decrease) in prepaid expenses	(2,440)	29,131
Increase (decrease) in inventory	6,105	-
Decrease (increase) in accounts payable and accrued liabilities	162,550	(149,256)
Decrease (increase) in vacation pay and compensatory leave	7,169	(25,924)
Decrease (increase) in employee future benefits	2,176	2,049
Cash used in operating activities	1,826,287	1,923,415

Capital investing activities

Capital investing activities	2022	2021
Acquisitions of tangible capital assets (excluding leased tangible capital assets)	198,312	384,011
Cash used in capital investing activities	198,312	384,011

Financing activities

Financing activities	2022	2021
Payments on lease obligations for tangible capital assets	67,987	60,062
Payments on obligation under public private partnership	3,630	3,499
Cash used in financing activities	71,617	63,561

Net cash provided by Government of Canada

	2022	2021
Net cash provided by Government of Canada	2,096,216	2,370,987

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

Shared Services Canada notes to the financial statements (unaudited) for the year ended March 31 (in thousands of dollars)

1. Authority and objectives

Shared Services Canada (SSC) was created on August 4, 2011 to transform how the Government of Canada manages its information technology (IT) infrastructure. SSC operates under the legislation set out in the Shared Services Canada Act. SSC is responsible for digitally enabling government programs and services by providing IT services in the domains of networks and network security, data centers and cloud offerings, digital communications and providing IT tools that the public service needs to do its job. As a service provider to over 40 government departments and agencies, SSC is focussed on moving toward an IT service delivery model that encourages sharing common solutions and platforms across departments in an effort to reduce the variety of IT solutions across the government. In taking this enterprise approach, SSC is working to solidify network capacity and security, equip and empower employees to collaborate, and support partners in the design and delivery of their digital service offering to Canadians. The Minister of Public Services and Procurement Canada is the Minister responsible for SSC.

SSC’s Departmental Results Framework is structured by the following core responsibility and internal services:

• Common Government of Canada IT Operations: Using a government-wide approach, SSC delivers reliable and secure IT operations, IT infrastructure and communication and workplace technology services that support and enable government-wide programs and digital services for the Public Service.
• 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 ten distinct services that support program delivery in the organization, regardless of the Internal Services delivery model in a department. These services 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 financial statements are 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:

a) Parliamentary authorities

SSC is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to SSC 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 “Expenses” and “Revenues” sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-oriented Statement of Operations included in the 2021-22 Departmental Plan. Planned results are not presented in the “Government funding and transfers” section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2021-22 Departmental Plan.

b) Net cash provided by Government of Canada

SSC operates within the Consolidated Revenue Fund, which is administered by the Receiver General for Canada. All cash received by SSC is deposited to the Consolidated Revenue Fund, and all cash disbursements made by SSC are paid from the Consolidated Revenue Fund. The net cash provided by government is the difference between all cash receipts and all cash disbursements, including transactions between departments of the government.

c) Amounts due from or to the Consolidated Revenue Fund

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

d) Revenues

Revenues are recognized in the period the event giving rise to the revenues occurred.

Revenues that are non-respendable are not available to discharge SSC’s liabilities. While the President of SSC 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 as a reduction of SSC’s gross revenues.

e) Expenses

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 and employer contributions to the health and dental insurance plans are recorded as operating expenses at their carrying value.

f) Employee future benefits

1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the government. SSC’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. SSC’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.

g) Accounts receivable and advances

Accounts receivable and advances are stated at the lower of cost and net recoverable value. A valuation allowance is recorded for receivables where recovery is considered uncertain.

h) Inventory

Inventories are valued at cost and are comprised of spare parts and supplies held for future program delivery and are not primarily intended for resale. Inventories that no longer have service potential are valued at the lower of cost or net realizable value.

i) Tangible capital assets

The cost 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 below. All tangible capital assets and leasehold improvements having an initial cost of ten thousand 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.

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
Buildings	From 20 to 50 years
Works and infrastructure	From 20 to 40 years
Machinery and equipment	From 5 to 15 years
Computer hardware	From 3 to 10 years
Computer software	From 3 to 10 years
Vehicles	From 6 to 8 years
Leasehold improvements	Lesser of the remaining term of the lease or useful life of the improvement
Leased tangible capital assets	According to the useful life of the asset if a bargain purchase option exists or over the term of the lease

Assets under construction are recorded in the applicable asset class in the year they become available for use and are not amortized until they become available for use.

