2015-2016 Departmental Performance Report
Section II: Expenditure Overview

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Actual Expenditure

Actual Spending in 2015-16 was $43.8 million higher than the Planned Spending mainly due incremental in-year authorities and expenditures related to: funding received for the Federal Infrastructure Initiative and Electronic Service Delivery Platform; Statutory Compensation Payments made as a result of the Avian Influenza outbreak in Ontario; and, salary related disbursements made on behalf of the Treasury Board Secretariat (maternity and paternity allowances, entitlements on cessation, etc.).

In 2014-15, the Agency concluded collective bargaining settlement negotiations applicable from 2010-11 through to 2013-14. The requirement for CFIA to absorb the ongoing cost increases associated with three of four years settled significantly impacted the Agency's FTE utilization. The ongoing cost of the most recent round of negotiations totalled approximately $30 million annually. Given that nearly 80% of the Agency's annual operating expenditures support personnel costs, there was limited flexibility to realign non-personnel authorities to cover these increases. As a result, the Agency FTE complement declined through attrition in all Programs. This downward trend was moderately offset by incremental funding received through Supplementary Estimates.

It should be noted that spending authorities and related expenditure information was drawn from the Public Accounts of Canada which were prepared using an expenditure basis of accounting, also known as modified cash accounting. However, the Agency uses the full accrual method of accounting to prepare and present its annual Agency financial statements.

Budgetary Financial Resources – (dollars)
2015–16 Main Estimates 2015–16 Planned Spending 2015–16 Total Authorities
Available for Use
2015–16 Actual Spending (authorities used) Difference
(actual minus planned)
698,151,888 705,551,888 789,959,478 749,362,527 43,810,639
Human Resources (Full-time equivalents - FTEs Table Note 43)
2015–16 Planned 2015–16 Actual 2015–16 Difference
actual minus planned)
6,148 5,901 (247)

Table Notes

Table Note 43

Full-Time Equivalent (FTE): A measure of human resource consumption, it calculates the number of assigned hours of work over the total hours of regularly scheduled work (37.5 hours per week over 12 months). For example, an employee who works half-time (18.75) hours per week) over a 12-month period is equivalent to a 0.5 FTE.

Return to table note 43  referrer

Budgetary Performance Summary

Budgetary Performance Summary Table for Strategic Outcome and Program(s) (dollars)
Strategic Outcome: A safe and accessible food supply and plant and animal resource base
Strategic Outcome, Program(s) and Internal Services 2015-16 Main Estimates 2015-16 Planned Spending 2016-17 Planned Spending 2017-18 Planned Spending 2015-16 Total Authority Available for use 2015-16 Actual Spending (authorities used) 2014-15 Actual Spending (authorities used) 2013-14 Actual Spending (authorities used)
Food Safety Program 362,958,350 363,836,779 365,461,365 318,276,712 408,312,924 376,113,531 421,520,442 364,310,526
Animal Health and Zoonotics Program 113,659,211 114,552,020 138,055,855 123,478,947 144,620,153 141,043,127 162,039,970 187,939,265
Plant Resources Program 76,204,256 76,730,103 93,894,697 78,723,209 82,153,712 79,807,062 90,262,195 86,537,965
International Collaboration and Technical Agreements 30,000,919 34,682,935 35,727,492 35,727,492 32,938,250 32,552,166 40,718,768 35,004,557
Subtotal 582,822,736 589,801,837 633,139,409 556,206,360 668,025,039 629,515,886 714,541,375 673,792,313
Internal Services Subtotal 115,329,152 115,750,051 113,999,756 112,417,466 121,934,439 119,846,641 133,951,514 131,959,340
Total 698,151,888 705,551,888 747,139,165 668,623,826 789,959,478 749,362,527 848,492,889 805,751,653

Departmental Spending Trend

Picture - Departmental Spending Trend Graph. Description follows.
Description for photo - Departmental Spending Trend Graph
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
Sunset Programs - Anticipated 37.2 37.2
Statutory 194.0 181.3 154.2 139.2 133.9 133.7
Voted 611.7 667.2 595.1 646.7 534.7 532.1
Total 805.8 848.5 749.4 785.9 705.8 703.0

Agency spending peaked in 2014-15 as a result of significant one-time salary related costs including; retroactive salary settlement payments; the cash out of accumulated severance; and, the transition salary payment in arrears. Another spending peak is anticipated in 2016-17 mainly due to temporary incremental spending to support of Federal Infrastructure Initiative and the Electronic Service Delivery Platform Initiative. Agency spending is forecasted to stabilize across 2017-18 and 2018-19 at a level that reflects on-going savings resulting from Budget 2012 initiatives.

The Agency will assess the level of resources required for programs with sunsetting funding and seek renewal as required in order to maintain and continuously improve Canada's strong food safety system, and safe and accessible food supply and plant and animal resource base.

Expenditure by Vote

For information on the Canadian Food Inspection Agency's organizational voted and statutory expenditures, consult the Public Accounts of Canada 2016Endnote xvii.

