Canada Border Services Agency financial statements for the year ended

Table of contents

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 , 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 Financial Management 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.

John Ossowski, President
Ottawa, Canada

Jonathan Moor, Chief Financial Officer
Ottawa, Canada


 

Canada Border Services Agency (agency activities)

Statement of financial position (unaudited) as at March 31 (in thousands of dollars)
Liabilities 2019 2018
Accounts payable and accrued liabilities (note 4) 243,841 194,036
Vacation pay and compensatory leave 75,989 65,614
Deposit accounts (note 6) 30,973 30,213
Environmental liabilities (note 5) 1,318 1,188
Provision for claims and litigation (note 11) 665 665
Employee future benefits (note 7) 57,588 57,615
Total liabilities 410,374 349,331
Financial assets
Due from Consolidated Revenue Fund 218,122 153,336
Accounts receivable and advances (note 8) 33,346 45,913
Total gross financial assets 251,468 199,249
Financial assets held on behalf of Government
Accounts receivable and advances (note 8) (3,402) (6,220)
Total financial assets held on behalf of Government (3,402) (6,220)
Total net financial assets 248,066 193,029
Departmental net debt 162,308 156,302
Non-financial assets
Tangible capital assets (note 9) 1,012,092 994,134
Total non-financial assets 1,012,092 994,134
Departmental net financial position 849,784 837,832

Contractual obligations (note 10)
Contingent liabilities (note 11)
The accompanying notes form an integral part of these financial statements.

 

Statement of operations and departmental net financial position (unaudited) for the year ended March 31 (in thousands of dollars)
Expenses 2019 Planned results 2019 2018
Border management 1,418,598 1,689,737 1,245,268
Internal services 363,565 391,487 457,213
Border enforcement 232,078 267,696 214,902
Total expenses 2,014,241 2,348,920 1,917,383
Revenues
Sales of goods and services 20,942 26,432 24,124
Miscellaneous revenues 2,300 1,386 843
Revenues earned on behalf of Government (4,812) (3,698) (3,824)
Total revenues 18,430 24,120 21,143
Net cost of operations before government funding and transfers 1,995,811 2,324,800 1,896,240
Government funding and transfers
Net cash provided by Government   2,087,194 1,723,158
Services provided without charge by other government departments (note 12)   184,777 160,937
Change in due from Consolidated Revenue Fund   64,786 46,778
Transfer of the transition payments for implementing salary payment in arrears   (5) (9)
Net cost of operations after government funding and transfers   (11,952) (34,624)
Departmental net financial position: beginning of year   837,832 803,208
Departmental net financial position: end of year   849,784 837,832

Segmented information (note 13)
The accompanying notes form an integral part of these financial statements.

Statement of change in departmental net debt (unaudited) for the year ended March 31 (in thousands of dollars)
  2019 2018
Net cost of operations after government funding and transfers (11,952) (34,624)
Change due to tangible capital assets    
Acquisition of tangible capital assets 136,378 109,946
Amortization of tangible capital assets (118,397) (77,295)
Proceeds from disposal of tangible capital assets (122) (31)
Net gain (loss) on disposal of tangible capital assets 99 (518)
Adjustments to tangible capital assets - 7,212
Total change due to tangible capital assets 17,958 39,314
Net increase in departmental net debt 6,006 4,690
Departmental net debt: beginning of year 156,302 151,612
Departmental net debt: end of year 162,308 156,302

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

Statement of cash flows (unaudited) for the year ended March 31 (in thousands of dollars)
Operating activities 2019 2018
Net cost of operations before government funding and transfers 2,324,800 1,896,240
Non-cash items:    
Services provided without charge by other government departments (note 12) (184,777) (160,937)
Amortization of tangible capital assets (118,397) (77,295)
Net gain (loss) on disposal of tangible capital assets 99 (518)
Adjustments to tangible capital assets - 7,212
Transition payments for implementing salary payments in arrears 5 9
Variations in statement of financial position:    
Increase (decrease) in accounts receivable and advances (9,749) 12,092
Increase in liabilities (61,043) (63,560)
Cash used in operating activities 1,950,938 1,613,243
Capital investing activities    
Acquisition of tangible capital assets 136,378 109,946
Proceeds from disposal of tangible capital assets (122) (31)
Cash used in capital investing activities 136,256 109,915
Net cash provided by Government of Canada 2,087,194 1,723,158

