Consolidated Financial Statements for the year ended March 31, 2019

Statement of Management Responsibility Including Internal Control Over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying consolidated financial statements for the year ended March 31, 2019, and all information contained in these statements rests with the management of Immigration, Refugees and Citizenship Canada (IRCC). These consolidated 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 consolidated financial statements. Some of the information in the consolidated 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 IRCC’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in IRCC’s Departmental Results Report, is consistent with these consolidated 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 consolidated 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 IRCC 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, 2019 was completed in accordance with the Treasury Board Policy on Financial Management and the results and action plans are summarized in the annex.

The effectiveness and adequacy of IRCC’s system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of IRCC’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 recommends the consolidated financial statements to the Deputy Minister of IRCC.

The consolidated financial statements of IRCC have not been audited.

Ottawa, Canada
September 18, 2019

Immigration, Refugees and Citizenship Canada
Consolidated Statement of Financial Position (unaudited)

As at March 31

(in thousands of dollars)

Contractual obligations (note 12)
Contingent liabilities (note 13)

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

Ottawa, Canada
September 18, 2019

Immigration, Refugees and Citizenship Canada
Consolidated Statement of Operations and Departmental Net Financial Position (unaudited)

For the Year Ended March 31

(in thousands of dollars)

Segmented information (note 15)

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

Immigration, Refugees and Citizenship Canada
Consolidated Statement of Change in Departmental Net Debt (unaudited)

For the Year Ended March 31

(in thousands of dollars)

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

Immigration, Refugees and Citizenship Canada
Consolidated Statement of Cash Flows (unaudited)

For the Year Ended March 31

(in thousands of dollars)

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

Immigration, Refugees and Citizenship Canada
Notes to the Consolidated Financial Statements (unaudited)

For the Year Ended March 31

1. Authority and objectives

Immigration, Refugees and Citizenship Canada (IRCC) was established under the Department of Citizenship and Immigration Act, it is a department named in Schedule I of the Financial Administration Act and reports to Parliament through the Minister of Immigration, Refugees and Citizenship.

IRCC administers the Citizenship Act of 1977 and shares responsibility with the Canada Border Services Agency for the Immigration and Refugee Protection Act (IRPA).

Jurisdiction over immigration is a shared responsibility between the federal and the provincial and territorial governments under section 95 of the Constitution Act, 1867. Under s. 91(25) of the Constitution Act, 1867, the federal government has jurisdiction over naturalization and aliens.

The Department’s priorities are:

• Growth in immigration;
• Economic immigration;
• Settlement Supports;
• Client experience improvements;
• International leadership on refugee and migration issues;
• A more inclusive citizenship study guide; and
• Irregular migration.

These seven priorities are delivered with the following core responsibilities:

Visitors, International Students and Temporary Workers: IRCC facilitates the entry of migrants who wish to come to Canada temporarily, while protecting the health, safety and security of Canadians. The Department works with partners to verify that individuals meet admissibility requirements. IRCC processes visas, electronic travel authorizations, and work and study permits for tourists, business travellers, international students and temporary workers, whose spending and presence in Canada benefit the economy.

Immigrant and Refugee Selection and Integration: IRCC facilitates the admission and economic and social integration of immigrants and refugees who intend to stay in Canada permanently, while protecting the health, safety and security of Canadians. The Department selects economic immigrant applicants to contribute to the Canadian economy, processes family member applicants to reunite families, and processes refugee and protected person applicants to provide a safe haven for those facing persecution. IRCC works with partners to verify that individuals meet admissibility requirements before they enter Canada. In order to support immigrants and refugees in integrating into Canadian society, IRCC offers a variety of settlement support services through a network of service providers.

Citizenship and Passports: IRCC promotes the rights and responsibilities of Canadian citizenship, and issues secure and internationally recognized Canadian citizenship and travel documents so that Canadians can participate fully in civic society and so that travel is facilitated across borders while contributing to international and domestic security.