Alignment of Spending With the Whole-of-Government Framework

2015- 16 Actual Spending by Whole-of-Government-Framework SpendingEndnote xviii Area (dollars)
Strategic Outcome Program Spending Area Government of Canada Outcome 2015-16 Actual Spending
A safe and accessible food supply and plant and animal resource base Food Safety Program Social Affairs Healthy Canadians 376,113,531
A safe and accessible food supply and plant and animal resource base Animal Health and Zoonotics Program Social Affairs Healthy Canadians 141,043,127
A safe and accessible food supply and plant and animal resource base Plant Resources Program Economic Affairs A clean and healthy environment 79,807,062
A safe and accessible food supply and plant and animal resource base International Collaboration and Technical Agreements International Affairs A prosperous Canada through global commerce 32,552,166
Total Actual Spending by Spending Area (dollars)
Spending Area Total Planned Spending Total Actual Spending
Economic Affairs 76,730,103 79,807,062
Social Affairs 478,388,799 517,156,658
International Affairs 34,682,935 32,552,166
Government Affairs Table Note 44 0 -

Table Notes

Table Note 44

Government Affairs is not applicable because this Spending Area does not align with the Programs delivered by the Canadian Food Inspection Agency. For more information, refer to: http://www.tbs-sct.gc.ca/hgw-cgf/finances/rgs-erdg/wgf-ipp-eng.asp

Return to table note 44 referrer

Financial Statements Highlights

The financial highlights presented within the Agency's Performance Report are intended to serve as a general overview of the CFIA's financial position and operations. Financial statements are prepared in accordance with accrual accounting principles, Treasury Board accounting policies and year-end instructions issued by the Office of the Comptroller General which are based on Canadian generally accepted accounting principles for the public sector as required under Section 31 of the Canadian Food Inspection Agency Act.

However, the financial information previously presented in the earlier portion of section 2 of this Department Performance Report was drawn from the Public Accounts of Canada which were prepared using an expenditure basis of accounting, also known as modified cash accounting.

The main financial highlights for 2015-16 are the reduction in the allowance for severance benefits following the remaining cash-out by the employees and the reduction in salaries resulting from a decrease in the workforce. The compensation payments in the Animal Health and Zoonotics Program for 2015-16 are similar to last fiscal year and mostly relate to Avian Influenza. Capital investments related to the modernization of information technologies were comparable to the prior year.

Condensed Statement of Operations and Agency Net Financial Position (Unaudited)
For the Year ended March 31, 2016 (in thousands of dollars)
Financial Information 2015–16 Planned
Results
2015–16 Actual 2014–15 Actual Difference (2015-16 actual minus 2015-16 planned) Difference (2015-16 actual minus 2014-15 actual)
Total expenses 828,095 817,882 840,801 (10,213) (22,919)
Total revenues 54,298 53,104 54,713 (1,194) (1,609)
Net cost of operations before government funding and transfers 773,797 764,778 786,088 (9,019) (21,310)
Agency – Net Financial position N/A 113,246 100,423 N/A 12,823
Condensed Statement of Financial Position (Unaudited)
Financial Information 2015–16 2014–15 Difference (2015-16 minus 2014-15)
Total net liabilities 145,217 183,651 (38,434)
Total net financial assets 80,240 96,497 (16,257)
Agency – net debt 64,977 87,154 (22,177)
Total non-financial assets 178,223 187,577 (9,354)
Agency – Net Financial Position 113,246 100,423 12,823
Picture - Liabilities by Type. Description follows.
Description for photo - Liabilities by Type
  • Account payable and accrued liabilities - 54.44%
  • Employee severance benefits - 23.19%
  • Vacation pay and compensatory leave - 21.16%
  • Deferred revenue - 1.21%

The total expenses were $818 million in 2015-16, a decrease of $23 million compared to last year's $841 million. The variance came mostly from a decrease in salaries resulting from a reduction in the workforce by attrition (130 indeterminate employees plus a reduction in term employees) to cover for future collective bargaining impacts. The total revenues amounted to $53 million for 2015-16, similar to last year.

Picture - Liabilities by Type. Description follows.
Description for photo - Liabilities by Type
  • Tangible capital assets - 68.29%
  • Due from CRF - 26.12%
  • Accounts receivable and advances - 4.95%
  • Inventory - 0.33%
  • Prepaid expenses - 0.31%

Total liabilities at the end of 2015-16 were $145 million, a decrease of $38 million over the previous year. The decrease is mostly the result of $23 million in the cash out of severance benefits. The entire $34 million in employee severance allowance represented 23% of total liabilities. The accounts payable and accrued liabilities corresponded to 54% ($79 million) of the total liability. Vacation pay and compensatory leave amounted to $31 million (21%), while deferred revenue represented around 1% of total liabilities.

The total net financial assets of $80 million represents a decrease of $16 million compared to last year's $97 million, the variation is the amount of Due from the Consolidated Revenue Fund being lower than the prior year because of the 2014-15 payable at year end with Treasury Board for the Employee Benefits Plan. The non-financial assets ($178 million) were $10 million less compared to $188 million in 2014-15, because of a reduction in Tangible Capital Assets net book value linked to higher amortization. Tangible capital assets represented the largest portion of total assets, at 68%, while Due from CRF corresponded to 26% at $68 million. Accounts receivable and advances only represented 5%, followed by the inventory and prepaid expenses which were both less than 1% of total assets.

