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.

Erin O'Gorman, President
Ottawa, Canada

Jonathan Moor, Chief Financial Officer
Ottawa, Canada


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)
  2022 2021
Liabilities
Accounts payable and accrued liabilities (note 4) 257,006 174,895
Vacation pay and compensatory leave 111,350 118,884
Deposit accounts (note 6) 33,722 33,524
Environmental liabilities (note 5) 376 1,444
Provision for claims and litigation (note 11) 4,905 22,802
Employee future benefits (note 7) 43,876 48,537
Total liabilities 451,235 400,086
Financial assets
Due from Consolidated Revenue Fund 239,365 154,243
Accounts receivable and advances (note 8) 28,786 30,465
Total gross financial assets 268,151 184,708
Financial assets held on behalf of Government
Accounts receivable and advances (note 8) (2,724) (2,247)
Total financial assets held on behalf of Government (2,724) (2,247)
Total net financial assets 265,427 182,461
Departmental net debt 185,808 217,625
Non-financial assets
Tangible capital assets (note 9) 1,075,645 1,036,491
Total non-financial assets 1,075,645 1,036,491
Departmental net financial position 889,837 818,866

Contractual obligations (note 10)
Contingent liabilities (note 11)

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

Erin O'Gorman, President
Ottawa, Canada

Jonathan Moor, Chief Financial Officer
Ottawa, Canada


Statement of operations and departmental net financial position (unaudited) for the year ended March 31
(in thousands of dollars)
  2022 planned results 2022 2021
Expenses
Border management 1,621,267 1,746,933 1,512,281
Internal services 430,602 563,499 627,456
Border enforcement 329,183 325,622 270,920
Total expenses 2,381,052 2,636,054 2,410,657
Revenues
Sales of goods and services  35,516 19,079 16,665
Miscellaneous revenues 1,718 1,986 922
Revenues earned on behalf of Government (13,204) (3,275) (1,924)
Total revenues  24,030 17,790 15,653
Net cost of operations before government funding and transfers 2,357,022 2,618,264 2,395,004
Government funding and transfers
Net cash provided by Government   2,391,064 2,202,282
Services provided without charge by other government departments (note 12)   213,049 184,533
Change in due from Consolidated Revenue Fund   85,122 (37,131)
Net cost of operations after government funding and transfers   (70,971) 45,320
Departmental net financial position: Beginning of year   818,866 864,186
Departmental net financial position: End of year   889,837 818,866

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)
  2022 2021
Net cost of operations after government funding and transfers (70,971) 45,320
Change due to tangible capital assets
Acquisition of tangible capital assets 146,370 153,879
Amortization of tangible capital assets (106,173) (150,998)
Proceeds from disposal of tangible capital assets (728) (320)
Net loss on disposal of tangible capital assets (1,864) (2,124)
Adjustments to tangible capital assets 1,549 3
Total change due to tangible capital assets 39,154 440
Net (decrease) increase in departmental net debt (31,817) 45,760
Departmental net debt: Beginning of year 217,625 171,865
Departmental net debt: End of year 185,808 217,625

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)
  2022 2021
Operating activities
Net cost of operations before government funding and transfers 2,618,264 2,395,004
Non-cash items
Services provided without charge by other government departments (note 12) (213,049) (184,533)
Amortization of tangible capital assets (106,173) (150,998)
Net loss on disposal of tangible capital assets (1,864) (2,124)
Adjustments to tangible capital assets  1,549 3
Variations in statement of financial position
Decrease in accounts receivable and advances (2,156) (4,324)
Increase in liabilities (51,149) (4,305)
Cash used in operating activities 2,245,422 2,048,723
Capital investing activities
Acquisition of tangible capital assets 146,370 153,879
Proceeds from disposal of tangible capital assets (728) (320)
Cash used in capital investing activities 145,642 153,559
Net cash provided by Government of Canada 2,391,064 2,202,282

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. 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 core responsibilities:

(a) Border management — The Canada Border Services Agency assesses risk to identify threats, manages the free flow of admissible travellers and commercial goods into, through and out of Canada, and manages non-compliance.

(b) Border enforcement — The Canada Border Services Agency contributes to Canada’s security by supporting the immigration and refugee system when determining a person’s admissibility to Canada, taking the appropriate immigration enforcement actions when necessary, and supporting the prosecution of persons who violate our laws.

