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Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2013, and all information contained in these statements rests with the management of the Canada Border Services Agency. These financial statements have been prepared by management using the Government’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 Canada Border Services Agency’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Canada Border Services Agency’s Departmental Performance 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 the Agency 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 on-going 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, 2013 was completed in accordance with the Treasury Board Policy on Internal Control and the results and action plans are summarized in the annex.
The effectiveness and adequacy of the Canada Border Services Agency’s system of internal controls is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of the Agency’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 financial statements to the President of the Canada Border Services Agency.
The financial statements of the Canada Border Services Agency have not been audited.
ddd
2013 | 2012 Restated (note 14) |
|
---|---|---|
Liabilities | ||
Accounts payable and accrued liabilities (note 4) | $136,135 | $105,737 |
Vacation pay and compensatory leave | 56,521 | 56,148 |
Deposit accounts (note 5) | 29,999 | 30,252 |
Employee future benefits (note 6) | 231,277 | 228,568 |
Total net liabilities | 453,932 | 420,705 |
Financial assets | ||
Due from Consolidated Revenue Fund | $123,813 | $92,955 |
Accounts receivable and advances (note 7) | 13,939 | 10,656 |
Total gross financial assets | 137,752 | 103,611 |
Financial assets held on behalf of Government | ||
Accounts receivable and advances (note 7) | (2,643) | (2,635) |
Total financial assets held on behalf of Government | (2,643) | (2,635) |
Total net financial assets | 135,109 | 100,976 |
Departmental net debt | 318,823 | 319,729 |
Non-financial assets | ||
Prepaid expenses | $214 | $134 |
Inventory (note 8) | 11,480 | 13,071 |
Tangible capital assets (note 9) | 642,732 | 575,853 |
Total non-financial assets | 654,426 | 589,058 |
Departmental net financial position | $335,603 | $269,329 |
Contingent liabilities (note 10)
Contractual obligations (note 11)
2013 Planned Results |
2013 | 2012 Restated (note 14) |
|
---|---|---|---|
Expenses | |||
Internal Services | $708,077 | $710,204 | $752,858 |
Admissibility Determination | 727,251 | 649,312 | 652,150 |
Immigration Enforcement | 176,357 | 161,332 | 162,013 |
Risk Assessment | 169,694 | 130,119 | 127,936 |
Revenue and Trade Management | 76,650 | 90,635 | 92,563 |
Secure and Trusted Partnerships | 50,382 | 41,623 | 45,535 |
Criminal Investigations | 26,021 | 29,259 | 30,277 |
Recourse | 11,225 | 12,300 | 14,158 |
Total expenses | 1,945,657 | 1,824,784 | 1,877,490 |
Revenues | |||
Sales of goods and services | 14,856 | 16,616 | 14,017 |
Forfeitures of cash bonds | 1,343 | 961 | 1,084 |
Miscellaneous | 2,427 | 638 | 571 |
Interest, penalties and fines | 166 | 166 | 270 |
Revenues earned on behalf of Government | 0 | (3,485) | (3,943) |
Total revenues | 18,792 | 14,896 | 11,999 |
Net cost of operations before government funding and transfers | $1,926,865 | $1,809,888 | $1,865,491 |
Government funding and transfers | |||
Net cash provided by Government | 1,675,339 | 1,822,134 | |
Services provided without charge by other government departments (note 12a) | 163,147 | 160,823 | |
Change in due from Consolidated Revenue Fund | 30,858 | 12,924 | |
Transfer of assets and liabilities with other government departments (note 9) | 6,818 | 584 | |
Net revenue from operations after government funding and transfers | (66,274) | (130,974) | |
Departmental net financial position - Beginning of year | 269,329 | 138,355 | |
Departmental net financial position - End of year | $335,603 | $269,329 |
Segmented Information (Note 13)
2013 | 2012 Restated (note 14) |
|
---|---|---|
Net revenue from operations after government funding and transfers | $(66,274) | $(130,974) |
Changes due to tangible capital assets | ||
Acquisition of tangible capital assets | 124,384 | 171,368 |
Amortization of tangible capital assets | (64,129) | (43,261) |
Proceeds from disposal of tangible capital assets | (371) | (213) |
Net (loss) or gain on disposal of tangible capital assets including adjustments | 177 | 981 |
Transfers from (to) other government departments | 6,818 | (194) |
Total change due to tangible capital assets | 66,879 | 128,681 |
Change due to inventories | (1,591) | (900) |
Change due to prepaid expenses | 80 | 21 |
Net (decrease) increase in departmental net debt | (906) | (3,172) |
Departmental net debt - Beginning of year | 319,729 | 322,901 |
Departmental net debt - End of year | $318,823 | $319,729 |
2013 | 2012 Restated (note 14) |
|
---|---|---|
Operating activities | ||
Net cost of operations before government funding and transfers | $1,809,888 | $1,865,491 |
Non-cash items | ||
Services provided without charge by other government departments | (163,147) | (160,823) |
Amortization of tangible capital assets | (64,129) | (43,261) |
Gain on disposal and write-down of tangible capital assets including adjustments | 177 | 981 |
Transfer of liabilities to other government department | 0 | (778) |
Other | 0 | (1,435) |
Variations in Statement of Financial Position | ||
Increase (decrease) in accounts receivable and advances | 3,275 | 696 |
Increase in prepaid expenses | 80 | 21 |
(Decrease) increase in inventory | (1,591) | (900) |
(Increase) decrease in accounts payable and adcrued liabilities | (30,398) | (16,453) |
(Increase) in vacation pay and compensatory leave | (373) | (9) |
Decrease in deposit accounts | 253 | 353 |
(Increase) decrease in employee future benefits | (2,709) | 7,096 |
Cash used in operating activities | 1,551,326 | 1,650,979 |
Capital investment activities | ||
Acquisitions of tangible capital assets | 124,384 | 171,368 |
Proceeds from disposal of tangible capital assets | (371) | (213) |
Cash used in capital investment activities | 124,013 | 171,155 |
Net Cash provided by Government of Canada | $1,675,339 | $1,822,134 |
The Canada Border Services Agency (Agency Activities) is responsible for providing integrated border services that support national security and public safety priorities and facilitate the free flow of persons and goods. The Canada Border Services Agency Act received royal assent on November 3, 2005. The Agency is a departmental corporation named in Schedule II of the Financial Administration Act and reports to Parliament through the Minister of Public Safety. The Agency is funded through authorities from the Government of Canada.