Comparison between Future-Oriented Financial Information and Actual Results

CFIA planned results are taken from the 2015-16 Future-Oriented Statement of Operations referenced in the Agency's 2015-16 Report on Plans and Priorities. They are based on assumptions and approved budget as of December 2014.

The main difference between the planned and the actual expenses comes from the compensation payments related to the Avian Influenza leading to higher expenses than forecasted in the Animal Health and Zoonotics Program. The change in actuarial estimations impacting the allowance for severance benefits also had an impact. Finally, the salaries were less than anticipated.

Financial Statements and Financial Statements Highlights

Financial Statements of Canadian Food Inspection Agency (Unaudited) Year ended March 31, 2016

Statement of Management Responsibility Including Internal Control Over Financial Reporting (Unaudited)

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2016 and all information contained in these statements rests with the Agency's management. 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 judgement, 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 Agency's financial transactions. Financial information submitted to the Public Accounts of Canada and included in the Agency's Departmental Performance Report is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting (ICFR) designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the Agency and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.

The system of ICFR is designed to mitigate risks to a reasonable level based on an on-going process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

A risk-based assessment of the system of ICFR for the year ended March 31, 2016 was completed in accordance with the Treasury Board Policy on Internal Control and the results and action plans are summarized in the annex.

The effectiveness and adequacy of the Agency's system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of the Agency's operations, and by the Departmental Audit Committee, which is responsible for providing the President with independent and objective advice on the maintenance of adequate control systems and the quality of financial reporting. The Departmental Audit Committee provides this support through oversight of core areas of the Agency's controls and accountabilities.

The financial statements of the Canadian Food Inspection Agency have not been audited.

Original Signed by

B.A. (Bruce) Archibald, PhD
President

Yves Bacon, CPA, CMA
Vice-President, CMB and Chief Financial Officer

Ottawa, Canada
August 24, 2016

Statement of Financial Position (Unaudited)
Statement of Financial Position (Unaudited)
As at March 31
(In thousands of dollars)
2016 2015
Liabilities
Accounts payable and accrued liabilities (Note 4) $79,053 $94,250
Vacation pay and compensatory leave 30,734 30,794
Deferred revenue 1,754 1,441
Employee severance benefits (Note 5 (b)) 33,676 57,166
Total liabilities 145,217 183,651
Financial Assets
Due from Consolidated Revenue Fund 67,522 88,246
Accounts receivable and advances (Note 6) 12,801 8,325
Total gross financial assets 80,323 96,571
Accounts receivable and advances held on behalf of Government (Note 6) (83) (74)
Total net financial assets 80,240 96,497
Agency - net debt 64,977 87,154
Non-Financial assets
Prepaid expenses 814 1,744
Inventory 857 905
Tangible capital assets (Note 7) 176,552 184,928
Total non-financial assets 178,223 187,577
Agency - net financial position $113,246 $100,423

Contingent liabilities (Note 8)
Contractual obligations (Note 9)
The accompanying notes are an integral part of these financial statements.

Original Signed by

B.A. (Bruce) Archibald, PhD
President

Yves Bacon, CPA, CMA
Vice-President, CMB and Chief Financial Officer

Ottawa, Canada
August 24, 2016

Statement of Operations and Agency Net Financial Position (Unaudited)
Statement of Operations and Agency Net Financial Position (Unaudited)
Year ended March 31
(In thousands of dollars)
2016 Planned Results 2016 2015
Expenses
Food Safety Program $424,502 $409,984 $417,402
Animal Health and Zoonotics Program 136,953 155,933 163,560
Plant Resources Program 90,555 90,028 90,170
International Collaboration and Technical Agreements 41,523 37,834 40,916
Internal Services 134,562 124,103 128,753
Total expenses 828,095 817,882 840,801
Revenues
Inspection fees 37,854 37,577 37,879
Registrations, permits, certificates 7,713 8,282 8,804
Miscellaneous fees and services 6,020 4,985 5,360
Establishment license fees 1,707 1,922 2,001
Administrative monetary penalties 1,211 556 1,150
Grading 160 101 100
Interest 32 32 39
Gain on disposal of property, plant and equipment - - 25
Revenues earned on behalf of Government (399) (351) (645)
Total revenues 54,298 53,104 54,713
Net cost of operations $773,797 $764,778 $786,088
Government funding and transfers
Net Cash provided by government 714,126 760,419
Change in due from Consolidated Revenue Fund (20,724) 29,850
Services provided without charge by other government departments (Note 10) 84,550 84,172
Assets funded by other government departments (OGD) - 20
Transfer of the transition payments for implementing salary payments in arrears (Note 11) (128) (17,196)
Transfer of assets and liabilities from/to OGD (223) -
Net cost of operations after government funding and transfers (12,823) (71,177)
Agency - net financial position - Beginning of year 100,423 29,246
Agency - net financial position - End of year $113,246 $100,423

Segmented information (Note 12)
The accompanying notes are an integral part of these financial statements.

