Passport Canada

Public Accounts of Canada 2023 Volume III—Top of the page Navigation

Statement of management responsibility

We have prepared the accompanying financial statements of the Passport Canada Revolving Fund as required by and in accordance with the Treasury Board Directive on Charging and Special Financial Authorities and the reporting requirements and standards of the Receiver General for Canada. These financial statements were prepared by the management of the Fund in accordance with the significant accounting policies set out in note 2 of the financial statements, on a basis consistent with that of the preceding year.

Responsibility for the integrity and objectivity of these financial statements rests with the management of the Fund. The information included in these financial statements is based on management's best estimates and judgment with due consideration given to materiality. To fulfill its accounting and reporting responsibilities, the Fund maintains a set of accounts which provides a centralized record of the Fund's financial transactions. Financial information submitted to the Public Accounts of Canada and included in the department's Departmental Results Report is consistent with these financial statements.

The Fund's directorate of financial services develops and disseminates financial management and accounting policies and issues specific directives which maintain standards of accounting and financial management. The Fund maintains systems of financial management and internal control which gives due consideration to costs, benefits and risks. The systems are designed to provide reasonable assurance that transactions are properly authorized by Parliament, are executed in accordance with prescribed regulations, and are properly recorded to maintain accountability of Government funds and safeguard the assets under the Fund's administration. Financial management and internal control systems are augmented by the maintenance of internal audit programs. The Fund also seeks to ensure the objectivity and integrity of data in its financial statements by the careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility, and by communication programs aimed at ensuring that its regulations, policies, standards and managerial authorities are understood throughout the organization.

Approved by:

Julie Chassé, CPA

 Deputy Chief Financial Officer| Director General
Financial Operations and Procurement Branch
Immigration, Refugees and Citizenship Canada

Nathalie Manseau, CPA
Chief Financial Officer | Assistant Deputy Minister
Finance, Security and Administration
Immigration, Refugees and Citizenship Canada

June 16, 2023
Ottawa, Canada

Table 1:Statement of authority used (unaudited) for the year ended March 31, 2023
(in thousands of dollars)
  2023 2022
EstimatesLink to table note 1 Actual EstimatesLink to table note 1 Actual
Net results (negative 81,671) (negative 290,698) (negative 146,602) (negative 241,298)
Items not requiring use of funds 925 305 2,415 (negative 1,432)
Operating use of funds (negative 80,746) (negative 290,393) (negative 144,187) (negative 242,730)
Items requiring use of funds :
Net tangible capital assets acquisitions (negative 29,206) (negative 7,325) (negative 23,198) (negative 677)
Net other assets and liabilities – (negative 19,999) – (negative 8,050)
Authority used (negative 109,952) (negative 317,717) (negative 167,385) (negative 251,457)

Table 2:Reconciliation of unused authority (unaudited) as at March 31, 2023
(in thousands of dollars)
  2023 2022
Debit balance in the accumulated net charge against the Fund's authority 397,211 669,575
Payables charged against the appropriation at year-end (negative 128,829) (negative 66,930)
Receivables credited to the appropriation at year-end 27,117 10,571
Net authority provided, end of year 295,499 613,216
Unused authority carried forward 295,499 613,216

Table 3:Statement of financial position (unaudited) as at March 31, 2023
(in thousands of dollars)
  2023 2022
Assets
Financial assets
Accounts receivable (note 3) 28,540 11,319
Inventory held for resale (note 4) 32,442 16,917
Total financial assets 60,982 28,236
Non-financial assets
Prepaid expenses (note 5) 37,281 34,808
Inventory held for consumption (note 4) 6,169 3,996
Tangible capital assets (note 6) 12,098 5,319
Total non-financial assets 55,548 44,123
Total assets 116,530 72,359
Liabilities
Accounts payable and accrued liabilities (note 7) 130,127 66,976
Vacation pay and compensatory leave 5,441 5,846
Employee future benefits (note 8) 1,775 2,016
Total liabilities 137,343 74,838
Net liabilities (note 9) (negative 20,813) (negative 2,479)
Net financial position of the Fund 116,530 72,359

Table 4:Statement of operations and net liabilities (unaudited) for the year ended March 31, 2023
(in thousands of dollars)
  2023 2022
Revenues
Fees earned 403,742 179,466
Miscellaneous revenues 295 234
Total revenues 404,037 179,700
Expenses
Professional and special services 476,728 265,875
Salaries and employee benefits 102,801 94,511
Freight, express and cartage 47,722 15,703
Passport materials 27,208 9,796
Passport operations at missions abroad 16,139 12,137
Rentals 8,927 11,272
Accommodation 5,389 5,269
Printing, stationery and supplies 5,256 2,675
Information 2,705 2,361
Amortization of tangible capital assets 546 559
Travel and relocation 494 42
Repair and maintenance 482 376
Other 338 422
Total expenses 694,735 420,998
Net results (negative 290,698) (negative 241,298)
Net liabilities, beginning of year (negative 2,479) (negative 1,192)
Net financial resources used and change in the accumulated net charge against the Fund's authority, during the year 272,364 240,011
Net liabilities, end of year (note 9) (negative 20,813) (negative 2,479)

Table 5:Statement of cash flows (unaudited) for the year ended March 31, 2023
(in thousands of dollars)
  2023 2022
Operating activities
Net results (negative 290,698) (negative 241,298)
Items not requiring use of funds
Amortization of tangible capital assets 546 559
Tangible capital assets adjustments – (negative 1,514)
Provision for employee future benefits (negative 241) (negative 477)
Subtotal (negative 290,393) (negative 242,730)
Variations in statement of financial position
Increase in accounts receivable (negative 17,221) (negative 9,468)
Increase in prepaid expenses (negative 2,473) (negative 3,706)
Increase in inventory held for resale (negative 15,525) (negative 2,071)
Increase in inventory held for consumption (negative 2,173) (negative 837)
Increase in accounts payable and accrued liabilities 63,151 20,257
Decrease in vacation pay and compensatory leave (negative 405) (negative 779)
Net financial resources used by operating activities (negative 265,039) (negative 239,334)
Capital investing activity
Acquisitions of tangible capital assets (negative 7,325) (negative 677)
Net financial resources used and change in the accumulated net charge against the Fund's authority, during the year (negative 272,364) (negative 240,011)
Accumulated net charge against the Fund's authority, beginning of year 669,575 909,586
Accumulated net charge against the Fund's authority, end of year (note 9) 397,211 669,575

Notes to the financial statements (unaudited) for the year ended March 31, 2023

1. Authority and purpose

The Passport Canada Revolving Fund (the Fund) was established in 1969 to provide for the issuance of passports and other travel document services in Canada and at posts abroad. The Revolving Funds Act authorizes the operation of the Fund.

The Fund has a continuing non-lapsing authority from Parliament, in the amount of $1, to make payments out of the Consolidated Revenue Fund for working capital and tangible capital acquisitions.

2. Significant accounting policies

The financial statements have been prepared in accordance with the reporting requirements of the Receiver General for Canada for revolving funds. The basis of accounting used in these financial statements differs from Canadian generally accepted accounting principles for the public sector because:

Significant accounting policies are as follows:

(a) Revenues

Revenues from passport fees are recognized upon request for a passport service, which is upon receipt of payment and verification of the passport application for completeness.

(b) Expenses

Expenses are recorded on an accrual basis.

Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective term of employment.

(c) Accounts receivable

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

(d) Inventory

Inventory of materials and supplies is carried at the lower of cost (using the average cost method) and net realizable value.

(e) Tangible capital assets

Tangible capital assets are recorded at cost and amortized on a straight-line basis over their estimated useful lives, as follows:

Depreciation policy
Asset class Amortization period
Office furniture 10 years
Vehicles 8 years
Informatics hardware 5 to 10 years
Software (purchased and developed) 3 to 10 years
Machinery and equipment 15 years
Leasehold improvements Lesser of the remaining term of the lease or estimated useful life of the improvement

Assets under construction are recorded in the applicable capital asset class in the year they became ready for productive use and are not amortized until then.

(f) Employee future benefits

Pension benefits

Eligible employees of the Fund participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government of Canada. The Fund's contributions to the Public Service Pension Plan are charged to expenses in the year incurred and represent the Fund's total obligation to the Public Service Pension Plan. The Fund's responsibility with regard to the Public Service Pension Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Public Service Pension Plan's sponsor.

Severance benefits

The accumulation of severance benefits for voluntary departures ceased for substantially all employees. The remaining obligation for the Fund's 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.

(g) Contingent liabilities

Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. If it is probable that the future event will or will not occur and a reasonable estimate of the loss can be made, a provision is made and an expense recorded. If the likelihood of the event is not determinable or a reasonable estimate cannot be made, the contingency is disclosed in the notes to the financial statements.

(h) Measurement uncertainty

The preparation of 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 and accompanying notes as at March 31. The estimates are based on facts and circumstances, historical experience, general economic conditions and reflect the Government's best estimate of the related amount at the end of the reporting period. The most significant items where estimates are used are the liability for employee future benefits, the estimated useful life of tangible capital assets, contingent liabilities and the allowance for doubtful accounts. 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.

3. Accounts receivable

The following table presents details of the Fund's accounts receivable:

Table 7:Accounts receivable
(in thousands of dollars)
  2023 2022
Accounts receivable
Accounts receivable—Government of Canada 28,513 11,292
Accounts receivable—Outside parties 38 31
Subtotal 28,551 11,323
Allowance for doubtful accounts on receivables from external parties (negative 11) (negative 4)
Net accounts receivable 28,540 11,319

4. Inventory

The following table presents details of the inventory, measured at the lower of cost (using the average cost method) and net realizable value:

Table 8:Inventory
(in thousands of dollars)
  2023 2022
Inventories
Inventory held for resale 32,442 16,917
Inventory held for consumption 6,169 3,996
Total 38,611 20,913

The inventory held for resale is passport booklets. The inventory held for consumption is mainly composed of prepaid envelopes and informatics hardware.

The cost of consumed inventory recognized as an expense in the Statement of operations and net liabilities is $57,181,355 for 2022–2023 ($21,438,074 for 2021–2022).

5. Prepaid expenses

The following table presents details of the Fund's prepaid expenses:

Table 9:Prepaid expenses
(in thousands of dollars)
  2023 2022
Prepaid expenses
Prepaid expenses—Modernization initiative 36,932 33,273
Prepaid expenses—Other 349 1,535
Total 37,281 34,808

In the context of the modernization initiative, the Passport program is transitioning to the Immigration, Refugees and Citizenship Canada Global Case Management System and the Integrated Payment Revenue Management System for the processing of passport applications. The costs incurred for this initiative and financed by the Fund are recorded as prepaid expenses since these systems belong to Immigration, Refugees and Citizenship Canada. The prepaid expenses are gradually recognized as expenses to reflect the usage of Immigration, Refugees and Citizenship Canada's systems by the Fund.

6. Tangible capital assets

The following table presents details of the tangible capital assets held by the Fund during the fiscal year:

Table 10:Cost
(in thousands of dollars)
  Balance at beginning of year Amortization Balance at end of year
Technology Enhancement Plan Project 2,906 – 2,906
Leasehold improvements 4,353 – 4,353
Office furniture 109 – 109
Informatics hardware 6,714 – 6,714
Software 26,930 – 26,930
Vehicles 21 – 21
Machinery and equipment 666 – 666
Assests under construction 3,161 7,325 10,486
Total 44,860 7,325 52,185

Table 11:Accumulated amortization
(in thousands of dollars)
  Balance at beginning of year Amortization Balance at end of year
Technology Enhancement Plan Project 2,906 – 2,906
Leasehold improvements 4,353 – 4,353
Office furniture 50 9 59
Informatics hardware 5,493 316 5,809
Software 26,408 185 26,593
Vehicles 19 – 19
Machinery and equipment 312 36 348
Total 39,541 546 40,087

Table 12:Net book value
(in thousands of dollars)
  2023 2022
Technology Enhancement Plan Project – –
Leasehold improvements – –
Office furniture 50 59
Informatics hardware 905 1,221
Software 337 522
Vehicles 2 2
Machinery and equipment 318 354
Assets under construction 10,486 3,161
Total 12,098 5,319

7. Accounts payable and accrued liabilities

The following table presents details of the Fund's accounts payable and accrued liabilities:

Table 13:Accounts payable and accrued liabilities
(in thousands of dollars)
  2023 2022
Accounts payable and accrued liabilities
Accounts payable—Government of Canada 85,167 48,662
Accounts payable—Outside parties 34,544 9,337
Accrued liabilities—Outside parties 8,654 7,614
Contractors' holdbacks 1,762 1,363
Total 130,127 66,976

8. Employee future benefits

a) Pension benefits

Employees of the Fund participate in the Public Service Pension 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 two 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 are indexed to inflation.

Both the employees and the Fund contribute to the cost of the Public Service Pension Plan. As a result of amendments to the Public Service Superannuation Act following the implementation of provisions related to the 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 Public Service Pension Plan as of January 1, 2013. Each group has a distinct contribution rate.

The 2022–2023 expense amounts to $7,996,992 ($7,582,549 in 2021–2022). For Group 1 members, the expense represents approximately 1.02 times (1.01 times in 2021–2022) the employee contributions, and for Group 2 members, approximately 1.00 times (1.00 times in 2021–2022) the employee contributions

b) Severance benefits

Severance benefits provided to 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, 2023, 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 obligation during the year were as follows:

Table 14:Employee future benefits
(in thousands of dollars)
  2023 2022
Accrued benefit obligation, beginning of year 2,016 2,493
Expense for the year (negative 78) (negative 452)
Benefits paid, during the year (negative 163) (negative 25)
Accrued benefit obligation, end of year 1,775 2,016

9. Net liabilities

The accumulated surplus is an accumulation of each fiscal year's surplus net of deficits since the inception of the Fund.

The accumulated net charge against the Fund's authority represents the cumulative receipts and disbursements over the life of the Fund.

The contributed capital represents the value of capital assets financed from capital contributions at the inception of the Fund.

Table 15:Net liabilities
(in thousands of dollars)
  2023 2022
Net liabilities
Accumulated surplus:
Opening balance 586,622 827,920
Net results (negative 290,698) (negative 241,298)
Closing balance 295,924 586,622
Accumulated net charge against the Fund's authority:
Opening balance (negative 669,575) (negative 909,586)
Net financial resources used and change in the accumulated net charge against the Fund's authority, during the year 272,364 240,011
Closing balance (negative 397,211) (negative 669,575)
Contributed capital 80,474 80,474
Net liabilities, end of year (negative 20,813) (negative 2,479)

10. Contractual obligations

Because of the nature of its activities, the Fund is engaged in contractual obligations for the purchase of goods and other services.

The maximum future payments under contracts for the procurement of blank passports, rental of premises and other goods and services worth approximately:

Table 16:Contractual obligations
(in thousands of dollars)
   
2024 137,711
2025 62,112
2026 63,213
2027 48,831
2028 49,464
2029 and thereafter 173,266
Total 534,597

11. Contingent liabilities

In the normal course of its operations, the Fund may become involved in various legal actions. Some of these potential liabilities may become actual liabilities when one or more future events occur or fail to occur. Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amount to $1,250 as at March 31, 2023 ($1,250 as at March 31, 2022).

12. Related party transactions

Through common ownership, the Fund is related to all Government of Canada created departments, agencies and Crown corporations. Payments for passport operations at missions abroad, passport delivery and processing service throughout Canada, accommodation and legal services, and the employer's contributions to the health and dental insurance plans are made to related parties in the normal course of business. All related party transactions are accounted for at the exchange amount, which represents the consideration agreed to by both parties.

Expenses reported as professional and special services in the Statement of operations and net liabilities include the following transactions with Shared Services Canada and Employment and Social Development Canada:

(in thousands of dollars)

  2023 2022
Related party transactions
Service delivery, operations and internal services (Employment and Social Development Canada) 354,773 191,848
Receiving agents (Employment and Social Development Canada) 40,540 6,745
Information technology services (Shared Services Canada) 19,978 18,578
e-Passport (Employment and Social Development Canada) 7,693 2,721
Transition and modernization (Employment and Social Development Canada) 6,287 5,120
3rd processing and printing centre (Employment and Social Development Canada) 5,521 3,169
Total 434,792 228,181

The following table presents the total of other transactions with related parties, such as passport operations at missions abroad, accommodation, legal services, employer's contributions to the health and dental insurance plans and passport revenues from other government departments and organizations:

Table 18:Related party transactions: Other government departments
(in thousands of dollars)
  2023 2022
Expenses—Other government departments 47,254 41,136
Revenues—Other government departments (negative 3,844) (negative 3,195)

As part of its operations, the Fund collects Consular fees on behalf of Global Affairs Canada. These fees are not recorded as revenues in the Statement of operations and net liabilities. In 2022–2023, the Fund collected and remitted to Global Affairs Canada $50,496,578 ($18,161,045 in 2021–2022) in consular fees.

Public Accounts of Canada 2023 Volume III—Bottom of the page Navigation

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