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

k. Contingent assets

Contingent assets are possible assets which may become actual assets when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, the contingent asset is disclosed in the notes to the financial statements.

l) 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 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 contingent liabilities, the liability for employee future benefits 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.

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 departmental financial statement purposes at the carrying amount.

3. Parliamentary authorities

SSC receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, SSC 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

	2022	2021

Net cost of operations before government funding and transfers

	2022	2021
Net cost of operations before government funding and transfers	2,395,266	2,371,403

Adjustments for items affecting net cost of operations but not affecting authorities:

Adjustments for items affecting net cost of operations but not affecting authorities:	2022	2021
Amortization of tangible capital assets	(425,698)	(389,364)
Net loss on disposal of tangible capital assets including adjustments	516	(3,876)
Net loss on the termination of lease obligations for tangible capital assets	(3,939)	-
Services provided without charge by other government departments	(111,776)	(120,779)
Decrease (increase) in vacation pay and compensatory leave	7,169	(25,924)
Decrease (increase) in employee future benefits	2,176	2,049
Decrease (increase) in accrued liabilities not charged to authorities	10,249	(10,249)
Bad debt expense	-	1
Refunds and adjustments to previous years’ expenses	10,216	7,801
Respendable revenue	296	1,540
Other	36	34
Total items affecting net cost of operations but not affecting authorities	(510,755)	(538,767)

Adjustments for items not affecting net cost of operations but affecting authorities:

Adjustments for items not affecting net cost of operations but affecting authorities:	2022	2021
Acquisitions of tangible capital assets (excluding leased tangible capital assets)	198,312	384,011
Payments on lease obligations for tangible capital assets	67,987	60,062
Payments on obligation under public private partnership	3,630	3,499
Increase (decrease) in accounts receivable for salary overpayments	2,759	2,858
Net increase (decrease) in prepaid expenses and advances	(1,150)	29,131
Increase (decrease) in inventory	6,105	-
Total items not affecting net cost of operations but affecting authorities	277,643	479,561

Current year authorities used

	2022	2021
Current year authorities used	2,162,154	2,312,197

b) Authorities provided and used

	2022	2021

Authorities provided

Authorities provided:	2022	2021
Vote 1 – Operating expenditures	1,969,432	1,963,755
Vote 5 – Capital expenditures	338,380	468,320
Statutory amounts	116,475	122,017

Less

Less:	2022	2021
Lapsed: Operating expenditures	(147,356)	(165,898)
Lapsed: Capital expenditures	(114,777)	(75,997)

Current year authorities used

	2022	2021
Current year authorities used	2,162,154	2,312,197

4. Accounts payable and accrued liabilities

The following table presents details of SSC’s accounts payable and accrued liabilities:

	2022	2021
Accounts payable - Other government departments and agencies	54,491	36,026
Accounts payable - External parties	271,902	366,123
Total accounts payable	326,393	402,149
Accrued liabilities	138,730	225,524
Total accounts payable and accrued liabilities	465,123	627,673

5. Lease obligations for tangible capital assets

SSC has entered into agreements to lease certain computer hardware under capital leases with a cost of $356,581 and accumulated amortization of $155,825 as at March 31, 2022 ($312,217 and $191,316 respectively as at March 31, 2021). The obligations related to the upcoming years include the following:

	2022	2021
2022	-	47,091
2023	75,736	28,090
2024	70,434	26,857
2025	51,517	20,142
2026	7,844	-
Total future minimum lease payments	205,531	122,180
Less: imputed interest (1.44% to 3.07%) (1.44% to 1.89% in 2020-21)	7,359	2,907
Balance of obligations under leased tangible capital assets	198,172	119,273

6. Obligation under public private partnership

SSC has entered into a public private partnership agreement to upgrade and expand the Enterprise Data Centre Borden with a cost of $153,304 and accumulated amortization of $10,987 as at March 31, 2022 ($153,304 and $7,921 respectively as at March 31, 2021). The obligations related to the upcoming years include the following:

	2022	2021
2022	-	7,867
2023	7,867	7,867
2024	7,867	7,867
2025	7,867	7,867
2026	7,867	7,867
2027	7,867	7,867
2028 and subsequent	122,292	122,292
Total future minimum lease payments	161,627	169,494
Less: imputed interest (3.67%)	48,269	52,506
Balance of obligation under public private partnership	113,358	116,988

7. Employee future benefits

a) Pension benefits

SSC’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 Plan benefits and they are indexed to inflation.

