Consolidated statement of administrative costs charged to the CPP accounts by ESDC, March 31, 2020
From: Employment and Social Development Canada
Official title: Consolidated Statement of Administrative Costs Charged to the Canada Pension Plan Accounts by Employment and Social Development Canada, for the period from April 1, 2019 to March 31, 2020
On this page
- List of abbreviations
- List of tables
- Independent auditor’s report
- Schedule 1 – Notes to the consolidated statement of administrative costs charged to the Canada Pension Plan accounts
- Schedule 2 – Administrative costs charged to the Canada Pension Plan accounts by the Deputy Minister’s Office
- Schedule 3 – Administrative costs charged to the Canada Pension Plan accounts by the Chief Operating Officer
- Schedule 4 – Administrative costs charged to the Canada Pension Plan accounts by the Income Security and Social Development Branch
- Schedule 5 – Administrative costs charged to the Canada Pension Plan accounts by the Corporate Secretariat
- Schedule 6 – Administrative costs charged to the Canada Pension Plan accounts by the Public Affairs and Stakeholder Relations Branch
- Schedule 7 – Administrative costs charged to the Canada Pension Plan accounts by the Human Resources Services Branch
- Schedule 8 – Administrative costs charged to the Canada Pension Plan accounts by the Legal Services Branch
- Schedule 9 – Administrative costs charged to the Canada Pension Plan accounts by the Internal Audit and Enterprise Risk Management Branch
- Schedule 10 – Administrative costs charged to the Canada Pension Plan accounts by the Strategic and Service Policy Branch
- Schedule 11 – Administrative costs charged to the Canada Pension Plan accounts by the Transformation and Integrated Service Management Branch and Benefits Delivery Services
- Schedule 12 – Administrative costs charged to the Canada Pension Plan accounts by the Citizen Service Branch
- Schedule 13 – Administrative costs charged to the Canada Pension Plan accounts by the Integrity Services Branch
- Schedule 14 – Administrative costs charged to the Canada Pension Plan accounts by the Social Insurance Register
- Schedule 15 – Administrative costs charged to the Canada Pension Plan accounts by the Innovation, Information and Technology Branch
- Schedule 16 – Administrative costs charged to the Canada Pension Plan accounts by the Chief Financial Officer Branch
- Schedule 17 – Administrative costs charged to the Canada Pension Plan accounts by the Strategic Services Bureau and Regional Assistant Deputy Ministers
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List of abbreviations
- CPP
- Canada Pension Plan
- ESDC
- Employment and Social Development Canada
- MoU
- Memorandum of Understanding
- NHQ
- National Headquarters
List of tables
- Table 1: Consolidated statement of administrative costs charged to the CPP accounts by ESDC
- Table 2: Administrative costs charged to the CPP accounts by the Deputy Minister’s Office
- Table 3: Administrative costs charged to the CPP accounts by the Chief Operating Officer
- Table 4: Administrative costs charged to the CPP accounts by the Income Security and Social Development Branch
- Table 5: Administrative costs charged to the CPP accounts by the Corporate Secretariat
- Table 6: Administrative costs charged to the CPP accounts by the Public Affairs and Stakeholder Relations Branch
- Table 7: Administrative costs charged to the CPP accounts by the Human Resources Services Branch
- Table 8: Administrative costs charged to the CPP accounts by the Legal Services Branch
- Table 9: Administrative costs charged to the CPP accounts by the Internal Audit and Enterprise Risk Management Branch
- Table 10: Administrative costs charged to the CPP accounts by the Strategic and Service Policy Branch
- Table 11: Administrative costs charged to the CPP accounts by the Transformation and Integrated Service Management Branch and Benefits Delivery Services
- Table 12: Administrative costs charged to the CPP accounts by the Citizen Service Branch
- Table 13: Administrative costs charged to the CPP accounts by the Integrity Services Branch
- Table 14: Administrative costs charged to the CPP accounts by the Social Insurance Register
- Table 15: Administrative costs charged to the CPP accounts by the Innovation, Information and Technology Branch
- Table 16: Administrative costs charged to the CPP accounts by the Chief Financial Officer Branch
- Table 17: Administrative costs charged to the CPP accounts by the Strategic Services Bureau and Regional Assistant Deputy Ministers
Independent auditor’s report
To the Internal Audit and Enterprise Risk Management Branch of Employment and Social Development Canada.