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

2. Summary of significant accounting policies

These consolidated financial statements are prepared using IRCC'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

IRCC is mainly financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to IRCC 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 Consolidated Statement of Operations and Departmental Net Financial Position and in the Consolidated 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 Consolidated Statement of Operations and Departmental Net Financial Position are the amounts reported in the Consolidated Future-oriented Statement of Operations included in the 2018-2019 Departmental Plan. Planned results are not presented in the “Government funding and transfers” section of the Consolidated Statement of Operations and Departmental Net Financial Position and in the Consolidated Statement of Change in Departmental Net Debt because these amounts were not included in the 2018-2019 Departmental Plan.

b) Consolidation

These consolidated financial statements include the accounts of the Passport Canada Revolving Fund, for which the deputy head (DH) is accountable. The accounts of the Passport Canada Revolving Fund have been consolidated with those of IRCC, and all inter-organizational balances and transactions have been eliminated.

c) Net cash provided by Government

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

d) Amount due from the CRF

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

e) Revenues

The recognition of revenues from immigration service fees, citizenship service fees, rights and privileges is deferred until a final decision has been rendered. Revenues from passport fees are recognized upon request for a passport service, which is upon receipt of payment and verification of the passport application for completeness. Other revenues, including International Experience Canada, are accounted for in the period in which the underlying transaction or event that gave rise to the revenues takes place.

Revenues that are non-respendable are not available to discharge IRCC’s liabilities. While the DH is expected to maintain accounting control, she 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 IRCC’s gross revenues.

Revenues that are respendable are mainly available to discharge the liabilities of the Passport and International Experience Canada programs.

f) Expenses

Expenses are recorded on an accrual basis.

Transfer payments are recorded as an expense 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 consolidated 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.

Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment. For the last three fiscal years, excess hours of vacation and compensatory leave earned were not automatically cashed out on March 31, but only when specifically requested by employees.

Services provided without charge by other government departments for international immigration and citizenship services, accommodation, employer’s contributions to the health and dental insurance plans, legal services, and workers’ compensation are recorded as operating expenses at their estimated costs.

g) Employee future benefits

• i) Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. IRCC's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. IRCC’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.
• ii) 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.

h) Accounts and loans receivable

Accounts and loans receivable are stated at the lower of cost and net recoverable value. A valuation allowance is recorded for accounts and loans receivable where recovery is considered uncertain. Loans that cannot be recovered are written off after receiving Parliamentary approval in accordance with the Debt Write-off Regulations.

i) Non-financial assets

The costs 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 in Note 11. 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 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.

Inventory consists of forms, informatics equipment and passport material held for future program delivery and not intended for resale, as well as forms and passport material held for resale. All passport material is valued at the lower of cost (using the average cost method) or net realizable value. Informatics equipment and forms are valued at cost using the first in, first out method.

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

k) Transactions involving foreign currencies

Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in foreign currencies are translated in Canadian dollars using the rate of exchange in effect at March 31. Gains and losses resulting from foreign currency translation are reported on the Consolidated Statement of Operations and Departmental Net Financial Position according to the activities to which they relate.

l) Measurement uncertainty

The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses reported in the consolidated 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 the deferred revenues, the liability for employee future benefits, the useful life of tangible capital assets, contingent liabilities and the allowance for doubtful accounts. Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the consolidated financial statements in the year they become known.

3. Parliamentary authorities

IRCC receives most of its funding through annual parliamentary authorities. IRCC is also responsible for the management of the Passport Canada Revolving Fund, a continuing non-lapsing authority from Parliament to make payments out of the Consolidated Revenue Fund for working capital, capital acquisitions and temporary financing of accumulated operating deficits. The International Experience Canada program is managed through a budgetary authority. Employee benefits are authorized by a statutory authority. IRCC issues immigration loans through a non-budgetary non-lapsing authority.

Revenues related to immigration and citizenship, including fees, rights and privileges, are deposited to the Consolidated Revenue Fund and are not available for use by the Department. Fees, rights and privileges are collected through the Immigration and Refugee Protection Regulations as well as through the Citizenship Regulations.