Both the employees and SSC 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 2021-22 expense amounts to $79,184 ($71,740 in 2020-21). For Group 1 members, the expense represents approximately 1.01 times (1.01 times in 2020-21) the employees’ contributions and, for Group 2 members, approximately 1.00 times (1.00 times in 2020-21) the employees’ contributions.

SSC’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 SSC’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, 2022, 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:

	2022	2021
Accrued benefit obligation - Beginning of year	27,914	29,963
Expense (adjustment) for the year	(264)	1,291
Benefits paid during the year	(1,912)	(3,340)
Accrued benefit obligation - End of year	25,738	27,914

8. Accounts receivable and advances

The following table presents details of SSC’s accounts receivable and advances:

	2022	2021
Receivables - Other government departments and agencies	245,159	448,042
Receivables - External parties	25,773	26,133
Employee advances	1,574	79
Subtotal	272,506	474,254
Allowance for doubtful accounts on receivables from external parties	-	-
Gross accounts receivable and advances	272,506	474,254
Accounts receivable held on behalf of Government	(8,572)	(6,824)
Net accounts receivable and advances	263,934	467,430

9. Inventory

The following table presents details of SSC’s inventory:

	2022	2021
Inventory held for consumption	6,105	-
Total inventory	6,105	-

The cost of consumed inventory recognized as an expense in the Statement of Operations and Departmental Net Financial Position is $1,404 in 2021-22 ($0 in 2020-21).

10. Tangible capital assets

Cost

Capital asset class	Opening balance	Acquisitions	Adjustments (1)	Disposals and write-offs	Closing balance
Buildings	156,389	-	-	-	156,389
Works and infrastructure	1,310	-	-	-	1,310
Machinery and equipment	59,102	293	-	58	59,337
Computer hardware	2,649,508	168,546	17,742	7,803	2,827,993
Computer software	247,468	6,179	5,362	-	259,009
Vehicles	3,232	298	-	38	3,492
Leasehold improvements	69,334	-	12,564	-	81,898
Leased tangible capital assets	312,217	157,030	-	112,666	356,581
Assets under construction	123,140	22,996	(32,510)	-	113,626
Total	3,621,700	355,342	3,158	120,565	3,859,635

Accumulated amortization

Capital asset class	Opening balance	Amortization	Adjustments (1)	Disposals and write-offs	Closing balance
Buildings	10,689	3,169	-	-	13,858
Works and infrastructure	333	52	-	-	385
Machinery and equipment	50,582	1,289	-	58	51,813
Computer hardware	1,876,125	329,223	1,183	7,114	2,199,417
Computer software	222,239	21,163	28	-	243,430
Vehicles	1,115	443	-	38	1,520
Leasehold improvements	41,695	7,267	-	-	48,962
Leased tangible capital assets	191,316	63,092	-	98,583	155,825
Assets under construction	-	-	-	-	-
Total	2,394,094	425,698	1,211	105,793	2,715,210

Net book value

Capital asset class	2022	2021
Buildings	142,531	145,700
Works and infrastructure	925	977
Machinery and equipment	7,524	8,520
Computer hardware	628,576	773,383
Computer software	15,579	25,229
Vehicles	1,972	2,117
Leasehold improvements	32,936	27,639
Leased tangible capital assets	200,756	120,901
Assets under construction	113,626	123,140
Total	1,144,425	1,227,606

11. Contractual obligations and contractual rights

a) Contractual obligations

The nature of SSC’s activities may result in some large multi-year contracts and obligations whereby SSC will be obligated to make future payments when the services/goods are received. Significant contractual obligations ($10 million or more) that can be reasonably estimated are summarized as follows:

	2023	2024	2025	2026	2027	2028 and subsequent	Total
Acquisition of goods and services	602,503	550,961	292,349	196,984	14,324	69,078	1,726,199
Tangible capital assets	13,020	-	-	-	-	-	13,020
Total	615,523	550,961	292,349	196,984	14,324	69,078	1,739,219

b) Contractual rights

SSC has determined that there are no contractual rights which require disclosure in these financial statements.