Our opinion
In our opinion, the accompanying financial information of Employment and Social Development Canada (ESDC) for the period from April 1, 2019 to March 31, 2020 is prepared, in all material respects, in accordance with the financial reporting provisions of the 2019 to 2020 Memorandum of Understanding (MoU) between Canada Pension Plan (the CPP) Accounts and ESDC dated March 31, 2020.
What we have audited
The ESDC financial information comprises the consolidated statement of administrative costs charged to the CPP accounts by ESDC for the period from April 1, 2019 to March 31, 2020 and the related schedules, which include a summary of significant accounting policies in schedule 1.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial information section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of ESDC in accordance with the ethical requirements that are relevant to our audit of the financial information in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.
Emphasis of matter – Basis of accounting and restriction on use
We draw attention to schedule 1 – note 1 to the financial information, which describes the basis of accounting. The financial information is prepared to assist ESDC to comply with the financial reporting requirements of the MoU between ESDC and the CPP. As a result, the financial information may not be suitable for another purpose. Our report is intended solely for ESDC in accordance with the terms of our engagement and should not be distributed to or used by parties other than ESDC, the CPP and the Office of the Auditor General of Canada (OAG). Our opinion is not modified in respect of this matter.
Responsibilities of management and those charged with governance for the financial information
ESDC management is responsible for the preparation of the financial information in accordance with the financial reporting provisions of the 2019 to 2020 MoU between the CPP and ESDC, and for such internal control as management determines is necessary to enable the preparation of financial information that is free from material misstatement, whether due to fraud or error.
Those charged with governance are responsible for overseeing management’s financial reporting process.
Auditor’s responsibilities for the audit of the financial information
Our objectives are to obtain reasonable assurance about whether the financial information as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial information.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- identify and assess the risks of material misstatement of the financial information, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control
- obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of management’s internal control
- evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
PricewaterhouseCoopers LLP
Chartered Professional Accountants, Licensed Public Accountants.
Ottawa, Ontario August 28, 2020.
| Service area as per the Memorandum of Understanding | 2020 cost in thousands of dollars | 2019 cost in thousands of dollars |
|---|---|---|
| Deputy Minister’s Office (Schedule 2) | 588 | 499 |
| Chief Operating Officer (Schedule 3) | 231 | 235 |
| Income Security and Social Development Branch (Schedule 4) | 12,819 | 12,714 |
| Corporate Secretariat (Schedule 5) | 1,992 | 1,857 |
| Public Affairs and Stakeholder Relations Branch (Schedule 6) | 3,281 | 3,105 |
| Human Resources Services Branch (Schedule 7) | 16,408 | 13,478 |
| Legal Services Branch (Schedule 8) | 3,681 | 3,501 |
| Internal Audit and Enterprise Risk Management Branch (Schedule 9) | 983 | 844 |
| Strategic and Service Policy Branch (Schedule 10) | 6,010 | 3,393 |
| Transformation and Integrated Service Management Branch and Benefits Delivery Services (Schedule 11) | 230,780 | 212,970 |
| Citizen Service Branch (Schedule 12) | 21,121 | 21,698 |
| Integrity Services Branch (Schedule 13) | 10,887 | 8,310 |
| Social Insurance Register (Schedule 14) | 4,674 | 4,666 |
| Innovation, Information and Technology Branch (Schedule 15) | 81,608 | 62,507 |
| Chief Financial Officer Branch (Schedule 16) | 52,053 | 44,447 |
| Strategic Services Bureau and Regional Assistant Deputy Ministers (Schedule 17) | 3,893 | 3,097 |
| Canada School of Public Service | 515 | 515 |
| Provision of pay administration services | 350 | 315 |
| Financial Management Transformation | 172 | 271 |
| Total administrative costs charged to the Canada Pension Plan accounts | 452,046 | 398,422 |
The notes included in Schedule 1 form an integral part of the Consolidated Statement of Administrative Costs Charged to the Canada Pension Plan Accounts.