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 on-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 core responsibilities:

2. Summary of significant accounting policies

These financial statements are prepared using the department’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 department is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the department 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 in 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 2018 to 2019 departmental plan. 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 2018 to 2019 departmental plan.

b) Net cash provided by Government: The department operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the department is deposited to the CRF, and all cash disbursements made by the department 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: These 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 department is entitled to draw from the CRF without further authorities to discharge its liabilities.

d) Revenues: Revenues from regulatory fees are recognized based on the services provided in the year.

Miscellaneous revenues are recognized in the period the event giving rise to the revenues occurred. Revenues that are non-respendable are not available to discharge the department’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 carrying value.

f) Employee future benefits

g) Accounts receivable and advances: Accounts receivable and advances are initially recorded at cost. When necessary, an allowance for valuation is recorded to reduce the carrying value of accounts receivable and advances to amounts that approximate their net recoverable value.

h) Non-financial assets: The costs of acquiring land, buildings, equipment and other capital property are capitalized as tangible capital assets and, except for land, are amortized to expense over the estimated useful lives of the assets, as described in Note 9. All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Tangible capital assets do not include immovable assets located on reserves as defined in the Indian Act, works of art, museum collection and Crown land to which no acquisition cost is attributable; and intangible assets.

i) Contingent liabilities: Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, a provision is accrued and an expense recorded to other expenses. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

j) Environmental liabilities: An environmental liability for the remediation of contaminated sites is recognized when all the following criteria are satisfied: an environmental standard exists, contamination exceeds the environmental standard, the Government is directly responsible or accepts responsibility, it is expected that future economic benefits will be given up and a reasonable estimate of the amount can be made. The liability reflects the Government’s best estimate of the amount required to remediate the sites to the current minimum standard for its use prior to contamination.

The recorded liabilities are adjusted each year, as required, for inflation, new obligations, changes in management estimates and actual costs incurred.

If the likelihood of the Government’s responsibility is not determinable, a contingent liability is disclosed in the notes to the consolidated statements.

k) Measurement uncertainty: The preparation of these financial statements requires management to make estimates and assumptions that affect the reported and disclosed amounts of assets, liabilities, revenues and expenses reported in the financial statements and accompanying notes at March 31. The estimates are based on facts and circumstances, historical experience, general economic conditions and reflect the Government’s best estimate of the related amount at the end of the reporting period. The most significant items where estimates are used are 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.

l) Related party transactions, other than inter-entity transactions, are recorded at the exchange amount.

Inter-entity transactions are transactions between commonly controlled entities. Inter-entity transactions, other than restructuring transactions, are recorded on a gross basis and are measured at the carrying amount, except for the following:

3. Parliamentary Authorities

The department 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 department 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:

Reconciliation of net cost of operations to current year authorities used: (in thousands of dollars)
  2019 2018
Net cost of operations before government funding and transfers 2,324,800 1,896,240
Adjustments for items affecting net cost of operations but not affecting authorities:    
Services provided without charge by other government departments (184,777) (160,937)
Amortization of tangible capital assets (118,397) (77,295)
Refund and adjustments to prior years' expenditures 5,243 2,744
Net gain (loss) on disposal of tangible capital assets 99 (518)
Decrease in employee future benefits 27 808
Increase in vacation pay and compensatory leave (10,375) (4,794)
Increase in environmental liabilities (130) (22)
Decrease in claims and litigation - 1,500
Increase in accrued liabilities not charged to authorities (1,403) (706)
Increase in bad debt expense (304) (355)
Other 3,894 1,846
Total items affecting net cost of operations but not affecting authorities (306,123) (237,729)
Adjustments for items not affecting net cost of operations but affecting authorities:    
Acquisition of tangible capital assets 136,378 109,946
Proceeds from disposal of tangible capital assets (122) (31)
Transition payments for implementing salary payments in arrears 5 9
Total items affecting net cost of operations but not affecting authorities 136,261 109,924
Current year authorites used 2,154,938 1,768,435
Authorities provided and used (in thousands of dollars)
Authorities provided: 2019 2018
Vote 1 - Operating expenditures 2,051,120 1,757,949
Vote 5 - Capital expenditures 264,388 296,526
Statutory amounts 208,589 159,863
Less:
Authorities available for future years (211,225) (219,539)
Lapsed: Operating (100,909) (97,998)
Lapsed: Capital (57,025) (128,366)
Current year authorities used 2,154,938 1,768,435