For financial reporting purposes, the activities of the Agency have been divided into two sets of financial statements: Agency Activities and Administered Activities. The financial statements - Agency Activities include those operational revenues and expenses which are managed by the Agency and utilized in running the organization. The financial statements - Administered Activities include those net revenues that are administered for someone other than the Agency, such as the federal government, a province or territory, or another group or organization. The purpose of the distinction between Agency and Administered activities is to facilitate, among other things, the assessment of the administrative efficiency of the Agency in achieving its mandate.
The Agency is responsible for the administration and enforcement of the following acts or portions of these acts: the Customs Act, the Customs Tariff, the Excise Act, the Excise Tax Act, the Citizenship Act, the Immigration and Refugee Protection Act, as well as other acts on behalf of other federal departments and provinces.
In delivering efficient and effective border management that contributes to the security and prosperity of Canada, the Agency operates under the following program activities:
These financial statements have been prepared using the Government’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:
The Agency is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Agency 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 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 Statement of Operations and Departmental Net Financial Position are the amounts reported in the future-oriented financial statements included in the 2012-13 Report on Plans and Priorities.
The Agency operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Agency is deposited to the CRF, and all cash disbursements made by the Agency 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.
The amounts due from or to the Consolidated Revenue Fund 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 Agency is entitled to draw from the CRF without further appropriations to discharge its liabilities.
Non-tax revenues reported in this statement include revenues collected on behalf of the Government of Canada under the Immigration and Refugee Protection Act, the Agriculture and Agri-Food Administrative Monetary Penalties Act and other similar legislation.
Non-tax revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenue.
Revenues that are non-respendable are not available to discharge the Agency’s liabilities. While the President of the Agency 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 entity’s gross revenues.
All expenses are recorded on an accrual basis:
Accounts receivable and advances are stated at the lower of cost and net recoverable value; a valuation allowance is recorded for receivables where recovery is considered uncertain based on the specific identification and on aging of receivables.
Inventory consists of forms, publications and uniforms held for future program delivery and not intended for resale. Inventory is valued at cost using the weighted average cost method. If there are no longer any service potential, inventory is valued at the lower of cost or net realizable value.
All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. The Agency does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections.
Amortization of tangible capital assets, except land, is done on a straight-line basis over the estimated useful life of the asset as follows:
Asset class | Amortization period |
---|---|
Buildings | 30 years |
Works and infrastructure | 40 years |
Machinery and equipment | 10 years |
Information technology equipment | 5 years |
In-house-developed software | 7 years |
Purchased software | 3 years |
Vehicles | 5 years to 10 years |
Leasehold improvements | Lesser of the remaining term of lease or useful life of the improvement. |
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.
(i) Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer plan administered by the Government of Canada. The Agency's contributions to the Plan are charged to expenses in the year incurred and represent the Agency’s total obligation to the Plan. The Agency’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: Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.
Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense 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.
Environmental liabilities reflect the estimated costs related to the management and remediation of environmentally contaminated sites. Based on management’s best estimates, a liability is accrued and an expense recorded when the contamination occurs or when the Agency becomes aware of the contamination and is obligated, or is likely to be obligated to incur remedial costs. If the likelihood of the Agency’s obligation to incur these costs is either not determinable, or if an amount cannot be reasonably estimated, the costs are disclosed as contingent liabilities in the notes to the financial statements.
The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable.
The most significant items where estimates are used are contingent liabilities, environmental liabilities, the liability for employee future benefits, the allowances for doubtful accounts 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.
