Table of contents
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, 2024, and all information contained in these financial 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, 2024 was completed in accordance with the Treasury Board Policy on Financial Management and the results and action plans are summarized in the Annex.
The Annex also provides information on the status of the risk-based assessment of the controls over common services provided by the department that have a bearing on a recipient's departmental financial statements.
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.
Original signed by
Lawrence Hanson, Deputy Minister
Ottawa, Canada
September 9, 2024
Original signed by
Marie-Claude Guérard, Chief Financial Officer
| 2024 | 2023 | |
|---|---|---|
| Liabilities | ||
| Accounts payable and accrued liabilities (Note 4) | 2,345,132 | 930,748 |
| Vacation pay and compensatory leave | 42,374 | 42,105 |
| Environmental liabilities and asset retirement obligations (Note 5) | 42,601 | 50,427 |
| Deferred revenues (Note 7) | 22,820 | 22,546 |
| Employee future benefits (Note 8) | 6,767 | 8,559 |
| Other liabilities (Note 9) | 67,534 | 69,732 |
| Total liabilities | 2,527,228 | 1,124,117 |
| Financial assets | ||
| Due from Consolidated Revenue Fund | 2,401,755 | 984,918 |
| Accounts receivable and advances (Note 10) | 32,013 | 29,387 |
| Loans receivable (Note 11) | 280,847 | 306,114 |
| Total financial assets | 2,714,615 | 1,320,419 |
| Financial assets held on behalf of Government | ||
| Accounts receivable and advances (Note 10) | (5,150) | (3,903) |
| Loans receivable (Note 11) | (280,847) | (306,114) |
| Total financial assets held on behalf of Government | (285,997) | (310,017) |
| Total net financial assets | 2,428,618 | 1,010,402 |
| Departmental net debt | 98,610 | 113,715 |
| Non-financial assets | ||
| Prepaid expenses and inventory | 1,772 | 2,756 |
| Tangible capital assets (Note 13) | 489,639 | 478,607 |
| Total non-financial assets | 491,411 | 481,363 |
| Departmental net financial position (Note 14) | 392,801 | 367,648 |
Contractual obligations and contractual rights (Note 15)
Contingent liabilities and contingent assets (Note 16)
The accompanying notes form an integral part of these consolidated financial statements.
Original signed by
Lawrence Hanson, Deputy Minister
Ottawa, Canada
September 9, 2024
Original signed by
Marie-Claude Guérard, Chief Financial Officer
| 2024 Planned results (Note 3c) |
2024 Actual |
2023 Actual |
|
|---|---|---|---|
| Expenses | |||
| Sector Risk | 780,614 | 2,477,157 | 1,740,038 |
| Domestic and International Markets | 1,219,670 | 1,654,805 | 386,915 |
| Science and Innovation | 572,576 | 774,632 | 733,031 |
| Internal services | 256,427 | 391,608 | 353,524 |
| Expenses incurred on behalf of Government | (62) | (36) | (86) |
| Total expenses | 2,829,225 | 5,298,166 | 3,213,422 |
| Revenues | |||
| Sale of goods and services | 73,198 | 65,384 | 72,088 |
| Crop Reinsurance Fund (Note 14) | 48 | 49,227 | 70 |
| Interest | 13,163 | 17,645 | 18,737 |
| Joint project and cost sharing agreements | 6,513 | 15,778 | 12,121 |
| Miscellaneous revenues | 995 | 2,495 | 1,699 |
| Gain on disposal of assets | 936 | 1,497 | 1,597 |
| Revenues earned on behalf of Government | (31,102) | (96,017) | (42,148) |
| Total revenues | 63,751 | 56,009 | 64,164 |
| Net cost of operations before government funding and transfers | 2,765,474 | 5,242,157 | 3,149,258 |
| Government funding and transfers | |||
| Net cash provided by Government of Canada | 3,780,146 | 3,463,318 | |
| Change in due from Consolidated Revenue Fund | 1,416,837 | (370,447) | |
| Services provided without charge by other government departments (Note 17) | 70,258 | 63,387 | |
| Other transfers of assets from other government departments | 69 | 15,907 | |
| Net cost of operations after government funding and transfers | (25,153) | (22,907) | |
| Departmental net financial position - Beginning of year | 367,648 | 344,741 | |
| Departmental net financial position - End of year | 392,801 | 367,648 | |
Segmented information (Note 18)
The accompanying notes form an integral part of these consolidated financial statements.
| 2024 | 2023 | |
|---|---|---|
| Net cost of operations after government funding and transfers | (25,153) | (22,907) |
| Change due to tangible capital assets | ||
| Acquisition of tangible capital assets | 61,811 | 50,459 |
| Amortization of tangible capital assets | (45,634) | (42,451) |
| Proceeds from disposal of tangible capital assets | (1,552) | (1,637) |
| Net gain on disposal of tangible capital assets including adjustments | 1,421 | 1,091 |
| Non-cash changes of tangible capital assets | (4,988) | (997) |
| Transfer (to) / from other government departments | (26) | 15,728 |
| Total change due to tangible capital assets | 11,032 | 22,193 |
| Change due to prepaid expenses and inventory | (984) | (221) |
| Decrease in departmental net debt | (15,105) | (935) |
| Departmental net debt - Beginning of year | 113,715 | 114,650 |
| Departmental net debt - End of year | 98,610 | 113,715 |
The accompanying notes form an integral part of these consolidated financial statements.