Statement of Change in Agency Net Debt (Unaudited)
Statement of Change in Agency Net Debt (Unaudited)
Year ended March 31
(In thousands of dollars)
2016 2015
Net cost of operations after government funding and transfers $(12,823) $(71,177)
Change in tangible capital assets
Acquisition of tangible capital assets 36,919 21,058
Amortization of tangible capital assets (44,144) (34,843)
Proceeds from disposal of tangible capital assets (532) (657)
Net (loss) or gain on disposal of tangible capital assets (482) 25
Post-capitalization of tangible capital assets 86 74
Tangible capital assets funded by other government departments (OGD) - 20
Tangible capital assets transfer to OGD (223) -
Total change due to tangible capital assets (8,376) (14,323)
Change in inventories (48) 109
Change in prepaid expenses (930) 1,260
Net increase in Agency net debt (22,177) (84,131)
Agency - net debt - Beginning of year 87,154 171,285
Agency - net debt - End of year $64,977 $87,154

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

Statement of Cash Flows (Unaudited) - Operating activities
Statement of Cash Flows (Unaudited)
Year ended March 31
(In thousands of dollars)
2016 2015
Cash received from:
Fees, permits and certificates $ (55,112) $ (55,349)
Cash paid for:
Salaries and employees benefits 590,962 646,645
Operating and maintenance 122,835 133,712
Transfer payments 18,712 14,375
Revenues collected on behalf of Government 342 635
Cash used by operating activities 677,739 740,018
apital investment activities
Acquisition of tangible capital assets 36,919 21,058
Proceeds from disposal of tangible capital assets (532) (657)
Cash used by capital investment activities 36,387 20,401
Net cash provided by Government of Canada $714,126 $760,419

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

1. Authority and Purposes

The Canadian Food Inspection Agency (the "Agency") was established, effective April 1, 1997, under the Canadian Food Inspection Agency Act. The Act consolidates all federally mandated food and fish inspection services and federal animal and plant health activities into a single agency.

The Agency is a departmental corporation named in Schedule II to the Financial Administration Act and reports to Parliament through the Minister of Health.

The mandate of the Agency is to enhance the effectiveness and efficiency of federal inspection and related services for food, animals and plants. The objectives of the Agency are to contribute to a safe food supply and accurate product information; to contribute to the continuing health of animals and plants; and to facilitate trade in food, animals, plants, and related products.

In delivering its mandate, the Agency operates under the following 4 programs supported by internal services:

  1. Food Safety Program: The Food Safety Program aims to mitigate risks to public health associated with diseases and other health hazards in the food supply system and to manage food safety emergencies and incidents. The program achieves its objectives by promoting food safety awareness through public engagement and verification of compliance by industry with standards and science-based regulations. The program delivers initiatives to verify that consumers receive food safety and nutrition information and to mitigate unfair market practices targeting consumers and industry. Collaboration with other governments and stakeholders further enhances the Agency's ability to track, detect and mitigate risks associated with food and the food supply system, including food-borne illness. This program supports public health and instils confidence in Canada's food system.
  2. Animal Health And Zoonotics Program: The Animal Health and Zoonotics Program aims to mitigate risks to Canada's animal resource base, animal feeds and animal products, which are integral to a safe and accessible food supply system as well as to public health. The program achieves its objectives by mitigating risks to Canada's animals (including livestock and aquatic animals) from regulated diseases, managing animal disease emergencies and incidents, mitigating and managing risks to livestock and derived food products associated with feed, promoting animal welfare and guarding against deliberate threats to the animal resource base. The program helps to mitigate risks associated with animal diseases that can be transmitted to humans by controlling diseases within animal populations. This program supports the health of Canada's animal resources and instils confidence in the safety of Canada's animals, animal products and by-products, and production systems.
  3. Plant Resources Program: The Plant Resources Program aims to mitigate risks to Canada's plant resource base, which is integral to a safe and accessible food supply, as well as to public health and environmental sustainability.

    The program achieves its objectives by regulating agricultural and forestry products; mitigating risks to the plant resource base (including crops and forests) from regulated pests and diseases; regulating the safety and integrity of seeds, fertilizers and plant products; and managing plant health emergencies and incidents. The program also guards against deliberate threats to the plant resource base, facilitates the introduction of emerging plant technologies and protects the rights of plant breeders. Achieving the objectives of the program instils confidence in Canada's plants, plant production systems and plant products, and contributes to the health of Canada's plant resources.

  4. International Collaboration And Technical Agreements: The CFIA's International Collaboration and Technical Agreements program contributes to a coherent, predictable, and science-based international regulatory framework that facilitates meeting regulatory requirements of importing countries' food, animals and plants, and their products, resulting in the facilitation of multi-billion dollar trade for the Canadian economy. The program achieves its objectives through actively participating in international fora for the development of international science-based rules, standards, guidelines and policies and, the management of sanitary and phytosanitary committees established under international agreements. The CFIA's active promotion of the Canadian science-based regulatory system with foreign trading partners and negotiations to resolve scientific and technical issues contribute to market access.
  5. Internal Services: Internal 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 those provided to a specific program. The groups of activities are Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Materiel Services; and Acquisition Services.

The Agency is responsible for the administration and enforcement of the following acts: Agriculture and Agri-Food Administrative Monetary Penalties Act, Canadian Food Inspection Agency Act, Feeds Act, Fertilizers Act, Health of Animals Act, Plant Breeders' Rights Act, Plant Protection Act, Seeds Act, and the Safe Food for Canadians Act, which once enacted, will replace the Canada Agricultural Products Act, Fish Inspection Act, Meat Inspection Act, and Consumer Packaging and Labelling Act (as it relates to food).