Schedule 1 – Notes to the consolidated statement of administrative costs charged to the Canada Pension Plan accounts
Note 1: Introduction
Under the Canada Pension Plan (CPP) legislation, the Minister of Employment and Social Development Canada (ESDC) has the responsibility for the administration of Parts II and III (except for some sections of Part III), that pertains to the general administration of the CPP. The CPP is administered by ESDC, with support from the Income Security and Social Development Branch, the Department of Finance, the Canada Revenue Agency, Public Services and Procurement Canada, the Office of the Superintendent of Financial Institutions, the Royal Canadian Mounted Police, the CPP Investment Board and the Administrative Tribunal Support Service of Canada.
The 2019 to 2020 Memorandum of Understanding (MoU) between the CPP and ESDC was signed on March 31, 2020. This 2019 to 2020 MOU is comprised of 2 parts: the first part (Part A) sets out the framework and basic principles regarding the services to be provided to the CPP. The second part (Part B) specifies the cost allocation methodologies used by ESDC to calculate the charges for its services to the CPP Accounts, in accordance with the costing principles approved by the Treasury Board in January 1988.
The 2018 to 2019 MoU between CPP and ESDC was signed on March 25, 2019. The framework and basic principles for the comparative figures shown in the Consolidated Statement of Administrative Costs under the 2019 header are set out in the 2018 to 2019 MoU.
The Consolidated Statement of Administrative Costs Charged to the CPP Accounts focuses on authority for payments in a fiscal year and is prepared for on a near-cash basis.
Note 2: Canada Pension Plan enhancement
On December 15, 2016, legislation to enact the CPP enhancement received Royal Assent. The CPP now defines 2 separate accounts, the CPP Account (base or existing CPP), and the Additional CPP Account (enhanced CPP), where the financial activities of each account are accounted for separately. For the purpose of the MoU and the Consolidated Statement of Administrative Costs, CPP refers to the whole of the Canada Pension Plan, which includes both the base and enhanced components of the CPP.
The 2019 to 2020 consolidated administrative costs of $452,046,840 (including Contributions to Employee Benefit Plans and Public Service Insurance) charged to the CPP Accounts includes direct and indirect costs of $324,650,867 associated with the CPP account and $127,395,973 associated with the CPP enhancement account. The $127,395,973 is broken down between $9,048,137 of direct costs and $118,347,836 of indirect costs. The CPP enhancement account has significantly increased from last year due to a new fixed percentage allocation of indirect costs in the 2019 to 2020 MoU that corresponds to the relative size of the 2 components of the CPP Accounts.
Based on benefit projections at maturity, a ratio was determined, where 27% of the indirect costs would be paid by the CPP enhancement account, and the remaining 73% by the CPP account. This ratio was determined to accurately reflect the scope of the enhancement relative to the base CPP, the volume and complexity of work done.
Note 3: Comparative information
Comparative figures have been reclassified to conform to the current year's presentation.
Note 4: Contingencies
Due to the nature of its operations, ESDC as a department within the Government of Canada is sometimes subject to grievances filed by its employees. A grievance has been raised that will result in a change of classification, which may impact charges relating to the CPP Accounts for future periods beyond the period ended March 31, 2020. The resolution of this grievance could have a material effect on the expenses included in the Consolidated Statement of Administrative Costs Charged to the CPP Accounts, however the financial impact is not determinable at this time.
