ARCHIVED - Canada Border Services Agency Financial Statements For the Year Ended March 31, 2015

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Statement of Management Responsibility Including Internal Control Over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2015, and all information contained in these statements rests with the management of the Canada Border Services Agency (CBSA). 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 CBSA's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the CBSA'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 CBSA 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 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 CBSA's system of internal controls is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of CBSA'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 CBSA.

The financial statements of the CBSA have not been audited.

Linda Lizotte-MacPherson, President
Ottawa, Canada
August 21, 2015

Christine Walker, Chief Financial Officer
Ottawa, Canada
August 21, 2015

Financial Statements - Agency Activities

Canada Border Services Agency (Agency Activities)
Statement of Financial Position (Unaudited)
As at March 31

(in thousands of dollars)
  2015 2014
Liabilities
Accounts payable and accrued liabilities (note 4) 173,226 215,763
Vacation pay and compensatory leave 66,631 64,885
Deposit accounts (note 5) 27,311 28,304
Environmental liabilities (note 6a) 2,480 2,320
Provision for claims and litigation (note 6b) 815 650
Employee future benefits (note 7) 82,894 183,278
Total liabilities 353,357 495,200
Financial assets
Due from Consolidated Revenue Fund 157,130 207,458
Accounts receivable and advances (note 8) 18,594 15,903
Total gross financial assets 175,724 223,361
Financial assets held on behalf of Government
Accounts receivable and advances (note 8) (2,209) (2,683)
Total financial assets held on behalf of Government (2,209) (2,683)
Total net financial assets 173,515 220,678
Departmental net debt 179,842 274,522
Non-financial assets 
Prepaid expenses - 177
Inventory (note 9) 9,787 12,643
Tangible capital assets (note 10) 863,345 738,438
Total non-financial assets 873,132 751,258
Departmental net financial position 693,290 476,736

Contingent liabilities (note 6)
Contractual obligations (note 11)
The accompanying notes form an integral part of these financial statements.

Canada Border Services Agency (Agency Activities)
Statement of Operations and Departmental Net Financial Position (Unaudited)
For the Year Ended March 31

(in thousands of dollars)
  2015
Planned Results
2015 2014
Expenses
Admissibility Determination 847,899 955,235 865,172
Internal Services 519,022 392,280 466,129
Immigration Enforcement 177,093 189,962 182,654
Risk Assessment 164,325 184,805 177,241
Revenue and Trade Management 101,141 91,135 101,862
Secure and Trusted Partnerships  47,185 52,124 51,429
Criminal Investigations  29,522 37,932 33,871
Recourse 11,641 13,512 12,844
Total expenses 1,897,828 1,916,985 1,891,202
Revenues 
Sales of goods and services  18,270 19,634 19,694
Other 2,970 1,305 3,008
Revenues earned on behalf of Government (4,810) (2,748) (4,534)
Total revenues 16,430 18,191 18,168
Net cost of operations before government funding and transfers 1,881,398 1,898,794 1,873,034
Government funding and transfers
Net cash provided by Government - 2,040,834 1,765,541
Services provided without charge by other government departments (note 12a) - 164,049 165,022
Change in due from Consolidated Revenue Fund - (50,328) 83,645
Transfers to other government departments (note 13) - (39,207) (41)
Net cost of operations after government funding and transfers - (216,544) (141,133)
Departmental net financial position - Beginning of year - 476,736 335,603
Departmental net financial position - End of year - 693,290 476,736

Segmented Information (Note 14)
The accompanying notes form an integral part of these financial statements.

Canada Border Services Agency (Agency Activities)
Statement of Change in Departmental Net Debt (Unaudited)
For the Year Ended March 31

(in thousands of dollars)
  2015 2014
Net cost of operations after government funding and transfers (216,554) (141,133)
Changes due to tangible capital assets
Acquisition of tangible capital assets 181,138 166,913
Amortization of tangible capital assets (56,432) (70,321)
Proceeds from disposal of tangible capital assets (456) (408)
Net loss on disposal of tangible capital assets (1,222) (2,813)
Adjustments to tangible capital assets 1,879 2,376
Transfers to Shared Services Canada (note 13b) - (41)
Total change due to tangible capital assets 124,907 95,706
Change due to inventories (2,856) 1,163
Change due to prepaid expenses (177) (37)
Net decrease in departmental net debt (94,680) (44,301)
Departmental net debt - Beginning of year 274,522 318,823
Departmental net debt - End of year 179,842 274,522

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

Canada Border Services Agency (Agency Activities)
Statement of Cash Flows (Unaudited)
For the Year Ended March 31

(in thousands of dollars)
  2015 2014
Operating activities
Net cost of operations before government funding and transfers 1,898,794 1,873,034
Non-cash items:
Services provided without charge by other government departments (note 12a) (164,049) (165,022)
Amortization of tangible capital assets (56,432) (70,321)
Net loss on disposal of tangible capital assets (1,222) (2,813)
Adjustments to tangible capital assets 1,879 2,376
Transition payments for implementing salary payments in arrears (note 13a) 39,207 -
Variations in Statement of Financial Position:
Increase in accounts receivable and advances 3,165 1,924
Decrease in prepaid expenses (177) (37)
(Decrease) Increase in inventory (2,856) 1,163
Decrease (increase) in liabilities 141,843 (41,268)
Cash used in operating activities 1,860,152 1,599,036
Capital investing activities
Acquisitions of tangible capital assets 181,138 166,913
Proceeds from disposal of tangible capital assets (456) (408)
Cash used in capital investment activities 180,682 166,505
Net cash provided by Government of Canada 2,040,834 1,765,541

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

Canada Border Services Agency (Agency Activities)
Notes to the Financial Statements (Unaudited)
For the Year Ended March 31

1. Authority and objectives

The Canada Border Services Agency (CBSA) provides integrated border services that support national security priorities and facilitate the free flow of people and goods. The Canada Border Services Agency Act received royal assent on . The CBSA is a departmental corporation named in Schedule II of the Financial Administration Act and reports to Parliament through the Minister of Public Safety. The CBSA is funded through authorities from the Government of Canada.