(c) Internal services — Internal support services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

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 2021-2022 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 2021-2022 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:

(a) Reconciliation of net cost of operations to current year authorities used
(in thousands of dollars)
  2022 2021
Net cost of operations before government funding and transfers 2,618,264 2,395,004
Adjustments for items affecting net cost of operations but not affecting authorities:
Services provided without charge by other government departments (213,049) (184,533)
Amortization of tangible capital assets (106,173) (150,998)
Refund and adjustments to prior years' expenditures 4,496 3,823
Net loss on disposal of tangible capital assets (1,864) (2,124)
Decrease in employee future benefits 4,661 7,570
Decrease (increase) in vacation pay and compensatory leave 7,534 (32,871)
Decrease in environmental liabilities 1,069 326
Decrease (increase) in claims and litigation 17,897 (22,320)
Increase in accrued liabilities not charged to authorities (99) (24)
Bad debt expense 61 (678)
Other 279 704
Total items affecting net cost of operations but not affecting authorities (285,188) (381,125)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets 146,370 153,879
Proceeds from disposal of tangible capital assets (728) (320)
Total items not affecting net cost of operations but affecting authorities 145,642 153,559
Current year authorities used 2,478,718 2,167,438
(b) Authorities provided and used
(in thousands of dollars)
  2022 2021
Authorities provided:
Vote 1: Operating expenditures 2,368,461 2,078,375
Vote 5: Capital expenditures 253,190 301,263
Statutory and other amounts 227,874 205,364
Less:
Authorities available for future years (178,643) (347,231)
Lapsed: Operating (126,212) (19,314)
Lapsed: Capital (65,952) (51,019)
Current year authorities used 2,478,718 2,167,438

4. Accounts payable and accrued liabilities

Details of the Department’s accounts payable and accrued liabilities
(in thousands of dollars)
  2022 2021
Accounts payable: Other government departments and agencies 61,654 31,155
Accounts payable: External parties 60,231 48,781
Total accounts payable 121,885 79,936
Accrued liabilities 135,121 94,959
Total accounts payable and accrued liabilities 257,006 174,895

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 (6 sites in ) where contamination may exist and assessment, remediation and monitoring may be required. Of these, the Department has identified 4 sites (4 sites in ) where action is required and for which a gross liability of $376 thousand ($1,444 thousand in ) 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 site (2 sites in 2021), no liability for remediation has been recognized as this site is now closed. 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 these liabilities by nature and source as at and
(in thousands of dollars)
Nature and source Number of sites 2022 Estimated liability 2022Footnote 3 Number of sites 2021 Estimated liability 2021Footnote 3
Fuel related practicesFootnote 1 3 366 4 1,444
Office/Commercial/Industrial OperationsFootnote 2 1 10 0 0
Totals 4 376 4 1,444

1. Contamination primarily associated with fuel storage and handling, e.g., accidental spills related to fuel storage tanks or former fuel handling practices, e.g. petroleum hydrocarbons, polyaromatic hydrocarbons and BTEX.

Return to first footnote 1 referrer

2. Contamination associated with the operations of the office/commercial/industrial facilities where activities such as fuel storage/handling, waste sites and use of metal-based paint resulted in former accidental contamination, e.g. metals, petroleum hydrocarbons, poluaromatic hydrocarbons, BTEX, etc.

Return to first footnote 2 referrer

3. 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.

Return to first footnote 3 referrer

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 account details
(in thousands of dollars)
  Opening balance Deposits Refunds Forfeitures Closing balance
Immigration guarantee fund 25,612 4,284 (3,289) (1,062) 25,545
General security deposits 7,912 265 8,177
Total deposit accounts 33,524 4,549 (3,289) (1,062) 33,722

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 - expense amounts to $153,345 thousand ($139,865 thousand in -). For Group 1 members, the expense represents approximately 1.01 times (1.01 times in -) the employee contributions and, for Group 2 members, approximately 1.00 times (1.00 times in -) 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 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 during the year
(in thousands of dollars)
  2022 2021
Accrued benefit obligation, beginning of year 48,537 56,107
Expense for the year (2,084) (4,385)
Benefits paid during the year (2,577) (3,185)
Accrued benefit obligation, end of year 43,876 48,537