| 2024 | 2023 | |
|---|---|---|
| Operating activities | ||
| Net cost of operations before government funding and transfers | 5,242,157 | 3,149,258 |
| Non‑cash items: | ||
| Amortization of tangible capital assets | (45,634) | (42,451) |
| Net gain on disposal of tangible capital assets including adjustments | 1,421 | 1,091 |
| Non‑cash changes of tangible capital assets | (4,988) | (997) |
| Services provided without charge by other government departments (Note 17) | (70,258) | (63,387) |
| Other transfers of assets from other government departments | (95) | (179) |
| Variations in Consolidated Statement of Financial Position: | ||
| Increase (decrease) in accounts receivable and advances | 1,379 | (6,039) |
| Decrease in prepaid expenses and inventory | (984) | (221) |
| (Increase) decrease in accounts payable and accrued liabilities | (1,414,384) | 389,011 |
| (Increase) decrease in vacation pay and compensatory leave | (269) | 4,901 |
| Decrease (increase) in environmental liabilities and asset retirement obligations | 7,826 | (8,024) |
| Increase in deferred revenues | (274) | (217) |
| Decrease in employee future benefits | 1,792 | 116 |
| Decrease (increase) in other liabilities | 2,198 | (8,366) |
| Cash used in operating activities | 3,719,887 | 3,414,496 |
| Capital investing activities | ||
| Acquisition of tangible capital assets | 61,811 | 50,459 |
| Proceeds from disposal of tangible capital assets | (1,552) | (1,637) |
| Cash used in capital investing activities | 60,259 | 48,822 |
| Net cash provided by Government of Canada | 3,780,146 | 3,463,318 |
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, 2024
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 operation. 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.
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.
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.
Internal services
Internal services are the services that are provided within a department so that it can meet its corporate obligations and deliver its programs. There are 10 categories of internal services: management and oversight; communications; legal; human resources management; financial management; information management; information technology; real property management; materiel management; and acquisition management.
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:
(a) 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 2023–24 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 2023–24 Departmental Plan.
(b) 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.
(c) 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.
(d) 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.
(e) Revenues and deferred revenues
Revenues are comprised of revenues earned from non-tax sources. They include exchange transactions where goods or services are provided for consideration where a performance obligation exists, and non-exchange transactions where no performance obligations exist to provide a good or service. These transactions can be recurring or non-recurring in nature. Recurring transactions are viewed as ongoing, routine activities that form part of the normal course of operations and can be used to indicate if they can be reasonably expected to be earned again in future years.
Deferred revenues consist of amounts received in advance of the delivery of goods and rendering of services that will be recognized as revenues in a subsequent fiscal year as they are 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 Departmental 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 earned on behalf of the Government of Canada and are therefore presented as a reduction of the entity's gross revenues. Revenues earned on behalf of Government consist of the sale of services and gains on the sale of assets. These are recognized when earned.
(f) 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.
(g) Employee future benefits
- 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.
- 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.
(h) Financial instruments
A contract establishing a financial instrument creates, at its inception, rights, and obligations to receive or deliver economic benefits. The financial assets and financial liabilities portray these rights and obligations in the financial statements. The Department recognizes a financial instrument when it becomes a party to a financial instrument contract.
Financial instruments consist of accounts and loans receivable, and accounts payable and accrued liabilities.
All financial assets and liabilities are recorded at cost or amortized cost. Any associated transaction costs are added to the carrying value upon initial recognition.
See Note 12 Risk management for risks related to the Department's financial instruments.
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 or include forgiveness clauses. Unconditionally repayable contributions 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. Loans receivable are subsequently measured at amortized cost.
(i) 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 13. 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.
(j) 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 not wholly in the Department's control 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.
(k) Contingent assets
Contingent assets are possible assets which may become actual assets when one or more future events not wholly in the Department's control 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.
(l) Environmental liabilities and asset retirement obligations
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 environmental standard for its use prior to contamination.
An asset retirement obligation is recognized when all of the following criteria are satisfied: there is a legal obligation to incur retirement costs in relation to a tangible capital asset, the past event or transaction giving rise to the retirement liability has occurred, it is expected that future economic benefits will be given up and a reasonable estimate of the amount can be made. The costs to retire an asset are normally capitalized and amortized over the asset's estimated remaining useful life. An asset retirement obligation may arise in connection with a tangible capital asset that is not recognized or no longer in productive use. In this case, the asset retirement cost would be expensed. The measurement of the liability is the Department's best estimate of the amount required to retire a tangible capital asset.
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, as required, for present value adjustments, inflation, new obligations, changes in management estimates and actual costs incurred.
(m) 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 and asset retirement obligations, 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.
Environmental liabilities and asset retirement obligations are subject to measurement uncertainty as discussed in Note 5 due to the evolving technologies used in the estimation of the costs for remediation of contaminated sites or asset retirements, the use of discounted present value of future estimated costs, inflation, interest rates and the fact that not all sites have had a complete assessment of the extent and nature of remediation or asset retirement costs. Changes to underlying assumptions, the timing of the expenditures, the technology employed, or the revisions to environmental standards or changes in regulatory requirements could result in significant changes to the environmental liabilities and/or asset retirement obligations recorded.