4. Accounts payable and accrued liabilities

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

Accounts payable and accrued liabilities (in thousands of dollars)
  2019 2018
Accounts payable: other government departments and agencies 76,424 34,344
Accounts payable: external parties 57,492 69,954
Total accounts payable 133,916 104,298
Accrued liabilities 109,925 89,738
Total accounts payable and accrued liabilities 243,841 194,036

5. Environmental liabilities

Remediation of contaminated sites

The Government’s “Federal Approach to Contaminated Sites” sets out a framework for management of contaminated sites using a risk-based approach. Under this approach the Government has inventoried the contaminated sites identified on federal lands, 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 to human health and the environment.

The department has identified 5 sites (5 sites in 2018) where contamination may exist and assessment, remediation and monitoring may be required. Of these, the department has identified 3 sites (3 sites in 2018) where action is required and for which a gross liability of $1,318 thousand ($1,188 thousand in 2018) has been recorded. This liability estimate has been determined based on site assessments performed by environmental experts.

This represents management’s best estimate of the costs required to remediate sites to the current minimum standard for its use prior to contamination, based on information available at the financial statement date.

For the remaining 2 sites (2 sites in 2018), no liability for remediation has been recognized. These sites are at various stages of testing and evaluation and if remediation is required, liabilities will be reported as soon as a reasonable estimate can be determined. For other sites, the department does not expect to give up any future economic benefits (there is likely no significant environmental impact or human health threats). These sites will be re-examined and a liability for remediation will be recognized if future economic benefits will be given up.

The following table presents the total estimated amounts of these liabilities by nature and source as at and :

Total estimated amounts of environmental liabilities by nature and source
Nature and Source Number of Sites 2019 Estimated Liability 2019(2) Number of Sites 2018 Estimated Liability 2018(2)
Fuel Related Practices (1) 3 1,318,000 3 1,188,000
Totals 3 1,318,000 3 1,188,000

1. Contamination pimarily associaed with fuel storage and handling, e.g., accidental spills related to fuel storage tanks or former fuel handling practices, e.g. peroleum hydrocarbons, polyaromatic hydrocarbons and BTEX.

2. It was determined that the effects of discounting these liabilities for each fiscal year is immaterial for the CBSA. Therefore, a present value technique has not been used to calculate the discounted value of each site.

The department’s ongoing efforts to assess contaminated sites may result in additional environmental liabilities.

6. 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:

Deposit accounts (in thousands of dollars)
  Opening balance Deposits Refunds Forfeitures Closing balance
Immigration guarantee fund 22,684 6,032 (4,624) (913) 23,179
General secuity deposits 7,529 265 - - 7,794
Total deposit accounts 30,213 6,297 (4,624) (913) 30,973

7. Employee future benefits

(a) Pension benefits

The department'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/Québec Pension Plan benefits and they are indexed to inflation.

Both the employees and the department contribute to the cost of the plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to 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 2018 to 2019 expense amounts to $145,347 thousand ($108,754 thousand in 2017 to 2018). For Group 1 members, the expense represents approximately 1.01 times (1.01 times in 2017 to 2018) the employee contributions and, for Group 2 members, approximately 1.00 times (1.00 times in 2017 to 2018) the employee contributions.