The Agency 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 parliamentary authorities in prior, current or future years. Accordingly, the Agency 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
2013 | 2012 Restated |
|
---|---|---|
Net revenue from operations after government funding and transfers | $1,809,888 | $1,865,491 |
Adjustments for items affecting net cost of operations but not affecting authorities | ||
Services provided without charge by other government departments | (163,147) | (160,823) |
Amortization of tangible capital assets | (64,129) | (43,261) |
Decrease (increase) in employee future benefits | (2,709) | 7,096 |
(Increase) in vacation pay and compensatory leave | (373) | (9) |
Gain on disposal and write-down of tangible capital assets | 177 | 981 |
Recovery of bad debt (bad debt expense) | 93 | (760) |
Decrease (increase) in environmental liabilities | 125 | (135) |
Refund of prior years' expenditures | 2,056 | 684 |
Decrease (increase) in contingent liabilities | 2,350 | (3,530) |
Decrease (increase) in other | 523 | (713) |
Total items affecting net cost of operations but not affecting authorities | (225,034) | (200,470) |
Adjustments for items not affecting net cost of operations but affecting authorities | ||
Acquisition of tangible capital assets | 124,384 | 171,368 |
Proceeds from disposal of tangible capital assets | (371) | (213) |
(Decrease) increase in inventory | (1,591) | (900) |
Increase in prepaid expenses | 80 | 21 |
Total items not affecting net cost of operations but affecting authorities | 122,502 | 170,276 |
Current year authorities used | $1,707,356 | $1,835,297 |
(b) Authorities provided and used
2013 |
2012 |
|
---|---|---|
Authorities provided | ||
Vote 10 – Operating expenditures | $1,702,510 | $1,677,761 |
Vote 15 – Capital expenditures | 197,232 | 239,192 |
Statutory amounts | 187,945 | 191,565 |
Total Authorities provided | 2,087,687 | 2,108,518 |
Less | ||
Authorities available for future years | (379,419) | (272,828) |
Lapsed: - Vote 10 - Operating expenditure | (912) | (393) |
(380,331) | (273,221) | |
Current year authorities used | $1,707,356 | $1,835,297 |
The following table presents details of the Agency’s accounts payable and accrued liabilities:
2013 |
2012 |
|
---|---|---|
Accounts payable - External parties | $42,329 | $35,319 |
Accounts payable - Other government departments and agencies | 32,425 | 25,792 |
Total accounts payable | 74,754 | 61,111 |
Accrued liabilities | 61,381 | 44,626 |
Total accounts payable and accrued liabilties | $136,135 | $105,737 |
The deposit accounts were established to record cash and securities required to guarantee payment of customs duties and excise taxes on imported goods pursuant to the Customs Act and the Excise Tax Act and to guarantee the compliance of transporters and individuals with the provisions of the Immigration and Refugee Protection Act.
The following table presents details on the deposit accounts:
Opening Balance |
Receipts |
Payments |
Closing Balance |
|
---|---|---|---|---|
Guarantee deposit accounts | $24,780 | $7,294 | $(7,751) | $24,323 |
Other deposit accounts | 5,472 | 204 | 0 | 5,676 |
Total deposit accounts | $30,252 | $7,498 | $(7,751) | $29,999 |
The Agency's employees participate in the Public Service Pension 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 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Quebec pension plan benefits and they are indexed to inflation.
Both the employees and the Agency contribute to the cost of the Plan. The 2012-2013 expense amounts to $133,626,000 ($137,438,000 in 2011-2012), which represents approximately 1.7 times (1.8 in 2011-2012) the contributions by employees.
The Agency'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.
The Agency provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future authorities.
As part of collective agreement negotiations with certain employee groups, and changes to conditions of employment for executives and certain non-represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.
Information about the severance benefits, measured as at March 31, is as follows:
2013 |
2012 |
|
---|---|---|
Accrued benefit obligation, beginning of year | $228,568 | $235,664 |
Transferred to other government department, effective Nov 15, 2011 | 0 | (577) |
Subtotal | 228,568 | 235,087 |
Expense for the year | 30,228 | 40,846 |
Benefits paid during the year | (27,519) | (47,365) |
Accrued benefit obligation, end of year | $231,277 | $228,568 |
The following table presents details of the accounts receivable and advances:
2013 |
2012 |
|
---|---|---|
Receivables - other government departments and agencies | $10,515 | $8,335 |
Receivables - external parties | 4,364 | 3,663 |
Employee advances and other receivables | 1,793 | 1,533 |
Deposits in transit to the Receiver General | (69) | 112 |
16,603 | 13,643 | |
Allowance for doubtful accounts on external receivables | (2,664) | (2,987) |
Gross accounts receivable | 13,939 | 10,656 |
Accounts receivable held on behalf of Government | (2,643) | (2,635) |
Net accounts receivable | $11,296 | $8,021 |
The following table presents details of the inventory, measured at cost using the weighted average cost method.
2013 |
2012 |
|
---|---|---|
Uniforms | $11,061 | $12,502 |
Forms and publications | 419 | 569 |
Total | $11,480 | $13,071 |
The cost of consumed inventory recognized as an expense in the Statement of Operations and Departmental Net Financial Position is $ 5,764,400 ($ 5,275,000 in 2011-2012).
The following table presents details of the tangible capital assets:
Cost | Accumulated amortization | 2013 | 2012 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Capital asset class |
Opening Balance | Acqui- sitions | Adjust- ments (1) |
Dispo-sals and write-offs | Closing balance |
Opening Balance | Amorti-zation |
Adjust- ments(1) |
Dispo-sals and write-offs | Closing balance |
Net book value |
Net book value |
Land | 4,580 | 0 | 70 | 0 | 4,650 | 0 | 0 | 0 | 0 | 0 | 4,650 | 4,580 |
Buildings | 200,012 | 457 | 60,560 | 264 | 260,765 | 74,810 | 8,716 | 24,188 | 167 | 107,547 | 153,218 | 125,202 |
Leasehold Improve-ments | 27,860 | 3,352 | 2,724 | 884 | 33,052 | 16,801 | 4,651 | 0 | 871 | 20,581 | 12,471 | 11,059 |
Works and infra-structure |
1,297 | 0 | 216 | 0 | 1,513 | 444 | 33 | 65 | 0 | 542 | 971 | 853 |
Machinery and equipment |
85,954 | 8,083 | 96 | 691 | 93,442 | 55,791 | 7,341 | 58 | 679 | 62,511 | 30,931 | 30,163 |
Information technology equipment, in-house-developed and purchased software |
174,148 | 2,507 | 103,666 | 182 | 280,139 | 141,809 | 39,985 | 164 | 182 | 181,776 | 98,363 | 32,339 |
Vehicles | 32,121 | 4,419 | 185 | 3,957 | 32,768 | 23,012 | 3,403 | 100 | 3,899 | 22,616 | 10,152 | 9,109 |
Assets under construc-tion |
362,548 | 105,566 | (135,685) | 453 | 331,976 | 0 | 0 | 0 | 0 | 0 | 331,976 | 362,548 |
Total | 888,520 | 124,384 | 31,832 | 6,431 | 1,038,305 | 312,667 | 64,129 | 24,575 | 5,798 | 395,573 | 642,732 | 575,853 |
1) Adjustments include assets under construction of $ 135,685 that were transferred to the other categories upon completion of the assets.