The CBSA 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.

For financial reporting purposes, the activities of the CBSA have been divided into two sets of financial statements: Agency Activities and Administered Activities. The Agency Activities financial statements include those operational revenues and expenses which are managed by the CBSA and utilized in operating the organization. The Administered Activities financial statements report on tax and non-tax revenues, assets and liabilities administered on behalf of the federal, provincial and territorial governments. One reason for the distinction between Agency Activities and Administered Activities is to facilitate the assessment of the administrative efficiency of the CBSA in achieving its mandate.

In delivering efficient and effective border management that contributes to the security and prosperity of Canada, the CBSA operates under the following program activities:

  • (a) Admissibility Determination – Through this program, the CBSA develops, maintains and administers the policies, regulations, procedures and partnerships that enable border services officers to intercept people and goods that are inadmissible to Canada and to process legitimate people and goods seeking entry into Canada within established service standards. In addition, the CBSA develops, maintains and administers the policies, regulations, procedures and partnerships to control the export of goods from Canada.
  • (b) Internal Services – This program is a group of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. The groups of activities are governance and management support, resource management services and asset management services. The CBSA's Internal Services supports the achievement of the CBSA's strategic outcome.
  • (c) Immigration Enforcement – This program determines whether foreign nationals and permanent residents who are or may be inadmissible to Canada are identified and investigated, detained, monitored and/or removed from Canada.
  • (d) Risk Assessment – This program "pushes the border out" by seeking to identify high risk people, goods and conveyances as early as possible in the travel and trade continuum to prevent inadmissible people and goods from entering Canada.
  • (e) Revenue and Trade Management – This program administers international and regional trade agreements and domestic legislation and regulations governing trade in commercial goods. The program ensures that appropriate trade data is collected and that the duties and taxes owed to the Government of Canada are remitted in accordance with Canadian trade laws and import requirements.
  • (f) Secure and Trusted Partnerships – Through this program, the CBSA works closely with clients, other government departments and international border management partners to enhance trade chain and traveler security while providing pre-approved, low-risk travelers and traders with streamlined and efficient border processes.
  • (g) Criminal Investigations – Under this program, the CBSA protects the integrity of border-related legislation and contributes to public safety and Canada's economic security by investigating and pursuing the prosecution of travelers, importers, exporters and/or other persons who commit criminal offences in contravention of Canada's border-related legislation.
  • (h) Recourse – This program provides the business community and individuals with an accessible mechanism to seek an impartial review of service-related complaints, program decisions and enforcement actions taken by the CBSA. This program ensures that their decisions are fair, transparent and accurately reflect the CBSA's policies and the Acts it administers.

2. Summary of significant accounting policies

These financial statements have been prepared in accordance with 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:

  • a) Parliamentary authorities - The CBSA is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the CBSA 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 "Expenses" and "Revenues" sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-oriented Statement of Operations included in the 2014-2015 Report on Plans and Priorities. Planned results are not presented in the "Government funding and transfers" section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2014-2015 Report on Plans and Priorities.
  • b) Net cash provided by Government - The CBSA operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the CBSA is deposited to the CRF, and all cash disbursements made by the CBSA 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.
  • c) Amounts due from or to the CRF - The amounts 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 CBSA is entitled to draw from the CRF without further authorities to discharge its liabilities.
  • d) Revenues – Revenues from regulatory fees are recognized in the accounts based on the services provided in the year. Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place. Revenues that are non-respendable are not available to discharge the CBSA's liabilities.  While the President of the CBSA is expected to maintain accounting control, the president 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.
  • e) Expenses - Expenses are recorded on an accrual basis:
    • Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.
    • Services provided without charge by other government departments for accommodation, employer contributions to the health and dental insurance plans, legal services and workers' compensation are recorded as operating expenses at their estimated cost.
  • f) Employee future benefits
    • Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government of Canada. The CBSA's contributions to the Plan are charged to expenses in the year incurred and represent the total CBSA obligation to the Plan. The CBSA'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.
    • 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.
  • g) Accounts receivable - Accounts receivable are stated at the lower of cost and net recoverable value.  A valuation allowance is recorded for accounts receivable where recovery is considered uncertain based on the specific identification and aging of receivables.
  • h) Contingent liabilities - 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.
  • i) Environmental liabilities - Environmental liabilities consist of estimated costs related to the remediation of environmentally contaminated sites. Remediation liabilities are accrued to recognize the estimated costs related to the management and remediation of contaminated sites where the CBSA is obligated, or likely to be obligated, to remediate the sites. If the responsibility to remediate is undeterminable, the amount is disclosed as a contingent liability.  If the responsibility to remediate is undeterminable and a reasonable estimate cannot be made, the nature, source and extent of contamination is disclosed as a contingent liability.
  • j) Inventory - 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. Where the service potential is impaired, inventory is valued at the lower of cost or net realizable value.
  • k) Tangible capital assets - All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. The CBSA does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value.