(n) 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:
- Services provided on a recovery basis are recognized as revenues and expenses on a gross basis and measured at the exchange amount.
- 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:
(a) Reconciliation of net cost of operations to current year authorities used
| 2024 | 2023 | |
|---|---|---|
| (in thousands of dollars) | ||
| Net cost of operations before government funding and transfers | 5,242,157 | 3,149,258 |
| Adjustments for items affecting net cost of operations but not affecting authorities: | ||
| Amortization of tangible capital assets | (45,634) | (42,451) |
| Net gain on disposal of tangible capital assets including adjustments | 1,421 | 1,091 |
| Non-cash changes of tangible capital assets | (4,988) | (997) |
| Services provided without charge by other government departments | (70,258) | (63,387) |
| Decrease in prepaid expenses and inventory | (984) | (221) |
| Decrease in restricted accounts (Note 14) | (169,981) | - |
| (Increase) decrease in vacation pay and compensatory leave | (269) | 4,901 |
| (Increase) decrease in accrued liabilities | (876,550) | 466,350 |
| Decrease (increase) in environmental liabilities and asset retirement obligations | 2,612 | (8,024) |
| Decrease in employee future benefits | 1,792 | 116 |
| Increase in allowances for bad debt expenses | (3,038) | (11,109) |
| Refund and adjustment of prior years' expenditures | 23,001 | 50,729 |
| Respendable revenue | 6,891 | 5,346 |
| Other | 12,191 | 6,549 |
| Total items affecting net cost of operations but not affecting authorities | (1,123,794) | 408,893 |
| Adjustments for items not affecting net cost of operations but affecting authorities: | ||
| Acquisition of tangible capital assets | 61,811 | 50,459 |
| Proceeds from disposal of tangible capital assets | (1,552) | (1,637) |
| Increase in accounts receivable and advances | 1,126 | 1,113 |
| Decrease in loans receivable | (16,307) | (1,541) |
| Total items not affecting net cost of operations but affecting authorities | 45,078 | 48,394 |
| Current year authorities used | 4,163,441 | 3,606,545 |
| – represents zero | ||
(b) Authorities provided and used
| 2024 | 2023 | |
|---|---|---|
| (in thousands of dollars) | ||
| Authorities provided: | ||
| Vote 1 ‑ Operating expenditures | 748,113 | 669,291 |
| Vote 5 ‑ Capital expenditures | 66,488 | 59,741 |
| Vote 10 ‑ Transfer payments | 889,684 | 748,051 |
| Statutory amounts | 2,598,712 | 2,212,379 |
| Total | 4,302,997 | 3,689,462 |
| Less: | ||
| Authorities available for future years | 15,910 | 17,054 |
| Lapsed authorities | 123,646 | 65,863 |
| Total | 139,556 | 82,917 |
| Current year authorities used | 4,163,441 | 3,606,545 |
(c) Planned results
Actual spending was greater than planned results included in the Consolidated Statement of Operations and Departmental Net Financial Position, mostly due to the new funding for the renewal of the Dairy Direct Payment Program and associated accrual and the Sustainable Canadian Agricultural Partnership. These were not included planned results due to the timing of their approval.
Note 4 – Accounts payable and accrued liabilities
The following table presents details of the Department's accounts payable and accrued liabilities:
| 2024 | 2023 | |
|---|---|---|
| (in thousands of dollars) | ||
| Accounts payable - Other government departments and agencies | 28,943 | 6,653 |
| Accounts payable - External parties | 2,299,834 | 901,999 |
| Total accounts payable | 2,328,777 | 908,652 |
| Accrued liabilities | 16,355 | 22,096 |
| Total accounts payable and accrued liabilities | 2,345,132 | 930,748 |
Accounts payable - External parties as at March 31, 2024 includes an accrual of $882.0 million for the Dairy Direct Payment Program to compensate and aid dairy producers adapt to market changes brought on by the Canada-United States-Mexico Agreement (CUSMA). The related expense has been recorded under Domestic and International Markets in the Consolidated Statement of Operations and Departmental Net Financial Position. This accrual also increased the Due from Consolidated Revenue Fund in the Consolidated Statement of Financial Position as program payments will be paid from future year appropriations. Increased demand in Business Risk Management programming, mainly AgriStability and AgriRecovery due to unexpected price declines for major crop commodities and hogs, and droughts and wildfires also contributed to increased expenditures and payables.
Note 5 – Environmental liabilities and asset retirement obligations
Environmental liabilities and asset retirement obligations include:
| 2024 | 2023 | |
|---|---|---|
| (in thousands of dollars) | ||
| Remediation liability for contaminated sites | 14,761 | 16,649 |
| Asset retirement obligations | 27,840 | 33,778 |
| Total environmental liabilities and asset retirement obligations | 42,601 | 50,427 |
(a) 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 43 sites (56 sites in 2023) where contamination may exist and assessment, remediation and monitoring may be required. Of these, the Department has identified 6 sites (7 sites in 2023) where action is required and for which a liability of $8.8 million ($11.4 million in 2023) has been recorded. This liability estimate has been determined based on site assessments performed by environmental experts.
In addition, there are 12 sites that have not been assessed by environmental experts (15 sites in 2023) for which the department has estimated and recorded a liability of $6.0 million ($5.2 million in 2023).