12. Contingent liabilities and contingent assets

a) Contingent liabilities

Claims have been made against SSC in the normal course of operations. Where it is likely that there will be a future payment and a reasonable estimate of the loss can be made, an allowance for claims and litigations is recorded. No allowance has been recorded in SSC’s financial statements. Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amounted to approximately $11,450 at March 31, 2022 ($205 at March 31, 2021).

b) Contingent assets

SSC has determined that there are no contingent assets which require disclosure in these financial statements.

13. Related party transactions

SSC 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.

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

	2022	2021
Employer’s contribution to the health and dental insurance plans	73,692	65,854
Accommodation	38,084	54,925
Total	111,776	120,779

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 Public Services and Procurement Canada, are not included in SSC’s Statement of Operations and Departmental Net Financial Position.

b) Common services provided without charge to other government departments

During the year, SSC provided services without charge to other government departments, related to the provision of IT infrastructure services. These services are not recognized as revenues in the Statement of Operations and Departmental Net Financial Position.

c) Other transactions with other government departments and agencies

	2022	2021
Expenses – Services provided to SSC by other government departments and agencies	217,403	209,395
Revenues – Services provided by SSC to other government departments and agencies	983,391	891,491

Expenses and revenues disclosed in c) exclude common services provided without charge by other government departments, which are already disclosed in a).

14. Segmented information

Presentation by segment is based on SSC’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 expenses and by major type of revenues. The segment results for the period are as follows:

	Common Government of Canada IT Operations	Internal Services	2022 Total	2021 Total

Operating expenses

Operating expenses	Common Government of Canada IT Operations	Internal Services	2022 Total	2021 Total
Salaries and employee benefits	782,843	182,211	965,054	963,037
Telecommunications	567,934	2,156	570,090	570,614
Rentals	533,449	6,423	539,872	481,663
Professional and special services	336,963	88,801	425,764	364,805
Amortization of tangible capital assets	422,085	3,613	425,698	389,364
Repairs and maintenance	242,069	593	242,662	263,368
Machinery and equipment	81,234	12,219	93,453	118,471
Accommodation	30,914	18,065	48,979	66,435
Utilities, materials and supplies	5,508	483	5,991	7,074
Information	5,284	536	5,820	4,068
Interest on capital lease payments	4,636	-	4,636	2,329
Interest on obligation under public private partnership	4,236	-	4,236	4,367
Net loss on the termination of lease obligations for tangible capital assets	3,939	-	3,939	-
Transportation	2,435	1,220	3,655	2,419
Loss on disposal of tangible capital assets	689	-	689	127
Other expenses	2,096	66	2,162	836
Total operating expenses	3,026,314	316,386	3,342,700	3,238,977

Revenues

Revenues	Common Government of Canada IT Operations	Internal Services	2022 Total	2021 Total
Sale of goods and services	988,674	-	988,674	896,994
Miscellaneous revenues	165	(10)	155	573
Revenues earned on behalf of Government	(41,420)	25	(41,395)	(29,993)
Total revenues	947,419	15	947,434	867,574

Net cost of operations before government funding and transfers

	Common Government of Canada IT Operations	Internal Services	2022 Total	2021 Total
Net cost of operations before government funding and transfers	2,078,895	316,371	2,395,266	2,371,403

15. Comparative information

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

Annex to the statement of management responsibility including internal control over financial reporting for the year ended March 31, 2022

1. Introduction

This document provides summary information on the measures taken by Shared Services Canada (SSC) to maintain an effective system of Internal Control over Financial Reporting (ICFR), including information on internal control management, assessment results and related action plans.

Detailed information on the department’s authority, mandate and program activities can be found in the 2021-22 Departmental Results Report (DRR) and the 2022-23 Departmental Plan.