Amortization of tangible capital assets 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
Informatics hardware 5 years
Informatics software  
Purchased software 3 years
In-house developed software 7 years
Vehicles  
Motor vehicles 5 years
Ships and boats 10 years
Leasehold improvements Lesser of the remaining term of lease or useful life of the improvement
Assets under construction Once in service, in accordance with asset type
  • l) Measurement uncertainty - 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 allowance 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.

3. Parliamentary Authorities

The CBSA 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 CBSA 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)
  2015 2014
Net cost of operations before government funding and transfers 1,898,794 1,873,034
Adjustments for items affecting net cost of operations but not affecting authorities:
Services provided without charge by other government departments (164,049) (165,022)
Amortization of tangible capital assets (56,432) (70,321)
Refund and adjustments to prior years' expenditures 8,145 5,971
Net loss on disposal of tangible capital assets (1,222) (2,813)
Decrease in employee future benefits 100,384 47,999
Increase in vacation pay and compensatory leave (1,746) (8,364)
Increase in environmental liabilities (160) (24)
(Increase) decrease in claims (165) 560
Increase in accrued liabilities not charged to authorities (2,116) (862)
Decrease (increase) in bad debt expense 28 (386)
Other 2,827 2,709
Total items affecting net cost of operations but not affecting authorities (114,506) (190,553)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets 181,138 166,913
Proceeds from disposal of tangible capital assets (456) (408)
(Decrease) increase in inventory (2,856) 1,163
Transition payments for implementing salary payments in arrears 39,207 -
Decrease in prepaid expenses (177) (37)
Total items not affecting net cost of operations but affecting authorities 216,856 167,631
Current year authorities used 2,001,144 1,850,112


(b) Authorities provided and used

(in thousands of dollars)
  2015 2014
Authorities provided:
Vote 1 - Operating expenditures 1,694,361 1,770,005
Vote 5 - Capital expenditures 277,532 230,352
Statutory amounts 198,255 187,896
  2,170,148 2,188,253
Less:
Authorities available for future years (76,120) (143,940)
Lapsed: Operating (17,624) (135,978)
Lapsed: Capital (75,260) (58,223)
  (169,004) (338,141)
Current year authorities used (2,001,144) (1,850,112)


4. Accounts Payable and Accrued Liabilities

The following table presents details of the CBSA’s accounts payable and accrued liabilities:

(in thousands of dollars)
  2015
2014
Accounts payable - Other government departments and agencies 36,592 20,731
Accounts payable - External parties 51,097 57,826
Total accounts payable 87,689 78,557
Accrued liabilities 85,537 137,206
Total accounts payable and accrued liabilties 173,226 215,763

5. Deposit Accounts

The Immigration guarantee fund serves to record amounts collected and held, pending final disposition either by refund to the original depositor or forfeiture to the Crown, pursuant to the provisions of the Immigration and Refugee Protection Act.

The General security deposits account serves to record general security deposits from transportation companies in accordance with the provisions of the Immigration and Refugee Protection Act.

The following table presents details on the deposit accounts:

 

(in thousands of dollars)
  Opening
Balance
 
Deposits
 
Refunds
Forfeitures Closing
Balance
Immigration guarantee fund 22,065 6,763 (6,950) (786) 21,092
General security deposits 6,239 100 (120) - 6,219
Total deposit accounts 28,304 6,863 (7,070) (786) 27,311

6. Contingent Liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown. They are grouped into two categories as follows:

(a) Environmental Liabilities

The government has developed a "Federal Approach to Contaminated Sites", which incorporates a risk-based approach to the management of contaminated sites. Under this approach, the Government has inventoried the contaminated sites on federal lands that have been identified, allowing them to be classified, managed and recorded in a consistent manner. This systematic approach aides in the identification of the high risk sites in order to allocate limited resources to those sites which pose the highest risk the environment and human health.

Liabilities are accrued to record the estimated costs related to the management and remediation of contaminated sites where the CBSA is obligated or likely to be obligated to incur such costs.

The CBSA has identified two sites (three sites in 2013-2014) where it is obligated or likely to be obligated to remediate for which a remediation liability of $2,480,000 ($2,320,000 in 2013-2014) has been recorded.

The CBSA's ongoing efforts to assess contaminated sites may result in additional environmental liabilities related to newly identified sites, or changes in the assessments of existing sites. These liabilities will be accrued by the CBSA in the year in which they become likely and are reasonably estimable.

(b) Claims and litigation

Forty-six (46) (35 in 2013-2014) general litigation claims have been made against the CBSA in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable.

The CBSA has recorded an allowance of $815,000 ($650,000 in 2013-2014) for claims and litigation where it is likely that there will be future payment and a reasonable estimate of the loss can be made. Claims and litigation for which the outcome is not determinable and a reasonable estimate can be made by management amount to $1,030,000 ($1,338,000 in 2013-2014).