During the year, the Agency exchanged assets with a net book value increase (decrease) of $ 6,818 as follows:
Public Works and Government Services Canada | 6,958 |
---|---|
Transport Canada | (204) |
Environment Canada | 34 |
Canadian Nuclear Safety Commission | 26 |
Western Economic Development Canada | 4 |
Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown. They are grouped into two categories as follows:
Liabilities are accrued to record the estimated costs related to the management and remediation of contaminated sites where the Agency is obligated or likely to be obligated to incur such costs. The Agency identified three sites (four sites in 2011-2012) where such action is possible and for which a liability of $2,296,000 ($2,421,000 in 2011-2012) has been recorded in accrued liabilities. No additional costs are known or expected. The Agency’s ongoing efforts to assess contaminated sites may result in additional environmental liabilities related to newly identified sites, or changes in the assessments or intended use of existing sites. These liabilities will be accrued in the year in which they become likely and are reasonably estimable.
Claims have been made against the Agency in the normal course of operations. These claims include items with pleading amounts and other for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. The Agency has recorded an allowance for claims and litigations where it is likely that there will be future payment and a reasonable estimate of the loss can be made of $1,210,000 ($3,560,000 in 2011-2012). Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management, amount to approximately $9,865,000 ($1,015,000 in 2011-2012 restated) at March 31, 2013.
The nature of the Agency’s activities can result in some large multi-year contracts and obligations whereby the Agency will be obligated to make future payments in order to carry out its programs or when services and goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:
2014 | 2015 | 2016 | 2017 | 2018 and there- after |
Total | |
---|---|---|---|---|---|---|
Operating contracts | $65,301 | $10,595 | $1,112 | $918 | $41 | $77,967 |
The Agency is related as a result of common ownership to all Government departments, agencies and Crown corporations of Canada. The Agency enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the Agency received common services which were obtained without charge from other Government departments as disclosed below:
During the year, the Agency received without charge from certain common service organizations, related to accommodation, legal services, the employer’s contribution to the health and dental insurance plans and workers’ compensation coverage. These services without charge have been recorded in the Agency’s Statement of Operations and Departmental Net Financial Position as follows:
2013 |
2012 |
|
---|---|---|
Accommodation | $65,756 | $63,677 |
Employer’s contribution to the health and dental insurance plans | 87,563 | 86,899 |
Workers' compensation coverage | 323 | 340 |
Legal services | 9,505 | 9,907 |
Total | $163,147 | $160,823 |
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 payroll and cheque issuance services provided by Public Works and Government Services Canada, audit services provided by the Office of the Auditor General, and telecommunication and network services provided by Shared Services Canada are not included as an expense in the Agency’s Statement of Operations and Departmental Net Financial Position.
Under an administrative arrangement signed with Canadian International Development Agency on May 4, 2009, the Agency administers a program to help develop the borders in Haiti. During the year, the department incurred expenses of $631,853 ($575,069 in 2011-2012) on behalf of Canadian International Development Agency. The expenses are reflected in the financial statements of the Canadian International Development Agency and not recorded in these financial statements.
Under an administrative arrangement signed with Canadian International Development Agency on December 15, 2009, the Agency commenced a project to strengthen the laboratory system of the State Customs Services of Ukraine. During the year, the department incurred expenses of $534,364 ($543,640 in 2011-2012) on behalf of Canadian International Development Agency. The expenses are reflected in the financial statements of the Canadian International Development Agency and not recorded in these financial statements.
Under a memorandum of understanding signed with the Department of National Defence on July 6, 2011, the Agency conducts research on operational video based evaluation of infrastructure and technology. During the year, the department incurred expenses of $130,000 ($120,000 in 2011-2012) on behalf of the Department of National Defence. The expenses are reflected in the financial statements of the Department of National Defence and not recorded in these financial statements.
Under a memorandum of understanding signed with the Department of Foreign Affairs and International Trade on February 3, 2012, the Agency provides expertise for the Afghanistan-Pakistan cooperation process. During the year, the department incurred expenses of $113,476 ($62,153 in 2011-2012) of behalf of the Department of Foreign Affairs and International Trade. The expenses are reflected in the financial statements of the Department of Foreign Affairs and International Trade and not recorded in these financial statements.
Under a memorandum of understanding signed with the Department of National Defence on June 27, 2011, the Agency conducts research on face recognition in video. During the year, the department incurred expenses of $100,000 ($150,000 in 2011-2012) on behalf of the Department of National Defence. The expenses are reflected in the financial statements of the Departmental of National Defence and not recorded in these financial statements.