These two estimates combined, totaling $14.8 million ($16.6 million in 2023), represents management's best estimate of the costs required to remediate sites to the current minimum standard for its use prior to contamination, based on information available at the financial statement date.
For the remaining 25 sites (34 sites in 2023), no liability for remediation has been recognized. Some of these sites are at various stages of testing and evaluation and if remediation is required, liabilities will be reported as soon as a reasonable estimate can be determined.
The following table presents the total estimated amounts of these liabilities by nature and source and the total undiscounted future expenditures as at March 31, 2024 and March 31, 2023. When the liability estimate is based on a future cash requirement, the amount is adjusted for inflation using an expected CPI rate of 2% (2% in 2023). Inflation is included in the undiscounted amount. The Government of Canada's cost of borrowing by reference to the actual zero-coupon yield curve for Government of Canada bonds has been used to discount the estimated future expenditures. The March 2024 rates range from 4.59% (4.50% in 2023) for a 1 year term to 3.43% (3.01% in 2023) for a 30 or greater year term.
| Nature and source | Total number of sites | Number of sites with a liability | Estimated liability ($'000) |
Estimated total undiscounted expenditures ($'000) |
|---|---|---|---|---|
| Fuel related practicesNote 1 | 21 | 8 | 637 | 767 |
| Landfills/waste sitesNote 2 | 15 | 5 | 173 | 211 |
| Engineered asset/air and land transportationNote 3 | - | - | - | - |
| Office/commercial/industrial operationsNote 4 | 1 | - | - | - |
| OtherNote 5 | 6 | 5 | 13,951 | 15,554 |
| Totals | 43 | 18 | 14,761 | 16,532 |
|
Notes: – represents zero
|
||||
| Nature and source | Total number of sites | Number of sites with a liability | Estimated liability ($'000) |
Estimated total undiscounted expenditures ($'000) |
|---|---|---|---|---|
| Fuel related practicesNote 1 | 26 | 11 | 830 | 892 |
| Landfills/waste sitesNote 2 | 19 | 5 | 164 | 177 |
| Engineered asset/air and land transportationNote 3 | 1 | - | - | - |
| Office/commercial/industrial operationsNote 4 | 3 | 1 | 18 | 19 |
| OtherNote 5 | 7 | 5 | 15,637 | 17,042 |
| Totals | 56 | 22 | 16,649 | 18,130 |
|
Notes: – represents zero
|
||||
(b) Asset retirement obligations
The Department has recorded asset retirement obligations for the removal of asbestos in buildings.
The changes in asset retirement obligations during the year are as follows:
| 2024 | 2023 | ||
|---|---|---|---|
| Asbestos in buildings |
Total | ||
| (in thousands of dollars) | |||
| Opening balance | 33,778 | 33,778 | 32,982 |
| Liabilities settled | (241) | (241) | - |
| Revisions in estimates | (6,507) | (6,507) | - |
| Accretion expenseNote 1 | 810 | 810 | 796 |
| Closing balance | 27,840 | 27,840 | 33,778 |
|
Note: – represents zero
|
|||
The undiscounted future expenditures, adjusted for inflation, for the planned projects comprising the liability are $52.0 million ($52.0 million in 2023).
Key assumptions used in determining the provision are as follows:
| 2024 | 2023 | |
|---|---|---|
| Discount rate | 3.51% - 4.98% | 3.13% - 4.50% |
| Discount period and timing of settlement | 1 to 19 years | 1 to 20 years |
| Long-term rate of inflation | 2.00% | 2.00% |
The Department's ongoing efforts to assess contaminated sites and asset retirement obligations may result in additional environmental liabilities and asset retirement obligations.
Note 6 – Revenues
The Department has the following major types of revenues: Sale of goods and services (including royalty revenues), Crop Reinsurance Fund, interest, joint project and cost sharing agreements, miscellaneous revenues, gain on disposal of assets, and revenues earned on behalf of the Government. Sale of goods and services, joint project and cost sharing agreements, and gain on disposal of assets are recorded when performance obligations are satisfied. Crop Reinsurance Fund and interest are recorded when they are earned. Miscellaneous revenues include other returns on investments from outside the Government and other fees and charges. These are recorded when they are earned.
| 2024 | 2023 | |
|---|---|---|
| (in thousands of dollars) | ||
| Revenues | ||
| Sale of goods and services (exchange) | 65,384 | 72,088 |
| Crop Reinsurance Fund (non-exchange) | 49,227 | 70 |
| Interest (non-exchange) | 17,645 | 18,737 |
| Joint project and cost sharing agreements (exchange) | 15,778 | 12,121 |
| Miscellaneous | ||
| Other returns on investments from outside the Government (non-exchange) | 1,962 | 1,208 |
| Other fees and charges (non-exchange) | 533 | 491 |
| Total miscellaneous | 2,495 | 1,699 |
| Gain on disposal of assets (exchange) | 1,497 | 1,597 |
| Revenues earned on behalf of Government | (96,017) | (42,148) |
| Total revenuesNote 1 | 56,009 | 64,164 |
|
Note:
|
||
Note 7 – Deferred revenues
Deferred revenues represent 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. Revenues are recognized in the period in which these expenditures are incurred or in which the services are performed. Departmental deferred revenues for the year consist of the following balance:
| 2024 | 2023 | ||||
|---|---|---|---|---|---|
| Opening balance | Receipts and other credits | Earned and other charges | Closing balance | Closing balance | |
| (in thousands of dollars) | |||||
| Specified purpose accounts | 22,546 | 16,090 | (15,816) | 22,820 | 22,546 |
Note 8 – Employee future benefits
(a) 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% per year of pensionable service, times the average of the best 5 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 2023–24 expense amounts to $46.2 million ($45.0 million in 2023). For Group 1 members, the expense represents approximately 1.02 times (1.02 times in 2023) the employee contributions and, for Group 2 members, approximately 1.00 times (1.00 times in 2023) 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.
