Employment and Social Development Canada Consolidated Future-Oriented Statement of Operations (Unaudited) for the year ending March 31, 2025

Consolidated Future-Oriented Statement of Operations (Unaudited) for the year ending March 31, 2025

Table 1: Consolidated Future-Oriented Statement of Operations (Unaudited) for the year ending March 31, 2025 (in thousands of dollars)

Detail	Forecast Results 2024	Planned Results 2025
Expenses
Pensions and Benefits	77,449,862	82,928,956
Learning, Skills Development and Employment	35,042,114	34,266,133
Social Development	6,887,103	7,937,416
Internal Services	1,379,046	1,233,308
Information Delivery and Services for Other Departments	534,409	604,660
Working Conditions and Workplace Relations	191,658	186,312
Expenses incurred on behalf of Government	21,361	15,214
Total expenses	121,505,553	127,171,999
Revenues
Employment Insurance	29,470,028	30,725,966
Recovery of CPP administration costs	635,299	566,964
Recovery of other government Department service delivery costs	514,258	575,966
User fees	160,842	177,051
Other	23,631	20,805
Revenues earned on behalf of Government	(319,727)	(329,993)
Total revenues	30,484,331	31,736,759
Net cost of operations before government funding and transfers	91,021,222	95,435,240

Table note:

• The accompanying notes form an integral part of the Consolidated Future-Oriented Statement of Operations.

Notes to the Consolidated Future-Oriented Statement of Operations (Unaudited)

1. Methodology and significant assumptions

The Consolidated Future-Oriented Statement of Operations has been prepared on the basis of government priorities and departmental plans as described in the Departmental Plan.

The information in the forecast results for the year 2024 is based on actual results as at November 30, 2023 and on forecasts for the remainder of the year. Forecasts have been made for the planned results for the 2025 year.

The main assumptions underlying the forecasts are as follows:

• ESDC’s activities will remain substantially the same as in the previous year.
• Pension and Benefits, Social Development, Learning, Skills Development and Employment statutory expenses and revenues are based on economic and fiscal projections, as well as the labour market projections in effect at the time of preparation of the Consolidated Future-Oriented Statement of Operations.
• Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.
• Allowances for uncollectability are based on historical experience. The general historical pattern is expected to continue.

These assumptions are adopted as at January 5, 2024.

2. Variations and changes to the forecast consolidated financial information

Although every attempt has been made to forecast final results for the remainder of 2024 and for 2025, actual results achieved for both years are likely to differ from the forecast information presented, and this variation could be material.

In preparing this Consolidated Future-Oriented Statement of Operations, ESDC has made estimates and assumptions about the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, and are continually evaluated.

Factors that could lead to material differences between the Consolidated Future-Oriented Statement of Operations and the historical statement of operations include:

• Other changes to the operating budget, such as new initiatives or technical adjustments later in the fiscal year;
• Economic conditions, which may affect both the amount of revenue earned and the collectability of loan receivables;
• The implementation of new collective agreements; and
• The timing and amounts of acquisitions and disposals of capital assets may affect gains/losses and amortization expense.

After the Departmental Plan is tabled in Parliament, ESDC will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates or budget announcements. Variances will be explained in the Departmental Results Report.

3. Summary of significant accounting policies

The Consolidated Future-Oriented Statement of Operations has been prepared using ESDC’s accounting policies in effect for fiscal year 2024, 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) Consolidation

This Consolidated Future-Oriented Statement of Operations includes the transactions of the Employment Insurance Operating (EIO) Account, a consolidated specified purpose account which includes revenues credited and expenses charged under the Employment Insurance Act and for which the Deputy Minister as Chairperson of the Canada Employment Insurance Commission is accountable. The accounts of the EIO Account have been consolidated with those of ESDC, and all inter-organizational balances and transactions have been eliminated.

The Canada Pension Plan (CPP) is excluded from ESDC's reporting entity because changes to the CPP require the agreement of two thirds of the provinces and therefore, the CPP is not controlled by ESDC.