The Agency has arrangements with the Canada Revenue Agency for the provision of information technology services to CBSA, which are paid for on a quarterly basis for a total of $51,461,500 ($129,149,000 in 2011-2012).
2013 |
2012 |
|
---|---|---|
Expenses - other government departments and agencies | 353,459 | 481,254 |
Revenues - other government departments and agencies | 1,066 | 469 |
Expenses and revenues disclosed in (d) exclude common services provided without charge are already disclosed in (a).
(in thousands of dollars)
Presentation by segment is based on the Agency’s program alignment architecture. 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 the revenues generated for the main programs, by major object of expenses and by major type of revenues.
Risk Assessment | Secure Trusted Partner-ship | Admissi-bility Determi-nation | Criminal Investiga-tions | Immigra-tion Enforce-ment | Recourse | Revenue and Trade Manage-ment |
Internal Services | 2013 Total | 2012 Total | |
---|---|---|---|---|---|---|---|---|---|---|
Operating Expenses | ||||||||||
Salaries and employee benefits | $114,396 | $38,143 | $596,755 | $25,645 | $87,727 | $11,250 | $83,745 | $418,029 | $1,375,690 | $1,395,525 |
Professional and special services | 2,926 | 599 | 5,719 | 947 | 43,840 | 260 | 1,435 | 133,472 | 189,198 | 236,647 |
Rental of land and buildings | 5,468 | 1,838 | 28,598 | 1,226 | 4,300 | 538 | 4,001 | 25,395 | 71,364 | 68,345 |
Amortization | 184 | 0 | 1,484 | 120 | 522 | 0 | 19 | 61,800 | 64,129 | 43,261 |
Transportation and telecommunication | 5,523 | 495 | 6,703 | 392 | 14,628 | 145 | 991 | 21,499 | 50,376 | 59,547 |
Repair and maintenance | 166 | 67 | 2,165 | 101 | 579 | 1 | 12 | 21,767 | 24,858 | 25,558 |
Materials and supplies | 568 | 276 | 5,129 | 269 | 983 | 18 | 337 | 9,576 | 17,156 | 17,650 |
Consumable machinery and equipment (parts) | 698 | 83 | 1,566 | 515 | 689 | 7 | 101 | 13,043 | 16,702 | 13,367 |
Other | 190 | 145 | 1,196 | 44 | 8,076 | 81 | 48 | 5,625 | 15,405 | 16,830 |
(Recovery) Bad debts | 0 | (23) | (3) | 0 | (12) | 0 | (54) | (2) | (94) | 760 |
Total operating expenses | 130,119 | 41,623 | 649,312 | 29,259 | 161,332 | 12,300 | 90,635 | 710,204 | 1,824,784 | 1,877,490 |
Revenues | ||||||||||
Sale of goods and services | 0 | 4,961 | 520 | 0 | 976 | 0 | 10,159 | 0 | 16,616 | 14,017 |
Forfeitures of cash bonds | 0 | 0 | 0 | 0 | 961 | 0 | 0 | 0 | 961 | 1,084 |
Miscellaneous | 0 | 0 | 7 | 0 | 382 | 26 | 0 | 223 | 638 | 571 |
Interest, penalties and fines | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 166 | 166 | 270 |
Revenues earned on behalf of Government | 0 | (1,257) | (100) | 0 | (448) | (5) | (1,577) | (98) | (3,485) | (3,943) |
Total revenues | 0 | 3,704 | 427 | 0 | 1,871 | 21 | 8,582 | 291 | 14,896 | 11,999 |
Net cost of operations before government funding and transfers | $130,119 | $37,919 | $648,885 | $29,259 | $159,461 | $12,279 | $82,053 | $709,913 | $1,809,888 | $1,865,491 |
During the preparation of the 2012-2013 financial statements, the following errors were identified in the 2011-2012 financial statements. As a result, the 2011-2012 comparative figures included in these statements have been restated.
a) The amount reported for accounts receivable and advances as a financial asset in the 2011-2012 Statement of Financial Position was incorrect and the amount reported for accounts receivable and advances as a financial asset held on behalf of Government in the 2011-2012 Statement of Financial Position had not been appropriately netted from gross accounts receivable and advances. These errors have been corrected and the effects are shown in the table below.
b) The amount reported for transfer of assets and liabilities to other government departments in the 2011-2012 Statement of Operations and Departmental Net Financial Position was incorrect. The amount reported should have been the adjustment to the departmental net financial position as shown in the note on transfers to other government departments in 2011-2012, rather than the amount for total assets transferred. This error has been corrected and the effects are shown in the table below. There was no effect of this error on the reported amount for net revenue from operations after government funding and transfers.
c) The amount reported for gain on disposal of tangible capital assets in the 2011-2012 Statement of Cash Flows was incorrect. This error has been corrected and the effects are shown in the table below.
