Treasury Board of Canada Secretariat Financial Statements (Unaudited) for the Year Ended March 31, 2023

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 that 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.

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 2022–23 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 2022–23 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, they have 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

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

a) Reconciliation of net cost of operations to current year authorities used ($ thousands)

b) Authorities provided and used ($ thousands)

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 2022–23 amounts to $26.1 million ($23.9 million in 2021–22). For Group 1 members, the expense represents approximately 1.02 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, 2023, 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.

($ thousands)

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. Claims for which the outcome is not determinable and a reasonable estimate can be made by management amount to approximately $2.5 million at March 31, 2023 ($11.2 million in 2021–22). None of these claims is with related parties.

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.

($ thousands)

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 $3.7 billion in 2022–23 ($2.9 billion in 2021–22).

c) Other transactions with related parties

($ thousands)

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 SAP contract administration for the Government of Canada and internal support services provided to other departments and agencies, as well as the recovery of costs related to public service pension administration.

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.

($ thousands)

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:

• employee relations and total compensation
• workplace policies and services
• executive and leadership development
• people management systems and processes
• research, planning and renewal

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

($ thousands)