7. Employee Future Benefits

(a) Pension benefits

The CBSA's employees participate in the public service pension plan (the "Plan"), which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 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 CBSA contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Economic Action Plan 2012, employee contributors have been divided into two groups - Group 1 relates to existing plan members as of and Group 2 relates to members joining the Plan as of . Each group has a distinct contribution rate.

The 2014-2015 expense amounts to $135,006,000 ($131,681,000 in 2013-2014). For Group 1 members, the expense represents approximately 1.41 times (1.6 in 2013-2014) the employee contributions and, for Group 2 members, approximately 1.39 times (1.5 times in 2013-2014) the employee contributions.

The CBSA'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.

(b) Severance benefits

The CBSA 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:

(in thousands of dollars)
  2015
2014
Accrued benefit obligation, beginning of year 183,278 231,277
Expense for the year 67,847 (17,153)
Benefits paid during the year (168,231) (30,846)
Accrued benefit obligation, end of year 82,894 183,278

8. Accounts Receivable and Advances

The following table presents details of the accounts receivable and advances:

(in thousands of dollars)
  2015
2014
Receivables - Other government departments and agencies 15,218 11,883
Receivables - External parties 4,492 5,090
Employee advances and other receivables 1,760 2,003
  21,470 18,976
Allowance for doubtful accounts on external receivables (2,876) (3,073)
Gross accounts receivable 18,594 15,903
Accounts receivable held on behalf of Government (2,209) (2,683)
Net accounts receivable 16,385 13,220

 

9. Inventory

The following table presents details of the inventory, measured at cost using the weighted average cost method.

(in thousands of dollars)
  2015
2014
Uniforms 9,787 12,075
Forms and publications - 568
Total 9,787 12,643

The cost of consumed inventory recognized as an expense in the Statement of Operations and Departmental Net Financial Position and included in note 14 Segmented Information under Utilities, materials and supplies is $5,355,600 ($5,163,200 in 2013-2014).

10. Tangible Capital Assets

The following table presents details of the tangible capital assets:

(in thousands of dollars)
  Cost Accumulated amortization 2015 2014
Capital
asset
class
Opening Balance Acquisitions Adjustments(1) Disposals and write-offs Closing balance Opening Balance Amortization Adjustments(1) Disposals and write-offs Closing balance Net book value Net book value
Land 4,649 - - - 4,649 - - - - - 4,649 4,649
Buildings 407,314 840 8,447 - 416,601 126,081 13,176 - - 139,257 277,344 281,233
Leasehold improvements 36,402 28 597 1,298 35,729 27,206 4,334 - 936 30,604 5,125 9,196
Works and
infrastructure
4,078 57 1,015 - 5,150 1,606 336 - - 1,942 3,208 2,472
Machinery and
equipment
110,555 10,933 124 5,554 116,058 64,804 6,872 50 5,528 66,198 49,860 45,751
Informatics hardware 32,992 1,927 19,677 3,459 51,137 29,080 2,275 12,526 3,361 40,520 10,617 3,912
Informatics software - in-house developed 275,788 91 7,795 - 283,674 180,697 25,135 - - 205,832 77,842 95,091
Informatics software - purchased 3,573 109 384 - 4,066 741 1,188 383 - 2,312 1,754 2,832
Motor vehicles 31,459 2,235 90 2,595 31,189 22,614 3,079 90 2,562 23,221 7,968 8,845
Ships and boats 592 13 103 - 708 441 37 103 - 581 127 151
Assets under construction 284,306 164,905 (23,201) 1,159 424,851 - - - - - 424,851 284,306
Total 1,191,708 181,138 15,031 14,065 1,373,812 453,270 56,432 13,152 12,387 510,467 863,345 738,438

(1) Adjustments include assets under construction of $23,201,000 that were transferred to the other categories upon completion of the assets.

11. Contractual Obligations

The nature of the CBSA's activities can result in some large multi-year contracts and obligations whereby the CBSA 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:

(in thousands of dollars)
  2016 2017 2018 2019 2020 and there-after Total
Purchase contracts 101,306 15,822 2,110 505 292 120,035

12. Related Party Transactions

The CBSA is related as a result of common ownership to all Government departments, agencies and Crown corporations of Canada. The CBSA enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the CBSA received common services which were obtained without charge from other Government departments as disclosed below:

(a) Common services provided without charge by other government departments

During the year, the CBSA received services 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 CBSA's Statement of Operations and Departmental Net Financial Position as follows:

(in thousands of dollars)
  2015
2014
Employer’s contribution to the health and dental insurance plans 90,898 91,382
Accommodation 61,550 61,810
Legal services 11,262 11,470
Workers' compensation coverage 339 360
Total 164,049 165,022

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 CBSA's Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties

(in thousands of dollars)
  2015
2014
Expenses - other government departments and agencies 371,476 338,089
Revenues - other government departments and agencies 597 981

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

13. Transfers to other government departments

(a) Transfer of Accounts receivable to Public Works and Government Services

The Government of Canada implemented salary payments in arrears in 2014-2015. As a result, a one-time payment was issued to employees and will be recovered from them in the future. The transition to salary payments in arrears forms part of the transformation initiative that replaces the pay system and also streamlines and modernizes the pay processes. This change to the pay system had no impact on the expenses of the Department. However, it did result in the use of additional spending authorities by the Department, along with the creation of an interim account receivable. Prior to year-end, this interim account receivable was transferred to Public Works and Government Services Canada, who is responsible for the administration of the Government pay system.