Schedule 2 – Administrative costs charged to the Canada Pension Plan accounts by the Deputy Minister’s Office
| Cost description | 2020 cost in thousands of dollars | 2019 cost in thousands of dollars |
|---|---|---|
| Deputy Minister’s Office | 480 | 409 |
| Contributions to Employee Benefit Plans | 65 | 56 |
| Public Service Insurance | 43 | 34 |
| Total | 588 | 499 |
Schedule 3 – Administrative costs charged to the Canada Pension Plan accounts by the Chief Operating Officer
| Cost description | 2020 cost in thousands of dollars | 2019 cost in thousands of dollars |
|---|---|---|
| Chief Operating Officer | 189 | 193 |
| Contributions to Employee Benefit Plans | 25 | 26 |
| Public Service Insurance | 17 | 16 |
| Total | 231 | 235 |
Schedule 4 – Administrative costs charged to the Canada Pension Plan accounts by the Income Security and Social Development Branch
| Cost description | 2020 cost in thousands of dollars | 2019 cost in thousands of dollars |
|---|---|---|
| Income Security and Social Development Branch | 10,481 | 10,464 |
| Contributions to Employee Benefit Plans | 1,409 | 1,398 |
| Public Service Insurance | 929 | 852 |
| Total | 12,819 | 12,714 |
Schedule 5 – Administrative costs charged to the Canada Pension Plan accounts by the Corporate Secretariat
| Cost description | 2020 cost in thousands of dollars | 2019 cost in thousands of dollars |
|---|---|---|
| Corporate Secretariat | 1,630 | 1,529 |
| Contributions to Employee Benefit Plans | 218 | 204 |
| Public Service Insurance | 144 | 124 |
| Total | 1,992 | 1,857 |
Schedule 6 – Administrative costs charged to the Canada Pension Plan accounts by the Public Affairs and Stakeholder Relations Branch
| Cost description | 2020 cost in thousands of dollars | 2019 cost in thousands of dollars |
|---|---|---|
| Public Affairs and Stakeholder Relations Branch | 2,697 | 2,575 |
| Contributions to Employee Benefit Plans | 352 | 329 |
| Public Service Insurance | 232 | 201 |
| Total | 3,281 | 3,105 |
Schedule 7 – Administrative costs charged to the Canada Pension Plan accounts by the Human Resources Services Branch
| Cost description | 2020 cost in thousands of dollars | 2019 cost in thousands of dollars |
|---|---|---|
| Human Resources Services Branch | 13,733 | 11,362 |
| Contributions to Employee Benefit Plans | 1,612 | 1,315 |
| Public Service Insurance | 1,063 | 801 |
| Total | 16,408 | 13,478 |
Schedule 8 – Administrative costs charged to the Canada Pension Plan accounts by the Legal Services Branch
| Cost description | 2020 cost in thousands of dollars | 2019 cost in thousands of dollars |
|---|---|---|
| Legal Services Branch | 3,414 | 3,272 |
| Contributions to Employee Benefit Plans | 161 | 142 |
| Public Service Insurance | 106 | 87 |
| Total | 3,681 | 3,501 |
Schedule 9 – Administrative costs charged to the Canada Pension Plan accounts by the Internal Audit and Enterprise Risk Management Branch
| Cost description | 2020 cost in thousands of dollars | 2019 cost in thousands of dollars |
|---|---|---|
| Internal Audit Services and Enterprise Risk Management Branch | 834 | 714 |
| Contributions to Employee Benefit Plans | 90 | 81 |
| Public Service Insurance | 59 | 49 |
| Total | 983 | 844 |
Schedule 10 – Administrative costs charged to the Canada Pension Plan accounts by the Strategic and Service Policy Branch
| Cost description | 2020 cost in thousands of dollars | 2019 cost in thousands of dollars |
|---|---|---|
| Strategic and Service Policy Branch | 5,650 | 3,118 |
| Contributions to Employee Benefit Plans | 217 | 171 |
| Public Service Insurance | 143 | 104 |