In addition, the Agency is responsible for enforcement of the Consumer Packaging and Labelling Act and the Food and Drugs Act as they relate to food, except those provisions that relate to public health, safety, or nutrition.
Operating and capital expenditures are funded by the Government of Canada through parliamentary authorities. Compensation payments under the Health of Animals Act and the Plant Protection Act and employee benefits are authorized by separate statutory authorities. Revenues generated by its operations are deposited to the Consolidated Revenue Fund and are available for use by the Agency.

2. Summary of Significant Accounting Policies

These financial statements have been prepared using the Government's accounting policies stated below, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

  1. Parliamentary authorities

    The Agency is mainly financed by the Government of Canada through Parliamentary authorities. Authorities provided to the Agency do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Agency 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 high level reconciliation between the bases of reporting. The planned results amounts in the "Expenses" and "Revenues" sections of the Statement of Operations and Agency Net Financial Position are the amounts reported in the Future-Oriented Statement of Operations approved in February 2015 and included in the 2015-16 Report on Plans and Priorities (RPP). The planned results are consistent with the information presented in the RPP and are based on approved budgetary figures as of December 2014. 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 2015-16 Report on Plans and Priorities.

  2. Net cash provided by Government of Canada

    The Agency operates within the Consolidated Revenue Fund (CRF), which is administrated by the Receiver General for Canada. All cash received by the Agency is deposited to the CRF and all cash disbursements made by the Agency are paid from the CRF.

    The net cash provided by Government is the difference between all cash receipts and all cash disbursements, including transactions between departments of the Government of Canada.

  3. Due from the Consolidated Revenue Fund (CRF)

    The amount of due from CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that the Agency is entitled to draw from the CRF without further authorities to discharge its liabilities.

  4. Revenues

    Revenues for fees, permits and certificates are recognized in the accounts as the services are provided.

    Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. Revenue from external parties for specified purposes is recognized in the period in which the related expenses are incurred.

    Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.
    Revenues earned on behalf of Government are non-respendable and are not available to discharge the Agency's liabilities. These revenues are presented as a reduction to the Agency's revenues. While the President is expected to maintain accounting control, he or she has no authority regarding the disposition of non-respendable revenues.

    As a result, non-respendable revenues are considered to be earned on behalf of Government of Canada and are therefore presented in reduction of the Agency's revenues.

  5. Expenses

    Expenses are recorded on an accrual basis:

    Transfer payments are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement.

    Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.

    Services provided without charge by other government departments for accommodation, the employer's contribution to the health and dental insurance plans, legal services and Shared Services Canada expenses are recorded as operating expenses at their estimated cost.

  6. Employee future benefits
    1. Pension benefits:

      The Agency's eligible employees participate in the Public Service Pension Plan (the ''Plan''), a multi-employer plan administered by the Government of Canada. Both the employees and the Agency contribute to the cost of the Plan. The Agency's contributions are expensed during the year in which the services are rendered and represent the total pension obligation of the Agency. Under present legislation the Agency is not required to make contributions with respect to actuarial deficits of the Plan.

    2. Severance benefits:

      As part of collective agreement negotiations with the employees, and changes to conditions of employment, the accumulation of severance benefits under the employee severance pay program has ceased commencing in 2012. As of March 31st 2015, all employees had been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. The obligation relating to the benefits earned to be paid on termination is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

    3. Other future benefit plans:

      The Government of Canada sponsors a variety of other future benefit plans from which employees and former employees can benefit during or after employment or upon retirement. The Public Service Health Care Plan and the Pensioners' Dental Services Plan represent the two major future benefit plans available to the Agency's employees.

      The Agency does not pay for these programs as they fall under the Government of Canada`s financial responsibilities, but the Agency records its share of the annual benefits paid under these programs as a service provided without charge by other government departments. No amount is recorded in the Agency's financial statements with regard to either the actuarial liability of these programs at year end or the annual increase of such liabilities.

  7. Accounts receivable and advances

    Accounts receivable and advances are stated at amounts expected to be ultimately realized; a provision is made for receivables where recovery is considered uncertain.

  8. Contingent liabilities

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

  9. Inventory

    Inventory consists of laboratory materials, supplies and livestock held for future program delivery and not intended for re-sale. It is valued at cost. If it no longer has service potential, it is valued at the lower of cost or net realizable value.

  10. Tangible capital assets

    All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Amortization of tangible capital assets is recorded on a straight-line basis over the estimated useful life of the asset as follows:

    Tangible capital assets
    Asset class Amortization Period
    Buildings 20-30 years
    Machinery and equipment 5-20 years
    Computer equipment and software 3-10 years
    Vehicles 7-10 years
    Leasehold improvements Lesser of the remaining term of the lease or useful life of the improvement
    Assets under construction Once in service, in accordance with asset class
  11. Measurement uncertainty

    The preparation of these financial statements requires management to make estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable.