(in thousands of dollars)
  2015 2014
Assets:    
Transfer of Accounts Receivable to Public Works and Government Services 39,207 -
Adjustment to the departmental net financial position 39,207 -

(b) Transfer of tangible capital assets to Shared Services Canada

Effective , the CBSA transferred responsibility for the services related to the acquisition and provision of hardware and software, including security software, for end user devices to Shared Services Canada in accordance with the Order-in-Council 2013-0368, including the stewardship responsibility for the assets and liabilities related to these activities. Accordingly, the CBSA transferred the following assets to Shared Services Canada:

(in thousands of dollars)
  2015 2014
Assets:    
Tangible capital assets (net book value) - 41
Adjustment to the departmental net financial position - 41

14. Segmented Information

Presentation by segment is based on the CBSA'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 major categories of revenue are described below.

Immigration and Refugee Protection Regulations administration fees

The administration fee amounts are set out in section 280 of the Immigration and Refugee Protection Regulations. Transporters are required to pay administration fees to partially defray the cost of processing certain categories of inadmissible foreign nationals conveyed to Canada. The fees apply when a transporter carries a foreign national.

Inspection fees for food, plant and animal products

Inspection fees for food, plant and animal products are set out in the Canadian Food Inspection Agency (CFIA) Fees Notice pursuant to section 24 of the Canadian Food Inspection Agency Act. The fees are for passenger and initial import inspection services performed at airports and other Canadian border points of entry into Canada.

NEXUS fees for pre-approved and frequent travellers

NEXUS fees are for processing applications related to a joint initiative between the CBSA and the United States Customs and Border Protection that simplifies border crossings for its members and enhances border security. Authority to collect these fees is pursuant to section 24(1) of the Presentation of Persons (2003) Regulations. The NEXUS fees are a non-refundable processing and application fee for becoming a member of this program.

Free and Secure Trade (FAST) fees for pre-approved and frequent importers

FAST fees are for processing applications related to a joint initiative between the CBSA and United States Customs and Border Protection that enhances border and trade chain security while making cross-border commercial shipments simpler and subject to fewer delays. Authority to collect these fees is pursuant to section 24(1) of the Presentation of Persons (2003) Regulations.

Detector dog training services

The CBSA offers detector dog services to other enforcement agencies and jurisdictions within Canada and abroad, such as police forces in municipal, provincial and federal correctional authorities and foreign countries.

The following table presents the expenses incurred and the revenues generated for the main programs, by major object of expense and by major type of revenues.

(in thousands of dollars)
  Admissibility Determination Internal Services Immigration Enforcement Risk Assessment Revenue and Trade Management Secure and Trusted Partnership Criminal Investigations Recourse 2015
Total
2014
Total
Operating Expenses
Salaries and employee future benefits 826,916 211,685 110,437 140,590 81,835 47,469 34,498 12,569 1,465,999 1,408,198
Professional and special services 47,640 74,610 55,767 29,869 4,605 1,825 634 329 215,279 215,516
Rental of buildings and machinery 37,522 12,773 4,920 6,036 3,515 2,030 1,479 533 68,808 73,478
Amortization of tangible capital assets 1,163 54,541 437 169 8 28 86 - 56,432 70,321
Transportation and telecommunication 22,053 8,291 13,700 1,888 766 435 377 54 47,564 49,316
Machinery and equipment 5,436 11,331 752 5,046 56 (35) 420 5 23,011 22,051
Repairs and maintenance 5,491 10,382 232 424 5 69 83 - 16,686 21,153
Utilities, materials and supplies 8,932 4,407 906 616 436 410 324 17 16,048 17,644
Other 4,257 5,352 2,861 157 62 29 11 - 12,729 8,103
Court awards and other settlements 266 1,794 85 97 - 3 23 9 2,277 11,542
Provision for contingent liabilities - 325 - - - - - - 325 (536)
Bad debts (1) 1 (3) - (14) (11) - - (28) 387
Refunds and adjustments to prior years' expenditures (4,440) (3,212) (132) (87) (139) (128) (3) (4) (8,145) (5,971)
Total operating expenses 955,235 392,280 189,962 184,805 91,135 52,124 37,932 13,512 1,916,985 1,891,202
Revenues
Sale of goods and services 477 - 965 - 9,981 8,211 - - 19,634 19,694
Other 110 327 852 50 (95) - 24 37 1,305 3,008
Revenues earned on behalf of Government (77) (43) (238) (7) (1,297) (1,078) (3) (5) (2,748) (4,534)
Total revenues 510 284 1,579 43 8,589 7,133 21 32 18,191 18,168
Net cost of operations before government funding and transfers 954,725 391,996 188,383 184,762 82,546 44,991 37,911 13,480 1,898,794 1,873,034

15. Comparative information

Comparative figures have been reclassified to conform to the current year's presentation.


Financial Statements - Administered Activities

Statement of Administered Assets and Liabilities (Unaudited)
As at March 31

(in thousands of dollars)
  2015
2014
Administered assets
Cash on hand 2,165,789 1,969,873
Accounts receivable - other government departments and agencies 3,229 7,754
Accounts receivable - external parties (note 3) 1,505,473 1,453,140
Total 3,674,491 3,430,767
Administered liabilities
Accounts payable - other government departments and agencies 216,834 211,725
Accounts payable - provinces (note 4) 10,956 11,067
Accounts payable - external parties 1,964 753
Deposit accounts (note 5) 10,619 10,029
Sub-total 240,373 233,574
Net amount due to the Consolidated Revenue Fund of the Government of Canada (note 6) 3,434,118 3,197,193
Total 3,674,491 3,430,767

Contingent liabilities (note 7)
The accompanying notes form an integral part of these financial statements.

