2021-22 Financial Statements

2021-22 Financial Statements (PDF, 22 pages, 643 KB)

Statement of Management Responsibility Including Internal Control Over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2022, and all information contained in these statements rests with the management of the Canadian Nuclear Safety Commission (CNSC). These financial statements have been prepared by management using the Government’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 financial statements. Some of the information in the 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 the CNSC’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the CNSC’s Departmental Results Report, is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting (ICFR) 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 as well as all relevant CNSC policies, authorities and statutory requirements, including the Canadian Nuclear Safety Commission Cost Recovery Fees Regulations.

Management seeks to ensure the objectivity and integrity of data in its 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 the CNSC; and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.

The system of ICFR 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 ICFR for the year ended March 31, 2022 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 the CNSC’s system of ICFR is reviewed by the internal control staff, who conduct periodic monitoring assessments, and by the Departmental Audit Committee, which oversees management’s responsibilities for maintaining adequate control systems and the quality of financial reporting, and recommends the financial statements to the president.

The Auditor General of Canada, the independent auditor for the Government of Canada, has expressed an opinion on the fair presentation of the financial statements of the CNSC which does not include an audit opinion on the annual assessment of the effectiveness of the CNSC’s internal controls over financial reporting. At the CNSC's request, the Auditor General of Canada also audited and expressed an opinion on its compliance with the Canadian Nuclear Safety Commission Cost Recovery Fees Regulations.

Ottawa, Canada

July 15, 2022

INDEPENDENT AUDITOR'S REPORT

To the Canadian Nuclear Safety Commission and the Minister of Natural Resources

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of the Canadian Nuclear Safety Commission (the CNSC), which comprise the statement of financial position as at 31 March 2022, and the statement of operations and net financial position, statement of change in net debt and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the CNSC as at 31 March 2022, and the results of its operations, changes in its net debt, and its cash flows for the year then ended in accordance with Canadian public sector accounting standards.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the CNSC in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information

Management is responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the CNSC’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the CNSC or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the CNSC’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the CNSC’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the CNSC’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the CNSC to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Report on Compliance with Specified Authorities

Opinion

In conjunction with the audit of the financial statements, we have audited transactions of the Canadian Nuclear Safety Commission coming to our notice for compliance with specified authorities. The specified authorities against which compliance was audited are the Canadian Nuclear Safety Commission Cost Recovery Fees Regulations pursuant to the Nuclear Safety and Control Act.

In our opinion, the transactions of the Canadian Nuclear Safety Commission that came to our notice during the audit of the financial statements have complied, in all material respects, with the specified authorities referred to above.

Responsibilities of Management for Compliance with Specified Authorities

Management is responsible for the Canadian Nuclear Safety Commission’s compliance with the specified authorities named above, and for such internal control as management determines is necessary to enable the Canadian Nuclear Safety Commission to comply with the specified authorities.

Auditor’s Responsibilities for the Audit of Compliance with Specified Authorities

Our audit responsibilities include planning and performing procedures to provide an audit opinion and reporting on whether the transactions coming to our notice during the audit of the financial statements are in compliance with the specified authorities referred to above.

Firyal Awada, CPA, CA
Principal
for the Auditor General of Canada
Ottawa, Canada
15 July 2022

Statement of Financial Position
As at March 31
(in thousands of dollars)

	2022	2021
Liabilities
Accounts payable and accrued liabilities (note 4)	32,764	33,216
Vacation pay and compensatory leave	10,492	11,083
Deferred revenue (note 5)	4,386	4,332
Employee future benefits (note 6b)	2,776	3,029
Asset retirement obligation (note 7)	335	355
Total liabilities	50,753	52,015
Financial assets
Due from the Consolidated Revenue Fund	32,833	33,372
Accounts receivable (note 8)	1,700	2,458
Total financial assets	34,533	35,830
Net debt	16,220	16,185
Non-financial assets
Tangible capital assets (note 9)	9,010	10,846
Prepaid expenses	964	764
Total non-financial assets	9,974	11,610
Net financial position	(6,246)	(4,575)

Contractual obligations (note 12) and contingent liabilities (note 13)

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

Ottawa, Canada

July 15, 2022

Statement of Operations and Net Financial Position
For the year ended March 31
(in thousands of dollars)