Items recognized in the Consolidated Statement of Operations and Departmental Net Financial Position and the Consolidated Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, IRCC 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

(in thousands of dollars)

b) Authorities provided and used

(in thousands of dollars)

4. Accounts payable and accrued liabilities

The following table presents details of IRCC's accounts payable and accrued liabilities:

(in thousands of dollars)

5. Immigrant Investor Program

The Economic Action Plan 2014 Act, no.1 (Bill C-31) terminated applications in the backlog of the federal Immigrant Investor Program (IIP) and Entrepreneur Program for which a selection decision was not made before February 11, 2014. While the program has been terminated, outstanding investments will continue to be returned to investors. The IIP allowed qualified immigrants to gain permanent residence in Canada by making an investment of $800,000 ($400,000 prior to December 1, 2010) in the Canadian economy. The investment is returned to the investor, without interest, five years and two months after initial payment.

After meeting other immigration requirements, applicants to these programs were required to pay their investment to the Receiver General for Canada. IRCC acted as an agent for the approved provincial funds by collecting the investments and distributing them to the participating provinces (British Columbia, Saskatchewan, Manitoba, Newfoundland and Labrador, and Prince Edward Island) on the first day of the second month following receipt from the investor.

The participating provinces were then responsible for investing their allocations to strengthen their economies and to create or continue employment. They still report to IRCC quarterly, and after the five-year holding period, remit the full amount of the investment back to IRCC. Within 30 days of receipt of the full amount from a participating province, IRCC returns the investment to the investor (without interest).

Ontario retracted from the program in 2017-2018, Nova Scotia in 2016-2017 and New Brunswick in 2015-2016, but they are continuing to repay the investments as they become due.

The value of financial transactions processed during the year is as follows:

(in thousands of dollars)

6. Deferred revenue

The deferred revenue account was established to record immigration service fees, citizenship service fees, and rights and privileges derived from the Immigration and Refugees Protection Act and Regulations and the Citizenship Act and Regulations for services that have yet to be rendered by the Department.

The following table presents details of the deferred revenue account:

(in thousands of dollars)

7. Employee future benefits

a) Pension benefits

IRCC'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 two 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 the Department contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to the 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 2018-2019 expense amounts to $57,368,068 ($50,813,114 in 2017-2018). For Group 1 members, the expense represents approximately 1.01 times (1.01 times in 2017-2018) the employee contributions and, for Group 2 members, approximately 1.00 times (1.00 times in 2017-2018) the employee contributions.

The Department’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 IRCC’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, 2019, 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:

(in thousands of dollars)

8. Accounts receivable and advances

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

(in thousands of dollars)

9. Loans receivable

In accordance with the IRPA, IRCC can issue immigration loans up to a maximum of $126,600,000. Since February 28, 1995, all immigration loans bore interest at a rate determined by the Minister of Finance at the beginning of each calendar year. Regulations provided for a period of up to six years for the repayment of the loans and the interest rate on outstanding interest-bearing loans varied from 0.76% to 9.06%. Since February 21, 2018, loans are non-interest bearing and are repayable over one to eight years with a possible deferment of two years. The closing balance of the immigration loans only includes the outstanding principal balance. An allowance for uncollectibility is recorded for loans when recovery is considered uncertain.

The following table presents details of IRCC’s immigration loans balances:

(in thousands of dollars)

10. Inventory

The following table presents details of the inventory, measured at cost or net realizable value:

(in thousands of dollars)

The cost of consumed inventory recognized as an expense in the Consolidated Statement of Operations and Departmental Net Financial Position is $37,592,463 in 2018-2019 ($59,920,637 in 2017-2018).

11. 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 asset class in the year they are put into service and are not amortized until then.

Cost

(in thousands of dollars)

Accumulated amortization

(in thousands of dollars)

Net book value

(in thousands of dollars)

12. Contractual obligations

The nature of IRCC’s activities may result in some large multi-year contracts and obligations whereby IRCC will be obligated to make future payments in order to carry out its transfer payment programs or when the services/goods are received.

Significant contractual obligations that can be reasonably estimated are summarized as follows:

(in thousands of dollars)

13. Contingent liabilities

Claims have been made against IRCC 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, most of their outcomes are not determinable. IRCC records an allowance for claims and litigation where it is likely that there will be a future payment and a reasonable estimate of the loss can be made. No such allowance has been recorded as at March 31, 2019 (nil as at March 31, 2018). Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amount to $60,500,000 as at March 31, 2019 ($60,500,000 as at March 31, 2018).

