Departmental Results Report for the period ending March 31, 2018

From: Innovation, Science and Economic Development Canada

Statement of Management Responsibility Including Internal Control over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2018, and all information contained in these statements rests with the management of Innovation, Science and Economic Development Canada. 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 fulfil its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of Innovation, Science and Economic Development Canada's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in Innovation, Science and Economic Development Canada's Departmental Results 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 the 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 Innovation, Science and Economic Development Canada; and through 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 ongoing process to identify key risks, to assess the effectiveness of associated key controls and to make necessary adjustments.

A risk-based assessment of the system of ICFR for the year ended March 31, 2018, was completed in accordance with the Policy on Financial Management, and the results and action plans are summarized in Innovation, Science and Economic Development Canada's Management Report on Internal Control over Financial Reporting for the fiscal year ending March 31, 2018.

The effectiveness and adequacy of Innovation, Science and Economic Development Canada's system of internal control is reviewed through the work of internal audit staff, who conduct periodic audits of different areas of Innovation, Science and Economic Development Canada 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 deputy head.

The financial statements of Innovation, Science and Economic Development Canada have not been audited.

The printed version was signed by:

Space to insert signature
John Knubley, Deputy Minister
Ottawa, Canada

August 31, 2018
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Date

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Simon Brault, Acting Assistant Deputy Minister/
Chief Financial Officer

August 21, 2018
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Date

Innovation, Science and Economic Development Canada
Consolidated Statement of Financial Position (Unaudited)
As at March 31
(in thousands of dollars)
2018

2017
Restated
(note 15)

Liabilities
Accounts payable and accrued liabilities (note 4) $ 496,595 $ 546,343
Vacation pay and compensatory leave 24,628 25,120
Deferred revenue (note 5) 7,289,246 8,214,300
Allowance for loan guarantees (note 12) 231,372 242,069
Employee future benefits (note 6) 21,340 21,088
Other liabilities (note 7) 64,692 46,276
Total gross liabilities 8,127,873 9,095,196
Liabilities held on behalf of Government
Deferred revenue (note 5) (7,220,508) (8,148,676)
Total liabilities held on behalf of Government (7,220,508) (8,148,676)
Total net liabilities 907,365 946,520
Financial Assets
Due from Consolidated Revenue Fund 402,967 399,135
Accounts receivable and advances (note 8) 57,623 60,395
Loans receivable (note 9) 1,425,229 1,621,770
Total gross financial assets 1,885,819 2,081,300
Financial assets held on behalf of Government
Accounts receivable and advances (note 8) (35,984) (39,309)
Loans receivable (note 9) (1,425,229) (1,621,770)
Total financial assets held on behalf of Government (1,461,213) (1,661,079)
Total net financial assets 424,606 420,221
Departmental net debt 482,759 526,299
Non-financial assets
Prepaid expenses 454 457
Tangible capital assets (note 10) 145,997 128,489
Total non-financial assets 146,451 128,946
Departmental net financial position $ (336,308) $ (397,353)

Contractual obligations and contractual rights (note 11)

Contingent liabilities and contingent assets (note 12)

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

The printed version was signed by :

Space to insert signature
John Knubley, Deputy Minister
Ottawa, Canada

August 31, 2018
Space to insert date
Date

Space to insert signature
Simon Brault, Acting Assistant Deputy Minister/
Chief Financial Officer

August 21, 2018
Space to insert date
Date

Innovation, Science and Economic Development Canada
Consolidated Statement of Operations and Departmental Net Financial Position (Unaudited)
For the Year Ended March 31
(in thousands of dollars)
2018
Planned Results
2018 2017
Restated
(note 15)
Expenses
The Canadian marketplace is efficient and competitive $ 494,260 $ 433,686 $ 398,696
Advancements in science and technology, knowledge, and innovation strengthen the Canadian economy 1,616,434 1,537,327 1,451,386
Canadian businesses and communities are competitive 340,147 228,590 236,061
Internal Services 213,994 259,524 227,419
Expenses incurred on behalf of government (2,447) (8,632) (76,740)
Total expenses 2,662,388 2,450,495 2,236,822
Revenues
Radio spectrum licences 1,137,398 1,130,688 1,130,480
Sales of services 313,286 312,960 313,625
Revenue from fines 29,146 35,795 22,074
Interest Revenue - 13,584 11,367
Amortization of discounts 5,077 6,105 8,536
Other revenue 847 5,668 894
Revenues earned on behalf of Government (1,228,067) (1,281,087) (1,257,445)
Total revenues 257,687 223,713 229,531
Net cost of operations before government funding and transfers 2,404,701 2,226,782 2,007,291
Government funding and transfers
Net cash provided by Government of Canada 2,205,184 1,806,464
Change in due from the Consolidated Revenue Fund 3,832 96,026
Services provided without charge by other government departments (note 13) 78,811 78,096
Transfer of the transition payments for implementing salary payments in arrears - (8)
Net cost (revenue) of operations after government funding and transfers (61,045) 26,713
Departmental net financial position - Beginning of year (397,353) (370,640)
Departmental net financial position - End of year $ (336,308) $ (397,353)

Segmented information (note 14)

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

Innovation, Science and Economic Development Canada
Consolidated Statement of Change in Departmental Net Debt (Unaudited)
For the Year Ended March 31
(in thousands of dollars)
2018 2017
Net cost (revenue) of operations after government funding and transfers $ (61,045) $ 26,713
Change due to tangible capital assets
Acquisition of tangible capital assets 31,418 20,722
Amortization of tangible capital assets (13,418) (16,652)
Proceeds from disposition of tangible capital assets (267) (159)
Net (loss) gain on disposal of tangible capital assets including adjustments (225) 1,007
Total change due to tangible capital assets 17,508 4,918
Change due to prepaid expenses (3) 117
Net increase (decrease) in departmental net debt (43,540) 31,748
Departmental net debt - Beginning of year 526,299 494,551
Departmental net debt - End of year $ 482,759 $ 526,299