	Planned results* 2022	2022	2021
Expenses
Salaries and employee benefits	127,473	119,586	119,239
Professional and special services	22,509	18,681	17,602
Accommodation	9,083	8,805	8,630
Travel and relocation	3,750	584	31
Amortization	2,929	2,903	3,807
Furniture, repairs and rentals	4,038	2,642	3,727
Grants and contributions	3,013	2,660	3,081
Communication and information	1,175	891	826
Utilities, materials and supplies	525	319	318
Other	100	582	600
Total expenses (note 10)	174,595	157,653	157,861
Revenues
Licence fees	120,406	111,685	109,903
Special projects	4,100	3,950	4,102
Other		41	32
Total revenues (note 10)	124,506	115,676	114,037
Net cost of operations before government funding and transfers	50,089	41,977	43,824
Government funding and transfers
Net cash provided by Government of Canada	33,551	24,489	25,999
Services provided without charge by other government departments (note 11a)	19,341	16,359	15,402
Change in due from (to) Consolidated Revenue Fund	(3,192)	(538)	1,413
Transfer of assets and liabilities from other government departments	-	(4)	40
Net cost of operations after government funding and transfers	389	1,671	970
Net financial position - Beginning of year	(4,473)	(4,575)	(3,605)
Net financial position - End of year	(4,862)	(6,246)	(4,575)

Segmented information (note 10)

Impact of Covid-19 (note 15)

*Planned results amounts in the “Expenses” and “Revenues” sections as reported in the Future-Oriented Statement of Operations included in the 2021–22 Departmental Plan. The planned results amounts in the “Government funding and transfers” section have not been previously published.

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

Statement of Change in Net Debt
For the year ended March 31
(in thousands of dollars)

	Planned results* 2022	2022	2021
Net cost of operations after government funding and transfers	389	1,671	970
Change due to tangible capital assets
Acquisition of tangible capital assets (note 9)	2,616	1,076	1,588
Amortization of tangible capital assets (note 9)	(2,929)	(2,903)	(3,807)
Transfer of assets and liabilities from other government departments		(4)	40
Proceeds from disposal of tangible capital assets		-	(25)
Loss on disposal of tangible capital assets including adjustments		(5)	(175)
Total change due to tangible capital assets	(313)	(1,836)	(2,379)
Change due to prepaid expenses	100	200	521
Net (decrease) increase in net debt	176	35	(888)
Net debt - Beginning of year	15,938	16,185	17,073
Net debt - End of year	16,114	16,220	16,185

*Planned results amounts have not been previously published.

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

Statement of Cash Flows
For the year ended March 31
(in thousands of dollars)

	2022	2021
Operating activities
Net cost of operations before government funding and transfers	41,977	43,824
Non-cash items:
Amortization of tangible capital assets (note 9)	(2,903)	(3,807)
Loss on disposal of tangible capital assets including adjustments	(5)	(175)
Services provided without charge by other government departments (note 11a)	(16,359)	(15,402)
Variations in Statement of Financial Position:
(Decrease) increase in accounts receivable	(758)	208
Increase in prepaid expenses	200	521
Decrease (increase) in accounts payable and accrued liabilities	480	(213)
Decrease in vacation pay and compensatory leave	591	436
Increase in deferred revenue	(54)	(81)
Decrease in employee future benefits	253	299
Decrease in asset retirement obligation	20	7
Cash used in operating activities	23,442	25,617
Capital investing activities
Acquisitions of tangible capital assets (note 9)	1,047	407
Proceeds from disposal of tangible capital assets	-	(25)
Cash used in capital investing activities	1,047	382
Net cash provided by Government of Canada	24,489	25,999

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

Notes to the Financial Statements

1. Authority and objectives

The Canadian Nuclear Safety Commission (CNSC) was established in 1946 by the Atomic Energy Control Act . It was known as the Atomic Energy Control Board until May 31, 2000, when the Nuclear Safety and Control Act (NSCA) came into effect. The CNSC is a departmental corporation listed in Schedule II of the Financial Administration Act and reports to Parliament through the Minister of Natural Resources.