14. Related party transactions

IRCC 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.

IRCC 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, IRCC received services without charge from certain common service organizations, related to accommodation, legal services, the employer’s contributions to the health and dental insurance plans, and workers' compensation coverage. Additionally, Global Affairs Canada (GAC) provides international immigration and citizenship services at missions abroad. These services provided without charge have been recorded at the carrying value in IRCC’s Consolidated Statement of Operations and Departmental Net Financial Position as follows:

(in thousands of dollars)

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, audit services provided by the Office of the Auditor General and information technology infrastructure services provided by Shared Services Canada are not included in IRCC’s Consolidated Statement of Operations and Departmental Net Financial Position.

b) Other transactions with other government departments and agencies

(in thousands of dollars)

Expenses disclosed in (b) exclude common services provided without charge, which are already disclosed in (a).

15. Segmented information

Presentation by segment is based on IRCC’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 expense and by major type of revenue. The segment results for the period are as follows:

(in thousands of dollars)

16. Adjustments to prior year’s results

In 2018-2019, IRCC conducted a review of the accounting related to its tangible capital assets. As a result of the review, IRCC identified tangible capital assets that were not properly recorded in accordance with the applicable accounting policy. In particular, some assets under construction were transferred to the associated asset class before they were put into service. This change has been applied retroactively and comparative information for 2017-2018 has been restated. The effect of this adjustment is presented in the table below:

(in thousands of dollars)

17. Comparative information

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

Immigration, Refugees and Citizenship Canada
Annex to the Statement of Management Responsibility Including Internal Control over Financial Reporting (unaudited)

Fiscal year 2018-2019

1. Introduction

This document provides summary information on the measures taken by Immigration, Refugees and Citizenship Canada (“IRCC” or “the Department”) 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 IRCC’s authority, mandate, and program activities can be found in its latest Departmental Results Report and in its most recent Departmental Plan.

2. Departmental System of Internal Control over Financial Reporting

2.1 Internal Control Management

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

• organizational accountability structures as they relate to internal financial control management to support sound financial management and reporting, including roles and responsibilities for senior managers in their areas of responsibility for control management;
• values and ethics, including a departmental code of conduct and a values and ethics champions network;
• on-going communication and training on statutory requirements, policies, and procedures for sound financial management and control; and,
• at least semi-annual monitoring and regular updates on internal financial control management as well as the reporting of annual assessment results and related action plans to the Deputy Head, departmental senior management and the Departmental Audit Committee.

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

IRCC’s senior management recognizes the importance of setting the tone from the top to help ensure that staff at all levels understand their roles in maintaining effective systems of ICFR and are equipped to exercise these responsibilities effectively. The Department’s focus is on ensuring that risks are managed well through a responsive and risk based control environment that enables continuous improvement and innovation.

2.2 Service Arrangements Relevant to Financial Statements

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

Common arrangements:

• Public Services and Procurement Canada (PSPC) centrally administers the payments of salaries and the procurement of goods and services, as per the Department’s Delegation of Spending and Financial Authority Instrument, and also provides accommodation services
• Treasury Board Secretariat provides the Department with information used to calculate various accruals and allowances, such as the accrued severance liability;
• The Department of Justice provides legal services to IRCC; and,
• Shared Services Canada (SSC) provides IT infrastructure services to the Department in the areas of data centre and network services. The scope and responsibilities are addressed in the interdepartmental arrangement between SSC and IRCC

Specific arrangements:

• The Department of Global Affairs Canada (GAC) provides common administrative services and support for the Immigration Program outside Canada, under a memorandum of understanding with IRCC. Common administrative services include accommodations, revenues and payments processing, accounting and telecommunications. Program support is offered by both Canada based officers and locally engaged staff in missions abroad. GAC also prepares periodic financial reports for IRCC staff on the revenues collected and the expenses incurred directly in the field;
• The Department of Employment and Social Development Canada (ESDC) provides passport processing and delivery services to IRCC. These services are governed by a service level agreement with IRCC which ensures optimal and sound financial management of the Passport Program and the recovery of costs associated with Passport Operations and Service Delivery, Receiving Agent Services, Modernization costs, Accommodations and Internal Services provided by Service Canada;
• VFS Global and TT Visa Services Ltd both manage visa application centres that deliver visa application intake services and the collection of related application fees abroad. As a result, reliance is placed on the control procedures of these external service providers; and,
• Medavie Blue Cross provides claims administration for the Interim Federal Health Program (IFHP). The IFHP reimburses service providers for emergency and essential health care services in cases where eligible clients, such as refugees, do not qualify for provincial, territorial or private health coverage. As a result, reliance is placed on the control procedures of Medavie Blue Cross.

3. Departmental Assessment Results during Fiscal Year 2018-2019

During 2018-19, the ongoing monitoring of controls was implemented according to plan. The key findings and significant adjustments required from the current year’s assessment activities are summarized below.

New or significantly amended key controls

In the current year, IRCC continued to expand its network of on-line application and revenue collection services. The Department enhanced and further digitized several other business processes, such as grants and contributions, immigrant loans, and accounts payable and payments. IRCC has also continued to adjust its salary business process following implementation, in recent years, of the Treasury Board Pay Transformation Initiative and the related Phoenix Pay System.

The design of any new or amended key controls within the revenues, grants and contributions, salaries, immigrant loans and accounts payable and payments business processes was thoroughly analyzed prior to their implementation. Operating effectiveness of these key controls was either assessed in 2018-19 or will be assessed during the next fiscal year, according to IRCC`s ongoing monitoring program. There were no significantly amended key controls in all other existing business processes that required a reassessment in 2018-19.

Ongoing monitoring program

As part of its rotational ongoing monitoring program, the Department completed its reassessment of the financial controls embedded within the following business processes: Passport Program costing, financial closing and reporting, transfer payments to service provider organizations (at NHQ and a Canadian regional office), transfer payments to other levels of government, salaries and employee benefits, non-salary operating expenses at NHQ (for three significant branches), Interim Federal Health Program expenses, services provided without charge by other departments, immigrant loans, accounts payable, accrued liabilities and payments, and all significant business processes at a Canadian case processing location and an international mission. For the most part, the key controls that were tested performed as intended, with remediation required in the following areas:

• performance of review of certain documents, transactions and reconciliations;
• existence of documentary evidence of the application of certain key controls, such as significant reviews, reconciliations and approvals; and,
• documentation of significant financial procedures and controls.

Management action plans addressing the remediation requirements were developed by the business process owners and several have already been implemented. The remaining action plans will be operationalized within a reasonable timeframe.

Furthermore, in 2018-19, the Department substantially advanced its reassessment of the financial controls embedded within the following business processes: revenues at NHQ, transfer payments to individuals – Resettlement Assistance Program, and all significant business processes at a Canadian case processing location. This reassessment work will be completed in 2019-20, and its results will be disclosed in next year’s annex.

Due to other management priorities, the planned reassessment of the financial controls embedded within the capital assets business process was deferred to the 2019-20 fiscal year.

4. Departmental Action Plan

4.1 Progress during Fiscal Year 2018-19

IRCC continued to conduct its ongoing monitoring according to the previous fiscal year’s rotational plan as shown in the following table.

In 2018-19, IRCC assessed the design of any new or amended key controls while expanding its on-line revenue collection services, enhancing and further digitizing its grants and contributions, immigrant loans, and accounts payable and payments processes, and adjusting its salary business process. It also followed-up on all financial controls that required enhancements as a result of prior year monitoring, and determined that these controls were being duly strengthened within appropriate timelines.

4.2 Action Plan for the Next Fiscal Year and Subsequent Years

IRCC’s rotational ongoing monitoring plan over the next three years, subject to an annual revalidation of the high risk processes and controls and related adjustments to the plan as required, is shown in the following table:

In addition to the ongoing monitoring rotational plan, IRCC plans to continue addressing any outstanding remediation resulting from its reassessments of the existing financial controls.