2012 As Previously stated |
Effect of the adjustments | 2012 Restated |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
14 a) | 14 b) | 14 c) | ||||||||
Statement of Financial Position | ||||||||||
Accounts receivable and advances | 8,021 | 2,635 | 10,656 | |||||||
Accounts receivable and advances (held on behalf of Government) | 2,635 | (5,270) | (2,635) | |||||||
Total net financial assets | 103,611 | (2,635) | 100,976 | |||||||
Department net debt | 317,094 | 2,635 | 319,729 | |||||||
Departmental net financial position | 271,964 | (2,635) | 269,329 | |||||||
Statement of Operations and Departmental Net Financial Position | ||||||||||
Net cash provided by Government | 1,822,528 | (394) | 1,822,134 | |||||||
Transfer of assets and liabilities to other government departments | 194 | 390 | 584 | |||||||
Other | (4) | 4 | 0 | |||||||
Net revenue from operations after government funding and transfers | (130,974) | (130,974) | ||||||||
Departmental net financial position - beginning of year | 140,990 | (2,635) | 138,355 | |||||||
Departmental net financial position - end of year | 271,964 | (2,635) | 269,329 | |||||||
Statement of Change in Departmental Net Debt: | ||||||||||
Departmental net debt - beginning of year | 320,266 | 2,635 | 322,901 | |||||||
Departmental net debt - end of year | 317,094 | 2,635 | 319,729 | |||||||
Statement of Cash Flows: | ||||||||||
Gain on disposal and write-down of tangible capital assets | 787 | 194 | 981 | |||||||
Transfer of liabilities to other government departments | (194) | (584) | (778) | |||||||
Other | 4 | (1,435) | (4) | (1,435) | ||||||
Decrease in accounts receivable | (739) | 1,435 | 696 | |||||||
Cash used in operating activities | 1,651,373 | (394) | 1,650,979 | |||||||
Net Cash provided by Government of Canada | 1,822,528 | (394) | 1,822,134 |
Comparative figures have been reclassified to conform to the current year’s presentation.
2013 |
2012 |
||||
---|---|---|---|---|---|
ADMINISTERED ASSETS | |||||
Cash on hand | 437,475 | 1,837,622 | |||
Accounts receivable - other federal government departments and agencies | 2,689 | 31,970 | |||
Taxes receivable (note 3) | 2,892,685 | 1,435,921 | |||
Total | 3,332,849 | 3,305,513 | |||
ADMINISTERED LIABILITIES | |||||
Accounts payable - other federal government departments and agencies | 265,974 | 273,543 | |||
Payable to provinces (note 4) | 8,811 | 9,232 | |||
Taxes payable | 369 | 1,837 | |||
Deposit accounts (note 5) | 13,043 | 12,739 | |||
Sub-Total | 288,197 | 297,351 | |||
Net amount due to the Consolidated Revenue Fund on behalf of the Government of Canada (note 6) | 3,044,652 | 3,008,162 | |||
Total | 3,332,849 | 3,305,513 |
The accompanying notes form an integral part of these financial statements.
2013 |
2012 |
||||
---|---|---|---|---|---|
Administered Revenues | |||||
Tax revenues | |||||
Excise taxes (note 7) | 20,337,711 | 19,927,035 | |||
Customs import duties | 3,979,494 | 3,861,607 | |||
Excise duties | 1,275,859 | 1,324,717 | |||
Total | 25,593,064 | 25,113,359 | |||
Non-tax revenues | |||||
Interest, penalties and fines | 15,051 | 12,784 | |||
Seized property | 9,673 | 10,008 | |||
Sale of goods and services | 1,374 | 1,412 | |||
Miscellaneous | 307 | 184 | |||
Total | 26,405 | 24,388 | |||
Total Revenue Administered on behalf of the Government of Canada |
25,619,469 | 25,137,747 | |||
Less: Bad Debts | 35,895 | 53,146 | |||
Net Administered Revenues | 25,583,574 | 25,084,601 |
The accompanying notes form an integral part of these financial statements.
2013 | 2012 | ||||
---|---|---|---|---|---|
Net Administered Revenues | 25,583,574 | 25,084,601 | |||
Variations in administered assets and liabilities: | |||||
(Increase) Decrease in cash on hand | 1,400,147 | (175,244) | |||
(Increase) Decrease in accounts receivable - other federal government departments and agencies | 29,281 | (26,529) | |||
(Increase) Decrease in taxes receivable | (1,456,764) | (19,049) | |||
Increase (Decrease) in accounts payable - other federal government departments and agencies | (7,569) | 81,098 | |||
Increase (Decrease) in payable to provinces | (421) | 885 | |||
Increase (Decrease) in taxes payable | (1,468) | (235) | |||
Increase (Decrease) in deposit accounts | 304 | 3,674 | |||
Net cash deposited in the Consolidated Revenue Fund of the Government of Canada | 25,547,084 | 24,949,201 | |||
Consisting of: | |||||
Cash deposits to the Consolidated Revenue Fund | 26,193,732 | 25,656,858 | |||
Cash payments/refunds from the Consolidated Revenue Fund | (646,648) | (707,657) | |||
Net cash deposited in the Consolidated Revenue Fund of the Government of Canada | 25,547,084 | 24,949,201 |
The accompanying notes form an integral part of these financial statements.
The Canada Border Services Agency (Agency) is responsible for providing integrated border services that support national security and public safety priorities and facilitate the free flow of persons and goods. The Canada Border Services Agency Act received royal assent on November 3, 2005. The Agency is a departmental corporation named in Schedule II of the Financial Administration Act and reports to Parliament through the Minister of Public Safety. The Agency is funded through appropriations from the Government of Canada.
The Agency is responsible for the administration and enforcement of the following acts or portions of these acts: the Customs Act, the Customs Tariff, the Excise Act, the Excise Tax Act, the Citizenship Act, the Immigration and Refugee Protection Act, as well as other acts on behalf of other federal departments and provinces.