(b) 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. As at March 31, 2024, 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:
| 2024 | 2023 | |
|---|---|---|
| (in thousands of dollars) | ||
| Accrued benefit obligation - Beginning of year | 8,559 | 8,675 |
| Expense for the year | 1,136 | 1,593 |
| Benefits paid during the year | (2,928) | (1,709) |
| Accrued benefit obligation - End of year | 6,767 | 8,559 |
Note 9 – 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:
| 2024 | 2023 | |
|---|---|---|
| (in thousands of dollars) | ||
| Opening balance | 69,732 | 61,366 |
| Deposits | 289,293 | 271,937 |
| Withdrawals | (291,491) | (263,571) |
| Closing balance | 67,534 | 69,732 |
Note 10 – Accounts receivable and advances
The following table presents details of the Department's accounts receivable and advances balances:
| 2024 | 2023 | |
|---|---|---|
| (in thousands of dollars) | ||
| Receivables - Other government departments and agencies | 7,931 | 5,457 |
| Receivables - External parties | 33,421 | 34,964 |
| Employee advances | 83 | 100 |
| Subtotal | 41,435 | 40,521 |
| Allowance for doubtful accounts on receivables from external parties | (9,422) | (11,134) |
| Total accounts receivable and advances | 32,013 | 29,387 |
| Accounts receivable held on behalf of Government | 5,260 | 3,989 |
| Allowance for doubtful accounts held on behalf of Government | (110) | (86) |
| Net accounts receivable held on behalf of Government | 5,150 | 3,903 |
| Net accounts receivable and advances | 26,863 | 25,484 |
The following table provides an aging analysis of accounts receivable from external parties and the valuation allowance used to reflect their net recoverable value:
| 2024 | 2023 | |
|---|---|---|
| (in thousands of dollars) | ||
| Accounts receivable from external parties | ||
| Not past due | 14,491 | 13,047 |
| Number of days past due | ||
| 1 to 30 | 223 | 191 |
| 31 to 60 | 748 | 262 |
| 61 to 90 | 40 | 735 |
| 91 to 365 | 1,789 | 2,368 |
| Over 365Note 1 | 16,130 | 18,361 |
| Subtotal | 33,421 | 34,964 |
| Less: Valuation allowance | (9,422) | (11,134) |
| Total | 23,999 | 23,830 |
|
Note:
|
||
Note 11 – Loans receivable
The following table presents details of the Department's loans receivable balances:
| 2024 | 2023 | |
|---|---|---|
| (in thousands of dollars) | ||
| Unconditionally repayable contributions | 149,318 | 161,758 |
| Loans resulting from loan guarantee programs | 263,650 | 276,954 |
| Subtotal | 412,968 | 438,712 |
| Allowance for valuation | (132,121) | (132,598) |
| Total loans receivable | 280,847 | 306,114 |
| Loans receivable held on behalf of Government | 280,847 | 306,114 |
| Net loans receivable | - | - |
| – represents zero | ||
(a) 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. The Department's unconditionally repayable contributions are non-interest bearing and have annual repayment terms of 1 to 10 years following the completion of the project. An allowance of $19.3 million ($18.9 million in 2023) has been recorded.
(b) 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 $112.8 million ($113.7 million in 2023) relating to these loans has been recorded.
The following table provides an aging analysis of loans resulting from loan guarantee programs that are either past due or impaired and the valuation allowance used to reflect their net recoverable value:
| 2024 | 2023 | |
|---|---|---|
| (in thousands of dollars) | ||
| Loans resulting from loan guarantee programs | ||
| Not past due | 6,027 | 11,582 |
| Number of days past due | ||
| 1 to 90 | 4 | - |
| 91 to 365 | 28 | - |
| Over 365 | 322 | 322 |
| Impaired | 257,269 | 265,050 |
| Subtotal | 263,650 | 276,954 |
| Less: Valuation allowance | (112,792) | (113,719) |
| Total | 150,858 | 163,235 |
| – represents zero | ||
Note 12 – Risk management
The Department has exposure to the following risks from its use of financial instruments: credit risk, interest rate risk and liquidity risk.
(a) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss.
The Department's maximum exposure to credit risk is the carrying amount of its financial assets.
The Department has determined that there is no significant concentration of credit risk related to accounts receivable from external parties. An analysis of the age of these financial assets and the valuation allowance used to reflect these accounts at their net recoverable value is disclosed in Note 10.
The Department intentionally takes on counterparty risk related to certain loans receivable with concessionary terms in order to support various policy aims. The valuation allowance is applied accordingly to reflect these accounts at their net recoverable value, as explained in Note 11.
(b) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Department's loans receivable bears interest which vary according to the initial terms of the loans. Although the fair value of these financial instruments will be affected by changes in market interest rates, there is no impact on the Department's consolidated financial statements as these items are measured at cost or amortized cost.
