Passport Canada Revolving Fund
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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
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) |
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 |
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 |
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) |
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:
- the net debt indicator and the statement of change in net debt are not presented in the financial statements;
- the services received without charge from other government departments and agencies are not reported as expenses;
- the expenses are reported by type in the statement of operations and net liabilities and not by function or major program; and
- no liability is recorded for sick leave.
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:
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:
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:
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:
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:
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 |
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 |
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:
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:
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:
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.
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:
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:
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:
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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