Linda Lizotte-MacPherson, President
Ottawa, Canada

Christine Walker, Chief Financial Officer
Ottawa, Canada

Statement of Administered Revenues (Unaudited)
For the Year Ended March 31

(in thousands of dollars)
  2015 2014
Administered revenues
Tax revenues
Excise taxes (note 8) 22,990,850 21,353,392
Customs import duties 4,581,247 4,238,854
Excise duties 1,473,152 1,310,862
Total 29,045,249 26,903,108
Non-tax revenues
Interest, penalties and fines 19,686 12,318
Seized property 7,415 9,560
Sale of goods and services 1,988 851
Other 615 319
Total 29,704 23,048
Total administered revenues 29,074,953 26,926,156
Bad debt expense (50,664) (29,212)
Net administered revenues 29,024,289 26,896,944

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

Statement of Administered Cash Flows (Unaudited)
For the Year Ended March 31

(in thousands of dollars)
  2015 2014
Net administered revenues 29,024,289 26,896,944
Variations in administered assets and liabilities:
(Increase) decrease in cash on hand (195,916) (1,532,398)
(Increase) decrease in accounts receivable - other government departments and agencies 4,525 (5,065)
(Increase) decrease in accounts receivable - external parties (52,333) 1,439,545
Increase (decrease) in accounts payable - other government departments and agencies 5,109 (54,249)
Increase (decrease) in accounts payable - provinces (111) 2,256
Increase (decrease) in accounts payable - external parties 1,211 384
Increase (decrease) in deposit accounts 590 (3,014)
Net cash deposited in the Consolidated Revenue Fund of the Government of Canada 28,787,364 26,744,403
Consisting of:
Deposits to the Consolidated Revenue Fund 29,458,860 27,340,696
Payments and refunds from the Consolidated Revenue Fund (671,496) (596,293)
Net cash deposited in the Consolidated Revenue Fund of the Government of Canada 28,787,364 26,744,403

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

Notes to the Financial Statements (Unaudited)
For the Year Ended March 31

1. Authority and objectives

The Canada Border Services Agency (CBSA) provides integrated border services that support national security priorities and facilitate the free flow of people and goods, including food, plants, animals and related products across the border. The Canada Border Services Agency Act received royal assent on . 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.

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 financial statements report on assets, liabilities, tax and non-tax revenues administered on behalf of the federal, provincial and territorial governments.

2. Summary of Significant Accounting Policies

The purpose of these Agency Administered Activities financial statements is to present information about revenues, expense, assets and liabilities that the Agency administers on behalf of the federal, provincial and territorial governments. The Agency reports in accordance with 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:

(a) Cash on hand

Cash on hand 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 (CRF) of the Government of Canada.

(b) Accounts receivable

Accounts receivable represent taxes and duties 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.

(c) Accounts payable – provinces

Accounts payable – provinces represents amounts in accordance with memorandums of understanding (MOUs) between the provinces and the Agency, whereby provincial sales, alcohol and tobacco taxes are collected and remitted to the provinces.

(d) Accounts payable – external parties

Accounts payable – external parties represent refunds, and related interest, to importers resulting from reassessments completed after March 31 for excise taxes, custom import duties and excise duties related to current or prior year imports.

(e) Contingent liabilities

Contingent liabilities are potential liabilities that 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 if an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

(f) Tax revenues

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 ends March 31; therefore, domestic taxes are not reflected in these statements. These revenues are recognized at the time the goods are released.

  • Excise taxes: Consists of the goods and services tax (GST) and the harmonized sales tax (HST) assessed on imports, net of the GST remission order to the Canada Revenue Agency (CRA) and the provincial portion of the HST. The input tax credits accorded for GST and HST paid on importations are not reflected in these statements as the CRA is responsible for their administration. Excise taxes are also assessed on gasoline and other imports.
  • Customs import duties: Consists of import duties assessed on imports. They are reported net of refunds, rebates and drawbacks.
  • Excise duties: Consists of tobacco, beer and liquor duties assessed on imports. They are reported net of refunds, rebates and drawbacks.

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.

(g) Non-tax revenues

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 non-tax revenue.

(h) Allowance for doubtful accounts

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, each of which is reviewed on an annual basis. A portion of the allowance is based on the collectability status of the accounts and the other portion is based on accounts under appeal.

(i) Tax remission order

The tax remission order provides for a remission of the GST and HST paid or payable by departments of the federal government on their taxable purchases of goods and services. The remission does not affect the net GST and HST ultimately retained by the government.

(j) Measurement uncertainty

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.

3. Accounts Receivable – External Parties

Accounts receivable – external parties represent the GST and HST, custom import duties, excise duties, penalties and interest due to the Receiver General for Canada as a result of importations into Canada.