(c) Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting its obligations associated with financial liabilities.
As the funding for the Department's financial liabilities is drawn from the Consolidated Revenue Fund, its exposure to liquidity risk is fully mitigated.
Note 13 – 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:
| 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 | Lesser of useful life of improvement or lease term |
| Assets under construction | Once in service, in accordance with asset type |
| Capital asset class | Opening balance |
Acquisitions | AdjustmentsNote 1 | Disposals and write-offs |
Closing balance |
|---|---|---|---|---|---|
| (in thousands of dollars) | |||||
| Land | 11,652 | - | 16 | 36 | 11,632 |
| Buildings | 819,977 | 341 | 9,088 | 221 | 829,185 |
| Works and infrastructure | 73,030 | 70 | 1,260 | 27 | 74,333 |
| Machinery and equipment | 281,420 | 16,380 | (213) | 4,979 | 292,608 |
| Vehicles | 72,097 | 4,552 | (15) | 3,515 | 73,119 |
| Computer hardware and software | 77,310 | 308 | 12,331 | 329 | 89,620 |
| Leasehold improvements | 35,375 | - | 272 | - | 35,647 |
| Assets under construction | 85,229 | 40,160 | (27,966) | - | 97,423 |
| Total | 1,456,090 | 61,811 | (5,227) | 9,107 | 1,503,567 |
|
Notes: – represents zero
|
|||||
| Capital asset class | Opening balance |
Amortization expense |
AdjustmentsNote 1 | Disposals and write-offs |
Closing balance |
|---|---|---|---|---|---|
| (in thousands of dollars) | |||||
| Land | - | - | - | - | - |
| Buildings | 598,177 | 15,512 | - | 194 | 613,495 |
| Works and infrastructure | 37,404 | 2,618 | (27) | 27 | 39,968 |
| Machinery and equipment | 211,693 | 14,246 | (196) | 4,953 | 220,790 |
| Vehicles | 53,533 | 3,781 | 26 | 3,473 | 53,867 |
| Computer hardware and software | 49,120 | 8,508 | (16) | 329 | 57,283 |
| Leasehold improvements | 27,556 | 969 | - | - | 28,525 |
| Assets under construction | - | - | - | - | - |
| Total | 977,483 | 45,634 | (213) | 8,976 | 1,013,928 |
|
– represents zero
|
|||||
| Capital asset class | 2024 | 2023 |
|---|---|---|
| (in thousands of dollars) | ||
| Land | 11,632 | 11,652 |
| Buildings | 215,690 | 221,800 |
| Works and infrastructure | 34,365 | 35,626 |
| Machinery and equipment | 71,818 | 69,727 |
| Vehicles | 19,252 | 18,564 |
| Computer hardware and software | 32,337 | 28,190 |
| Leasehold improvements | 7,122 | 7,819 |
| Assets under construction | 97,423 | 85,229 |
| Total | 489,639 | 478,607 |
Note 14 – 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:
| 2024 | 2023 | |
|---|---|---|
| (in thousands of dollars) | ||
| Crop Reinsurance Fund - Restricted | ||
| Balance - Beginning of year - Restricted | 301,063 | 300,993 |
| Revenues | 49,227 | 70 |
| Expenses | (169,981) | - |
| Balance - End of year - Restricted | 180,309 | 301,063 |
| Agricultural Commodities Stabilization Accounts - Restricted | 647 | 647 |
| Unrestricted | 211,845 | 65,938 |
| Departmental net financial position - End of year | 392,801 | 367,648 |
| – represents zero | ||
Note 15 – Contractual obligations and contractual rights
(a) 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 contractual obligations that can be reasonably estimated are summarized as follows:
| Transfer payments | |
|---|---|
| (in thousands of dollars) | |
| 2025 | 665,113 |
| 2026 | 365,547 |
| 2027 | 331,727 |
| 2028 | 318,236 |
| 2029 | - |
| 2030 and subsequent | - |
| Total | 1,680,623 |
| – represents zero | |
(b) 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 and revenue/profit sharing arrangement from research agreements. Major contractual rights that will generate revenues in future years and that can be estimated are summarized as follows:
| Interest on loans receivable | Research agreements | Total | |
|---|---|---|---|
| (in thousands of dollars) | |||
| 2025 | 16,600 | 16,410 | 33,010 |
| 2026 | 16,599 | 8,125 | 24,724 |
| 2027 | 16,599 | 5,676 | 22,275 |
| 2028 | 16,599 | 4,193 | 20,792 |
| 2029 | 16,600 | 15 | 16,615 |
| 2030 and subsequent | 82,997 | - | 82,997 |
| Total | 165,994 | 34,419 | 200,413 |
| – represents zero | |||
Note 16 – Contingent liabilities and contingent assets
(a) 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 | |||
|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | ||
| (in thousands of dollars) | |||||
| Loans according to the Advance Payments Program under the Agricultural Marketing Programs Act | 7,500,000 | 2,225,290 | 1,436,448 | 15,614 | 21,305 |
| Loans to farmers under the Canadian Agricultural Loans Act | 3,000,000 | 74,011 | 79,082 | 740 | 791 |
| Price guarantee agreements with marketing agencies pursuant to the Price Pooling Program under the Agricultural Marketing Programs Act | No limit | - | - | - | - |
| Total | 2,299,301 | 1,515,530 | 16,354 | 22,096 | |
| – represents zero | |||||
Under the Advance Payments Program of Agricultural Marketing Programs Act, a producer can obtain a cash advance of up to $1.0 million. While the federal government typically pays the interest on the first $0.1 million, the interest-free limit was temporarily increased to $0.25 million for the 2022 program year, $0.35 million for the 2023 program year and $0.25 million for the 2024 program year to help producers who are facing increased input costs and interest rates. Producers are required to repay their advances as they sell their products, with up to 18 months to fully repay advances on most agricultural products (up to 24 months on cattle and bison). By improving producers' cash flow throughout the year, the Advanced Payments Program helps crop and livestock producers meet their financial obligations and benefit from the best market conditions.
