Treasury Board of Canada Secretariat Financial Statements (Unaudited) for the Year Ended March 31, 2021

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• Statement of Management Responsibility Including Internal Control over Financial Reporting
• Statement of Financial Position (unaudited)
• Statement of Operations and Departmental Net Financial Position (unaudited)
• Statement of Change in Departmental Net Financial Asset (unaudited)
• Statement of Cash Flows (unaudited)
• Notes to the financial statements (unaudited)

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, 2021, and all information contained in these statements, rests with the management of the Treasury Board of Canada Secretariat (TBS). 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 the TBS financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the TBS 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 TBS; 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 assess key risks and the effectiveness of associated key controls and to make any necessary adjustments.

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

The effectiveness and adequacy of the TBS system of ICFR is reviewed by internal audit staff, who conduct periodic audits of different areas of TBS’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 reviews the financial statements and provides advice to the Secretary.

The financial statements of TBS have not been audited.

Treasury Board of Canada Secretariat
Statement of Financial Position (unaudited)
as at March 31

Treasury Board of Canada Secretariat
Statement of Operations and Departmental Net Financial Position (unaudited)
for the year ended March 31

Treasury Board of Canada Secretariat
Statement of Change in Departmental Net Financial Asset (unaudited)
for the year ended March 31

Treasury Board of Canada Secretariat
Statement of Cash Flows (unaudited)
for the year ended March 31

Treasury Board of Canada Secretariat
Notes to the financial statements (unaudited)
for the year ended March 31

1. Authority and objectives

Under the broad authority of sections 5 to 13 of the Financial Administration Act, the Treasury Board of Canada Secretariat (TBS) supports the Treasury Board as a committee of ministers in its role as the general manager and employer of the core public administration. TBS is headed by a Secretary, who reports to the President of the Treasury Board.

The mission of TBS is to ensure that rigorous stewardship of public resources achieves results for Canadians.

The core business of TBS is currently organized into the following core responsibilities:

a) Spending Oversight

Review spending proposals and authorities; review existing and proposed government programs for efficiency, effectiveness and relevance; provide information to Parliament and Canadians on government spending.

b) Administrative Leadership

Lead government-wide initiatives; develop policies and set the strategic direction for government administration related to service delivery and access to government information, as well as the management of assets, finances, information and technology.

c) Employer

Develop policies and set the strategic direction for people management in the public service; manage total compensation (including pensions and benefits) and labour relations; undertake initiatives to improve performance in support of recruitment and retention.

d) Regulatory Oversight

Develop and oversee policies to promote good regulatory practices, review proposed regulations to ensure they adhere to the requirements of government policy, and advance regulatory cooperation across jurisdictions.

e) 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: Acquisition Management Services; Communications Services; Financial Management Services; Human Resources Management Services; Information Management Services; Information Technology Services; Legal Services; Materiel Management Services; Management and Oversight Services; and Real Property Management Services.

2. Summary of significant accounting policies

These financial statements have been prepared using TBS’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.

The significant accounting policies are as follows:

a) Parliamentary authorities

TBS is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to TBS 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 2020-21 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 Financial Assets because these amounts were not included in the 2020-21 Departmental Plan.

b) Net cash provided by Government

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

c) Amounts due from or to the CRF

Amounts due from or to the CRF are the result of timing differences at year-end between the time 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 TBS is entitled to draw from the CRF without further authorities to discharge its liabilities.

d) Revenues

Revenues are accounted for in the period in which the related transaction or event that gave rise to the revenues occurred.

Revenues that are non-respendable are not available to discharge TBS’s liabilities. While the Secretary is expected to maintain accounting control, he or she 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, therefore, are presented as a reduction of the entity’s gross revenues.

e) Expenses

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

Operating expenses, which are recorded on an accrual basis when goods are received or services are rendered, include the following:

• public service employer payments recorded centrally by TBS on behalf of other federal organizations
• departmental salaries and employee benefits, professional and special services, transportation and telecommunications, equipment and furniture, rentals, repairs and maintenance, and utilities, materials and supplies
• services provided without charge by other government departments for accommodation and legal services reported at their estimated cost
• vacation pay and compensatory leave accrued as the benefits are earned by employees under their respective terms of employment
• amortization of tangible capital assets, which is recorded on a straight-line basis over the estimated useful life of each asset

f) Government-wide employee benefits

(i) Pension and other employee benefits

Eligible public service employees participate in the Public Service Pension Plan (the Plan), a defined benefit pension plan sponsored by the Government of Canada. In support of the Treasury Board’s role as employer for the public service, TBS funds employer contributions to the Plan for all departments and agencies, including additional contributions in respect of any actuarial deficits, via statutory authorities.