    The most significant items where estimates are used are contingent liabilities, the liability for employee severance benefits and the useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3. Parliamentary Authorities

The Agency receives most of its funding through annual Parliamentary authorities. Items recognized in the Statement of Operations and Agency Net Financial Position and the Statement of Financial Position in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, the Agency has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

(a) Reconciliation of net cost of operations to current year authorities used:
(In thousands of dollars) 2016 2015
Net cost of operations before government funding and transfers $764,778 $786,088
Adjustments for items affecting net cost of operations but not affecting authorities:
Add (less):
Services provided without charge by other government departments (84,550) (84,172)
Amortization of tangible capital assets (44,144) (34,843)
Revenues pursuant to Section 30 of the CFIA act 52,527 53,407
Refund of Prior year expenditures 3,079 5,000
Bad debt (118) (197)
Change in Employee Severance Benefits 23,490 52,707
Change in Allowance for Expired Collective Agreements (2,988) 28,080
Other net changes in future funding requirements 1,170 4,727
Gain (loss) on disposal of tangible capital assets (482) 25
Post-capitalization of tangible capital assets 86 74
Total (51,930) 24,808
Adjustments for items not affecting net cost of operations but affecting authorities:
Add (less):
Acquisition of tangible capital assets 36,919 21,058
Proceeds from disposal of tangible capital assets (532) (657)
Transition payments for implementing salary payments in arrears 128 17,196
Total 36,515 37,597
Current year authorities used $749,363 $848,493
(b) Authorities provided and used:
(In thousands of dollars) 2016 2015
Vote 1 - Operating expenditures $567,541 $660,582
Vote 5 - Capital expenditures 62,009 27,959
Revenues pursuant to Section 30 of the CFIA act 68,152 93,870
Statutory compensation (transfer) payments 17, 131 12,555
Statutory contributions to employee benefits plans and other statutory authorities 75,126 88,249
Less:
Authorities available for future years (6,179) (13,406)
Lapsed authority - operating (7,182) (13,965)
Lapsed authority - capital (27,235) (7,351)
Current year authorities used $749,363 $848,493
4. Accounts Payable and Accrued Liabilities

The following table presents details of the Agency's account payable and accrued liabilities:

Accounts Payable and Accrued Liabilities
(In thousands of dollars) 2016 2015
Accounts payable to other government department (OGD) $3,713 $21,906
Accounts payable to external parties 34,921 29,872
Total for accounts payable 38,634 51,778
Accrued liabilities 40,419 42,472
Total $79,053 $94,250
5. Employee Benefits
  1. Pension benefits.

    The Agency'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 Agency contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to the Canada's Economic Action Plan 2012, employee contributors have been divided into two groups – Group 1 relates to existing plan members as of December 31, 2012 and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.

    The 2015-2016 expense amounts to $51,500,288 ($60,107,261 in 2014-2015). For Group 1 members, the expense represents approximately 1.25 times (1.41 times in 2014-2015) the employee contributions and, for Group 2 members, approximately 1.24 times (1.39 times in 2014-2015) the employee contributions.

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

  2. Severance benefits

    The Agency provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded and thus have no assets, resulting in a plan deficit equal to the accrued benefit obligation. Benefits will be paid from future authorities.

    As part of collective agreement negotiations with the employees, and changes to conditions of employment, the accumulation of severance benefits under the employee severance pay program has ceased commencing in 2012.

    Employees have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation. Information about the severance benefits, measured for March 31, is as follows:

    Accrued benefit obligation
    (In thousands of dollars) 2016 2015
    Accrued benefit obligation, beginning of year $57,166 $109,873
    Expense for the year (3,907) 16,289
    Benefits paid during the year (19,583) (68,996)
    Accrued benefit obligation, end of year $33,676 $57,166
6. Accounts Receivable and Advances

The following table presents details of accounts receivable and advances:

Accounts Receivable and Advances
(In thousands of dollars) 2016 2015
Receivables from other government departments (OGD) $6,748 $2,505
Receivables from external parties 5,664 6,036
Employee advances 849 287
Sub-total 13,261 8,828
Less:
Allowance for doubtful accounts on receivables from external parties (460) (503)
Accounts receivable 12,801 8,325
Accounts receivable and advances held on behalf of Government (83) (74)
Net accounts receivable $12,718 $8,251
7. Tangible Capital Assets
Tangible Capital Assets (In thousands of dollars)
Cost Accumulated amortization
Capital asset class Opening balance Acquisitions AdjustmentsTable Note 45 Disposals and write-offs Closing balance Opening balance AmortizationTable Note 46 Disposals and write-offs Closing balance 2016 Net book value 2015 Net book value
Land $3,330 $- $- $- $3,330 $- $- $- $- $3,330 $3,330
Buildings 294,028 5,691 2,117 174 301,662 223,989 18,227 174 242,042 ,59,620 70,039
Machinery and equipment 93,453 5,537 (23) 3,743 95,017 54,191 5,728 3,228 56,691 38,326 39,262
Computer equipment and software 91,011 3,941 12,769 61 107,660 64,959 14,602 90 76,471 28,189 26,052
Vehicles 30,011 3,434 - 4,569 28,876 21,365 2,429 4,533 19,261 9,615 8,646
Assets under construction 26,521 17,858 (15,150) - 29,229 - - - - 29,229 26,521
Leasehold improvements 55,273 458 237 4,417 51,551 44,195 3,158 4,045 43,308 8,243 11,078
Total $593,627 $36,919 $(257) $12,964 $617,325 $408,699 $44,144 $12,070 $440,773 $176,552 $184,928

Table Notes

Table Note 45

Adjustments include assets under construction of $15,150,000 that were transferred to the other categories upon completion of the assets.