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

Innovation, Science and Economic Development Canada
Consolidated Statement of Cash Flows (Unaudited)
For the Year Ended March 31
(in thousands of dollars)
2018 2017
Operating activities
Net cost of operations before government funding and transfers $ 2,226,782 $ 2,007,291
Non-cash items:
Amortization of tangible capital assets (13,418) (16,652)
Gain (Loss) on disposal of tangible capital assets (174) (234)
Loss on write-offs of tangible capital assets (21) -
Adjustment to tangible capital assets (30) 1,241
Services provided without charge by other government departments (note 13) (78,811) (78,096)
Transition payments for implementing salary payments arrears - 8
Variations in Statement of Financial Position:
Increase in accounts receivable 553 7,134
Increase (decrease) in prepaid expenses (3) 117
Decrease (increase) in accounts payable and accrued liabilities 49,748 (165,424)
Decrease (increase) in vacation pay and compensatory leave 492 (2,091)
Decrease (increase) in deferred revenue (3,114) 4,316
Decrease in allowance for loan guarantees 10,697 24,699
Decrease (increase) in employee future benefits (252) 6,465
Increase in other liabilities (18,416) (2,873)
Cash used in operating activities 2,174,033 1,785,901
Capital investing activities:
Acquisitions of tangible capital assets 31,418 20,722
Proceeds from disposal of tangible capital assets (267) (159)
Cash used in capital investing activities 31,151 20,563
Net cash provided by Government of Canada $ 2,205,184 $ 1,806,464

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

Innovation, Science and Economic Development Canada
Notes to the Financial Statements (Unaudited)
For the Year Ended March 31

1. Authority and Objectives

The authorities for the programs for which Innovation, Science and Economic Development Canada (ISED) is responsible are derived from the Department of Industry Act. Many other acts are under the responsibility of the Minister of Innovation, Science and Economic Development, and Treasury Board also defines other specific ISED authorities.

Innovation, Science and Economic Development Canada helps Canadian businesses grow, innovate and export so that they can create good quality jobs and wealth for Canadians through its three strategic outcomes, which are mutually reinforcing. Fostering competitiveness helps advance the marketplace by developing and administering economic framework policies that promote competition and innovation; support investment and entrepreneurial activity; and instill consumer, investor and business confidence. Investing in science and technology to generate knowledge and equip Canadians with the skills and training they need to compete and prosper in the global, knowledge-based economy helps ensure that discoveries and breakthroughs happen here in Canada, and that Canadians can realize the social and economic benefits. Promoting economic development in communities helps support business by encouraging the development of skills, ideas and opportunities across the country. Taken together, ISED's strategic outcomes support growth in employment, income, productivity and sustainable development in Canada.

Internal Services are groups of activities and resources that are administered to support the needs of programs and other corporate obligations of Innovation, Science and Economic Development Canada. Internal Services include only those activities and resources that apply across Innovation, Science and Economic Development Canada, not those provided specifically to a program.

Innovation, Science and Economic Development Canada's activities are delivered at its headquarters in Ottawa as well as in the regions. There are five regional offices with service points located across Canada and an office for FedNor.

Innovation, Science and Economic Development Canada has a number of transfer payment programs through which it provides grants and contributions to recipients in targeted groups and sectors. Each transfer payment program has specific objectives and expected results that support the achievement of ISED's strategic objectives.

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 the Canadian public sector accounting standards.

Significant accounting policies are as follows:

  1. Parliamentary authorities — Innovation, Science and Economic Development Canada is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to Innovation, Science and Economic Development Canada 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 the 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 consistent with the amounts reported in the Future-Oriented Statements of Operations included in the 2017–18 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 2017–18 Departmental Plan.

  2. Consolidation — The consolidated financial statements include the accounts of Innovation, Science and Economic Development Canada and the Canadian Intellectual Property Office (CIPO) Revolving Fund. The accounts of this sub-entity have been consolidated with those of Innovation, Science and Economic Development Canada and, as a result, all inter-organizational balances and transactions have been eliminated.

  3. Net cash provided by Government — Innovation, Science and Economic Development Canada operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by ISED is deposited to the CRF and all cash disbursements made by ISED 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.

  4. Amounts due from/to the CRF — These are the result of timing differences at year-end between when a transaction affects Innovation, Science and Economic Development Canada's authorities and when it is processed through the CRF. Amounts due from the CRF represents the net amount of cash that Innovation, Science and Economic Development Canada is entitled to draw from the CRF without further authorities to discharge its liabilities.

  5. Revenues

    Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.

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

    Deferred revenue consists of amounts received in advance of the delivery of goods and rendering of services that will be recognized as revenue in a subsequent fiscal year as it is earned.

    Other revenues are recognized in the period the event giving rise to the revenues occurred.

    Revenues that are non-respendable are not available to discharge Innovation, Science and Economic Development Canada's liabilities. While the Deputy Head is expected to maintain accounting control, he or she has no authority regarding the disposition of non-respendable revenues. As a result, these are considered to be earned on behalf of the Government of Canada and are therefore presented as a reduction to the entity's gross revenues.

  6. Expenses

    Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to the transfer payment expense.

    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, the employer's contribution to the health and dental insurance plans, workers' compensation costs, and legal services are recorded as operating expenses at their estimated cost. These exclude the CIPO Revolving Fund, which make payments for these services in their normal course of business.