| Total | 6,010 | 3,393 |
Schedule 11 – Administrative costs charged to the Canada Pension Plan accounts by the Transformation and Integrated Service Management Branch and Benefits Delivery Services
| Cost description | 2020 cost in thousands of dollars | 2019 cost in thousands of dollars |
|---|---|---|
| Benefits Delivery Services — National Headquarters (NHQ) | 50,045 | 52,494 |
| Benefits Delivery Services — Regions | 128,190 | 112,559 |
| Call Centers — NHQ | 1,826 | 1,719 |
| Call Centers — Regions | 12,391 | 12,196 |
| Contributions to Employee Benefit Plans | 23,096 | 21,128 |
| Public Service Insurance | 15,232 | 12,874 |
| Total | 230,780 | 212,970 |
Schedule 12 – Administrative costs charged to the Canada Pension Plan accounts by the Citizen Service Branch
| Cost description | 2020 cost in thousands of dollars | 2019 cost in thousands of dollars |
|---|---|---|
| Citizen Service Branch — NHQ | 1,462 | 1,524 |
| Citizen Service Branch — Regions | 15,841 | 16,441 |
| Contributions to Employee Benefit Plans | 2,301 | 2,320 |
| Public Service Insurance | 1,517 | 1,413 |
| Total | 21,121 | 21,698 |
Schedule 13 – Administrative costs charged to the Canada Pension Plan accounts by the Integrity Services Branch
| Cost description | 2020 cost in thousands of dollars | 2019 cost in thousands of dollars |
|---|---|---|
| Integrity Services Branch — NHQ | 2,291 | 2,111 |
| Integrity Services Branch — Regions | 6,789 | 4,910 |
| Contributions to Employee Benefit Plans | 1,089 | 801 |
| Public Service Insurance | 718 | 488 |
| Total | 10,887 | 8,310 |
Schedule 14 – Administrative costs charged to the Canada Pension Plan accounts by the Social Insurance Register
| Cost description | 2020 cost in thousands of dollars | 2019 cost in thousands of dollars |
|---|---|---|
| Social Insurance Register | 5,421 | 5,442 |
| Contributions to Employee Benefit Plans | 550 | 554 |
| Public Service Insurance | 363 | 337 |
| Total administrative costs | 6,334 | 6,333 |
| Less: funding from Treasury Board | (1,660) | (1,667) |
| Total | 4,674 | 4,666 |
Schedule 15 – Administrative costs charged to the Canada Pension Plan accounts by the Innovation, Information and Technology Branch
| Cost description | 2020 cost in thousands of dollars | 2019 cost in thousands of dollars |
|---|---|---|
| Innovation, Information and Technology Branch - regular operating | 52,866 | 35,836 |
| Shared Services Canada | 22,287 | 21,683 |
| Contributions to Employee Benefit Plans | 3,890 | 3,099 |
| Public Service Insurance | 2,565 | 1,889 |
| Total | 81,608 | 62,507 |
Schedule 16 – Administrative costs charged to the Canada Pension Plan accounts by the Chief Financial Officer Branch
| Cost description | 2020 cost in thousands of dollars | 2019 cost in thousands of dollars |
|---|---|---|
| Chief Financial Officer Branch - regular operating | 13,574 | 12,202 |
| National Accommodation Plan | 35,880 | 30,003 |
| Contributions to Employee Benefit Plans | 1,566 | 1,393 |
| Public Service Insurance | 1,033 | 849 |
| Total | 52,053 | 44,447 |
Schedule 17 – Administrative costs charged to the Canada Pension Plan accounts by the Strategic Services Bureau and Regional Assistant Deputy Ministers
| Cost description | 2020 cost in thousands of dollars | 2019 cost in thousands of dollars |
|---|---|---|
| Strategic Services Bureau and Regional Assistant Deputy Ministers | 3,226 | 2,556 |
| Contributions to Employee Benefit Plans | 402 | 336 |
| Public Service Insurance | 265 | 205 |
| Total | 3,893 | 3,097 |
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