2. Departmental system of internal control over financial reporting

2.1 Internal control management

SSC has a well-established governance and accountability structure to support departmental assessment efforts and oversight of its system of internal control. A departmental internal control management framework, approved by the President, is in place and includes:

• Organizational accountability structures as they relate to internal control management to support sound financial management, including roles and responsibilities of senior managers in their areas of responsibility for control management;
• An internal attestation process in support of certification by the President and Chief Financial Officer, whereby, senior departmental executives who report to the President attest that they have maintained an effective system of Internal Control over Financial Reporting in their area of responsibility;
• Values and ethics;
• Ongoing communication, training and internal improvements on statutory requirements, and policies and procedures for sound financial management and control; and
• Regular monitoring of internal control management, as well as the provision of related assessment results and action plans to the President, departmental senior management and, as applicable, the Departmental Audit Committee.

The Departmental Audit Committee provides advice to the President on the adequacy and functioning of the department's risk management, control and governance frameworks and processes.

2.2 Service arrangements relevant to financial statements

SSC relies on other organizations for the processing of certain transactions that are recorded in its financial statements as follows:

Common Service Arrangements

• Public Services and Procurement Canada (PSPC) centrally administers the payments of salaries and the procurement of goods and services in accordance with the SSC’s Delegation of Authority and provides accommodation services;
• The Treasury Board of Canada Secretariat provides services related to public sector insurance for employees of SSC and centrally administers payment of the employer’s share of contributions toward statutory employee benefit plans (i.e., the Public Service Pension Plan, Employment Insurance Plan, Canada Pension Plan, Quebec Pension Plan and Public Service Supplementary Death Benefit Plan) on behalf of SSC; and
• The Department of Justice provides legal services to SSC.

Readers of this Annex may refer to the Annexes of the above-noted organizations for a greater understanding of the systems of ICFR related to these specific services.

SSC relies on other external service providers and/or departments for the processing of certain transactions or information that are recorded in its financial statements, as follows:

Specific Arrangements

• PSPC provides SSC with an SAP financial platform to capture and report all financial transactions; and
• Agriculture and Agri-Food Canada provides SSC with a PeopleSoft platform to process transactions related to human resources.

2.3 Common Services Provided by SSC

SSC plays a significant role in the delivery of digital government by establishing a reliable, modern, secure and accessible network; supporting a digitally-enabled public service; and providing modern and efficient infrastructure solutions.

There are shared internal control responsibilities under the Treasury Board Policy on Financial Management. As a common service provider, SSC is responsible for the assessment of IT general controls for IT infrastructure services provided to customers. Customers are responsible for the assessment of application level controls and general IT controls that support their financial applications. Created on August 4, 2011, SSC was given a broad mandate to modernize and consolidate the Government of Canada’s information technology infrastructure. Today, SSC provides the digital backbone of the federal government, the underpinning for providing essential services and programs to Canadians. SSC delivers network, data centre, email, security and workplace technology to 43 of the larger federal departments and agencies.

The following diagram provides a summary view of the infrastructure layers and services that are in scope for the ITGC assessment.

Long description – Figure 1

This graphic shows the infrastructure layers that are part of the ITGC framework. A box on the left shows that SSC’s IT general controls include Operations, Security, Implementation and Maintenance, and Managing outsourced providers. Two arrows point to a separate box showing that SSC’s IT general controls are responsible for IT infrastructure services provided to customers. This includes Database/Middleware, Operating System, Network and Data Centre Facility. A separate box represents the Customer IT Environment which includes Operations (people, process, technology) and Customer Financial Applications. This demonstrates that customers are responsible for the assessment of application level controls and general IT controls that support their financial applications.

*Responsibility over certain infrastructure elements is shared between SSC and its customers in accordance with customer agreements. For instance, for Platform Services (database and middleware services), depending on the customer, some components are fully managed and maintained by SSC while others are only partially managed and maintained by SSC.

3. Departmental assessment results during fiscal year 2021-22 (ICFR)

During 2021-22, SSC continued to make progress in assessing and improving its key controls.  The following table summarizes the department’s progress based on the plans identified in the previous fiscal year’s Annex.

Progress during the 2021-22 fiscal year

Element from previous year’s action plan	Status
The assessment of IT general controls over feeder systems has progressed as per the plan and the testing will be completed in 2021-22.	Completed. Remediation is in progress (outstanding action items in management action plans).
Operating effectiveness testing of Operating expenses and accounts payable process is completed. The remediation is in progress.	Ongoing monitoring in progress.
Operating effectiveness testing of Revenue and accounts receivable is completed. The remediation is in progress.	Completed. Remediation is in progress (outstanding action items in management action plans).
The assessment of Capital assets has progressed as per the plan and the testing will be completed in 2021-22.	Completed. Remediation is in progress (outstanding action items in management action plans).
Operating effectiveness testing of Payroll and benefits is completed. The remediation is in progress.	Completed. Remediation is in progress (outstanding action items in management action plans).