(b) Expenses

Expenses are recorded on an accrual basis of accounting:

• Expenses for ESDC’s operations are recorded when goods are received or services are rendered, including services provided without charges for employer contributions to the health and dental insurance plans and legal services which are recorded as expenses at their estimated cost. Vacation pay and compensatory leave, as well as severance benefits, are accrued, and expenses are recorded as the benefits are earned by employees under their terms of employment.
• Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.
• Expenses also include provisions to reflect changes in the value of assets, including provisions for bad debt on accounts receivable, provision for valuation on Canada Student Loans or liabilities, including contingent liabilities, to the extent the future event is likely to occur and a reasonable estimate can be made.
• Expenses also include amortization of tangible capital assets which are capitalized at their acquisition cost. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset.
• The expenses incurred on behalf of Government are linked to the assets held on behalf of Government. As a result, these expenses are considered to be incurred on behalf of the Government of Canada and are therefore presented as a reduction of the department's gross expenses.

(c) Revenues

Revenues are recorded on an accrual basis of accounting:

• Employment Insurance (EI) premiums are recognized as revenue in the period in which they are earned, when workers, through their employment, generate these premiums and the related employer’s contribution. Premiums earned in the period are measured from amounts assessed by the Canada Revenue Agency (CRA) and from estimates of amounts not yet assessed. Premium revenue also includes adjustments between actual and estimated premiums of previous years.
• Recoveries of CPP administration costs and other government department service delivery costs are recognized as the performance obligations are met.
• Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place and future economic benefits are expected to be received.
• Revenues that are non-respendable are not available to discharge ESDC's liabilities. While the Deputy Minister 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 the department's gross revenues.

4. Parliamentary authorities

ESDC receives most of its funding through annual parliamentary authorities. Items recognized in the Consolidated Future-Oriented Statement of Operations in 1 year may be funded through parliamentary authorities in prior, current or future years. Furthermore, as a consolidated specified purpose account, the EIO Account expenses and revenues recognized in ESDC’s Consolidated Future-Oriented Statement of Operations do not affect parliamentary authorities. Accordingly, ESDC has different net cost of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

Table 2: (a) Reconciliation of net cost of operations to requested authorities (in thousands of dollars)

Detail	Forecast Results 2024	Planned Results 2025
Net cost of operations before government funding and transfers	91,021,222	95,435,240
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets	(63,840)	(67,308)
Services provided without charge by other government departments	(93,984)	(83,637)
Decrease (increase) in vacation pay	(2,784)	11,326
Decrease in employee future benefits	4,673	6,131
Bad debt expense (excluding EI)	357,874	374,193
Refund of program expenditures	(70,040)	(93,075)
Decrease in accounts payable and accrued liabilities not charged to authorities	48,424	28,441
Revenue not available for respending	301,426	265,665
Revenue for services provided to other government Departments	514,258	575,966
Allowance for the Repayment Assistance Plan for Canada Student Loans	(422,366)	(442,166)
Net EIO Account transactions	2,922,175	2,945,780
Other adjustments	987	3,338
Total items affecting net cost of operations but not affecting authorities	3,496,803	3,524,654
Adjustments for items not affecting net cost of operations but affecting authorities:
Canada Student and Apprentice Loan forgiveness	(55,779)	(65,472)
Acquisition of tangible capital assets	(151,221)	(162,202)
Total items not affecting net cost of operations but affecting authorities	(207,000)	(227,674)
Requested authorities forecasted to be used	94,311,025	98,732,220

Table 3: (b) Authorities requested (in thousands of dollars):

Detail	Forecast Results 2024	Planned Results 2025
Authorities requested:
Vote 1 – Operating expenditures	1,625,608	1,296,716
Vote 5 – Grants and contributions	10,121,867	10,185,640
Debt write-offs	215,519	0
Statutory amounts	82,348,031	87,249,864
Requested authorities forecasted to be used	94,311,025	98,732,220