Employer contributions to the Plan are expensed in the year incurred, and TBS recovers the employer contributions from other departments and agencies. TBS’s departmental financial statements therefore report on employer contributions in respect of only its own employees’ participation in the Plan.

The Government of Canada also sponsors a variety of other employee benefit plans that TBS is responsible for administering and/or funding through its centrally managed funds. Benefit payments for these plans are recognized as expenses in TBS’s financial statements when they become due, and no accruals are recorded for future benefits. A portion of these benefits is also recovered from other departments and agencies. This accounting treatment corresponds to the funding provided to TBS through parliamentary appropriations.

For all pension and other employee future benefits, the actuarial liabilities and related disclosures, as well as actuarial surpluses or deficiencies for the whole of government, are recognized in the financial statements of the Government of Canada. It is the government as the sponsor of the defined benefit plans that ultimately bears the actuarial and investment risks inherent to these plans.

(ii) Severance benefits

The accumulation of severance benefits for voluntary departures ceased for applicable employee groups beginning in 2011 (see Note 6b). The remaining obligation for employees who did not withdraw their accumulated 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 or net recoverable value. A valuation allowance has been recorded for receivables where recovery is considered uncertain.

Accounts receivable held on behalf of government are presented in these financial statements as the Secretary must maintain accounting control for these items; however, they are later presented as a reduction to TBS’s gross financial assets because the receipt of these receivables cannot be used by TBS to discharge existing liabilities.

h) Tangible capital assets

The costs of acquiring equipment and other capital property are capitalized as tangible capital assets and are amortized to expense these costs over the estimated useful lives of the assets, as described in Note 7. 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 works of art and intangible assets.

i) Contingent liabilities

Contingent liabilities are potential liabilities that 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 is recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

j) 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 and general economic conditions, and they 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 claims incurred but not yet reported under the public service health and dental care plans, 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.

k) 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 are 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

TBS receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Departmental Net Financial Position and the Statement of Financial Position in one year may be funded through the parliamentary authorities of prior, current or future years. Accordingly, TBS’s net results of operations for the year are different depending whether they are expressed on a government funding basis or 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 TBS’s accounts receivable and advance balances:

5. Accounts payable and accrued liabilities

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

6. Employee future benefits

a) Pension benefits

TBS’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% 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 TBS 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:

1. Group 1 relates to existing Plan members as of December 31, 2012
2. Group 2 relates to members joining the Plan as of January 1, 2013

Each group has a distinct contribution rate. The employer expense in 2020-21 amounts to $24.8 million ($22.3 million in 2019-20). For Group 1 members, the expense represents approximately 1.01 times the employee contributions and, for Group 2 members, approximately 1.00 times the employee contributions.

b) Severance benefits

Severance benefits provided to TBS’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 to collect the full or remaining value of benefits upon departure from the public service. By March 31, 2021, 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:

7. 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 capital asset class in the year that they become available for use, and are not amortized until they become available for use.

The following table presents the details of tangible capital assets:

8. Contractual obligations

The nature of TBS’s activities can result in some large multi-year contracts and obligations whereby TBS is obligated to make future payments in order to carry out its transfer payment programs or when the services or goods are received. Significant contractual obligations that can be reasonably estimated are summarized in the following table:

9. Contingent liabilities

Claims and litigations

Claims have been made against TBS in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. TBS has recorded an allowance for claims and litigations where it is likely that there will be a future payment and where a reasonable estimate of the loss can be made, except for certain unresolved claims related to ongoing negotiations. Due to the sensitivity of these latter claims, an allowance has been recorded centrally by the Office of the Comptroller General in the consolidated financial statements of the Government of Canada. Upon resolution in the future, any resulting allowance for these claims will be recorded by the department and could be material. For claims where the estimate of loss is based on a range of possible outcomes and the amount accrued was less than the maximum of the range, the exposure to liability in excess of the amount accrued is estimated at $65 thousand. Claims for which the outcome is not determinable and a reasonable estimate can be made by management amount to approximately $40.1 million at March 31, 2021 ($0.8 million in 2019-20). None of these claims is with related parties.