Return to table note 45 referrer

Table Note 46

Amortization expense for the year ended March 31, 2016 is $44,144,000 (2015 - $34,843,000).

Return to table note 46 referrer

8. Contingent Liabilities

Claims relating to both legal claims and employee grievances have been made against the Agency in the normal course of operations. Some of these potential liabilities 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 estimate of liability is accrued and an expense recorded in the financial statements.

Amounts have been accrued for contingent liabilities as at March 31, 2016 pertaining to legal claims. The amount of the contingent liabilities for legal claims recognized is based on management's best estimate. Other legal claims against the Agency and other defendants include a class action suit related to bovine spongiform encephalopathy (BSE) for which the likelihood of liability is not determinable.

No amounts have been accrued pertaining to employee grievances as at March 31, 2016.

9. Contractual Obligations

The nature of the Agency's activities can result in some large multi-year contracts and agreements whereby the Agency will be obligated to make future payments when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

Contractual Obligations
In thousands of dollars) 2017 2018 2019 2020 2021 and thereafter Total
Operating contracts $ 21,577 $ 3,670 $ 2,889 $ 2,661 $ 428 $ 31,225
Operating leases 3,216 12 10 6 - 3,244
Transfer payments 404 91 49 - - 544
Capital projects 133 - - - - 133
Total $25,330 $3,773 $2,948 $2,667 $ 428 $35,146
10. Related Party Transactions

The Agency is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The Agency enters into transactions with these entities in the normal course of business and on normal trade terms.

  1. Services provided without charge by other government departments

    During the year, the Agency received without charge from other government departments: The employer's contribution to the health and dental insurance plans, accommodation, certain legal services and Shared Services Canada expenses. These amounts have been recognized in the Agency's Statement of Operations and Agency Net Financial Position as follows:

    Services provided without charge by other government departments
    (In thousands of dollars) 2016 2015
    Employer's contribution to the health and dental insurance plans $41,097 $39,628
    Accommodation 29,463 30,661
    Legal services 1,432 1,325
    Shared Services Canada expenses 12,558 12,558
    Total $84,550 $84,172
  2. Other transactions with related parties
    Other transactions with related parties
    (In thousands of dollars) 2016 2015
    Accounts receivable from other government departments and agencies $6,748 $2,505
    Accounts payable to other government departments and agencies 3,713 21,906
    Expenses - Other Government departments and agencies 110,188 122,822
    Revenues - Other Government departments and agencies 380 666
11. Transfer of the transition payments for implementing salary payments in arrears

The Government of Canada implemented salary payments in arrears in 2014-15. As a result, a one-time payment was issued to employees and will be recovered from them in the future. The transition to salary payments in arrears forms part of the transformation initiative that replaces the pay system and also streamlines and modernizes the pay processes. This change to the pay system had no impact on the expenses of the Department. Prior to year end, the transition payments for implementing salary payments in arrears were transferred to a central account administered by Public Works and Government Services Canada, who is responsible for the administration of the Government pay system.

12. Segmented information

Presentation by segment is based on the Agency's program alignment architecture. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 2. The following table presents the expenses incurred and revenues generated by program, by major object of expenses and by major type of revenues. The segment results for the period are as follows:

Segmented information
(In thousands of dollars) 2016 2015
Food Safety Program Animal Health and
Zoonotics Program
Plant Resources Program International Collaboration and
Technical Agreements
Internal Services Total Total
Transfer Payments
Compensation payments $- $15,498 $1,633 $- $- $17,131 $12,555
Other 837 377 51 537 - 1,802 879
Total transfer payments 837 15,875 1,684 537 - 18,933 13,434
Operating Expenses
Salaries and employee benefits 308,113 98,806 66,318 30,907 79,590 583,734 623,943
Professional and special services 28,732 10,452 4,406 1,140 22,921 67,651 69,335
Accommodation 19,486 7,422 4,754 1,745 4,435 37,842 39,036
Amortization 22,039 8,512 4,830 2,031 6,732 44,144 34,843
Utilities, materials and supplies 8,389 5,616 3,288 215 1,896 19,404 18,619
Travel and relocation 8,410 3,032 1,602 545 1,416 15,005 15,134
Communications 6,316 2,454 1,379 580 2,154 12,883 12,817
Furniture and equipment 3,655 1,656 677 23 1,584 7,595 4,067
Repairs 2,995 1,386 728 67 794 5,970 5,218
Equipment rentals 456 336 146 11 1,827 2,776 3,390
Information 101 32 79 3 549 764 374
Miscellaneous 214 261 84 8 132 699 591
Loss of disposal of assets 241 93 53 22 73 482 -
Total operating expenses 409,147 140,058 88,344 37,294 124,103 798,949 827,367
Total expenses 409,984 155,933 90,028 37,834 124,103 817,882 840,801
Revenues
Inspection fees 26,396 1,001 3,973 6,207 - 37,577 37,879
Registrations, permits, certificates 2,043 685 892 4,662 - 8,282 8,804
Miscellaneous fees and services 244 1,518 1,406 1,465 352 4,985 5,360
Establishment license fees 1,897 - 25 - - 1,922 2,001
Administrative monetary penalties 27 308 164 - 57 556 1,150
Grading 99 - - 2 - 101 100
Interest - - - - 32 32 39
Gain on disposal of assets - - - - - - 25
Revenues earned on behalf of Government - - - - (351) (351) (645)
Total revenues 30,706 3,512 6,460 12,336 90 53,104 54,713
Net cost of operations $379,278 $152,421 $83,568 $25,498 $124,013 $764,778 $786,088