The department's responsibility with regard to the plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the Consolidated financial statements of the Government of Canada, as the plan's sponsor.

(b) Severance benefits

Severance benefits provided to the department’s employees were previously based on an employee’s eligibility, years of service and salary at termination of employment. However, since 2011 the accumulation of severance benefits for voluntary departures progressively ceased for substantially all employees. Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service. By , substantially all settlements for immediate cash out were completed. Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities.

The changes in obligations during the year were as follows:

Changes in obligations of employee future benefits (in thousands of dollars)
  2019 2018
Accrued benefit obligation, beginning of year 57,615 58,423
Expense for the year 4,755 3,464
Benefits paid during the year (4,782) (4,272)
Accrued benefit obligation, end of year 57,588 57,615

8. Accounts receivable and advances

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

Accounts receivable and advances (in thousands of dollars)
  2019 2018
Receivables: other government departments and agencies 24,140 38,753
Receivables: external parties 4,759 4,694
Employee advances and other receivables 7,747 5,320
  36,646 48,767
Allowance for doubtful accounts (3,300) (2,854)
Gross accounts receivable 33,346 45,913
Accounts receivable held on behalf of Government (3,402) (6,220)
Net accounts receivable 29,944 39,693

9. Tangible capital assets

Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:

Amortization of tangible capital assets
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
In-house developed software
 
3 years
7 years
Vehicles
Motor vehicles
Ships and boats
 
5 years
10 years
Leasehold improvements Over the useful life of the improvement or lease term, whichever is shorter
Assets under construction Once in service, in accordance with asset type

Assets under construction are recorded in the applicable asset class in the year they are put into service and are not amortized until they are put into service.

The following table presents details of the tangible capital assets:

Amortization of tangible capital assets: cost (in thousands of dollars)
Capital asset class Opening balance Acquisitions Adjustments Disposals and write-offs Closing balance
Land 7,408 - - 2 7,406
Buildings 443,141 - 102,780 - 545,921
Leasehold improvements 30,315 - 6,498 - 36,813
Works and infrastructure 7,293 800 2,054 - 10,147
Machinery and equipment 114,025 6,328 6,993 1,529 125,817
Informatics hardware 55,821 6,986 - 162 62,645
Informatics software: in-house developed 490,756 - 76,517 - 567,273
Informatics software: purchased 5,811 - - 12 5,799
Motor vehicles 29,782 6,693 - 951 35,524
Ships and boats 1,044 1,114 - - 2,158
Assets under construction 501,481 114,457 -194,842 - 421,096
Total 1,686,877 136,378 - 2,656 1,820,599
Amortization of tangible capital assets: accumulated amortization (in thousands of dollars)
Capital asset class Opening balance Amortization Adjustments Disposals and write-offs Closing balance
Land - - - - -
Buildings 178,602 20,832 - - 199,434
Leasehold improvements 27,881 4,826 - - 32,707
Works and infrastructure 3,004 455 - - 3,459
Machinery and equipment 62,656 13,148 - 1,517 74,287
Informatics hardware 42,471 4,842 - 162 47,151
Informatics software: in-house developed 345,030 72,685 - - 417,715
Informatics software: purchased 5,811 - - 12 5,799
Motor vehicles 26,466 1,529 - 942 27,053
Ships and boats 822 80 - - 902
Assets under construction - - - - -
Total 692,743 118,397 - 2,633 808,507
Amortization of tangible capital assets: net book value (in thousands of dollars)
Capital asset class 2019 2018
Land 7,406 7,408
Buildings 346,487 264,539
Leasehold improvements 4,106 2,434
Works and infrastructure 6,688 4,289
Machinery and equipment 51,530 51,369
Informatics hardware 15,494 13,350
Informatics software: in-house developed 149,558 145,726
Informatics software: purchased - -
Motor vehicles 8,471 3,316
Ships and boats 1,256 222
Assets under construction 421,096 501,481
Total 1,012,092 994,134

10. Contractual obligations

The nature of the department’s activities may result in some large multi-year contracts and obligations whereby the department will be obligated to make future payments in order to carry out its programs or when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

Contractual obligations (in thousands of dollars)
  2020 2021 2022 2023 2024 2025 and subsequent Total
Purchase contracts 113,340 30,302 4,750 1,161 36 2 149,591

11. Contingent liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown.

Claims and litigation

Claims have been made against the department 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 department has recorded an allowance for claims and litigations where it is likely that there will be a future payment and a reasonable estimate of the loss can be made.

Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amount to approximately $8,625 thousand ($8,715 thousand in 2017 to 2018) at .

Claims and litigation with related parties included in the above amounts amount to nil (nil in 2018) at .

12. Related party transactions

The department is related as a result of common ownership to all government departments, agencies, and crown corporations. Related parties also include individuals who are members of key management personnel or close family members of those individuals, and entities controlled by, or under shared control of, a member of key management personnel or a close family member of that individual.

The department enters into transactions with these entities in the normal course of business and on normal trade terms.

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

During the year, the department 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 at the carrying value in the department’s Statement of operations and departmental net financial position as follows:

Common services provided without charge by other government departments (in thousands of dollars)
  2019 2018
Employer's contribution to the health and dental insurance plans 120,586 102,474
Accommodation 59,549 53,814
Legal services 4,372 4,332
Workers' compensation coverage 270 317
Total 184,777 160,937

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 Services and Procurement Canada and audit services provided by the Office of the Auditor General, and telecommunication and network services provided by Shared Services Canada are not included in the department’s Statement of operations and departmental net financial position.

(b) Other transactions with other government departments and agencies (in thousands of dollars)
  2019 2018
Expenses 394,491 346,339
Revenues 643 753

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

13. Segmented information

Presentation by segment is based on the department’s core responsibility. The presentation by segment is based on the same accounting policies as described in the summary of significant accounting policies in note 2.

The 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 department 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 department 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 department 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 revenues generated for the main core responsibilities, by major object of expense and by major type of revenue. The segment results for the period are as follows:

Operating expenses (in thousands of dollars)
  Border management Internal services Border enforcement 2019
Total
2018
Total
Salaries and employee benefits 1,335,213 242,864 188,751 1,766,828 1,385,991
Professional and special services 115,863 98,077 48,903 262,843 258,309
Amortization of tangible capital assets 107,246 10,884 267 118,397 77,295
Rental of buildings and machinery 55,782 8,562 7,685 72,029 62,221
Transportation and telecommunication 29,807 5,244 14,562 49,613 43,714
Machinery and equipment 9,811 15,819 1,889 27,519 42,452
Repairs and maintenance 19,199 7,522 666 27,387 24,520
Utilities, materials and supplies 10,137 1,491 1,524 13,152 12,932
Other 6,466 430 3,126 10,022 10,509
Court awards and other settlements 83 290 323 696 562
Bad debts - 304 - 304 356
Provision for contingent liabilities 130 - - 130 (1,478)
Total operating expenses 1,689,737 391,487 267,696 2,348,920 1,917,383
Revenues
  Border management Internal services Border enforcement 2019
Total
2018
Total
Sales of goods and services 24,657 7 1,768 26,432 24,124
Miscellaneous revenues 43 232 1,111 1,386 843
Revenues earned on behalf of Government (3,283) (32) (383) (3,698) (3,824)
Total revenues 21,417 207 2,496 24,120 21,143
Net cost from operations before government funding and transfers 1,668,320 391,280 265,200 2,324,800 1,896,240

14. 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

Statement of administered assets and liabilities (in thousands of dollars)
Administered assets 2019 2018
Cash on hand 545,378 350,358
Accounts receivable: other government departments and agencies 441 1,270
Accounts receivable: external parties (note 3) 3,592,946 3,362,913
Total 4,138,765 3,714,541
Administered liabilities    
Accounts payable: other government departments and agencies 299,142 268,961
Accounts payable: provinces (note 4) 11,772 13,310
Accounts payable: external parties 484 452
Deposit accounts (note 5) 11,761 9,810
  323,159 292,533
Net amount due to the Consolidated Revenue Fund of the Government of Canada (note 6) 3,815,606 3,422,008
Total 4,138,765 3,714,541