The following table presents details of accounts receivable – external parties:

(in thousands of dollars)
  2015
2014
Accounts receivable - external parties 1,621,767 1,545,410
Allowance for doubtful accounts (116,294) (92,270)
Accounts receivable - external parties 1,505,473 1,453,140

4. Accounts Payable - Provinces

The following table presents details of provincial sales, alcohol and tobacco taxes collected and remitted to the provinces:

(in thousands of dollars)
  2015 2014
Opening balance 11,067 8,811
Receipts from importers 77,216 74,826
Refunds to importers (484) (477)
Payments to provinces (76,843) (72,093)
Closing balance 10,956 11,067

5. Deposit Accounts

The deposit accounts were established to record cash and securities received to guarantee payment of excise taxes and customs duties on imported goods pursuant to the Excise Tax Act and the Customs Act.

The following table presents details on the deposit accounts:

(in thousands of dollars)
  2015 2014
Opening balance 10,029 13,043
Receipts 3,296 1,244
Payments (2,706) (4,258)
Closing balance 10,619 10,029

6. Net amount due to the Consolidated Revenue Fund of the Government of Canada

The net amount due to the CRF of the Government of Canada is the difference between administered assets held and collectible and 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:

(in thousands of dollars)
  2015
2014
Opening balance 3,197,193 3,044,652
Net administered revenues 29,024,289 26,896,944
Net cash deposited in the Consolidated Revenue Fund (28,787,364) (26,744,403)
Closing balance 3,434,118 3,197,193

7. Contingent Liabilities

Claims have been made against the Agency in the normal course of operations. These claims represent appeals for previously assessed GST and HST, customs duties and excise duties. While the total amount claimed in these actions amount to approximately $41 million as at ($76 million as at ), their outcomes are not determinable and as a result no liability has been recorded in the financial statements (nil as at ).

8. Excise Taxes

The following table presents details of the excise tax revenues:

(in thousands of dollars)
  2015 2014
GST and HST 23,107,788 21,464,015
Tax remission order (31,059) (33,766)
Transfer of HST to Provinces (174,128) (165,024)
Other excise taxes 88,249 88,167
Excise taxes 22,990,850 21,353,392

9. Related Party Transactions

The Agency is related, as a result of common ownership, to all Federal 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 has an agreement with the CRA related to the provision of collection services under Part V.I of the Customs Act for which the CRA is funded through appropriations from the Government of Canada.

10. Comparative Information

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


Annex to the Statement of Management Responsibility Including Internal Control over Financial Reporting Fiscal Year 2014-2015

1. Introduction

This document provides summary information on the measures taken by Canada Border Services Agency (CBSA) to maintain an effective system of internal control over financial reporting, including information on internal control management, assessment results and related action plans.

Detailed information on the CBSA's authority, mandate, and program activities can be found in the 2014-15 Departmental Performance Report and 2014-15 Report on Plans and Priorities.

2. CBSA's system of internal control over financial reporting

2.1 Internal Control Management

The CBSA has an established governance and accountability structure to support its assessment efforts, and the oversight of its system of internal control. The Agency's internal control management framework, approved by the President and the Comptrollership Branch Management Committee, is in place and includes:

  • Organizational accountability structures as they relate to a sound and effective system of internal control over financial reporting, including senior managers' roles and responsibilities in their respective areas of responsibility;
  • Values and ethics;
  • On-going communication and training on statutory requirements, policies, and procedures for sound financial management and control; and
  • Continuous monitoring and annual risk-based updates of internal controls over financial reporting;
  • Periodic reporting to senior management, at least semi-annually, on internal controls management, including the provision of assessment results and action plan to the President and the Agency's senior management and, when necessary or as applicable, the Departmental Audit Committee (DAC).

The Departmental Audit Committee 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.

2.2 Service Arrangements relevant to financial statements

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

Common Arrangements:

  • Public Works and Government Services Canada centrally administers payments for salaries and  goods and services in accordance with the CBSA Delegation of Authority, and provides accommodation services;
  • The Treasury Board of Canada Secretariat provides the CBSA with information used to calculate various accruals and allowances, such as the accrued severance liability;
  • The Department of Justice provides legal services to the CBSA; and
  • Shared Services Canada provides information technology (IT) infrastructure services to the CBSA in the areas of data center and network services.

Specific Arrangements:

  • Pursuant to ongoing arrangements, the Canada Revenue Agency (CRA) provides information technology services, including associated internal controls testing for information technology general controls (ITGCs), as well as account receivable collection services for customs duties, taxes, fees, penalties, and other amounts owing under the Customs Act, Customs Tariff, Excise Tax Act, Excise Act 2001, and related regulations.

3. CBSA assessment results during fiscal year 2014-2015

During 2014-15, the CBSA substantially completed the design and operating effectiveness testing of key control areas. As a result of the CBSA reassessment of key risk areas, some resources were re-allocated to address the assessment activities of the CBSA Confidential Human Source (CHS) Program. In addition, ongoing monitoring activities were conducted according to the action plan with the exception of Compensation and Revenue Management. Assessment activities for the Compensation and Revenue Management processes were deferred due to new functional initiatives being implemented for 2015-16.

3.1 Design effectiveness testing of key controls

In 2014-15, the Agency completed the design and operating effectiveness testing of Interdepartmental Settlements, the Delegated Financial Authorities (DFA) and the CBSA Confidential Human Source Program control frameworks. No significant design control deficiencies were identified but some improvement opportunities were noted in relation to the DFA activities.