  7. Employee future benefits

    1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. Innovation, Science and Economic Development Canada's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Innovation, Science and Economic Development Canada'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 accumulation of severance benefits for voluntary departures ceased for applicable employee groups. The remaining obligation for employees who did not withdraw benefits is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

  8. Accounts and loans receivable — These are stated at the lower of cost and net recoverable value.

    Transfer payments that are unconditionally repayable are recognized as loans receivable. When the terms of repayment for unconditionally repayable contributions are above the nominal amount provided, interest is recorded using the effective interest rate method.

    When the terms of the loans are concessionary, such as those provided with a low or no interest clause, they are recorded at their estimated present value. An unamortized discount is used to reduce the carrying value of the loans to amounts that approximate their net realizable value. A portion of the discount is recorded as revenue each year, on a straight-line basis, to reflect the change in the present value of the loans outstanding. With the adoption of Public Sector Accounting Standard 3450 – Financial Instruments on April 1, 2021, the effective interest rate method of recognizing interest will be used for recording the revenue portion of the discounted loans.

    A valuation allowance is recorded for accounts and loans receivable where recovery is considered uncertain. Write-offs are recorded annually.

  9. Allowances for loan guarantees — An allowance for loan guarantees is recorded for potential losses on loan guarantees when it is likely that a payment will be made in the future to honour a guarantee and when the amount of the loss can be reasonably estimated.

    The allowance for losses on outstanding loan guarantees is based on forecasting models developed by program areas.

  10. Tangible capital assets (Non-financial assets) — All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Innovation, Science and Economic Development Canada does not capitalize intangibles; works of art and historical treasures that have cultural, aesthetic or historical value; assets located on Indian Reserves; and museum collections.

  11. 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 an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

  12. Contingent assets — Contingent assets are possible assets which may become actual assets when one or more future events occur or fail to occur. If the future even is likely to occur or fail to occur, the contingent asset is disclosed in the notes to the financial statements.

  13. Prepaid expenses (Non-financial asset) — These include prepaid expenses, deferred charges and payments where, pursuant to a contract or contribution agreement, a payment is made before the completion of the work, delivery of the goods or rendering of the service.

  14. Foreign currency transactions — Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in a foreign currency are translated into Canadian dollars using the rate of exchange in effect at year-end. Gains and losses resulting from foreign currency transactions are included in the Statement of Operations and Departmental Net Financial Position.

  15. Measurement uncertainty — The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are contingent liabilities, the liability for employee future benefits and the useful life of tangible capital assets. Actual results could differ significantly 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.

  16. Related party transactions — 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:

    1. Services provided on a recovery basis are recognized as revenues and expenses on a gross basis and measured at the exchange amount.
    2. Certain services received on a without charge basis are recorded for departmental financial statement purposes at the carrying amount.

3. Parliamentary Authorities

Innovation, Science and Economic Development Canada 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, Innovation, Science and Economic Development Canada has different net results of operations for the year on a government-funding basis rather 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
2018 2017
(in thousands of dollars)
Net cost of operations before government funding and transfers $ 2,226,782 $ 2,007,291
Adjustments for items affecting net cost of operations but not affecting authorities:
Repayment of conditionally repayable contributions 46,975 55,196
Services provided without charge by other government departments (78,811) (78,096)
Provision for loan guarantees 10,697 24,699
Amortization of tangible capital assets (13,418) (16,652)
Decrease (increase) in employee future benefits (252) 6,465
Adjustment of previous year's Accounts Payable 3,508 5,572
Refund of prior year's expenditures 306 18,786
Decrease (increase) in vacation pay and compensatory leave 357 (2,290)
Net gain (loss) on tangible capital assets (195) (234)
Year-end accrual of transfer payments 31,200 (63,100)
Revenue not available for spending 45,175 58,896
Other (7,996) (6,371)
Total items affecting net cost of operations but not affecting authorities 37,546 2,871
Adjustments for items not affecting net cost of operations but affecting authorities:
Increase in loans and advances 105,394 107,069
Revenue available for spending (48,626) (54,228)
Increase in allowance for vacation and compensatory leave 135 199
Transition payments for implementing salary payments in arrears - 8
Acquisitions of tangible capital assets 31,418 20,722
Other 3,289 2,982
Total items not affecting net cost of operations but affecting authorities 91,610 76,752
Current year authorities used $ 2,355,938 $ 2,086,914
(b) Authorities provided and used
2018 2017
(in thousands of dollars)
Authorities Provided:
Vote 1 – Operating expenditures $ 416,543 $ 374,590
Vote 5 – Capital expenditures 17,575 20,611
Vote 10 – Grants and contributions 2,225,321 1,582,925
Statutory amounts 308,885 382,382
2,968,324 2,360,508
Less:
Authorities available for future years 152,603 171,558
Lapsed authorities: Operating expenditures 6,694 27,814
Capital expenditures 650 6,051
Grants and contributions 451,639 67,371
Other 800 800
Current year authorities used $ 2,355,938 $ 2,086,914

4. Accounts Payable and Accrued Liabilities

The following table presents details of Innovation, Science and Economic Development Canada's accounts payable and accrued liabilities:

Accounts Payable and Accrued Liabilities
2018 2017
(in thousands of dollars)
Accounts payable to other government departments and agencies $ 10,510 $ 7,008
Accounts payable to external parties 299,623 317,631
Year-end accrual – pending Budget Implementation Act 149,200 180,400
Accrued salaries and wages 37,183 41,242
Other external payables 79 62
Total accounts payable and accrued liabilities $ 496,595 $ 546,343

5. Deferred Revenue

The majority of Innovation, Science and Economic Development Canada's deferred revenues result from auctions of radio licence frequencies. These revenues are recognized over a 10-year period for previous auctions and a 20-year period for the new licenses arising from more recent spectrum auctions. Another main source of deferred revenues comes from examination requests of intellectual property. These fees are charged in advance and are recognized as revenue once the examination is completed.