8. Accounts receivable and advances

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

Accounts receivable and advances details
(in thousands of dollars)
  2022 2021
Receivables: Other government departments and agencies 16,097 18,858
Receivables: External parties 3,291 3,981
Employee advances and other receivables 11,265 9,935
  30,653 32,774
Allowance for doubtful accounts  (1,867) (2,309)
Gross accounts receivable 28,786 30,465
Accounts receivable held on behalf of Government (2,724) (2,247)
Net accounts receivable 26,062 28,218

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 3 years
In-house developed software 7 years
Vehicles
Motor vehicles 5 years
Ships and boats 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 (in thousands of dollars):

Tangible capital assets details
(in thousands of dollars)
  Cost Accumulated amortization 2022 2021
Capital asset class Opening balance Acquisitions Adjustments Disposals and write-offs Closing balance Opening balance Amortization Adjustments Disposals and write-offs Closing balance Net book value Net book value
Land 9,157 9,157 9,157 9,157
Buildings 601,899 1,022 602,921 235,960 18,881 254,841 348,080 365,939
Leasehold improvements 47,499 3,813 51,312 37,275 3,890 41,165 10,147 10,224
Works and infrastructure 10,018 1,339 80 11,437 3,940 435 4,375 7,062 6,078
Machinery and equipment 134,957 2,548 809 122 138,192 90,612 9,429 535 117 100,459 37,733 44,345
Informatics hardware 70,162 4,223 2,517 76,902 55,593 5,479 853 61,925 14,977 14,569
Informatics software: In-house developed 721,426 59,718 781,144 571,484 64,106 635,590 145,554 149,942
Informatics software: Purchased 5,799 5,799 5,799 5,799
Motor vehicles 39,661 4,053 270 2,356 41,628 26,679 3,728 2,309 28,098 13,530 12,982
Ships and boats 2,943 755 (174) 18 3,506 1,192 225 (171) 18 1,228 2,278 1,751
Assets under construction 421,504 133,452 (65,289) 2,540 487,127 487,127 421,504
Total 2,065,025 146,370 2,766 5,036 2,209,125 1,028,534 106,173 1,217 2,444 1,133,480 1,075,645 1,036,491

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 ($10 million or more) that can be reasonably estimated are summarized as follows:

Contractual obligations
(in thousands of dollars)
  2023 2024 2025 2026 2027 2028 and subsequent Total
Tangible capital assets 23,051 77         23,128
Purchase contracts 7,343 6,400 6,400 6,400 6,400 30,057 63,000
Total 30,394 6.477 6,400 6,400 6,400 30,057 86,128

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 $3,232 thousand ($1,862 thousand in -) at .

Claims and litigation with related parties included in the above amounts amount to nil (nil in ) 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)
  2022 2021
Employer's contribution to the health and dental insurance plans 146,616 119,395
Accommodation 61,144 59,873
Legal services 5,021 4,986
Workers' compensation coverage 268 279
Total 213,049 184,533

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
Other transactions with other government departments and agencies
(in thousands of dollars)
  2022 2021
Expenses 489,864 463,930
Revenues 670 469

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:

Expenses incurred and revenues generated for the main core responsibilities,
by major object of expense and by major type of revenue
(in thousands of dollars)
  Border management Internal services Border enforcement 2022 total 2021 total
Operating expenses
Salaries and employee benefits 1,379,599 356,434 224,215 1,960,248 1,722,645
Professional and special services 154,004 148,073 70,994 373,071 320,341
Amortization of tangible capital assets 74,254 31,862 57 106,173 150,998
Rental of buildings and machinery 49,229 11,766 12,010 73,005 69,874
Machinery and equipment 20,093 18,034 1,323 39,450 27,385
Transportation and telecommunication 22,525 2,097 12,255 36,877 26,355
Repairs and maintenance 23,658 10,765 749 35,172 39,377
Utilities, materials and supplies 14,953 1,681 1,609 18,243 20,689
Other 7,560 720 1,486 9,766 9,426
Court awards and other settlements 2,127 25 924 3,076 895
Bad debts (61) (61) 678
Provision for contingent liabilities (1,069) (17,897) (18,966) 21,994
Total operating expenses 1,746,933 563,499 325,622 2,636,054 2,410,657
Revenues
Sales of goods and services 18,224 40 815 19,079 16,665
Miscellaneous revenues 160 694 1,132 1,986 922
Revenues earned on behalf of Government (2,858) (114) (303) (3,275) (1,924)
Total revenues 15,526 620 1,644 17,790 15,653
Net cost from operations before government funding and transfers 1,731,407 562,879 323,978 2,618,264 2,395,004