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

Statement of administered revenues (Unaudited)
For the Year Ended March 31

Statement of administered revenues (in thousands of dollars)
Administered revenues    
Tax revenues 2019 2018
Excise taxes (note 8) 26,966,368 25,252,550
Customs import duties 6,880,783 5,297,964
Excise duties 1,500,650 1,470,902
  35,347,801 32,021,416
Non-tax revenues    
Interest, penalties and fines 90,771 44,380
Sale of goods and services 717 819
Other 129 111
  91,617 45,310
Total administered revenues 35,439,418 32,066,726
Bad debt expense 122,527 108,184
Net administered revenues 35,316,891 31,958,542

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

Statement of administered cash flows (unaudited)
for the year ended March 31

Statement of administered cash flows (in thousands of dollars)
  2019 2018
Net administered revenues 35,316,891 31,958,542
Variations in administered assets and liabilities: 2019 2018
(Increase) decrease in cash on hand (195,020) 98,975
(Increase) decrease in accounts receivable: other government departments and agencies 829 (1,220)
(Increase) decrease in accounts receivable: external parties (230,033) (427,734)
Increase (decrease) in accounts payable: other government departments and agencies 30,181 22,723
Increase (decrease) in accounts payable: provinces (1,538) 1,695
Increase (decrease) in accounts payable: external parties 32 66
Increase (decrease) in deposit accounts 1,951 (15)
Net cash deposited in the Consolidated Revenue Fund of the Government of Canada 34,923,293 31,653,032
Consisting of:    
Deposits to the Consolidated Revenue Fund 35,529,872 32,206,340
Payments and refunds from the Consolidated Revenue Fund (606,579) (553,308)
Net cash deposited in the Consolidated Revenue Fund of the Government of Canada 34,923,293 31,653,032

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

Canada Border Services Agency (Administered 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, 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.

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; in those cases, the Agency does not estimate the amount of 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:

Accounts receivable: external parties (in thousands of dollars)
  2019 2018
Accounts receivable: external parties 3,983,628 3,659,352
Allowance for doubtful accounts (390,682) (296,439)
Accounts receivable: external parties 3,592,946 3,362,913

4. Accounts payable: provinces

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

Accounts payable: provinces (in thousands of dollars)
  2019 2018
Opening balance 13,310 11,615
Receipts from importers 83,924 87,339
Refunds to importers (565) (408)
Payments to provinces (84,897) (85,236)
Closing balance 11,772 13,310

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:

Deposit accounts (in thousands of dollars)
  2019 2018
Opening balance 9,810 9,825
Receipts 2,517 531
Payments (566) (546)
Closing balance 11,761 9,810

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:

Net amount due to the Consolidated Revenue Fund of the Government of Canada (in thousands of dollars)
  2019 2018
Opening balance 3,422,008 3,116,498
Net administered revenues 35,316,891 31,958,542
Net cash deposited in the Consolidated Revenue Fund (34,923,293) (31,653,032)
Closing balance 3,815,606 3,422,008

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 $22 million as at ($69 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:

Excise taxes (in thousands of dollars)
  2019 2018
GST and HST 27,189,397 25,415,835
Tax remission order (54,677) (23,034)
Transfer of HST to Provinces (233,694) (236,527)
Other excise taxes 65,342 96,276
Excise taxes 26,966,368 25,252,550

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 2018 to 2019

1. Introduction

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) including information on internal control management and assessment results and related action plans.

Detailed information on the CBSA’s raison d’être, mandate, and program activities can be found in the Departmental Results Report 2018 to 2019 and the Departmental Plan 2018 to 2019.

2. The CBSA’s system of internal control over financial reporting

2.1 Internal control management

The CBSA has a well-established governance and accountability structure to support its assessment efforts and the oversight of its system of internal control.