The Prime Minister's Awards account was established to record amounts deposited by external parties to be used in support of the Prime Minister's Awards for Teaching Excellence.

Deferred Revenue
2018 2017
(in thousands of dollars)
Opening balance $ 8,214,300 $ 9,003,990
Licence fees received 164,948 257,713
Licence fees earned 1,093,089 1,043,101
Sub-total (928,141) (785,388)
Fees for trademarks, patents and copyrights received 47,926 54,228
Fees for trademarks, patents and copyrights earned 44,876 58,568
Sub-total 3,050 (4,340)
Other services of a regulatory nature received 700 453
Other services of a regulatory nature earned 453 403
Sub-total 247 50
Prime Minister's awards received 50 100
Prime Minister's awards disbursed 96 80
Sub-total (46) 20
Customer deposits received 45,386 46,338
Customer deposits disbursed 45,537 46,383
Sub-total (151) (45)
Loan Guarantee Fees received - 13
Loan Guarantee Fees earned 13 -
Sub-total (13) 13
Gross closing balance 7,289,246 8,214,300
Deferred revenues held on behalf of Government  (7,220,508) (8,148,676)
Net closing balance $ 68,738 $ 65,624

6. Employee Future Benefits

a) Pension benefits

Innovation, Science and Economic Development Canada's employees participate in the public service pension plan (the "Plan"), which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Quebec Pension Plan benefits and they are indexed to inflation.

Both the employees and Innovation, Science and Economic Development Canada contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to 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 2017–18 expense amounts to $59,095,750 ($55,469,153 in 2016–17). For Group 1 members, the expense represents approximately 1.01 times (1.12 times in 2016–17) the employee contributions and, for Group 2 members, approximately 1.00 time (1.08 times in 2016–17) the employee contributions.

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

b) Severance benefits

Severance benefits provided to Innovation, Science and Economic Development Canada's employees were previously based on an employee's eligibility, years of service and salary at termination of employment. However, since 2011 the accumulation of severance benefits for voluntary departures progressively ceased for substantially all employees. Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service. By March 31, 2018, 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 the obligations during the year were as follows:

Employee Future Benefits
2018 2017
(in thousands of dollars)
Accrued benefit obligation - Beginning of year $ 21,088 $ 27,553
Expense for the year 2,407 (4,531)
Benefits paid during the year (2,155) (1,934)
Accrued benefit obligation - End of year $ 21,340 $ 21,088

7. Other Liabilities

Other liabilities represent amounts received from third parties to be disbursed for a specified purpose. Activity during the year in these accounts is as follows:

Other Liabilities
Opening Balance Receipts Payments Closing Balance
(in thousands of dollars)
Deposits from Spectrum Auctions $ - $ 16,373 $ - $ 16,373
Restitutions under the Competition Act 4 - - 4
Cost sharing projects 1,849 577 392 2,034
Securities in Trust, Bankruptcy and Insolvency Act 52 - - 52
Unclaimed dividends and undistributed assets (BIA) 30,520 2,018 894 31,644
Petro Canada Enterprises unclaimed shares 687 - - 687
Canada Business Corporations Act (CBCA) 8,247 796 62 8,981
Winding-up and Restructuring Act 4,917 - - 4,917
Total other liabilities $ 46,276 $ 19,764 $ 1,348 $ 64,692

Deposits from Spectrum Auctions — This account was established to record amounts deposited by external parties to be eligible to participate in an auction of spectrum licences.

Restitutions under the Competition Act — This account was established to facilitate judgments rendered under Article 52 of the Competition Act, and to account for monies received in trust for restitution and for subsequent payment.

Cost-sharing Projects — Innovation, Science and Economic Development Canada partners with other governments and external organizations to deliver programs and services that contribute to an innovative economy. The account was established to record amounts deposited by these partners.

Securities in Trust and Income from Securities in Trust, Bankruptcy and Insolvency Act — This account was established to record dividends paid on shares held by a bankrupt stockbroker on behalf of clients. As the shares were not registered in clients' names, dividends are paid to the last registered owner, in this case, the stockbroker. These dividends are forwarded to the Superintendent of Bankruptcy until such time as rightful owners are identified.

Unclaimed Dividends and Undistributed Assets, Bankruptcy and Insolvency Act— This account represents amounts credited to the Receiver General in accordance with the provisions of the Act, pending distribution to creditors.

Petro-Canada Enterprises Inc. unclaimed shares — This account was established to record the liability to shareholders who have not presented their shares for payment in accordance with Section 227 of the Canada Business Corporations Act.

Unclaimed Dividends and Undistributed Assets, Canada Business Corporations Act — This account was established for the purpose of recording liabilities to creditors and shareholders who have not been located. The account is charged when funds are paid to them.

Winding-up and Restructuring Act — This account records deposits credited to the Receiver General as a result of the final winding-up of the operations of a company, in accordance with sections 138 and 139 of the Winding-up and Restructuring Act, pending distribution to the persons entitled thereto.