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% 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 $0.5 million. Most loans are repayable within 10 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 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 as no costs are likely to occur.
(b) Contingent assets
Transfer payments - Conditionally repayable contributions
Under the EcoAgriculture Biofuels Capital Initiative, conditionally repayable contributions which are outstanding in 2023–24 total $0.8 million ($0.8 million in 2023). Repayments are determined by a project's profitability, and have a maximum repayment period of 10 years which ended on June 30, 2022.
Under the Slaughter Improvement Program, conditionally repayable contributions which are outstanding in 2023–24 total $5.4 million ($11.2 million in 2023). Repayments are determined by a project's profitability, and have a maximum repayment period of 10 years. The final repayments are due no later than June 1, 2024.
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 AgriRecovery 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 $5.3 million ($5.1 million in 2023). Contingent recoveries are not recorded in the consolidated financial statements.
Note 17 – 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.
(a) 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:
| 2024 | 2023 | |
|---|---|---|
| (in thousands of dollars) | ||
| Employer's contribution to the health and dental insurance plans | 50,126 | 42,531 |
| Accommodation | 18,574 | 19,204 |
| Legal services | 870 | 966 |
| Workers' compensation | 688 | 686 |
| Total | 70,258 | 63,387 |
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 are not included in the Department's Consolidated Statement of Operations and Departmental Net Financial Position, as they are not significant.
(b) Other transactions with other government departments and agencies
| 2024 | 2023 | |
|---|---|---|
| (in thousands of dollars) | ||
| Expenses | 171,543 | 144,988 |
| Revenues | 25,351 | 27,832 |
Expenses and revenues disclosed in (b) exclude common services provided without charge, which are already disclosed in (a). The expenses are related to the acquisition of various goods and services with other departments and agencies and the employer portion of employment insurance and pension contributions. The revenues mainly related to internal support services provided to other departments and agencies.
Note 18 – 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 |
Domestic and International Markets |
Science and Innovation |
Internal services |
2024 Total |
2023 Total |
|
|---|---|---|---|---|---|---|
| (in thousands of dollars) | ||||||
| Expenses | ||||||
| Transfer payments | 2,102,387 | 1,560,645 | 314,878 | - | 3,977,910 | 2,258,712 |
| Salaries and employee benefits | 38,625 | 70,341 | 324,912 | 244,208 | 678,086 | 595,458 |
| Professional and other services | 10,546 | 20,691 | 48,471 | 57,772 | 137,480 | 126,944 |
| Payments and allowances relating to loan guarantees and bad debt | 153,012 | - | 2,673 | (2) | 155,683 | 52,090 |
| Materials and supplies | 1,511 | 317 | 34,872 | 6,970 | 43,670 | 44,921 |
| Amortization of tangible capital assets | - | 107 | - | 45,527 | 45,634 | 42,451 |
| Accommodation and other | 273 | 368 | 11,698 | 34,838 | 47,177 | 49,007 |
| Travel | 675 | 2,127 | 4,276 | 1,477 | 8,555 | 7,321 |
| Repairs and maintenance | 141 | 204 | 12,569 | 813 | 13,727 | 14,141 |
| Electricity and other public services | 6 | 5 | 20,283 | 5 | 20,299 | 22,463 |
| Crop Reinsurance Fund | 169,981 | - | - | - | 169,981 | - |
| Expenses incurred on behalf of Government | - | - | - | (36) | (36) | (86) |
| Total expenses | 2,477,157 | 1,654,805 | 774,632 | 391,572 | 5,298,166 | 3,213,422 |
| Revenues | ||||||
| Sale of goods and services | 881 | 8,472 | 30,710 | 25,321 | 65,384 | 72,088 |
| Crop Reinsurance Fund | 49,227 | - | - | - | 49,227 | 70 |
| Interest | 17,415 | - | - | 230 | 17,645 | 18,737 |
| Joint project and cost sharing agreements | - | - | - | 15,778 | 15,778 | 12,121 |
| Miscellaneous revenues | 828 | 10 | 105 | 1,552 | 2,495 | 1,699 |
| Gain on disposal of assets | - | - | - | 1,497 | 1,497 | 1,597 |
| Revenues earned on behalf of Government | (67,987) | (10) | (8,814) | (19,206) | (96,017) | (42,148) |
| Total revenues | 364 | 8,472 | 22,001 | 25,172 | 56,009 | 64,164 |
| Net cost of operations | 2,476,793 | 1,646,333 | 752,631 | 366,400 | 5,242,157 | 3,149,258 |
| – represents zero | ||||||
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 the 2023–24 Fiscal Year (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:
- Organizational accountability structures as they relate to internal control management to support sound financial management, including roles and responsibilities of senior departmental managers for control management in their areas of responsibility;
- Values and ethics;
- Ongoing communication and training on statutory requirements, and policies and procedures for sound financial management and control; and
- Monitoring of, and regular updates to, internal control management, as well as the provision of related assessment results and action plans to the Deputy Minister and senior departmental management and, as applicable, the Departmental Audit Committee.