The CBSA’s Internal Control Financial Management Framework, approved by the President and the Comptrollership Branch Management Committee, is in place and includes:

The DAC provides advice to the President of the CBSA on the adequacy and functioning of the CBSA’s risk management, internal control and governance frameworks and processes.

2.2 Service arrangements relevant to financial statements

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

Common service arrangements:
Specific arrangements:

3. CBSA assessment results during fiscal year 2018 to 2019

Progress during fiscal year 2018 to 2019
Previous year's rotational ongoing monitoring plan for current year Status
Entity-level control Completed as planned; remedial actions required but not yet started.
Information Technology General Controls (ITGCs) No testing of the CBSA financial system as per CRA’s rotational ongoing monitoring plan.
Revenues and Accounts Receivable Ledger (ARL) (for excise tax, custom imports duties and excise duties) Completed as planned; remedial actions started.
Payables and payments Account verification work completed as planned; remedial actions started.
Capital assets Incorporated into project management.
Compensation Expected completion date deferred to 2019 to 2020.
Financial statements, public accounts and financial close and reporting processes Completed as planned; no significant remedial actions required.
Budgeting and forecasting Expected completion date deferred to 2019 to 2020.
Memorandum to Cabinet (MC) and Treasury Board (TB) Submissions Incorporated into project management.
Project management Includes capital assets, memorandum to Cabinet (MC) and Treasury Board (TB) submissions and related CFO attestation, investment planning, costing.
Expected completion date deferred to 2019 to 2020.

 

The key findings and significant adjustments required from the current year’s assessment activities are summarized below.

3.1 New or significantly amended key controls

In the current year, there were no significantly amended key controls in existing processes which required a reassessment.

Design effectiveness testing was initiated within the business processes for budgeting and forecasting, and project management. Some significant process improvements were observed, such as the implementation of a new governance committee for oversight of lower risk projects, actions to minimize budgetary lapses related to projects, and enhancements to financial management advisory services and capacity. These and other improvements will be considered during the completion of the business process assessment work in 2019 to 2020.

In future years, design and operational effectiveness testing will be conducted on the key controls for the new CBSA assessment and revenue management business process. This process replaces the existing accounts receivable ledger business process.

3.2 Ongoing monitoring program

As part of its rotational ongoing monitoring plan, the CBSA completed its reassessment of entity-level controls and the financial controls within the business processes of revenues and accounts receivable ledger; payments and payables; and financial statements, public accounts and financial close and reporting. For the most part, the key controls that were tested performed as intended, with remediation required as follows:

4. The CBSA’s action plan for the next fiscal year and subsequent years

The CBSA’s rotational ongoing monitoring plan over the next three fiscal years, based on an annual validation of the high-risk processes and controls and related adjustments to the ongoing monitoring plan as required, is shown in the following table.

Rotational ongoing monitoring plan
Key control areas Fiscal year
2019 to 2020
Fiscal Year
2020 to 2021
Fiscal year
2021 to 2022
Entity level controls applicable applicable applicable
Information technology general controls (ITGCs) applicable not applicable applicable
CBSA assessment and revenue management (CARM)
(includes accounts receivable ledger (ARL) and commercial revenue adjustments)
applicable applicable applicable
Casual refund program not applicable applicable applicable
Non tax revenues and account receivable not applicable applicable not applicable
Procurement, payables and payments
(includes Relocation and CBSA’s quality assurance and account verification activities)
applicable applicable applicable
Compensation applicable applicable applicable
Budgeting and forecasting applicable not applicable applicable
Financial close and reporting
(includes Future-oriented statement of perations, quarterly financial report, financial statements, public accounts)
applicable not applicable not applicable
Section 6 of the Customs Act applicable not applicable not applicable
Project Management
(includes Capital Assets; Memorandum to Cabinet (MC), Treasury Board (TB) Submissions and related CFO attestation, investment planning, costing)
applicable applicable applicable

In addition to its rotational ongoing monitoring plan, the CBSA plans to complete deferred assessment work and/or remedial activities in 2019 to 2020 for the following processes:

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