The Agency administered activities reports on tax and non-tax revenues, assets and liabilities administered on behalf of the federal, provincial and territorial governments.
The purpose of these Administered Activities financial statements is to present information about revenues, expenses, assets and liabilities that the Agency administers on behalf of the federal, provincial and territorial governments. The Agency reports against accounting principles that are consistent with those applied in the preparation of the financial statements of the Government of Canada.
A summary of significant accounting policies are as follows:
The determination of the Agency’s tax revenues is based on the taxes and duties assessed that relate to goods authorized by the Agency to enter into Canada during the fiscal year that ended March 31. These revenues are recognized at the time the goods are released.
The Canadian customs and tax systems are predicated on self-assessment where importers are expected to understand the laws and comply with them. This has an impact on the completeness of duty and tax revenues when importers fail to comply with laws. The Agency has implemented systems and controls in order to detect and correct situations where importers are not complying with the various acts it administers. These systems and controls include performing audits of importer records where determined necessary by the Agency. Such procedures cannot be expected to identify all undeclared or incorrectly declared importations or other cases of non-compliance. The Agency does not estimate the amount of unreported duties and taxes. However, such amounts are included in revenues when identified during reassessment.
Non-tax revenues consists of items such as fees, penalties, interest and fines and are recognized in the period in which the underlying transaction or event occurred that gave rise to the revenue.
Cash includes amounts received in Agency offices or by Agency agents as at March 31 but not yet deposited to the credit of the Consolidated Revenue Fund of the Government of Canada.
Taxes receivable represent duties and taxes and other revenues not yet collected. All receivables are stated at amounts ultimately expected to be realized. A provision is made for doubtful accounts where recovery is considered uncertain.
The allowance for doubtful accounts reflects management’s best estimate of the collectability of accounts receivable, including the related interest and penalties. The allowance for doubtful accounts is composed of two parts; which are reviewed on an annual basis. A portion of the allowance is based on the age of the accounts and the other portion is calculated based on accounts in appeal.
Payable to provinces represents amounts derived from memorandums of understanding (MOUs) between the provinces and the Agency, whereby provincial sales, alcohol and tobacco taxes are collected and remitted to the provinces.
Taxes payable to importers represent refunds and related interest resulting from assessments completed after March 31 for excise duties, customs import duties and GST/HST for current or prior year imports.
The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expense reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant item where estimates are used is for establishing 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 financial statements in the year they become known.
Taxes receivable represent the customs duties, excise taxes, GST and HST, penalties and interest due to the Receiver General for Canada as a result of importations into Canada.
The following table presents details of taxes receivable:
2013 |
2012 |
|
---|---|---|
Taxes receivable | 3,002,804 | 1,514,568 |
Allowance for doubtful accounts | (110,119) | (78,647) |
Taxes receivable | 2,892,685 | 1,435,921 |
The following table presents details of provincial sales, alcohol and tobacco taxes collected and remitted to the provinces:
2013 |
2012 |
|
---|---|---|
Opening balance | 9,232 | 8,347 |
Receipts from importers | 45,323 | 41,951 |
Refunds to importers | (337) | (217) |
Payments to provinces | (45,407) | ( 40,849) |
Closing Balance | 8,811 | 9,232 |
The deposit accounts were established to record cash and securities required to guarantee payment of customs duties and excise taxes on imported goods pursuant to the Customs Act and the Excise Tax Act.
The following table presents details on the deposit accounts:
2013 |
2012 |
|
---|---|---|
Opening balance | 12,739 | 9,065 |
Receipts | 5,246 | 3,957 |
Payments | (4,942) | (283) |
Closing Balance | 13,043 | 12,739 |
The net amount due to the Consolidated Revenue Fund (CRF) on behalf of the Government of Canada is the difference between administered assets and other administered liabilities payable by the Agency out of the CRF.
The change in the net amount due to the CRF during the fiscal year is presented in the table below:
2013 |
2012 |
|
---|---|---|
Opening balance | 3,008,162 | 2,872,762 |
Net administered revenues | 25,583,574 | 25,084,601 |
Net cash deposited in the Consolidated Revenue Fund | (25,547,084) | (24,949,201) |
Closing Balance | 3,044,652 | 3,008,162 |
The following table presents details of the excise tax revenues:
2013 |
2012 |
|
---|---|---|
GST/HST | 20,564,894 | 20,115,492 |
Tax remission order | (47,141) | (57,106) |
Transfer of HST to Provinces | (206,903) | (203,854) |
Other excise taxes | 26,861 | 72,503 |
Excise taxes | 20,337,711 | 19,927,035 |
The Agency is related as a result of common ownership to all Government departments, agencies and Crown corporations. The Agency enters into transactions with these entities in the normal course of business and on normal trade terms. The Agency also receives collection services from Canada Revenue Agency under Part V.I of the Customs Act.
Comparative figures have been reclassified to conform to the current year’s presentation.
This document provides summary information on the measures taken by the Canada Border Services Agency (CBSA) to maintain an effective system of internal control over financial reporting (ICFR). In particular, it provides summary information on the results of the assessments conducted by the CBSA as of March 31, 2013, and the related action plans; it provides information on progress made so far, along with some highlights pertinent to understanding the control environment unique to the Agency.
Detailed information on the CBSA’s authority, mandate, and program activities can be found in the CBSA’s Departmental Performance Report and Report on Plans and Priorities.