Results regarding design and operating effectiveness testing, ongoing monitoring, and remediation activities of key control areas are detailed below.

3.1 Design effectiveness testing of key controls

As a result of design effectiveness testing, the department identified a deficiency in the Capital assets process; there was no stocktaking exercise at the time of the assessment. This could lead to inaccurate and incomplete financial information in the financial statements.

An action plan is being implemented to:

• Launch a comprehensive stocktaking of Capital assets in 2022-23 that will support the accuracy and completeness of the financial statements.

3.2 Operating effectiveness testing of key controls

As a result of testing during 2021-22, the department did not identify any significant deficiency that could lead to material misstatement of its financial statements.

3.3 Ongoing monitoring of key controls

In 2021-22, the department performed ongoing monitoring activities of its Operating expenses and accounts payable process which will be completed in 2022-23.

4. Departmental status and action plan for the next fiscal year and subsequent years (ICFR)

Status and action plan for the next fiscal year and subsequent years

Key control areas	Design effectiveness testing and remediation	Operating effectiveness testing and remediation	Ongoing monitoring rotation
Entity level controls	Completed	Completed	2022-23
ITGC over SIGMA	Completed	Completed	2023-24
ITGC over Feeder Systems Footnote 1	Completed	Completed	2023-24
Business Process Controls
Financial close and reporting	Completed	Completed	2024-25
Operating expenses and accounts payable	Completed	Completed	2024-25
Revenue and accounts receivable	Completed	Completed	2022-23
Capital assets	Completed	Completed	2023-24
Payroll and benefits	Completed	Completed	2022-23

In 2021-22, SSC completed the full assessment of its system of Internal Control over Financial Reporting. Going forward, the department will apply its ongoing monitoring plan to reassess control performance on a risk basis across all control areas. The status and action plan for the completion of the identified control areas for the next fiscal year and for subsequent years are shown in the table above.

5. Common Service Provider (CSP) Annual Assessment Results for 2021-22 and Action Plan for Future Years

SSC provides IT infrastructure services that are delivered to customer organizations that operate IT systems in legacy, partially modernized or fully modernized environments. A legacy environment refers to an older system inherited from a customer that continues to remain vital to the organization. A partially modernized environment refers to a system that contains a mix of older and updated components that are deployed in an enterprise data centre. A fully modernized environment refers to a system that contains updated components that are deployed in an enterprise data centre.

IT general controls are classified as being either customer-specific controls or common controls.  Customer-specific controls operate according to legacy processes and procedures, while common controls operate according to enterprise-wide processes and procedures using common tools. Common controls operate primarily in fully modernized environments, but may also be adopted in a legacy or partially modernized environment.

5.1 Departmental status and action plan for the next fiscal year and subsequent years (CSP)

SSC has implemented a multi-year, risk-based assessment plan for IT General Controls for IT infrastructure services. The multi-year plan is refreshed on an annual basis.

The results of the current year assessment and future plans are detailed below.

Status and action plan for the next fiscal year and subsequent years

Key control areas	Design effectiveness testing and remediation	Operating effectiveness testing and remediation	Ongoing monitoring rotation
Entity level controls	Completed	2023-24	Future Years
Common controls	Completed	2023-24	Future Years
Customer-specific controls (DFMSFootnote 2) – Customers with high financial reporting risk	Completed	2022-23	Future Years
Customer-specific controls (DFMSFootnote 3) – Customers with medium financial reporting risk	2023-24	2024-25	Future Years
Customer-specific controls (GC central systemsFootnote 4)	Completed	2022-23	Future Years
Customer-specific controls (high revenue systemFootnote 5)	Completed	2022-23	Future Years

5.2 Departmental assessment results during fiscal year 2021-22 (CSP)

Assessment of customer-specific controls (GC central system, high revenue system)

In fiscal year 2021-22 work continued on the outstanding management action plans to address the design effectiveness recommendations to strengthen logical access controls within the infrastructure.