Canada Border Services Agency: Administered activities

Statement of administered assets and liabilities (unaudited) as at March 31
(in thousands of dollars)
  2022 2021
Administered assets    
Cash on hand 242,348 320,838
Accounts receivable: Other government departments and agencies 39,155 29
Accounts receivable: External parties (note 3) 3,888,205 3,233,621
Total 4,169,708 3,554,488
Administered liabilities    
Accounts payable: Other government departments and agencies 440,258 341,430
Accounts payable: Provinces (note 4) 17,592 15,716
Accounts payable: External parties 889 1,206
Deposit accounts (note 5) 11,258 11,776
  469,997 370,128
Net amount due to the Consolidated Revenue Fund of the Government of Canada (note 6) 3,699,711 3,184,360
Total 4,169,708 3,554,488

Contingent liabilities (note 7)

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

Erin O’Gorman, President
Ottawa, Canada

Jonathan Moor, Chief Financial Officer
Ottawa, Canada


Statement of administered revenues (unaudited) for the year ended March 31
(in thousands of dollars)
  2022 2021
Administered revenues
Tax revenues
Excise taxes (note 8) 27,555,533 22,745,592
Customs import duties 5,236,876 4,254,126
Excise duties 1,438,815 1,266,463
  34,231,224 28,266,181
Non-tax revenues
Interest, penalties and fines 103,226 81,083
Miscellaneous services 355 134
Other 24 22
  103,605 81,239
Total administered revenues 34,334,829 28,347,420
Bad debt expense 226,705 124,881
Net administered revenues 34,108,124 28,222,539

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)
  2022 2021
Net administered revenues 34,108,124 28,222,539
Variations in administered assets and liabilities
(Increase) decrease in cash on hand 78,490 (248,408)
(Increase) decrease in accounts receivable: Other government departments and agencies (39,126) 1,456
(Increase) decrease in accounts receivable: External parties (654,584) 406,868
Increase (decrease) in accounts payable: Other government departments and agencies 98,828 83,902
Increase (decrease) in accounts payable: Provinces 1,876 4,263
Increase (decrease) in accounts payable: External parties (317) 631
Increase (decrease) in deposit accounts (518) (365)
Net cash deposited in the Consolidated Revenue Fund of the Government of Canada 33,592,773 28,470,886
Consisting of:
Deposits to the Consolidated Revenue Fund 34,315,415 29,206,209
Payments and refunds from the Consolidated Revenue Fund (722,642) (735,323)
Net cash deposited in the Consolidated Revenue Fund of the Government of Canada 33,592,773 28,470,886

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.

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:

Details of accounts receivable — External parties
(in thousands of dollars)
  2022 2021
Accounts receivable — External parties 4,701,118 3,838,450
Allowance for doubtful accounts (812,913) (604,829)
Accounts receivable — External parties 3,888,205 3,233,621

4. Accounts payable: Provinces

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

Accounts payable details: Provinces
(in thousands of dollars)
  2022 2021
Opening balance 15,716 11,453
Receipts from importers 146,796 107,923
Refunds to importers (451) (556)
Payments to provinces (144,469) (103,104)
Closing balance 17,592 15,716

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:

Details on the deposit accounts
(in thousands of dollars)
  2022 2021
Opening balance 11,776 12,140
Receipts 1,159 409
Payments (1,677) (773)
Closing balance 11,258 11,776

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:

Change in the net amount due to the CRF during the fiscal year
(in thousands of dollars)
  2022 2021
Opening balance 3,184,360 3,432,707
Net administered revenues 34,108,124 28,222,539
Net cash deposited in the Consolidated Revenue Fund  (33,592,773) (28,470,886)
Closing balance 3,699,711 3,184,360

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 $248 million as at ($185 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:

Details of the excise tax revenues
(in thousands of dollars)
  2022 2021
GST and HST 27,937,988 23,030,365
Tax remission order (24,618) (20,628)
Transfer of HST to provinces (407,100) (311,715)
Other excise taxes 49,263 47,570
Excise taxes 27,555,533 22,745,592

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.

Annex to the statement of management responsibility including internal control over financial reporting fiscal year 2021-2022

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, assessment results and related action plans.