  • The CBSA identified the following improvement opportunity in the Delegated Financial Authorities (DFA) control area: Consolidate monitoring of CBSA managers' nominations and reassignment activities, in collaboration with Human Resource Branch, to pro-actively identify DFA amendment requirements and ensure accurate and timely delegation of financial authorities.

3.2 On-going monitoring program

In 2014-15, the Agency completed planned ongoing monitoring activities of acquisition cards, hospitality/travel, systems access configured controls, information technology general controls and entity-level controls.

Acquisition Cards

Tests performed demonstrated key controls effectiveness ensures compliance with CBSA and Treasury Board policies/directives and the section 34 approval of the Financial Administration Act (FAA). It was noted that provision of supporting documentation by the CBSA managers in order to demonstrate the FAA S.32 (Commitment Control Authority) needs improvement. Remediation activities have been initiated and ongoing monitoring of acquisition cards will be maintained as part of the CBSA account verification quality assurance strategy.

Hospitality / Travel

Tests performed demonstrated key controls effectiveness ensures compliancy with CBSA and Treasury Board policies/directives. No evidence of material control failures where remediation would be required has been identified.

Systems Access Configured Controls

The segregation of duties matrix for access to the CBSA financial system was assessed in order to identify potential segregation issues. No significant design deficiencies were identified but improvement opportunity was noted. The CBSA identified that:

  • Monitoring activities should be implemented at the transactional levels for financial system roles designated as high risk.

IT General Controls

The CRA is responsible for Information Technology General Controls (ITGC) ongoing effectiveness testing and the related remediation on behalf of the CBSA. As a result of the ongoing review of IT General (key) Controls that relate to the systems' operations, security, implementation and maintenance, no significant design control effectiveness deficiencies have been identified.

Entity-Level Controls

In 2014-15, the CBSA targeted monitoring efforts at control principles in its Control Environment relating to Human Resources policies and practices, and enterprise risk management. At year end, the existence of the CBSA key control Entity-level controls attributes was substantiated. No significant design deficiencies were identified.

4. CBSA’s action plan

4.1 Progress during fiscal year 2014-2015

During 2014-15, the Agency continued to make significant progress in assessing and improving its key controls. The following table summarizes the Agency's progress based on the plans identified in the previous fiscal year's annex:

Progress during Fiscal Year 2014-15
Element in previous year's action plan Status
Design and operating effectiveness testing and remediation of deficiencies: Interdepartmental settlements, the Delegated financial authorities and Budgeting and forecasting.
  • Operating effectiveness testing was completed and remediation of operating deficiencies identified. The assessment of the Budgeting and forecasting process was deferred to 2015-16 due the reallocation of resources to the assessment of the Confidential Human Source Program.
On-going Monitoring: Acquisition cards, hospitality/travel, systems access configured controls, IT general controls, entity-level controls, compensation, and revenue management.
  • Rotational reassessment was completed for acquisition cards, hospitality/travel, systems access configured controls, IT general controls and entity-level controls.
  • Rotational reassessment for compensation was deferred to 2015-16 due to implementation of the Pay modernization project.
  • Rotational reassessment for revenue management was deferred to 2016-17 due to the implementation of the CBSA Account Receivable Ledger.

4.2 Status and action plan for the next fiscal year and subsequent years

Building on progress to date, the CBSA is positioned to complete the full assessment of its system of ICFR in 2015-16. 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 the next fiscal year and for subsequent years are shown in the following table.

Status and Action Plan for the Next Fiscal Year and Subsequent Years

Agency Activities
Key control areas Design effectiveness testing and remediation Operational effectiveness testing and remediation Ongoing monitoring rotation
Compensation Complete Complete 2015-16
Capital Assets Complete Complete 2016-17
Procurement, payables and payments Complete Complete 2015-16
Information Technology General Controls (ITGCs) Complete Complete 2015-16
Entity Level Controls (ELCs) Complete Complete 2015-16
Financial Statements, Financial Close and Reporting Complete Complete 2016-17
Budgeting and Forecasting 2015-2016 2015-2016 2016-17

Administered Activities under the Customs Act, the Customs Tariff, the Excise Act, and the Excise Tax Act

Key control areas Design effectiveness testing and remediation Operational effectiveness testing and remediation Ongoing monitoring rotation
Excise tax revenues Complete Complete 2016-17
Custom Imports duties Complete Complete 2016-17
Excise duties Complete Complete 2016-17

4.3 Key Control Opportunities

The following financial control frameworks will be documented:

Budgeting and Forecasting: The Operating and forecasting Budget is based on certain principles, such as:

  • Departments and agencies must live within approved budgets;
  • Benefiting from Operating Budgets will depend on empowering line managers and employees;
  • Increased managerial flexibility will require a corresponding increase in managerial accountability;
  • Departments have to comply with all legislation and policies.

A budgeting and forecasting financial control framework will be established and documented in order to identify the key controls that the Agency should follow when creating, submitting and adhering to budgets and forecasts.

Account verification risk based strategy: As part of its ongoing account verification activities, the CBSA is proceeding with key control testing of the following key processes: Interdepartmental Settlements, Acquisition Cards, Delegation of Financial authorities, Hospitality/Travel and Revenue Management. Any significant deficiencies observed are reported on a continuing basis to the CBSA senior management and the CFO and are taken into consideration in the annual assessment of the effectiveness of the CBSA system of internal control.

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