8. Accounts receivable and advances

The following table presents details of Innovation, Science and Economic Development Canada's accounts receivable and advances balances:

Accounts receivable and advances
2018 2017
(in thousands of dollars)
Receivables from other government departments and agencies $ 17,411 $ 19,786
Accounts receivable from external parties 34,135 36,413
Accrued receivables 21,992 29,585
Employee advances 259 181
Other receivables 7,233 5,945
Total external 81,030 91,910
Allowance for doubtful accounts on receivables from external parties (23,407) (31,515)
Gross accounts receivables and advances 57,623 60,395
Accounts receivable held on behalf of Government (35,984) (39,309)
Net accounts receivable $ 21,639 $ 21,086

9. Loans receivable

The following table presents details of the Innovation, Science and Economic Development Canada's loans and unconditionally repayable contributions:

Loans receivable
2018 2017
Restated
(note 15)
(in thousands of dollars)
Unconditionally repayable contributions $ 1,543,275 $ 1,741,586
Less: Unamortized discount 118,046 119,816
Less: Allowance for doubtful loans and advances - -
Net unconditionally repayable contributions 1,425,229 1,621,770
Loans on expired loan guarantees 62,115 72,284
Less: Allowance for doubtful loans 62,115 72,284
Net loans on expired loan guarantees - -
Gross loans receivable 1,425,229 1,621,770
Loans held on behalf of Government  (1,425,229) (1,621,770)
Net loans receivable $ - $ -

Unconditionally repayable contributions — Loans have been made to various recipients under several programs managed by Innovation, Science and Economic Development Canada, including the Strategic Aerospace Defence Initiative (SADI), Technology Partnerships Canada (TPC), the Defence Industries Productivity Program (DIPP) and the Automotive Innovation Fund (AIF). All have different repayment terms and maturity dates that are included in the individual agreement. The unamortized discount is related to unconditionally repayable contributions that have significant concessionary terms and is calculated by applying the 25% rule on an individual loan basis. The unamortized discount rate is the Consolidated Revenue Lending Rate posted by the department of Finance. Unconditionally repayable contributions that have payment terms above the original loan amount accrue interest revenue quarterly based on their internal rate of return.

Loans may also be established as a result of contribution agreement changes. Under some circumstances, when repayment terms are changed, previously recorded conditionally repayable contributions become unconditionally repayable. Under these circumstances, prior year expenses for the agreements are reversed in-year, and a loan receivable is established.

Loans on expired loan guarantees — These are payments made to lending institutions for loss claims on defaulted loans which have been guaranteed by ISED. These loan guarantees to small business enterprises under the Canada Small Business Financing Act and other loan guarantee programs are made net of recoveries. The allowance is recorded to match the loan amount as these payments represent loans which have already defaulted with lending institutions, therefor their collection is doubtful.

10. 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:

Tangible Capital Assets
Asset Class Amortization Period
Buildings 15 to 30 years
Works and infrastructure 30 years
Machinery and equipment 3 to 10 years
Vehicles 5 to 10 years
Computer hardware 5 to 10 years
Computer software 3 to 10 years
Leasehold improvements Lesser of the remaining term of the lease or useful life of the improvement

Assets under construction are recorded in the applicable capital asset class and are amortized in the year that they become available for use.

(in thousands of dollars) Cost Accumulated Amortization Net Book Value
Capital asset class Opening balance Acquisitions Adjustments and Transfers Footnote * Disposals and write-offs Closing balance Opening balance Amortization Adjustments and Transfers Disposals and write-offs Closing balance 2018 2017
Land $ 1,441 $ - $ - $ - $ 1,441 $ - $ - $ - $ - $ - $ 1,441 $ 1,441
Buildings 53,170 - 28,097 7 81,260 36,487 1,064 (2,626) 3 34,922 46,338 16,683
Works and infrastructure 12,792 - 3,474 - 16,266 11,444 408 - - 11,852 4,414 1,348
Machinery and equipment 58,828 1,745 481 3,063 57,991 44,663 2,923 17 2,963 44,640 13,351 14,165
Vehicles 10,022 531 27 547 10,033 8,183 461 20 547 8,117 1,916 1,839
Computer hardware 14,990 1,171 197 518 15,840 13,565 377 - 518 13,424 2,416 1,425
Computer software 104,114 46 (2,838) 983 100,339 53,509 6,501 (99) 964 58,947 41,392 50,605
Assets under construction 34,817 27,925 (32,156) 339 30,247 - - - - - 30,247 34,817
Leasehold Improvements 40,940 - - 23,874 17,066 34,774 1,684 - 23,874 12,584 4,482 6,166
Total $ 331,114 $ 31,418 $ (2,718) $ 29,331 $ 330,483 $ 202,625 $ 13,418 $ (2,688) $ 28,869 $ 184,486 $ 145,997 $ 128,489

11. Contractual obligations and contractual rights

a) Contractual obligations

The nature of Innovation, Science and Economic Development Canada's activities results in some large multi-year contracts and obligations whereby Innovation, Science and Economic Development Canada is committed to make future payments in order to carry out its transfer payment programs or when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

Contractual obligations
2019 2020 2021 2022 2023 and
thereafter
Total
(in thousands of dollars)
Transfer payments $ 1,139,348 $ 386,325 $ 234,493 $ 166,553 $ 38,163 $ 1,964,882
Other goods and services 69,588 14,847 13,486 9,378 7,307 114,606
Total $ 1,208,936 $ 401,172 $ 247,979 $ 175,931 $ 45,470 $ 2,079,488

b) Contractual rights

The activities of Innovation, Science and Economic Development Canada sometimes involve the negotiation of contracts or agreements with outside parties that result in the department having rights to both assets and revenues in the future. Major contractual rights for Innovation, Science and Economic Development in the form of interest on loans receivable that will generate revenues in future year and that can be reasonably estimated are summarized as follows:

Contractual rights
2019 2020 2021 2022 2023 and
thereafter
Total
(in thousands of dollars)
Interest revenue $ 12,733 $ 14,507 $ 15,029 $ 14,732 $ 109,536 $ 166,537
Total $ 12,733 $ 14,507 $ 15,029 $ 14,732 $ 109,536 $ 166,537

12. Contingent liabilities and contingent assets

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

a) Contingent liabilities

Claims and litigation

Claims have been made against Innovation, Science and Economic Development Canada in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable and as such, no provision has been made for these claims in either 2017–18 or 2016–17.