Summary of the assessment of effectiveness of the systems of internal control over financial reporting and the action plan of the Canadian Food Inspection Agency for fiscal year 2015-16 (unaudited)

Annex to the Statement of Management Responsibility Including Internal Control over Financial Reporting

1. Introduction

This document provides summary information on the measures taken by the Canadian Food Inspection Agency (CFIA or the Agency) 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 CFIA's authority, mandate and program activities can be found in the Agency's Departmental Performance Report and Report on Plans and Priorities.

2. Agency system of internal control over financial reporting

2.1 Internal control management

The CFIA has a well-established governance and accountability structure to support departmental assessment efforts and oversight of its system of internal control. An Agency internal control management framework, approved by the President, is in place and includes:

  • Organizational accountability structures as they relate to internal control management to support sound financial management, including roles and responsibilities of senior managers in their areas of responsibility for control management;
  • Values and ethics;
  • Ongoing communication and training on statutory requirements, and policies and procedures for sound financial management and control; and
  • At least semi-annual monitoring of and regular updates on internal control management, as well as the provision of related assessment results and action plans to the President and departmental senior management and, as applicable, the Agency Audit Committee.

The Agency Audit Committee provides advice to the President on the adequacy and functioning of the Agency's risk management, control and governance frameworks and processes.

2.2 Service arrangements relevant to financial statements

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

Common arrangements

  • Public Services and Procurement Canada (PSPC) centrally administers pay services and the procurement of goods and services, as per the Agency's Delegation of Authority, and provides accommodation services;
  • The Treasury Board Secretariat provides the Agency with information used to calculate various accruals and allowances;
  • The Department of Justice provides legal services to the CFIA; and
  • Shared Services Canada provides information technology (IT) infrastructure services to the CFIA in the areas of data centre and network services.

Specific arrangements

  • Agriculture and Agri-Food Canada (AAFC) provides the CFIA with:
    • The SAP financial system platform to capture and report all financial transactions;
    • The Enterprise data warehouse to report financial information; and
    • The PeopleSoft human resource system platform to manage pay and leave transactions.

3. Agency assessment results during fiscal year 2015-16

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

New or significantly amended key controls: In the current year, there were no significantly amended key controls in existing processes which required a reassessment. Design and operating effectiveness testing was conducted on any new key controls identified. Significant adjustments were not required for the new key controls.

Ongoing monitoring program: As part of its rotational ongoing monitoring plan, the Agency completed its reassessment of entity-level controls within Values & Ethics, People Management and Governance; Information Technology controls within PeopleSoft and Electronic Invoicing, and the financial controls within the business processes of Pay, Non-Pay, Statutory Compensation Payments and Financial Close & Reporting. For the most part, the key controls that were tested performed as intended, with remediation required as follows:

  • Improvements to existing values and ethics training;
  • Improvements to PeopleSoft access controls and retention of approval documentation;
  • Improvements to documentation of information technology general controls, user access control and retention of access approval documentation, for Electronic Invoicing applications, and;
  • Clarification of information contained in pay authorization reports and retention of pay related documentation.

4. Departmental Action Plan

4.1 Progress during fiscal year 2015–16

The CFIA continued to conduct its ongoing monitoring according to the previous fiscal year's rotational plan as shown in the following table:

Progress during fiscal year 2015–16
Previous year's rotational ongoing monitoring plan for current year Status
Complete on-going operating effectiveness testing for People Management, Governance and Financial Close & Reporting. Completed as planned; no remedial actions required.
Complete on-going operating effectiveness testing for Values and Ethics, Pay, Non-Pay Statutory Compensation Payments, People Soft and Electronic Invoicing. Completed as planned; remedial actions in progress.
Continue to follow up on outstanding improvement opportunities identified in previous years. Improvement opportunities are substantially completed for Capital Assets and are in progress for Pay and Revenue.

Other improvement opportunities identified in previous years have been fully implemented.

4.2 Action Plan for the next fiscal year and subsequent years

The CFIA's rotational ongoing monitoring plan over the next three years, based on an annual validation of risks and controls and related adjustments as required, is shown in the following table.

Entity level controls
Key Control Areas 2016-17 2017-18 2018-19
Values and Ethics No No Yes
Governance No Yes No
Risk Management No Yes No
Financial Management Yes No Yes
People Management No No Yes
Information technology general controls under Agency management
Key Control Areas 2015-16 2016-17 2017-18
SAP/Enterprise Yes No Yes
PeopleSoft No Yes No
Electronic Invoicing No No Yes
Business Process Controls
Key Control Areas 2015-16 2016-17 2017-18
Pay Yes Yes Yes
Non-Pay (Operating and Maintenance) No Yes No
Revenue Yes No Yes
Capital Assets Yes No Yes
Financial Close and Reporting Yes Yes Yes
Statutory Compensation Payments No Yes No

In addition to the risk-based on-going monitoring plan, the Agency will continue to address outstanding remediation.

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