10. Related-party transactions

TBS is related, as a result of common ownership, to all Government of Canada departments, agencies and Crown corporations. Related parties also include TBS’s key management personnel and their close family members, as well as entities that are controlled by, or are under shared control of, these individuals. TBS may enter into transactions with these entities in the normal course of business and on normal trade terms.

In addition, TBS has the responsibility to administer and fund, on behalf of other government departments, the employer’s contribution to health, dental and other employee insurance plans and payroll benefits through its centrally managed funds (refer to Note 10b).

During the year, TBS received and provided common services as disclosed in the following sections:

a) Common services provided without charge by other government departments

TBS received accommodation and legal services from certain common service organizations. These services were provided without charge and have been recorded at the carrying value in TBS’s Statement of Operations and Departmental Net Financial Position as follows:

In order to achieve efficiency and cost effectiveness, and to deliver programs economically to the public, the government has centralized some of its administrative activities. 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 cost 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 TBS’s Statement of Operations and Departmental Net Financial Position.

b) Common services provided without charge to other government departments

TBS provided services without charge to other government departments for the provision of the employer’s contribution to health, dental and other employee insurance plans and payroll benefits in the amount of $2.9 billion in 2020-21 ($2.6 billion in 2019-20).

c) Other transactions with related parties

Expenses and revenues disclosed in (c) exclude common services provided without charge, which have already been disclosed in (a) and (b). The expenses are related to the acquisition of various goods and services and recoveries of costs from other departments and agencies related to shared-costs programs and employee transfers. The revenues are mainly related to internal support services provided to other departments and agencies, as well as the recovery of costs related to public service pension administration.

11. Transfers from or to other government departments

Throughout the year, transfers from or to other government departments of accounts receivable related to salary overpayments were made. These transfers are made when an employee transfers between departments before an outstanding salary overpayment is fully recovered by the department they transferred from. Additionally, TBS developed and transferred an asset under construction with a net book value of $4,542,315 to Health Canada, effective July 30, 2020.

The impact of transfers from or to other government departments in the financial statements is as follows:

12. Segmented information

a) Expenses and revenues

Information for TBS is presented by segment based on a breakdown by core responsibility. This presentation is consistent with the accounting policies described in Note 2. The following table presents the expenses incurred and revenues generated for the main core responsibilities, by major category of expenses and revenues:

b) Employer expenses

Total expenses reported under the “Employer” core responsibility are comprised of public service employer payments recorded centrally by TBS on behalf of other federal organizations and departmental expenses in support of the Treasury Board in its role as the employer of the core public administration.

Public service employer payments account for approximately 90% of TBS’s total expenses and include the following:

• the employer’s share of contributions to the Public Service Pension Plan and Retirement Compensation Arrangement
• the employer’s share of contributions to the Public Service Death Benefit Account
• the employer’s share of contributions to the Canada Pension Plan and Québec Pension Plan
• the employer’s share of Employment Insurance premiums
• the employer’s share of disability and life insurance premiums and related Québec sales tax
• the employer’s share of the Québec Parental Insurance Plan premiums
• claims and related costs under the Public Service Health Care Plan, the Public Service Dental Care Plan and the Pensioners’ Dental Services Plan
• provincial payroll taxes for employees who work in Quebec, Ontario, Manitoba, British Columbia, and Newfoundland and Labrador. The payroll tax is levied on employers in these provinces to help fund their respective health plans
• returns to certain employees of their share of the Employment Insurance premium reduction

Generally, statutory employer contributions to the Public Service Pension Plan, Public Service Death Benefit Account, Canada Pension Plan, Québec Pension Plan, and Employment Insurance premiums are recovered from all departments, agencies and revolving funds, based on expenses incurred for salaries and wages. Non-statutory contributions to other employee benefit plans and payroll-related employer obligations are provided without-charge for most departments and agencies and on a recovery basis for revolving funds and certain departments and agencies, based on a percentage of expenses incurred for salaries and wages.

Departmental expenses under the “Employer” core responsibility are related to the following activities of the Office of the Chief Human Resources Officer:

• executive and leadership development
• employment conditions and labour relations
• pension and benefits management
• people management systems and processes
• workplace policies and services
• research, planning and renewal

The following table presents a detailed breakdown of employer expenses by major category:

13. Adjustments to prior year’s results

In 2020-21, TBS identified tangible capital assets (computer software) that were not recorded in accordance with the accounting policy for tangible capital assets. The change has been applied retroactively, and comparative information for 2019-20 has been restated. The effect of this adjustment is presented in the table below.

14. Comparative information

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