Passport Canada Revolving Fund

Public Accounts of Canada 2024 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 with the Receiver General reporting requirements. 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:

Nathalie Proulx, 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
Chief Financial Officer Sector
Immigration, Refugees and Citizenship Canada

June 16, 2024 
Ottawa, Canada

Table 1Statement of authority used (unaudited) for the year ended March 31, 2024Links to footnote * in table 1
(in thousands of dollars)

  2024 2023
EstimatesLinks to footnote 1 in table 1 Actual EstimatesLinks to footnote 1 in table 1 Actual
Net results 7,858 (negative 153,505) (negative 81,671) (negative 290,698)
Items not requiring use of funds 559 1,358 925 305
Operating source (use) of funds 8,417 (negative 152,147) (negative 80,746) (negative 290,393)
Items requiring use of funds :
Net tangible capital assets acquisitions (negative 15,000) (negative 6,472) (negative 29,206) (negative 7,325)
Net other assets and liabilities 57,257 (negative 19,999)
Authority used (negative 6,583) (negative 101,362) (negative 109,952) (negative 317,717)

Table 2Reconciliation of unused authority (unaudited) as at March 31, 2024
(in thousands of dollars)

  2024 2023
Debit balance in the accumulated net charge against the Fund's authority 249,622 397,211
Payables charged against the appropriation at year-end (negative 92,741) (negative 128,829)
Receivables credited to the appropriation at year-end 37,257 27,117
Net authority provided, end of year 194,138 295,499
Unused authority carried forward 194,138 295,499

Table 3Statement of financial position (unaudited) as at March 31, 2024Links to footnote * in table 3
(in thousands of dollars)

  2024 2023
Assets
Financial assets
Accounts receivable (note 4) 38,856 28,540
Inventory held for resale (note 5) 24,041 32,442
Total financial assets 62,897 60,982
Non-financial assets
Prepaid expenses (note 6) 39,943 37,281
Inventory held for consumption (note 5) 5,930 6,169
Tangible capital assets (note 7) 17,156 12,098
Total non-financial assets 63,029 55,548
Total assets 125,926 116,530
Liabilities
Accounts payable and accrued liabilities (note 8) 103,587 130,127
Vacation pay and compensatory leave 5,704 5,441
Deferred revenue (note 9) 41,645
Employee future benefits (note 10) 1,719 1,775
Total liabilities 152,655 137,343
Net liabilities (note 11) (negative 26,729) (negative 20,813)
Net financial position of the Fund 125,926 116,530

Table 4Statement of operations and net liabilities (unaudited) for the year ended March 31, 2024Links to footnote * in table 4
(in thousands of dollars)

  2024 2023
Revenues
Fees earned 553,732 403,742
Funding to stabilize the Passport Program 25,000
Miscellaneous revenues 371 295
Total revenues 579,103 404,037
Expenses
Professional and special services 474,987 476,728
Salaries and employee benefits 117,168 102,801
Freight, express and cartage 57,443 47,722
Passport materials 40,425 27,208
Passport operations at missions abroad 19,003 16,139
Rentals 10,194 8,927
Accommodation 4,715 5,389
Printing, stationery and supplies 3,422 5,256
Information 2,578 2,705
Amortization of tangible capital assets 1,414 546
Travel and relocation 811 494
Repair and maintenance 262 482
Other 186 338
Total expenses 732,608 694,735
Net results (negative 153,505) (negative 290,698)
Net liabilities, beginning of year (negative 20,813) (negative 2,479)
Net financial resources used and change in the accumulated net charge against the Fund's authority, during the year 147,589 272,364
Net liabilities, end of year (note 11) (negative 26,729) (negative 20,813)

Table 5Statement of cash flows (unaudited) for the year ended March 31, 2024Links to footnote * in table 5
(in thousands of dollars)

  2024 2023
Operating activities
Net results (negative 153,505) (negative 290,698)
Items not requiring use of funds
Amortization of tangible capital assets 1,414 546
Provision for employee future benefits (negative 56) (negative 241)
Subtotal (negative 152,147) (negative 290,393)
Variations in statement of financial position
Increase in accounts receivable (negative 10,316) (negative 17,221)
Increase in prepaid expenses (negative 2,662) (negative 2,473)
Decrease (increase) in inventory held for resale 8,401 (negative 15,525)
Decrease (increase) in inventory held for consumption 239 (negative 2,173)
Increase (decrease) in accounts payable and accrued liabilities (negative 26,540) 63,151
Increase (decrease) in vacation pay and compensatory leave 263 (negative 405)
Increase in deferred revenue 41,645
Net financial resources used by operating activities (negative 141,117) (negative 265,039)
Capital investing activity
Acquisitions of tangible capital assets (negative 6,472) (negative 7,325)
Net financial resources used and change in the accumulated net charge against the Fund's authority, during the year (negative 147,589) (negative 272,364)
Accumulated net charge against the Fund's authority, beginning of year 397,211 669,575
Accumulated net charge against the Fund's authority, end of year (note 11) 249,622 397,211

Notes to the financial statements (unaudited) for the year ended March 31, 2024

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 and deferred revenues

The recognition of revenue from passport fees is deferred until a final decision has been made. Deferred revenue consists of amounts received in advance for the delivery of goods and provision of services that will be recognized as revenue in a subsequent fiscal year when it will be earned.

In addition, revenue of $25 million was recognized in 2023–2024. This funding was to stabilize the Passport Program and is not a result of the Passport Office's recurring activities. This one-time injection of funds was needed after historically low application volumes followed by an increase in demand in recent years. The Passport Program strives to balance service delivery standards with the need to maintain the integrity and international reputation of the Canadian passport, all while delivering services as cost-effectively as possible. These funds serve to support client access to passport services, maintain processing capacity within service standards and to safeguard against passport service delivery issues.

(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 Plan are charged to expenses in the year incurred and represent the Fund's total obligation to the Plan. The Fund'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.

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. Accounting policy change

Effective April 1, 2023, the Fund adopted the new Public Sector Accounting Standard (PS) 3400, Revenue. This standard requires public sector entities to differentiate between revenue arising from transactions that include performance obligations (exchange transactions) and transactions without performance obligations (non-exchange transactions). Revenues from transactions that include performance obligations are recognized only when each performance obligation is fulfilled. In accordance with Public Sector Accounting Standard (PS) 3400, Revenue, the financial statements for prior periods were not restated upon transition since the Fund chose to apply the standard prospectively. On the initial application of the standard, the Fund changed the accounting policy for revenues from passport fees and recognized deferred revenue.

4. Accounts receivable

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

Table 7Accounts receivable
(in thousands of dollars)

  2024 2023
Accounts receivable
Accounts receivable—Government of Canada 38,679 28,513
Accounts receivable—Outside parties 193 38
Subtotal 38,872 28,551
Allowance for doubtful accounts on receivables from external parties (negative 16) (negative 11)
Net accounts receivable 38,856 28,540

5. 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 8Inventory
(in thousands of dollars)

  2024 2023
Inventories
Inventory held for resale 24,041 32,442
Inventory held for consumption 5,930 6,169
Total 29,971 38,611

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 $83,455,195 for 2023–2024 ($57,181,355 for 2022–2023).

6. Prepaid expenses

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

Table 9Prepaid expenses
(in thousands of dollars)

  2024 2023
Prepaid expenses
Prepaid expenses—Modernization initiative 38,950 36,932
Prepaid expenses—Other 993 349
Total 39,943 37,281

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.

7. Tangible capital assets

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

Table 10CostLinks to footnote * in table 10
(in thousands of dollars)

  Balance at beginning of year Acquisitions Adjustments Disposals Balance at end of year
Technology Enhancement Plan Project 2,906 2,906
Leasehold improvements 4,353 4,353
Office furniture 109 47 156
Informatics hardware 6,714 9,125 15,839
Software 26,930 (negative 2,039) 24,891
Vehicles 21 (negative 21)
Machinery and equipment 666 666
Assets under construction 10,486 6,425 (negative 9,125) 7,786
Total 52,185 6,472 (negative 2,060) 56,597

Table 11Accumulated amortizationLinks to footnote * in table 11
(in thousands of dollars)

  Balance at beginning of year Amortization Disposals Balance at end of year
Technology Enhancement Plan Project 2,906 2,906
Leasehold improvements 4,353 4,353
Office furniture 59 9 68
Informatics hardware 5,809 1,194 7,003
Software 26,593 175 (negative 2,039) 24,729
Vehicles 19 2 (negative 21)
Machinery and equipment 348 34 382
Total 40,087 1,414 (negative 2,060) 39,441

Table 12Net book valueLinks to footnote * in table 12
(in thousands of dollars)

  2024 2023
Technology Enhancement Plan Project
Leasehold improvements
Office furniture 88 50
Informatics hardware 8,836 905
Software 162 337
Vehicles 2
Machinery and equipment 284 318
Assets under construction 7,786 10,486
Total 17,156 12,098

8. Accounts payable and accrued liabilities

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

Table 13Accounts payable and accrued liabilities
(in thousands of dollars)

  2024 2023
Accounts payable and accrued liabilities
Accounts payable—Government of Canada 77,921 85,167
Accounts payable—Outside parties 17,330 34,544
Accrued liabilities—Outside parties 5,782 8,654
Contractors' holdbacks 2,554 1,762
Total 103,587 130,127

9. Deferred revenue

The deferred revenue account was established to record revenues from passport fees in the Passport Canada Revolving Fund derived from the Revolving Funds Act for services that have yet to be rendered.

The following table presents details of the deferred revenue account:

Table 14Deferred revenueLinks to footnote * in table 14
(in thousands of dollars)

  2024 2023
Opening balance
Amounts received 601,864
Revenue recognized (negative 560,219)
Closing balance 41,645

10. 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 2023–2024 expense amounts to $8,292,670 ($7,996,992 in 2022–2023). For Group 1 members, the expense represents approximately 1.02 times (1.02 times in 2022–2023) the employee contributions, and for Group 2 members, approximately 1.00 times (1.00 times in 2022–2023) 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, 2024, 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 15Employee future benefits
(in thousands of dollars)

  2024 2023
Accrued benefit obligation, beginning of year 1,775 2,016
Expense for the year (negative 12) (negative 78)
Benefits paid, during the year (negative 44) (negative 163)
Accrued benefit obligation, end of year 1,719 1,775

11. 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 16Net liabilities
(in thousands of dollars)

  2024 2023
Net liabilities
Accumulated surplus:
Opening balance 295,924 586,622
Net results (negative 153,505) (negative 290,698)
Closing balance 142,419 295,924
Accumulated net charge against the Fund's authority:
Opening balance (negative 397,211) (negative 669,575)
Net financial resources used and change in the accumulated net charge against the Fund's authority, during the year 147,589 272,364
Closing balance (negative 249,622) (negative 397,211)
Contributed capital 80,474 80,474
Net liabilities, end of year (negative 26,729) (negative 20,813)

12. 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 17Contractual obligations
(in thousands of dollars)

   
2025 163,146
2026 68,342
2027 54,164
2028 53,238
2029 36,702
2030 and thereafter 136,564
Total 512,156

13. 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, 2024 ($1,250 as at March 31, 2023).

14. 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:

Table 18Related party transactionsLinks to footnote * in table 18
(in thousands of dollars)

  2024 2023
Related party transactions
Service delivery, operations and internal services (Employment and Social Development Canada) 350,562 354,773
Receiving agents (Employment and Social Development Canada) 31,347 40,540
Information technology services (Shared Services Canada) 19,245 19,978
e-Passport (Employment and Social Development Canada) 14,770 7,693
3rd processing and printing centre (Employment and Social Development Canada) 10,018 5,521
Transition and modernization (Employment and Social Development Canada) 9,923 6,287
Passport Digital Services (Employment and Social Development Canada) 801
Total 436,666 434,792

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 19Related party transactions: Other government departments
(in thousands of dollars)

  2024 2023
Expenses—Other government departments 52,826 47,254
Revenues—Other government departments (negative 27,785) (negative 3,844)

During the year ended March 31, 2024, the Fund received funding of $25 million from Immigration, Refugees and Citizenship Canada to stabilize the Passport Program.

Also, 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 2023–2024, the Fund collected and remitted to Global Affairs Canada $86,874,909 ($50,496,578 in 2022–2023) in consular fees.

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