The Agency has an established governance and accountability structure to support its assessment efforts, and the oversight of its system of internal control. The CBSA’s internal control management framework has been updated during the year 2012 - 2013 to correspond with the new CBSA corporate and governance structures. The Agency’s internal control management framework includes:
The DAC provides advice to the President of the CBSA on the adequacy and functioning of the Agency’s risk management, internal control and governance frameworks and processes. The work of the DAC is guided by the responsibilities identified in the Treasury Board Policy on Internal Audit in the Government of Canada, namely: the DAC comprises 2 internal members, 4 external members and Ex-Officio participants at each Committee meeting and, when necessary, officials of the Treasury Board Secretariat and the Office of the Comptroller General are invited to attend. The external members are: Richard J. Neville, FCA, a former Deputy Comptroller General of Canada; Louis F. O’Brien, a former Comptroller and Senior Vice-President of Canada Post; Pierre-Yves Bourduas, former Chair of the RCMP Organized Crime Committee; and Guylaine Leclerc, FCPA Quebec, a practising professional accountant.
In 2012-2013, the DAC met 4 times to provide advice to the President of the CBSA and discuss CBSA business as follows:
December 19, 2012 – The focus was on the Audit of Border Controls at Marine Ports of Entry, Review of the e-Manifest Project, the CBSA Internal Audit Charter and the Audit Committee Charter.
Below are the CBSA'S key positions with responsibilities for maintaining and reviewing the effectiveness of Agency's system of ICFR:
President – The President, as Accounting Officer, assumes overall responsibility and leadership for the measures taken to maintain an effective system of internal control. In this role, the President chairs the Departmental Audit Committee.
Executive Vice-President – The Executive Vice-President (EVP) reports directly to the President. In this role, the EVP is the primary support to the President in discharging his obligations as Accounting Officer and for ensuring that an effective system of ICFR is in place and functioning as intended.
Vice Presidents – The Vice Presidents are responsible for maintaining and reviewing the effectiveness of the system of ICFR within their respective areas of responsibility.
Chief Financial Officer (CFO) – The CFO reports directly to the President and provides leadership for the coordination, coherence and focus on the design and maintenance of an effective system of ICFR. The CFO is an ex-officio member of the DAC.
Agency Comptroller – Agency Comptroller provides the corporate and operational leadership for financial stewardship, including on-going communication and training on statutory requirements, policies, and procedures for sound financial management and control.
Values & Ethics – Internal control related to Values and Ethics are delivered through the Senior Ethics Official (SEO) and Senior Officer for Internal Disclosure (SOID). The SEO offers support and guidance on matters of values and ethics and the SOID provides a confidential, arm's-length resource and process on matters concerning wrongdoing in the workplace.
Chief Audit Executive (CAE) – The CAE reports directly to the President and provides assurance through periodic internal audits which are instrumental for the maintenance of an effective system of ICFR. The CFO is an ex-officio member of the DAC.
The CBSA relies on other Federal organizations for the processing of certain transactions that are recorded in its financial statements as follows:
Common Arrangements:
Specific Arrangements:
The Department completed all remaining design effectiveness testing, with the exception of Financial Authorities, including those controls related to Asset Safeguarding, System Access Configuration and Revenue Management.
As a result of design effectiveness testing, the Agency identified the following remediation as required:
During the year, the Agency also commenced operating effectiveness testing of the Financial Close and Reporting procedures. To date, operating effectiveness testing has identified opportunities for improvement with respect to the mapping of corporate accounting business processes.
In the current year, the Agency performed on-going monitoring in the following control areas, namely Entity Level Controls, Compensation, Payment Requisitioning (s.33 of the Financial Administration Act verification), Capital Assets, Acquisition Cards, Hospitality/Travel, and the Information technology general controls (ITGC) processes. The results were as follows:
With respect to identified remediation activities, 17 general computer control improvements are within CRA’s area of controls of which 7 apply to the CBSA. All of these (except 1 that is still under development) were re-tested and 9 (5 of which apply to the CBSA) still require remediation. These ITGC activities relate to:
For more information on the implementation, operating effectiveness testing and ongoing monitoring of the CBSA’s ITGCs, refer to Canada Revenue Agency’s (CRA’s) Annex to the Statement of Management Responsibility including Internal Controls Over Financial Reporting (http://www.cra-arc.gc.ca/gncy/nnnl/2011-2012/fn-stmnt-dtd-dmnstrd-tvts-eng.html).
During 2012-2013, the Agency has continued to make significant progress in assessing and improving its key controls. Below is a summary of the main progress made by the CBSA based on the plans identified in the previous fiscal year’s annex:
Element in Previous Year’s (2011-2012)
During 2012-2013, advancement was made in the implementation of an Accounts Receivable Ledger (ARL) project and the Assessment and Revenue Management (CARM) project. The primary goal of these initiatives is to ensure accurate, timely, complete and reliable financial information for efficient and effective management and accounting of tax revenues. During the development and construction phases of both initiatives, particular attention is being deployed to ensure internal control are embedded in the new solutions.
Building on progress to date, the CBSA is positioned to complete the full assessment of its system of ICFR in 2013-2014 and subsequent years. At that time, the Agency will be applying its rotational on-going monitoring plan to reassess control performance on a risk basis across all control areas. The status and action plan for the completion of the identified control areas for 2013-2014 and subsequent years is as follows:
Key control Areas
With the implementation of new financial automation functionalities, specifically for electronic authentication and authorization of payment requisitions, the following financial control frameworks will be assessed: