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Agriculture and Agri-Food Canada Consolidated Financial Statements (Unaudited) for the year ended March 31, 2019

Financial Statements (Unaudited) For the year ending March 31, 2019 (PDF, 670 KB)

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Statement of Management Responsibility Including Internal Control over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying consolidated financial statements for the year ended March 31, 2019, and all information contained in these statements rests with the management of Agriculture and Agri-Food Canada. These consolidated financial statements have been prepared by management using the Government of Canada'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 consolidated financial statements. Some of the information in the consolidated financial statements is based on management's best estimates and judgment, and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of Agriculture and Agri-Food Canada's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in Agriculture and Agri-Food Canada's Departmental Results Report, is consistent with these consolidated financial statements.

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

Management seeks to ensure the objectivity and integrity of data in its consolidated 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 Agriculture and Agri-Food Canada and through conducting an annual risk-based assessment of the effectiveness of the system of internal control over financial reporting.

The system of internal control over financial reporting is designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

A risk-based assessment of the system of internal control over financial reporting for the year ended March 31, 2019 was completed in accordance with the Treasury Board Policy on Financial Management and the results and action plans are summarized in the Annex.

The effectiveness and adequacy of Agriculture and Agri-Food Canada's system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of Agriculture and Agri-Food Canada's operations, and by the Departmental Audit Committee, which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting.

The consolidated financial statements of Agriculture and Agri-Food Canada have not been audited.

Chris Forbes, Deputy Minister
Ottawa, Canada
September 6, 2019

Michael Whittaker, Acting Chief Financial Officer

Consolidated Statement of Financial Position (Unaudited)
As at March 31
(in thousands of dollars)
2019 2018
Liabilities
Accounts payable and accrued liabilities (Note 4) $859,956 $843,403
Vacation pay and compensatory leave 29,208 29,797
Environmental liabilities (Note 5) 5,979 6,630
Deferred revenue (Note 6) 12,653 17,711
Employee future benefits (Note 7) 17,979 17,880
Other liabilities (Note 8) 59,405 53,479
Total liabilities 985,180 968,900
Financial assets
Due from Consolidated Revenue Fund 892,240 849,179
Accounts receivable and advances (Note 9) 35,962 34,718
Loans receivable (Note 10) 226,043 261,060
Total gross financial assets 1,154,245 1,144,957
Financial assets held on behalf of Government
Accounts receivable and advances (Note 9) (2,006) (1,818)
Loans receivable (Note 10) (226,043) (261,060)
Total financial assets held on behalf of Government (228,049) (262,878)
Total net financial assets 926,196 882,079
Departmental net debt 58,984 86,821
Non-financial assets
Prepaid expenses and inventory 1,452 4,950
Tangible capital assets (Note 11) 439,249 423,720
Total non-financial assets 440,701 428,670
Departmental net financial position (Note 12) $381,717 $341,849

Contractual obligations and contractual rights (Note 13)

Contingent liabilities and contingent assets (Note 14)

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

Chris Forbes, Deputy Minister
Ottawa, Canada
September 6, 2019

Michael Whittaker, Acting Chief Financial Officer

Consolidated Statement of Operations and Departmental Net Financial Position (Unaudited)
For the year ended March 31
(in thousands of dollars)
2019
Planned Results
2019 2018
Expenses
Sector Risk $1,538,456 $1,136,371 $-
Science and Innovation 557,642 526,559 -
Domestic and International Markets 261,936 290,056 -
Internal Services 262,360 284,400 301,454
Expenses not allocated to the Department’s 2018-2019 core responsibility (Note 17) - - 1,795,413
Expenses Incurred on behalf of Government (17) (91) (19)
Total expenses 2,620,377 2,237,295 2,096,848
Revenues
Sale of goods and services 67,396 66,591 73,350
Interest 14,083 11,221 12,270
Joint project and cost sharing agreements 8,036 8,274 7,958
Miscellaneous revenues 2,735 2,180 2,159
Gain on disposal of assets 3,171 1,126 2,326
Crop Reinsurance Fund 1,144 572 2,428
Revenues earned on behalf of Government (28,584) (32,334) (35,991)
Total revenues 67,981 57,630 64,500
Net cost of operations before government funding and transfers 2,552,396 2,179,665 2,032,348
Government funding and transfers
Net cash provided by Government of Canada 2,121,159 2,077,507
Change in due from Consolidated Revenue Fund 43,061 (109,240)
Services provided without charge by other government departments (Note 15) 55,361 60,588
Transfer of the transition payments for implementing salary payments in arrears - (4)
Other transfers of assets between other government departments (48) 57
Net cost of operations after government funding and transfers (39,868) 3,440
Departmental net financial position - Beginning of year 341,849 345,289
Departmental net financial position - End of year $381,717 $341,849

- represents zero

Segmented information (Note 16)

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

Consolidated Statement of Change in Departmental Net Debt (Unaudited)
For the year ended March 31
(in thousands of dollars)
2019 2018
Net cost of operations after government funding and transfers $(39,868) $3,440
Change due to tangible capital assets
Acquisition of tangible capital assets 59,212 59,523
Amortization of tangible capital assets (43,266) (39,874)
Proceeds from disposal of tangible capital assets (1,304) (2,706)
Net (loss) or gain on disposal of tangible capital assets including adjustments 537 (6,220)
Non-cash changes of tangible capital assets 399 79
Transfer (to) / from other government departments (49) (6)
Total change due to tangible capital assets 15,529 10,796
Change due to prepaid expenses and inventory (3,498) 221
Net increase (decrease) in departmental net debt (27,837) 14,457
Departmental net debt - Beginning of year 86,821 72,364
Departmental net debt - End of year $58,984 $86,821
The accompanying notes form an integral part of these consolidated financial statements.
Consolidated Statement of Cash Flows (Unaudited)
For the year ended March 31
(in thousands of dollars)
2019 2018
Operating activities
Net cost of operations before government funding and transfers $2,179,665 $2,032,348
Non-cash items:
Amortization of tangible capital assets (43,266) (39,874)
Gain (Loss) on disposal of tangible capital assets 537 (6,220)
Non-cash changes of tangible capital assets 399 79
Services provided without charge by other government departments (Note 15) (55,361) (60,588)
Other transfers of assets from other government departments (1) (63)
Transition payments for implementing salary payments in arrears - 4
Variations in Consolidated Statement of Financial Position:
Increase (decrease) in accounts receivable and advances 1,056 (6,031)
Increase (decrease) in prepaid expenses and inventory (3,498) 221
Decrease (increase) in accounts payable and accrued liabilities (16,553) 106,668
Decrease (increase) in vacation pay and compensatory leave 589 (3,628)
Decrease (increase) in environmental liabilities 651 (3,207)
Decrease (increase) in deferred revenue 5,058 (193)
Decrease (increase) in employee future benefits (99) 1,314
Decrease (increase) in other liabilities (5,926) (140)
Cash used in operating activities 2,063,251 2,020,690
Capital investing activities
Acquisition of tangible capital assets 59,212 59,523
Proceeds from disposal of tangible capital assets (1,304) (2,706)
Cash used in capital investing activities 57,908 56,817
Net cash provided by Government of Canada $2,121,159 $2,077,507

- represents zero

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

Notes to the Consolidated Financial Statements (Unaudited)
For the year ended March 31
(tabular amounts in thousands of dollars)

Note 1 – Authority and objectives

The Department of Agriculture and Agri-Food was established in 1868. Under the Department of Agriculture and Agri-Food Act, the Minister is responsible for agriculture, products derived from agriculture and research related to agriculture, and products derived from agriculture including the operation of experimental farm stations unless they have been assigned by law to another department, board, or agency.

The Department provides information, research and technology, and policies and programs to achieve security of the food system, health of the environment and innovation for growth through the following core responsibilities:

Sector Risk

Agriculture and Agri-Food Canada provides tools to mitigate the financial impact of risks beyond producers' control that threaten the viability of their operations. Agriculture and Agri-Food Canada also works with the sector to ensure that systems, standards and tools are developed to support its ability to prevent and control risks and address market demands.

Science and Innovation

Agriculture and Agri-Food Canada conducts scientific research, develops new knowledge and new technologies, and transfers the results to the agriculture and agri-food sector. Agriculture and Agri-Food Canada also works with industry and other partners to strengthen the sector's capacity to develop and adopt innovative practices, products and processes.

Domestic and International Markets

Agriculture and Agri-Food Canada provides programs and services and works in collaboration with the sector to support its competitiveness at home and abroad. Agriculture and Agri-Food Canada also works to increase opportunities for the sector to export its products by maintaining and expanding market access and advancing agricultural interests internationally.

Internal Services

Internal Services are those groups of related activities and resources that the federal government considers to be services in support of programs and/or required to meet corporate obligations of an organization. Internal Services refers to the activities and resources of the 10 distinct service categories that support Program delivery in the organization, regardless of the Internal Services delivery model in a department. The 10 service categories are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Materiel Services; and Acquisition Services.

Note 2 – Summary of significant accounting policies

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

Significant accounting policies are as follows:

  1. Parliamentary authorities
    The Department is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Department 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 Consolidated Statement of Operations and Departmental Net Financial Position and in the Consolidated 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 Consolidated Statement of Operations and Departmental Net Financial Position are the amounts reported in the Consolidated Future-Oriented Statement of Operations included in the 2018-2019 Departmental Plan. Planned results are not presented in the “Government funding and transfers” section of the Consolidated Statement of Operations and Departmental Net Financial Position and in the Consolidated Statement of Change in Departmental Net Debt because these amounts were not included in the 2018-2019 Departmental Plan.

  2. Consolidation
    These consolidated financial statements include the accounts of the sub-entities for which the Deputy Minister is accountable for. The accounts of these sub-entities have been consolidated with those of the Department, and all inter-organizational balances and transactions have been eliminated. The accounting entity comprises the Department of Agriculture and Agri-Food, the Farm Products Council of Canada and the Canadian Pari-Mutuel Agency. The consolidated financial statements do not include the accounts of the Canadian Grain Commission, the Canadian Dairy Commission and Farm Credit Canada because they are not under the control of Agriculture and Agri-Food Canada and therefore are not consolidated.

  3. Net Cash Provided by Government of Canada
    The Department operates within the Consolidated Revenue Fund, which is administered by the Receiver General for Canada. All cash received by the Department is deposited to the Consolidated Revenue Fund, and all cash disbursements made by the Department are paid from the Consolidated Revenue Fund. The net cash provided by Government of Canada is the difference between all cash receipts and all cash disbursements, including transactions between departments of the Government.

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

  5. Revenues
    • Revenues from regulatory fees are recognized 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 the Department's liabilities. While the Deputy Minister is expected to maintain accounting control, he or she has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented as a reduction to the entity's gross revenues.
  6. Expenses
    • Transfer payments are recorded as an expense in the year the transfer is authorized and all eligibility criteria have been met by the recipient.
    • 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 the employer's contribution to the health and dental insurance plans, accommodation, legal services, and workers' compensation are recorded as operating expenses at their carrying value.
  7. Employee future benefits
    1. Pension benefits – Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. The Department's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The Department's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the consolidated 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
    Accounts and loans receivable are initially recorded at cost and where necessary, are discounted to reflect their concessionary terms. Concessionary terms of loans include cases where loans are made on a long-term, low interest or interest-free basis. Transfer payments that are unconditionally repayable are recognized as loans receivable. When necessary, an allowance for valuation is recorded to reduce the carrying value of accounts and loans receivable to amounts that approximate their net recoverable value.

  9. Tangible capital assets
    The costs of acquiring land, buildings, equipment and other capital property are capitalized as tangible capital assets and, except for land, are amortized to expense over the estimated useful lives of the assets, as described in Note 11. All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Tangible capital assets do not include works of art, museum collections and Crown land to which no acquisition cost is attributable; and intangible assets.

  10. Contingent liabilities
    Contingent liabilities, including the allowance for loan or price guarantees, are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, a provision is accrued and an expense recorded to other expenses. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the consolidated financial statements.
    For loan or price guarantees, an allowance is recorded when it is likely that a payment will be made to honour a guarantee and where the amount of the anticipated loss can be reasonably estimated. The amount of the allowance for losses is determined based on historical loss experience and economic conditions adversely affecting the capacity of borrowers to reimburse the loan. The allowance is reviewed on a regular basis with any changes being charged or credited to current year expenses.

  11. 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 event is likely to occur or fail to occur, the contingent asset is disclosed in the notes to the consolidated financial statements.

  12. Environmental liabilities
    An environmental liability for the remediation of contaminated sites is recognized when all of the following criteria are satisfied: an environmental standard exists, contamination exceeds the environmental standard, the Department is directly responsible or accepts responsibility, it is expected that future economic benefits will be given up and a reasonable estimate of the amount can be made. The liability reflects the Department's best estimate of the amount required to remediate the sites to the current minimum standard for its use prior to contamination. When the future cash flows required to settle or otherwise extinguish a liability are estimable, predictable and expected to occur over extended future periods, a present value technique is used. The discount rate used reflects the Government's cost of borrowing, associated with the estimated number of years to complete remediation.

    The recorded liabilities are adjusted each year, for present value adjustments, inflation, new obligations, changes in management estimates and actual costs incurred.

    If the likelihood of the Department's responsibility is not determinable, a contingent liability is disclosed in the notes to the consolidated financial statements.

  13. Measurement uncertainty
    The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported and disclosed amounts of assets, liabilities, revenues and expenses reported in the consolidated financial statements and accompanying notes at March 31. The estimates are based on facts and circumstances, historical experience, general economic conditions and reflect the Department's best estimate of the related amount at the end of the reporting period. The most significant items where estimates are used are contingent liabilities, environmental liabilities, the liability for employee future benefits and the useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the consolidated financial statements in the year they become known.

  14. 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.

Note 3 – Parliamentary authorities

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

  1. Reconciliation of net cost of operations to current year authorities used
    Reconciliation of net cost of operations to current year authorities used
    2019 2018
    Net cost of operations before government funding and transfers $2,179,665 $2,032,348
    Adjustments for items affecting net cost of operations but not affecting authorities:
    Amortization of tangible capital assets (43,266) (39,874)
    Gain (Loss) on disposal of tangible capital assets 537 (6,220)
    Non-cash changes of tangible capital assets 399 79
    Services provided without charge by other government departments (55,361) (60,588)
    Increase (decrease) in prepaid expenses and inventory (3,498) 221
    Decrease (increase) in vacation pay and compensatory leave 589 (3,628)
    Decrease (increase) in accrued liabilities 26,766 (11,417)
    Decrease (increase) in environmental liabilities 651 (3,207)
    Decrease (increase) in employee future benefits (228) 1,450
    Decrease (increase) in allowances for bad debt expenses (13,386) (6,262)
    Refund and adjustment of prior years' expenditures 16,567 19,186
    Respendable revenue 4,761 7,376
    Other 12,165 5,299
    Total items affecting net cost of operations but not affecting authorities (53,304) (97,585)
    Adjustments for items not affecting net cost of operations but affecting authorities:
    Acquisitions of tangible capital assets 59,212 59,523
    Proceeds from disposal of tangible capital assets (1,304) (2,706)
    Transition payments for implementing salary payments in arrears - 4
    Increase (decrease) in accounts receivable and advances 2,362 3,080
    Increase (decrease) in loans receivable (28,685) (9,766)
    Total items not affecting net cost of operations but affecting authorities 31,585 50,135
    Current year authorities used $2,157,946 $1,984,898
    - represents zero
  2. Authorities provided and used
    2019 2018
    Authorities provided:
    Vote 1 - Operating expenditures $622,435 $606,697
    Vote 5 - Capital expenditures 68,942 80,136
    Vote 10 - Transfer payments 426,625 394,758
    Statutory amounts 1,152,226 993,717
    Total 2,270,228 2,075,308
    Less:
    Authorities available for future years 18,066 19,942
    Lapsed authorities 94,216 70,468
    Total 112,282 90,410
    Current year authorities used $2,157,946 $1,984,898

Note 4 – Accounts payable and accrued liabilities

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

2019 2018
Accounts payable - Other government departments and agencies $10,675 $12,390
Accounts payable - External parties 831,441 785,044
Total accounts payable 842,116 797,434
Accrued liabilities 17,840 45,969
Total accounts payable and accrued liabilities $859,956 $843,403

Note 5 – Environmental liabilities

Remediation of contaminated sites

The Government's “Federal Approach to Contaminated Sites” sets out a framework for management of contaminated sites using a risk-based approach. Under this approach the Government has inventoried the contaminated sites identified on federal lands, allowing them to be classified, managed and recorded in a consistent manner. This systematic approach aids in identification of the high risk sites in order to allocate limited resources to those sites which pose the highest risk to human health and the environment.

The Department has identified a total of 82 sites (120 sites in 2018) where contamination may exist and assessment, remediation and monitoring may be required. Of these, the Department has identified 10 sites (11 sites in 2018) where action is required and for which a liability of $4,784,000 ($4,752,000 in 2018) has been recorded. This liability estimate has been determined based on site assessments performed by environmental experts.

In addition, there are 26 sites that have not been assessed by environmental experts (47 sites in 2018) for which the department has estimated and recorded a liability of $1,195,000 ($1,878,000 in 2018).

These two estimates combined, totalling $5,979,000 ($6,630,000 in 2018), represents management's best estimate of the costs required to remediate sites to the current minimum standard for its use prior to contamination, based on information available at the financial statement date.

For the remaining 46 sites (62 sites in 2018), no liability for remediation has been recognized. Some of these sites are closed and some are at various stages of testing and evaluation and if remediation is required, liabilities will be reported as soon as a reasonable estimate can be determined. For other sites, the Department does not expect to give up any future economic benefits (there is likely no significant environmental impact or human health threats). These sites will be re-examined and a liability for remediation will be recognized if future economic benefits will be given up.

The following table presents the total estimated amounts of these liabilities by nature and source, the associated expected recoveries and the total undiscounted future expenditures as at March 31, 2019 and March 31, 2018. When the liability estimate is based on a future cash requirement, the amount is adjusted for inflation using a forecast CPI rate of 2.2% (1.9% in 2018). Inflation is included in the undiscounted amount. The Government of Canada's cost of borrowing by reference to the actual zero-coupon yield curve for Government of Canada bonds has been used to discount the estimated future expenditures. The March 2019 rates range from 1.55% for a 2 year term to 1.92% for a 30 or greater year term.

Nature and Source of Liability 2019
Nature and Source Total Number of Sites Number of Sites with a liability Estimated Liability Estimated Total Undiscounted Expenditures Estimated Recoveries
Fuel Related Practices[1] 34 13 995 1,039 -
Landfills/Waste Sites[2] 27 6 417 443 -
Engineered Asset/Air and Land
Transportation[3]
11 10 383 417 -
Other[4] 10 7 4,184 4,391 -
Totals 82 36 5,979 6,290 -

- represents zero

  • [1] Contamination primarily associated with fuel storage and handling, for example accidental spills related to fuel storage tanks or former fuel handling practices, for example petroleum hydrocarbons, polyaromatic hydrocarbons and BTEX (benzene, toluene, ethylbenzene and xylenes).
  • [2] Contamination associated with former landfill/waste site or leaching from materials deposited in the landfill/waste site, for example metals, petroleum hydrocarbons, BTEX, other organic contaminants, etc.
  • [3] Contamination associated with the operations of engineered assets such as airports, railways and roads where activities such as fuel storage/handling, waste sites, firefighting training facilities and chemical storage areas resulted in former or accidental contamination, for example metals, petroleum hydrocarbons, polyaromatic hydrocarbons, BTEX and other organic contaminants. Sites often have multiple sources of contamination.
  • [4] Contamination from other sources, for example use of pesticides, herbicides, fertilizers at agricultural sites; use of PCBs, firefighting training areas, firing ranges and training facilities, etc.
Nature and Source of Liability 2018
Nature and Source Total Number of Sites Number of Sites with a liability Estimated Liability Estimated Total Undiscounted Expenditures Estimated Recoveries
Fuel Related Practices[1] 55 25 1,324 1,377 -
Landfills/Waste Sites[2] 40 16 879 909 -
Engineered Asset/Air and Land
Transportation[3]
14 9 328 344 -
Other[4] 11 8 4,099 4,275 -
Totals 120 58 6,630 6,905 -

- represents zero

  • [1] Contamination primarily associated with fuel storage and handling, for example accidental spills related to fuel storage tanks or former fuel handling practices, for example petroleum hydrocarbons, polyaromatic hydrocarbons and BTEX (benzene, toluene, ethylbenzene and xylenes).
  • [2] Contamination associated with former landfill/waste site or leaching from materials deposited in the landfill/waste site, for example metals, petroleum hydrocarbons, BTEX, other organic contaminants, etc.
  • [3] Contamination associated with the operations of engineered assets such as airports, railways and roads where activities such as fuel storage/handling, waste sites, firefighting training facilities and chemical storage areas resulted in former or accidental contamination, for example metals, petroleum hydrocarbons, polyaromatic hydrocarbons, BTEX and other organic contaminants. Sites often have multiple sources of contamination.
  • [4] Contamination from other sources, for example use of pesticides, herbicides, fertilizers at agricultural sites; use of PCBs, firefighting training areas, firing ranges and training facilities, etc.

The Department's ongoing efforts to assess contaminated sites may result in additional environmental liabilities.

Note 6 – Deferred revenue

Deferred revenue represents the balance at year-end of unearned revenues stemming mainly from joint collaborative agreements and cost-sharing agreements which are restricted to fund the expenditures related to specific research projects and amounts received for fees prior to services being performed. Revenue is recognized in the period in which these expenditures are incurred or in which the service is performed. Details of the transactions related to this account are as follows:

2019 2018
Opening balance $17,711 $17,518
Amounts received 3,225 8,151
Revenue recognized (8,283) (7,958)
Closing balance $12,653 $17,711

Note 7 – Employee future benefits

  1. Pension benefits

    The Department's employees participate in the Public Service Pension Plan (the “Plan”), which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plan benefits and they are indexed to inflation.

    Both the employees and the Department contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to 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 2018-2019 expense amounts to $42,144,000 ($41,296,000 in 2017-2018). For Group 1 members, the expense represents approximately 1.01 times (1.01 times in 2017-2018) the employee contributions and, for Group 2 members, approximately 1.00 times (1.00 times in 2017-2018) the employee contributions.

    The Department's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the Consolidated Financial Statements of the Government of Canada, as the Plan's sponsor.

  2. Severance benefits

    Severance benefits provided to the Department'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, 2019, 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:

    Severance benefits
    2019 2018
    Accrued benefit obligation - Beginning of year $17,880 $19,194
    Expense for the year 4,171 1,233
    Benefits paid during the year (4,072) (2,547)
    Accrued benefit obligation - End of year $17,979 $17,880

Note 8 – Other liabilities

The Department holds funds in trust from the AgriInvest program, the AgriStability program as well as security and other deposits.

AgriInvest is a self-managed producer-government savings account that allows producers to set money aside which can be used to recover from small income shortfalls, or to make investments to reduce on-farm risks. Program payments are cost-shared with the province or territory, which producers can withdraw under specific terms and conditions. Producers make their AgriInvest deposits at a participating financial institution of their choice. Existing funds held by the federal government are being transferred to the producers' AgriInvest accounts held at the financial institutions.

The AgriStability program helps producers protect their farming operations against larger drops in income. Program payments are shared 60% federally and 40% provincially/territorially. The provincial/territorial share of the contributions and interest paid on the contributions are held in a specified purpose account until the producers draw down their funds.

AgriInvest, AgriStability and security and other deposit account activity during the year was as follows:

AgriInvest, AgriStability and security deposit account activity
2019 2018
Opening balance $53,479 $53,339
Deposits 296,153 284,265
Withdrawals (290,227) (284,125)
Ending balance $59,405 $53,479

Note 9 – Accounts receivable and advances

The following table presents details of the Department's accounts receivable and advances balances:

2019 2018
Receivables - Other government departments and agencies $13,193 $11,954
Receivables - External parties 36,629 45,445
Employee advances 108 72
Subtotal 49,930 57,471
Allowance for doubtful accounts on receivables from external parties (13,968) (22,753)
Gross accounts receivable 35,962 34,718
Accounts receivable held on behalf of Government 2,100 1,888
Allowance for doubtful accounts held on behalf of Government (94) (70)
Net accounts receivable held on behalf of Government 2,006 1,818
Net accounts receivable $33,956 $32,900

Note 10 – Loans receivable

The following table presents details of the Department's loans receivable balances:

2019 2018
Unconditionally repayable contributions $140,071 $143,474
Loans resulting from loan guarantee programs 262,219 289,442
Subtotal 402,290 432,916
Less: Allowance for uncollectibility (176,247) (171,856)
Gross loans receivable 226,043 261,060
Loans receivable held on behalf of Government 226,043 261,060
Net loans receivable $- $-
- represents zero
  1. Unconditionally repayable contributions

    Unconditionally repayable contributions relate to contributions made to outside parties which are repayable based on conditions specified in the contribution agreement that have come into being. An allowance of $28,243,000 ($17,789,000 in 2018) has been recorded.

  2. Loans resulting from loan guarantee programs

    The Department's loan receivables are the result of the exercise of loan guarantees by the initial lender under the terms of various loan guarantee programs. These loans are in default with the initial lender and due immediately to the Department. Interest rates on these loans vary according to the initial terms of the loans and applicable government regulations. An allowance of $148,004,000 ($154,067,000 in 2018) relating to these loans has been recorded.

Note 11 – 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 20 to 30 years
Works and infrastructure 15 to 40 years
Machinery and equipment 3 to 20 years
Vehicles 7 to 25 years
Computer hardware and software 3 to 5 years
Leasehold improvements Over the useful life of the improvement or the lease term, whichever is shorter
Assets under construction Once in service, in accordance with asset type

Assets under construction are recorded in the applicable asset class in the year they are put into service and are not amortized until they are put into service.

Tangible capital assets - Cost
Capital Asset Class Opening Balance Acquisitions Adjustments[1] Disposals and Write-Offs Closing Balance
Land $12,921 $- $350 $81 $13,190
Buildings 709,310 410 61,261 1,998 768,983
Works and infrastructure 33,416 78 3,949 - 37,443
Machinery and equipment 236,533 16,872 517 5,571 248,351
Vehicles 67,300 3,161 (140) 3,346 66,975
Computer hardware and software 49,820 273 (58) 300 49,735
Leasehold improvements 32,465 - 853 23 33,295
Assets under construction 67,447 38,418 (66,213) 65 39,587
Total $1,209,212 $59,212 $519 $11,384 $1,257,559

- represents zero

 [1] Adjustments include assets under construction of $66,213,000 that were transferred to the other categories upon completion of the assets.

Tangible capital assets - Accumulated Amortization
Capital Asset Class Opening Balance Amortization Adjustments[1] Disposals and Write-Offs Closing Balance
Land $- $- $- $- $-
Buildings 494,734 20,440 (68) 1,683 513,423
Works and infrastructure 17,504 1,155 209 - 18,868
Machinery and equipment 158,299 14,115 98 5,394 167,118
Vehicles 46,539 4,375 (48) 3,217 47,649
Computer hardware and software 47,347 1,749 (22) 300 48,774
Leasehold improvements 21,069 1,432 - 23 22,478
Assets under construction - - - - -
Total $785,492 $43,266 $169 $10,617 $818,310

- represents zero

 [1] Adjustments include assets under construction of $66,213,000 that were transferred to the other categories upon completion of the assets.

Net Book Value - Tangible capital assets
Capital Asset Class 2019 2018
Land $13,190 $12,921
Buildings 255,560 214,576
Works and infrastructure 18,575 15,912
Machinery and equipment 81,233 78,234
Vehicles 19,326 20,761
Computer hardware and software 961 2,473
Leasehold improvements 10,817 11,396
Assets under construction 39,587 67,447
Total $439,249 $423,720

Note 12 – Departmental net financial position

A portion of the Department's net financial position is used for a specific purpose. Related revenues and expenses are included in the Consolidated Statement of Operations and Departmental Net Financial Position. The Department operates two programs which under legislation require that the revenues be earmarked to offset the expenses of the program.

The Crop Reinsurance Fund was established pursuant to the Farm Income Protection Act and provides insurance to participating provinces for costs they incur in operating crop insurance programs. The fund records receipts and disbursements under the terms of reinsurance agreements. When there are insufficient revenues to meet payments, the Minister of Finance may authorize an advance of additional funds to cover these obligations.

The Agricultural Commodities Stabilization Accounts were established pursuant to the Agricultural Stabilization Act, under which the commodity accounts formerly operated, and has since been repealed and replaced by the Farm Income Protection Act effective April 1, 1991. The purpose of these accounts was to reduce income loss to producers from market risks through stabilizing prices. Premiums were shared equally by the Government of Canada, the governments of participating provinces and participating producers. Current activities are limited to collection of accounts receivable.

Activity in the accounts is as follows:

2019 2018
Crop Reinsurance Fund - Restricted
Balance - Beginning of year - Restricted $299,290 $296,862
Revenues 572 2,428
Expenses - -
Balance - End of year - Restricted 299,862 299,290
Agricultural Commodities Stabilization Accounts - Restricted 647 647
Unrestricted 81,208 41,912
Departmental net financial position - End of year $381,717 $341,849
- represents zero

Note 13 – Contractual obligations and contractual rights

  1. Contractual obligations

    The nature of the Department's activities can result in some large multi‑year contracts and obligations whereby the Department will be obligated to make future payments in order to carry out its transfer payment programs. Significant non revocable contractual obligations that can be reasonably estimated are summarized as follows:

    2020 2021 2022 2023 2024 2025 and thereafter Total
    Transfer payments $328,558 $277,234 $268,297 $260,250 $- $- $1,134,339
    - represents zero
  2. Contractual rights

    The activities of the Department 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. They principally involve interest on loans receivable, revenue/profit sharing arrangement from research agreements. Major contractual rights that will generate revenues in future years and that can be reasonably estimated are summarized as follows:

    Interest on
    loans receivable
    Research
    agreements
    Total
    2020 $11,599 $22,655 $34,254
    2021 11,599 12,302 23,901
    2022 11,599 8,723 20,322
    2023 11,599 6,917 18,516
    2024 11,599 - 11,599
    2025 and subsequent 57,994 - 57,994
    Total $115,989 $50,597 $166,586
    - represents zero

Note 14 – Contingent liabilities and contingent assets

  1. Contingent liabilities

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

    Claims and litigation

    Claims have been made against the Department in the normal course of operations. These claims include items with pleading amounts and other for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. The Department records an allowance for claims and litigations when it is likely that there will be a future payment and a reasonable estimate of the loss can be made.

    Loan or price guarantees

    Authorized limit Outstanding
    Guarantees
    Allowance as at
    March 31
    2019 2018 2019 2018
    Loans according to the Advance Payments Program under the Agricultural Marketing Programs Act $5,000,000 $1,674,656 $1,269,711 $16,494 $43,600
    Loans to farmers under the Canadian Agricultural Loans Act 3,000,000 97,909 100,548 979 1,006
    Price guarantee agreements with marketing agencies pursuant to the Price Pooling Program under the Agricultural Marketing Programs Act No limit - - - -
    National Biomass Ethanol Program 140,000 - - - -
    Total $1,772,565 $1,370,259 $17,473 $44,606
    - represents zero

    Under the Advance Payments Program of Agricultural Marketing Programs Act, the Department guarantees the repayment of advances made by producer organizations to farmers in the spring and in the fall, creating a more stable business environment. The maximum cash advance of the program for 2018-2019 was $400,000. The loans generally have a repayment term of 18 to 24 months.

    Under the Canadian Agricultural Loans Act, the Department guarantees loans by financial institutions to farmers for improvement and development of farms, and the processing, distribution or marketing of farm products. This program guarantees 95 percent of the value of loans provided to farms and co‑operatives by financial institutions. For individual applicants, including corporations, the maximum amount for a Canadian Agricultural Loans Act loan is $500,000. Most loans are repayable within ten years. For loans on land purchases, the repayment period is 15 years.

    Under the Price Pooling Program of the Agricultural Marketing Programs Act, the Department provides a price guarantee that protects marketing agencies and producers against unanticipated declines in the market price of their products.

    The Minister of Agriculture and Agri-Food is authorized to guarantee Line of Credit Agreements entered into by Farm Credit Canada under the National Biomass Ethanol Program.

    The allowance for losses is the amount recorded for estimated losses on outstanding loan guarantees and which is included in accrued liabilities. No allowance has been recorded for the Price Pooling Program of the Agricultural Marketing Programs Act and for the National Biomass Ethanol Program as no costs are likely to occur.

  2. Contingent assets

    Transfer payments - Conditionally repayable contributions

    Under the EcoAgriculture Biofuels Capital Initiative, conditionally repayable contributions which are outstanding in 2019 total $42,434,000 ($55,627,000 in 2018). Repayments are determined by a project's profitability, and have a maximum repayment period of 10 years. The final repayment is due no later than June 30, 2022.

    Under the Slaughter Improvement Program, conditionally repayable contributions which are outstanding in 2019 total $24,125,000 ($34,734,000 in 2018). Repayments are determined by a project's profitability, and have a maximum repayment period of 10 years. The final repayment is due no later than October 1, 2023.

    Under the Slaughter Waste Innovation Program, conditionally repayable contributions which are outstanding in 2019 total $16,202,000 ($17,031,000 in 2018). Repayments are determined by a project's profitability as well as whether and how a project demonstrates the destruction or deactivation of Specified Risk Material. Contributions have a maximum repayment period of 10 years. The final repayment is due no later than September 1, 2023.

    As these are conditionally repayable contributions, the amounts that will become repayable cannot be currently estimated as contribution agreements are subject to specific program requirements, which require annual determinations as to the value which must be repaid each year. Thus, to forecast a specific amount repayable each year is not possible due to the varying factors facing each recipient as it relates to their economic and production performances.

    Contingent recoveries

    AgriStability and Canadian Agricultural Income Stabilization programs are federally and provincially/territorially cost shared programs and the Canadian Agricultural Income Stabilization Inventory Transition Initiative is a federally funded program. When provincial/territorial governments deliver these programs and overpayments occur, the federal government is entitled to recover its share of funding if and when overpayments are recovered. The Department has estimated the contingent recoverable amount as $6,714,000 ($6,951,000 in 2018). Contingent recoveries are not recorded in the consolidated financial statements.

Note 15 – Related party transactions

The Department 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.

The Department enters into transactions with Government departments, agencies, and Crown Corporations in the normal course of business and on normal trade terms.

  1. Common services provided without charge by other government departments

    During the year, the Department received services without charge from certain common service organizations, related to the employer's contribution to the health and dental insurance plans, accommodation, legal services, and workers' compensation coverage. These services provided without charge have been recorded at the carrying value in the Department's Consolidated Statement of Operations and Departmental Net Financial Position as follows:

    2019 2018
    Employer's contribution to the health and dental insurance plans $35,482 $40,218
    Accommodation 18,261 18,661
    Legal services 707 706
    Workers' compensation 911 1,003
    Total $55,361 $60,588

    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 and audit services provided by the Office of the Auditor General are not included in the Department's Consolidated Statement of Operations and Departmental Net Financial Position.

  2. Other transactions with other government departments and agencies
    2019 2018
    Expenses $134,093 $143,363
    Revenues 17,924 18,244

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

Note 16 – Segmented information

Presentation by segment is based on the Department's core responsibility. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in Note 2. The following table presents the expenses incurred and revenues generated for the main core responsibilities, by major object of expense and by major type of revenue. The segment results for the period are as follows:

Sector Risk Science and Innovation Domestic and
International Markets
Internal Services 2019 Total 2018 Total
Expenses
Transfer payments $1,082,096 $133,010 $172,312 $- $1,387,418 $1,224,029
Salaries and employee benefits 31,952 268,833 58,733 155,543 515,061 539,168
Professional and other services 10,979 36,435 22,155 53,327 122,896 127,575
Allowance for loan guarantees and bad debts 10,250 12,991 - 62 23,303 40,636
Materials and supplies 575 35,051 960 7,924 44,510 46,406
Amortization of tangible capital assets - - 316 42,950 43,266 39,874
Accommodation and other 309 10,649 35,223 22,939 69,120 48,650
Travel 29 830 117 226 1,202 974
Repairs and maintenance 104 12,977 186 592 13,859 12,848
Electricity and other public services 77 15,783 54 837 16,751 16,707
Expenses incurred on behalf of Government - - - (91) (91) (19)
Total expenses 1,136,371 526,559 290,056 284,309 2,237,295 2,096,848
Revenues
Sale of goods and services 1,224 30,999 16,266 18,102 66,591 73,350
Interest 11,077 - - 144 11,221 12,270
Joint project and cost sharing agreements - - - 8,274 8,274 7,958
Miscellaneous revenues 1,427 159 49 545 2,180 2,159
Gain on disposal of assets - - - 1,126 1,126 2,326
Crop Reinsurance Fund 572 - - - 572 2,428
Revenues earned on behalf of Government (13,917) (7,214) (773) (10,430) (32,334) (35,991)
Total revenues 383 23,944 15,542 17,761 57,630 64,500
Net cost of operations $1,135,988 $502,615 $274,514 $266,548 $2,179,665 $2,032,348
- represents zero

Note 17 – Program alignment architecture

Certain 2017-2018 figures in the Consolidated Statement of Operations and Departmental Net Financial Position have not been presented under the Department's 2018-2019 core responsibility due to significant changes. Below are the unallocated amounts based on the Department's 2017-2018 program alignment architecture:

2018
Business Risk Management $974,469
Science, Innovation, Adoption and Sustainability 556,320
Market Access, Negotiations, Sector Competitiveness, and Assurance Systems 193,044
Industry Capacity 59,573
Canadian Pari-Mutuel Agency 9,414
Farm Products Council of Canada 2,593
Total $1,795,413

Note 18 – Subsequent events

  1. Agricultural Marketing Programs Regulations

    On May 29, 2019, the Government of Canada announced its decision to amend the Agricultural Marketing Programs Regulations. Under the Advance Payments Program of the Agricultural Marketing Programs Act, the amendment increases the maximum advance outstanding for all eligible agricultural producers to $1,000,000 (previously $400,000) and increases the authorized limit for loans according to the Advance Payment Program to $7,500,000,000 (previously $5,000,000,000).

  2. Compensation for Supply-Managed Dairy Producers

    On August 16, 2019, the Minister of Agriculture and Agri-Food Canada announced $1,750,000,000 will be made available over eight years to Canada's nearly 11,000 dairy farmers. Of this amount, $345,000,000, in fiscal year 2019-2020, will be paid in the form of direct payments that will benefit all dairy producers in proportion to their quota held.

    The impact of these subsequent events will be reflected in the 2019-2020 consolidated financial statements.

Note 19 – Comparative information

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

Annex to the Statement of Management Responsibility Including Internal Control over Financial Reporting of Agriculture and Agri-Food Canada for Fiscal Year 2018-2019 (Unaudited)

1. Introduction

This document provides summary information on the measures taken by Agriculture and Agri-Food Canada to maintain an effective system of internal control over financial reporting, including information on internal control management, assessment results and related action plans.

Detailed information on the Department's authority, mandate and Core Responsibilities can be found in the Departmental Plan and Departmental Results Report.

2. Agriculture and Agri-Food Canada's System of Internal Control Over Financial Reporting

Agriculture and Agri-Food Canada recognizes the importance of setting the tone from the top to help ensure that staff at all levels understand their roles in maintaining effective systems of internal control over financial reporting and are well equipped to exercise these responsibilities effectively. Agriculture and Agri-Food Canada's focus is to ensure risks are well managed through a responsive and risk-based control environment that enables continuous improvement and innovation.

2.1 Internal Control Management

Agriculture and Agri-Food Canada 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 management framework, approved by the Deputy Minister, is in place and comprises:

Key Positions, Roles and Responsibilities

Below are Agriculture and Agri-Food Canada's key positions and committees with responsibilities for maintaining and reviewing the effectiveness of its system of internal control over financial reporting.

Deputy Minister
Agriculture and Agri-Food Canada's Deputy Minister, as Accounting Officer, assumes overall responsibility and leadership for the measures taken to maintain an effective system of internal control. In this role, the Deputy Minister is advised by the Departmental Audit Committee and the Departmental Management Committee.
Chief Financial Officer (CFO)
Agriculture and Agri-Food Canada's CFO reports directly to the Deputy Minister and provides leadership for the coordination, coherence and focus on the design and maintenance of an effective and integrated system of internal control over financial reporting, including its annual assessment. Falling under the CFO responsibilities is also the management of the Corporate Risk Profile of Agriculture and Agri-Food Canada.
Senior Departmental Managers
Agriculture and Agri-Food Canada's senior departmental managers in charge of program delivery are responsible for maintaining and reviewing the effectiveness of the system of internal control over financial reporting falling within their mandate.
Chief Audit Executive (CAE)
Agriculture and Agri-Food Canada's CAE reports directly to the Deputy Minister and provides assurance through periodic internal audits which are instrumental to the maintenance of an effective system of internal control over financial reporting.
Departmental Audit Committee (DAC)
The DAC is an advisory committee that provides objective views on the Department's risk management, control and governance frameworks and processes. It is comprised of three external members and two ex-officio members, the Deputy Minister and Associate Deputy Minister. The DAC formally meets at least three times per year.
Departmental Management Committee (DMC)
The DMC is chaired by the Deputy Minister and serves as an executive forum to address departmental management and operational issues such as human resources, finance, assets, information management/information technology, and public affairs.
Policy and Programs Management Committee (PPMC)
The PPMC is chaired by the Deputy Minister and is responsible for guiding the development and implementation of cohesive and comprehensive policies, programs and services, and monitoring of results.
2.1.1 Key Measures taken by Agriculture and Agri-Food Canada

Agriculture and Agri-Food Canada's control environment also includes a series of measures to equip its staff to manage risks through raising awareness, providing appropriate knowledge and tools as well as developing skills. The most relevant are:

2.2 Service arrangements relevant to financial statements

Agriculture and Agri-Food Canada relies on other organizations for processing certain transactions that are recorded in its financial statements, as follows:

Common Service Arrangements

Readers of this annex may refer to the annexes of the above-noted departments for a greater understanding of the systems of internal control over financial reporting related to these specific services.

Specific Arrangements

3. Agriculture and Agri-Food Canada's assessment results for the 2018-2019 fiscal year

The Department has adopted an ongoing risk-based monitoring approach to support testing of internal control over financial reporting. The level of risk impacts the extent and frequency of testing required for key control activities. High risk areas are assessed annually, medium risk at least every two to three years, and low risk, at least every three to four years.

3.1 New or significantly amended key controls

In the current fiscal year, there were no new or significantly amended key controls in existing processes that required reassessment.

3.2 Ongoing Monitoring Program

For 2018-2019, adjustments were not required to the rotational ongoing monitoring plan and the Department adopted the ongoing monitoring plan outlined in the Department's Annex for 2017-2018 and validated and reassessed internal controls in the following areas:

Previous fiscal year’s rotational ongoing monitoring plan for the current fiscal year Status
Financial Close and Reporting

Completed as planned.

Where required, remedial actions have either been completed or are planned during 2019-2020.

Section 33
Forecasting
Payroll
Capital Assets
AgriInsurance
Generic Grants and Contributions
Operating Expenditures
Information Technology General Controls (ITGCs) for SAP, PeopleSoft, Business Risk Management Suite (BRMS), and Production Insurance National Statistical System (PINSS)

The ITGCs testing for SAP and PeopleSoft also includes the process and controls performed by the Department as an administrator and service provider to other federal government departments and agencies.

The testing period covered January 1, 2018 to December 31, 2018. Based on areas assessed in the current year, no high risk findings were identified. Therefore, for the most part, the key controls that were tested performed as intended. Remediation points that were identified primarily focused on system access controls. Where feasible, corrective actions were implemented shortly after adjustments were identified and management action plans either have been or are currently being developed to fully address the recommendations. A follow-up will be performed to ensure action plans are being implemented as planned.

4. Action plan for the next fiscal year and subsequent years

Agriculture and Agri-Food Canada's rotational ongoing monitoring plan over the next three fiscal years, based on an annual validation of the high-risk processes and controls and related adjustments to the ongoing monitoring plan as required, is shown in the following table.

Key Control Areas Fiscal Year
2019–2020
Fiscal Year
2020–2021
Fiscal Year
2021–2022
Higher Risk
(Annual)
Financial Close and Reporting X X X
Section 33 X X X
Forecasting X X X
Payroll X X X
Medium Risk
(2-3 years)
Capital Assets X
Low Risk
(3-4 years)
AgriInsurance X
AgriStability/AgriInvest X
Budgeting X
Generic Grants and Contributions X
Loan Guarantees X
Operating Expenditures X
Revenues X
X: applicable
IT Processes
Key Control Areas Fiscal Year
2019–2020
Fiscal Year
2020–2021
Fiscal Year
2021–2022
Higher Risk
(Annual)
PeopleSoft X X X
SAP (ECC/BW/BPC) X X X
Medium Risk
(2-3 years)
Advance Payments Program Electronic Delivery System (APPEDS) X
Business Risk Management Suite (BRMS) X
Production Insurance National Statistical System (PINSS) X
Low Risk
(3-4 years)
Entity Level Controls X
X: applicable

During 2018-2019, the Department reviewed its ongoing monitoring work plan. In order to increase efficiency, the Department adjusted the testing of ITGCs for PINSS from 2020-2021 to 2021-2022 in order to coincide with the assessment of the related business process controls for AgriInsurance. High risk control areas will continue to be assessed annually, medium risk at least every 2-3 years and low risk at least every 3-4 years.

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