Guarantees provided by the Department

Innovation, Science and Economic Development Canada has guaranteed the following debts:

Claims and litigation
Authorized Limit Loan Guarantee Outstanding Balance
(in thousands of dollars)
Canada Small Business Financing Act (CSBFA) 2,463,533 869,124
Regional Aircraft Credit Facility 1,500,000 30,047
Total $ 3,963,533 $ 899,171

An allowance of $231,371,833 has been recorded for estimated losses on outstanding loan guarantees ($242,068,983 in 2016–17). The expenses related to loan guarantees are reported under "Other transfers" in note 14 for segmented Statement of Operations information.

Canada Small Business Financing (CSBF) Program — Loans are made directly by approved lenders to small business enterprises, providing for sharing of each individual loan loss, if any, on the basis of 85% government, 15% lender, to an aggregate, per lending institution not exceeding the Minister's contingent liability, as stated in Section 6(2) of the CSBFA.

The authorized limit represents the Crown's maximum liability incurred on the aggregate amount of loans made by the lender starting in April 1999.

The outstanding guarantee for loans made starting in April 1999 is the lesser of the Crown's net liability (authorized limit less claims paid by the Crown) or 85% of the outstanding loan amounts of the lenders.

Regional Aircraft Credit Facility — Innovation, Science and Economic Development Canada has extended loan guarantees on several Air Canada regional jets. Provisioning from the Canada Account Loss Provisioning Pool has been set aside by Finance Canada, manager of the funds. The loan guarantees began in the summer of 2005.

b. Contingent assets

Transfer payments - Conditionally repayable contributions

Under the Defence Industry Productivity Program (DIPP), which ended on December 31, 1996, there are 22 conditionally repayable contribution agreements that remain with potential repayments spanning until April 30, 2022.

Under the Technology Partnerships Canada (TPC) program, which ended on December 31, 2006, there are 76 conditionally repayable contribution agreements that remain with potential repayments spanning until October 31, 2034.

Under the Program for Strategic Industrial Projects (PSIP), which ended on March 31, 2011, there is 1 conditionally repayable contribution agreement that remains with potential repayments spanning until April 30, 2032.

Under the Strategic Aerospace and Defence Initiative (SADI) program, which ended on June 29, 2017, there are still 12 conditionally repayable contribution agreements that remain with potential repayments spanning until April 30, 2037.

Under the Bombardier C-Series Program, there are still 2 conditionally repayable contribution agreements that remain with potential repayments spanning until March 31, 2035.

Under the Strategic Innovation Fund (SIF), launched on July 7, 2017, there is currently 1 conditionally repayable contribution agreement with potential repayments spanning until October 31, 2038.

Due to the varying factors facing each recipient as it relates to their economic and production performances; combined with the fact that contribution agreements are subject to specific program requirements that will vary for each program and influence these factors, the amounts that may become repayable on each contribution agreement cannot be currently estimated.

13. Related Party Transactions

ISED 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.

ISED enters into transactions with these entities in the normal course of business and on normal trade terms (see 13c). In addition, ISED received services that were obtained without charge from other Government departments as disclosed below (see 13a).

a) Common services provided without charge by other government departments

During the year, Innovation, Science and Economic Development Canada (excluding CIPO Revolving Fund) received services without charge from certain common service organizations, related to accommodations, legal services, the employer's contribution to the health and dental insurance plans, and workers' compensation coverage. These services provided without charge have been recorded in Innovation, Science and Economic Development Canada's Statement of Operations and Departmental Net Financial Position as follows:

Common services provided without charge by other government departments
2018 2017
(in thousands of dollars)
Accommodation $ 46,035 $ 46,275
Employer's contribution to the health and dental insurance plans 30,830 29,169
Workers' compensation coverage 320 354
Legal services 1,626 2,298
Total $ 78,811 $ 78,096

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 the payroll and cheque issuance services provided by Public Services and Procurement Canada, audit services provided by the Office of the Auditor General, and information technology (IT) infrastructure services provided by Shared Services Canada are not included in Innovation, Science and Economic Development Canada's Statement of Operations and Departmental Net Financial Position.

b) Administration of programs on behalf of other government departments

Under a memorandum of understanding signed with the Department of National Defence (DND) on December 11, 1997, Innovation, Science and Economic Development Canada administers a program called Development, Test, and Evaluation and Technical Services Activities. During the year, Innovation, Science and Economic Development Canada incurred expenses of $2,686,030 ($2,082,417 in 2016–17) on behalf of DND. These expenses are reflected in the financial statements of DND and are not recorded in these financial statements.

c) Other transactions with related parties

Other transactions with related parties
2018 2017
(in thousands of dollars)
Expenses – Other government departments and agencies $ 159,979 $ 147,722
Revenues – Other government departments and agencies 50,509 43,177

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

14. Segmented Information

Presentation by segment is based on Innovation, Science and Economic Development Canada's program activity architecture. The presentation by segment is based on the same policies as described in the Summary of Significant Accounting Policies in note 2. The following table presents the expenses incurred and revenues generated for the main program activities, by major object of expenses and by major type of revenues. The segment results for the period are as follows:

The Canadian marketplace is efficient and competitive Advancements in science and technology, knowledge, and innovation strengthen the Canadian economy Canadian businesses and communities are competitive Internal Services Intradepartmental transactions 2018 Total 2017 Total Restated (note 15)
Expenses
Transfer payments
Transfers to non-profit organizations $ 2,102 $ 538,373 $ 61,074 $ - $ - $ 601,549 $ 568,839
Transfers to other levels of Government - 729,409 - - - 729,409 740,309
Transfer to Industry - 241,422 50,896 - - 292,318 235,179
Other transfers 5,633 - 38,932 - - 44,565 39,524
Expenses incurred on behalf of Government - (495) 1,125 - - 630 (54,807)
Total transfer payments 7,735 1,508,709 152,027 - - 1,668,471 1,529,044
Operating expenses
Salaries and employee benefits 312,083 22,058 60,199 163,625 - 557,965 500,455
Professional and special services 64,361 4,224 10,082 45,655 (33,900) 90,422 85,879
Accommodation 22,087 1,240 1,550 21,158 - 46,035 46,275
Furniture and equipment 7,464 185 729 11,977 - 20,355 11,050
Rental 9,431 60 307 6,525 - 16,323 16,119
Amortization 11,351 - 40 2,027 - 13,418 16,652
Communication 5,055 1,036 2,530 2,831 - 11,452 9,907
Travel 6,115 942 1,892 1,732 - 10,681 9,030
Bad debt expense 10,864 (1,713) 111 - - 9,262 21,933
Equipment repair and maintenance 3,643 16 32 3,008 - 6,699 5,738
Utilities, materials and supplies 4,702 74 232 593 - 5,601 5,648
Other operating expenses 2,128 1 (43) (379) - 1,707 (402)
Postage 304 - 27 767 - 1,098 1,375
Damage and other claims against the crown 263 - - 5 - 268 52
Expenses incurred on behalf of Government (10,864) 1,713 (111) - - (9,262) (21,933)
Intradepartmental transactions (33,900) - - - 33,900 - -
Total operating expenses 415,087 29,836 77,577 259,524 - 782,024 707,778
Total expenses 422,822 1,538,545 229,604 259,524 - 2,450,495 2,236,822
Revenues
Radio spectrum licences 1,130,688 - - - - 1,130,688 1,130,480
Sales of services 247,598 541 62,003 36,718 (33,900) 312,960 313,625
Revenue from fines 35,795 - - - - 35,795 22,074
Interest revenue - 13,576 8 - - 13,584 11,367
Amortization of discounts - 6,105 - - - 6,105 8,536
Other revenue 431 169 39 5,029 - 5,668 894
Revenues earned on behalf of Government (1,191,065) (20,391) (62,050) (7,581) - (1,281,087) (1,257,445)
Intradepartmental transactions - - - (33,900) 33,900 - -
Total revenues 223,447 - - 266 - 223,713 229,531
Net cost from continuing operations $ 199,375 $ 1,538,545 $ 229,604 $ 259,258 $ - $ 2,226,782 $ 2,007,291

15. Restatement of prior year's results

The 2016–17 comparative figures presented in the Consolidated Statement of Financial Position and the Consolidated Statement of Operations and Departmental Net Financial Position have been adjusted to reflect interest revenues. Prior to this fiscal year, these amounts were not accrued for unconditionally repayable contributions. The impacts are summarized below:

Restatement of prior year's results
2017 as previously stated Effect of Change 2017 Restated
(in thousands of dollars)
Consolidated Statement of Financial Position
Financial Assets
Loans receivable 1,571,577 50,193 1,621,770
Financial assets held on behalf of Government
Loans receivable (1,571,577) (50,193) (1,621,770)
Consolidated Statement of Operations and Departmental Net Financial Position
Revenues 
Interest Revenue - 11,367 11,367
Revenues earned on behalf of Government (1,246,078) (11,367) (1,257,445)

16. Comparative Information

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

Summary of the Assessment of Effectiveness of the System of Internal Control over Financial Reporting and the Action Plan of Innovation, Science and Economic Development Canada

For the fiscal year ending March 31, 2018

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

1. Introduction

This document is attached to Innovation, Science and Economic Development Canada's (ISED) Statement of Management Responsibility Including Internal Control over Financial Reporting for the 2017–18 fiscal year. This annex provides summary information on the measures taken by ISED to maintain an effective system of internal control over financial reporting (ICFR). In particular, it provides summary information on the assessments conducted by ISED as at March 31, 2018, including results and related action plans.

Detailed information on ISED's authority, mandate and program activities can be found in the Departmental Results Report (DRR) and the Departmental Plan (DP).

2. Departmental system of internal control over financial reporting

2.1 Internal Control Management
ISED has a well-established governance and accountability structure to support departmental assessment efforts and oversight of its system of internal control. A departmental internal control framework, approved by the Deputy Head, is in place which includes: The DAC provides advice to the Deputy Head on the adequacy and functioning of the department's risk management, control and governance frameworks and processes.
2.2 Service arrangements relevant to financial statements

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

Common Arrangements:

Specific Arrangements:

ISED provides ICFR support to others and accordingly, reliance is placed by others on certain aspects of ISED's system of internal control over financial reporting, as follows:

3. ISED assessment results during fiscal year 2017–18

The areas of the departmental system of ICFR which have been reviewed this fiscal year are summarized in this section.

New or significantly amended key controls are summarized in section 3.1.

As part of its rotational ongoing monitoring plan, ISED completed reassessments for Entity Level Controls, Information Technology General Controls (ITGC), specified operating processes and one transfer payment program. Overall, the key controls in these areas tested positively, with areas for remediation summarized in section 3.2 below.