Detailed information on the CBSA's authority, mandate and core responsibilities can be found in the Departmental Plan 2021-2022 and the Departmental Results Report 2021-2022 .

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. An internal control financial management framework, approved by the President, is in place and includes:

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

2.2 Service arrangements relevant to financial statements

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

2.2.1 Common service arrangements

Readers of this annex may refer to the annexes of the above-noted departments for a greater understanding of the systems of internal control over financial reporting related to these specific services.

The CBSA relies on other external service providers for the processing of certain information or transactions that are recorded in its financial statements, as follows:

2.2.2 Specific arrangements

Canada Revenue Agency (CRA), which provides IT services and the ongoing internal controls monitoring of the shared SAP financial system. CRA also provides accounts 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. The CBSA's assessment results for the 2021 to 2022 fiscal year

The following table summarizes the status of the ongoing monitoring activities according to the previous fiscal year's rotational plan.

Progress during fiscal year 2021 to 2022
Element in previous year’s action plan Status
Information Technology General Controls (ITGC) under CBSA management Ongoing monitoring testing was completed for ITGC for corporate financial systems, including the preparation of a draft recommendations letter outlining findings.
Payroll and Benefits

Documentation of key controls was revisited and framework updated to address weaknesses identified as part of an internal audit review. Design and operating effectiveness testing on updated key controls is planned for fiscal year 2022-23.

A Pay framework was developed using a risk-based approach to support Section 33 certification for pay transactions.

Capital Assets

Following results of the operational effectiveness testing completed at the end of 2020-21, Management Action Plans (MAPs) have been developed to address findings and remedial actions have started by Business Process Owners (BPO).

In the upcoming year, Internal Control team will follow up on MAPs and request evidence of implementation.

Accounts Payable and Payments

Documentation currently under review. Design and operating effectiveness testing postponed to fiscal year 2022-23 due to the change in business processes with the implementation of SAP Ariba.

Below listed are some key activities that occurred:

  • Updated framework with BPO;
  • Documented additional key controls not reflected in current framework;
  • Conducted assessment of changes to framework with the implementation of SAP Ariba; and
  • Communicated decision to delay testing due to major changes to processes following go-live of SAP Ariba.

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

3.1 New or significantly amended key controls

There were no other new or significantly amended key controls in existing processes which required a reassessment in the current fiscal year with the exception of Payroll and Benefits. The results of last year’s operational effectiveness testing on the Payroll process suggested control deficiencies which has led to revisiting the design effectiveness to improve the control environment.

The current year implementation of SAP Ariba impacted how the agency buys goods and services and pays its invoices. Therefore, this will require design and operational effectiveness testing to be conducted on revised key controls in the upcoming year.

As of next fiscal year, CFO Attestation, Costing and Investment Planning processes will be included in the rotational ongoing monitoring plan individually as opposed to be assessed as part of the project management review.

3.2 Ongoing monitoring program

As part of its rotational ongoing monitoring plan, the CBSA completed its assessment of controls within ITGCs. Overall, the key controls tested performed as intended, with opportunities for improvement noted.

Details of the assessment and the results are as follows:

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

The following table shows the CBSA’s rotational ongoing monitoring plan over the next five fiscal years. This plan will be revisited annually on the basis of the validation of high-risk processes and controls and related adjustments to the ongoing monitoring plan as required.

Rotational ongoing monitoring plan
Key control areas 2022-2023 fiscal year 2023-2024 fiscal year 2024-2025 fiscal year 2025-2026 fiscal year 2026-2027 fiscal year
Entity-level controls   applicable     applicable
IT general controls under CBSA management applicable     applicable  
CARM (See note 1) applicable applicable    
Other revenues and accounts receivable   applicable     applicable
Payroll and benefits applicable applicable     applicable
Accounts payable and payments applicable     applicable  
Capital assets (See note 2)   applicable    
Project management     applicable    
Budgeting and forecasting     applicable    
Financial close and reporting   applicable     applicable
CFO Attestation applicable     applicable  
Investment Planning     applicable    
Costing applicable     applicable  

Note 1: Throughout the year, implementation of key controls are discussed through monthly meetings with the CARM project team. This cooperation will continue until its full implementation planned for 2023-24.

Note 2: Internal Control will follow-up on Management Action Plan and request evidence for implementation according to completion dates.

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