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 Senior 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 independent advice on the adequacy and functioning of the Department's frameworks and processes for risk management, controls and governance. The committee is comprised of three external members, the Deputy Minister and ex-officio members and meets at least three times per year.
- Senior Management Committee (SMC)
- The SMC is chaired by the Deputy Minister and provides decision-making, direction setting and oversight. SMC focuses on items relating to department and ministerial mandates, Government of Canada-wide initiatives, priorities as established by the Clerk, Minister, or Deputy Minister.
- Resource Management Committee (RMC)
- The RMC is co-chaired by two Assistant Deputy Ministers. RMC considers and approves departmental priorities and direction on financial resources, people management and corporate initiatives.
- Strategic Planning and Policy Committee (SPPC)
- The SPPC is co-chaired by two Assistant Deputy Ministers and is responsible for considering and approving departmental priorities and direction on strategic alignment and planning, policy, service design, program delivery and science initiatives.
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:
- Departmental Values and Ethics Policy Centre and Values and Ethics Code which provide information and support to staff on ethical issues;
- Security Guidelines relating to the overall security program including elements of information and personnel security;
- Guidelines for managers, supervisors, and employees for the internal disclosure of wrongdoing;
- Departmental policies tailored to the Department's control environment;
- Regularly updated delegated authorities matrix;
- Training program and communications in core areas of financial management; and
- Documentation and testing of main business processes and related key controls.
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
- Public Services and Procurement Canada, which administers the payments of salaries and the procurement of goods and services, and provides accommodation services;
- Shared Services Canada, which provides information technology (IT) infrastructure services;
- Department of Justice Canada, which provides legal services; and
- Treasury Board of Canada Secretariat, which provides services related to public sector insurance and centrally administers payment of the employer's share of contributions toward statutory employee benefit plans.
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
- Agriculture and Agri-Food Canada administers a shared instance of SAP, the financial and material management system, on behalf of the Department, the Canadian Food Inspection Agency, Environment and Climate Change Canada, Natural Resources Canada, Northern Pipeline Agency, Impact Assessment Agency of Canada, Canadian Nuclear Safety Commission, Canadian Dairy Commission, Office of the Chief Electoral Officer, and Veterans Affairs Canada;
- Agriculture and Agri-Food Canada provides SAP hosting services to Canadian Space Agency, Canadian Heritage, and Parks Canada; and
- Agriculture and Agri-Food Canada administers PeopleSoft, the Human Resources management system, on behalf of the Department and its portfolio partners (the Canadian Grain Commission and the Canadian Dairy Commission), the Canadian Food Inspection Agency, Health Canada, the Patented Medicine Prices Review Board, the Public Health Agency of Canada, and Shared Services Canada.
3. Agriculture and Agri-Food Canada's assessment results for the 2023–24 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 2 to 3 years, and low-risk, at least every 3 to 4 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 2023–24, adjustments were not required to the Department's rotational ongoing monitoring plan and as such, internal controls were validated and reassessed 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 2024–25. |
| Section 33 | |
| Forecasting | |
| Payroll | |
| AgriStability/AgriInvest | |
| Other revenues | |
| Entity level controls | |
| Information Technology General Controls (ITGCs) for SAP, PeopleSoft and Business Risk Management Suite (BRMS)Note 1 | |
|
Notes:
|
|
The testing period covered January 1, 2023 to December 31, 2023. 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 access controls, documentation and proper 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.
In line with the Department's commitment to maintaining a robust system of internal controls, an independent external audit was conducted which provided assurance on the design, implementation, and operating effectiveness of key controls over financial reporting related to the Department's SAP system administration. The audit was performed in accordance with the Canadian Standard on Assurance Engagements 3416. Two low-risk findings were identified. One finding was no longer relevant by year-end, therefore a management action plan was not required and the other finding has since been resolved by management.
4. Action plan for the next three fiscal years
Agriculture and Agri-Food Canada's rotational ongoing monitoring plan over the next 3 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.
Business processes
| Key control areas | 2024–25 Fiscal year |
2025–26 Fiscal year |
2026–27 Fiscal year |
|
|---|---|---|---|---|
| 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 | X | |
| Low risk (3–4 years) |
AgriInsurance | X | ||
| AgriStability/AgriInvest | X | |||
| Budgeting | X | |||
| Generic grants and contributions | X | |||
| Loan guarantees | X | |||
| Operating expenditures | X | |||
| Other revenues | X | |||
| X: applicable | ||||
IT processes
| Key control areas | 2024–25 Fiscal year |
2025–26 Fiscal year |
2026–27 Fiscal year |
|
|---|---|---|---|---|
| Higher risk (Annual) |
PeopleSoft | X | X | X |
| SAP (ECC/BW/BPC/BOBJ) | 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 | ||||
High-risk control areas will continue to be assessed annually, medium risk at least every 2 to 3 years and low-risk at least every 3 to 4 years.