3.1 New or significantly amended key controls

Work to document changes to payroll controls in light of the centralization of pay administration at PSPC continued in 2017–18. The pay administration process narrative, which describes key financial control for pay in the department, has been drafted. However, there have been some delays as the department works to implement a quality assurance program for pay transactions. A walkthrough of documented controls is planned for the 2018–19 fiscal year.

In relation to a restatement of financial statement accounts (see note 15), procedures for grants & contributions payments have been adjusted. To ensure the capture of accrued interest for unconditionally repayable contributions (URC) where repayments are above their nominal amounts, the financial operations team (FOD) will be updating the following existing controls:

3.2 On-going monitoring programFootnote 1

ISED completed testing of Entity Level Controls, ITGCs, the Canada Small Business Financing Program (claims process) as well as two specified operating processes, namely the Financial Close and Reporting and the Master Data. Senior management has received reports on the results of testing and has developed action plans where necessary. For the majority of those tested, the key controls performed as intended.

Entity Level Controls

Testing of the Entity Level Controls was completed with no issues to report to management.

Information Technology General Controls (ITGC)

The systems that were tested included the Integrated Financial and Materiel System (IFMS), the Contribution Management Information System (CMIS), and the Canada Small Business Financing Program (CSBFP).

Testing of ITGCs was completed with some areas requiring remedial measures, such as the timely deactivation of users (IFMS and CSBFP), evidence of access review (CMIS), and monitoring of system changes to the production environment (CMIS).

Our review also identified a risk with password settings (CMIS) which management considers as low. They have evaluated the costs of modifications to the ageing system and have determined them to be high in comparison to the risk. Management accepts the risk with the additional knowledge that there are plans to replace the system.

Grants and Contributions

Testing of the Canada Small Business Financing Program process was completed with minor issues to report to management. Following a discussion with management, some work will be required to better align future testing with existing control activities.

Operating

Testing of operating processes (Financial Close and Master Data) was completed with minor issues to report to management. One area for remediation noted was for controls related to access to electronic files. A new filing system (GCdocs) was implemented after the testing period which will mitigate the risk of inappropriate access going forward.

4. ISED action plan

4.1 Progress during fiscal year 2017–18

ISED conducted its ongoing monitoring as per its previous fiscal year plan and reports results of this monitoring directly to management:

Previous year's rotational ongoing monitoring plan for current year

Status

Entity Level

Information Technology General Controls

Canada Small Business Financing Program

Operating process (Financial Close, Master Data)

All completed as planned, reported, and remedial actions started

New processes and programs were being documented and evaluated throughout the year as follows:

Previous year's new processes/programs

Status

Post-Secondary Institution Strategic Investment Fund (PSI-SIF)

Strategic Innovation Fund (SIF)

Innovation Supercluster Initiative

Connect to Innovate

Canadian Intellectual Property Office (CIPO)

Performed Operating effectiveness testing and no issues were found

Began process of documenting. Continuing the design process in 2018–19.

Began drafting its process narrative. Claims process to be documented to complete.

Began drafting its process narrative. Continuing the design process in 2018–19.

Documented the revenue process, performed a design walkthrough, and identified medium and minor risks to be addressed in 2018–19.

4.2 Action plan for the next fiscal year (2018–19) and subsequent years

The department's focus is on ongoing monitoring, the full assessment cycle having been completed in previous years. Action plans from previous years will be followed-up on to ensure that remedial actions have been taken.

Operating effectiveness testing will be conducted only in those areas subject to reassessment unless significant amendments have been made to key controls where design effectiveness testing may be necessary.

The table below shows the department's rotational ongoing monitoring plan over the next three years. An annual risk-assessment is conducted each year to validate the high risk controls and to adjust the on-going monitoring plan as required.

Rotational On-going monitoring for Internal Control over Financial Reporting
Internal Control over Financial Reporting On-going Monitoring Rotation
(3 year rotation)
2018–19 2019–20 2020–21
Entity level
Control environment, risk management, information systems and communication, monitoring No No Yes
General computer controls
Enterprise systems (CMIS & IFMS) No No Yes
Canada Small Business Financing Program (CSBFP) No No Yes
Business Processes
Grants and contributions
(risk based rotation)
Transfer Payments for Designated Recipients Footnote 2 No Yes TBD
Data and Digital Programming Footnote 3 Yes No TBD
Connecting Canadians No Yes TBD
FedNor Yes No TBD
Post-Secondary Institution Strategic Investment Fund Yes N/A N/A
Canada Small Business Financing Program No No TBD
Operating Operating expenditures No Yes TBD
Payroll No Yes TBD
Capital assets Yes No TBD
Financial close & reporting No No TBD
Master data – vendors/customers No No TBD
Special Purpose Accounts No Yes TBD
Revenue
(risk based rotation)
Competition Bureau No Yes TBD
Corporations Canada Yes No TBD
Communications Research Canada Yes No TBD
Office of the Superintendent of Bankruptcy Yes No TBD
Canada Small Business Financing Program No Yes TBD
Spectrum, Information Technologies and Telecommunications No Yes TBD

TBD – Evaluated during the annual risk assessment

New Processes/Programs to be added based on the yearly risk assessment
Internal Control over Financial Reporting Stage of Testing
2018–19 2019–20 2020–21
Grants & Contributions Strategic Innovation FundFootnote 4 Design effectiveness Operating effectiveness On-going monitoring
Innovation Super Clusters Initiative Design effectiveness Operating effectiveness On-going monitoring
Connect to Innovate Design effectiveness Operating effectiveness On-going monitoring
Revenue Canadian Intellectual Property Office (Revolving Fund) Design effectiveness Operating effectiveness On-going monitoring
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