To protect the health, safety and security of people and the environment, the NSCA provides comprehensive powers to the CNSC to establish and enforce national standards on the use of nuclear energy and materials. As part of this mandate, the CNSC is responsible for disseminating objective scientific, technical and regulatory information to the public. The NSCA establishes a basis for implementing Canadian nuclear policy and fulfilling Canada’s international commitments on the peaceful use of nuclear energy. It also empowers the CNSC to require financial guarantees, order remedial action in hazardous situations, and require responsible parties to bear the costs of decontamination and other remedial measures.

Under the Canadian Nuclear Safety Commission Cost Recovery Fees Regulations (CRFR) (2003), the CNSC recovers costs related to its regulatory activities from users licensed under the NSCA. These activities include conducting technical assessments of licence applications, performing compliance inspections and developing licensing standards.

2. Summary of significant accounting policies

These financial statements are prepared using the CNSC'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 and revenue spending authority

The CNSC is financed by the Government of Canada through Parliamentary and statutory authorities. Included in the statutory appropriation is a revenue-spending authority, which allows the CNSC to spend licence fee revenue. Financial reporting of authorities provided to the CNSC 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 CNSC Statement of Operations and Net Financial Position and in the 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 CNSC Statement of Operations and Net Financial Position are the amounts reported in the Future-Oriented Statement of Operations included in the 2021–22 Departmental Plan. The planned results amounts in the “Government funding and transfers” section of the CNSC Statement of Operations and Net Financial Position and in the CNSC Statement of Change in Net Debt were prepared for internal management purposes and have not been previously published.

(b) Net cash provided by Government of Canada

The CNSC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the CNSC is deposited to the CRF, and all cash disbursements made by the CNSC are paid from the CRF. The net cash provided by Government of Canada is the difference between all cash receipts and all cash disbursements, including transactions between departments and agencies of the Government.

(c) Amounts due from or to the Consolidated Revenue Fund

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

(d) Revenues

Revenues from regulatory fees are recognized based on the services provided in the year. Revenue is recognized in the period in which the underlying transaction or event that gave rise to the revenue takes place. Licence fee revenue is recognized on a straight-line basis over the period to which the fee payment pertains (normally three months or one year). Licence fees received for future year licence periods are recorded as deferred revenue.

Certain educational institutions, not-for-profit research institutions wholly owned by educational institutions, publicly funded healthcare institutions, not-for-profit emergency response organizations and federal government departments and agencies are not subject to the CRFR. The CNSC provides licences to these organizations free of charge. The value of licences provided free of charge is calculated on the same basis as licence fees for organizations subject to the CRFR. The CNSC does not include the foregone revenue associated with these licences in the Statement of Operations and Net Financial Position.

(e) Accounts payable and accrued liabilities

• Accounts payable and accrued liabilities are measured at cost and represent obligations of the CNSC for salary and wages, for material and supply purchases and for the cost of services rendered to the CNSC.
• Salary-related accrued liabilities are determined using the employees’ salary levels at year-end.

(f) Expenses

Expenses are recorded on an accrual basis. The cost of goods and services are expensed as they are incurred.

The CNSC provides grants and contributions to enable the development and management of activities of its Research and Support Program and Participant Funding Program. Grants are recognized in the year in which the conditions for payment are met.
Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement, provided that the transfer is authorized and a reasonable estimate can be made.

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 are recorded as operating expenses at their carrying amount. These include accommodation provided by Public Services and Procurement Canada, contributions covering the employer’s share of employees’ insurance premiums and other costs paid by the Treasury Board Secretariat, services provided by Shared Services Canada and audit services provided by the Office of the Auditor General.

(g) Related party transactions

Related party transactions, other than inter-entity transactions, are recorded at the exchange amount. Related parties include individuals who are members of key management personnel (KMP) or close family members of those individuals, and entities controlled by, or under shared control of, a member of KMP or a close family member of that individual. The CNSC has defined its KMP to be the president and the vice-presidents.

Inter-entity transactions are transactions between commonly controlled entities which includes all government departments, agencies, and Crown corporations. Inter-entity transactions that are undertaken on similar terms and conditions to those adopted if the entities were dealing at arm's length are recorded on a gross basis and are measured at the exchange amount, with the exception of services received without charge between commonly controlled entities used in the normal course of the operations, which have been recorded as expenses at the carrying amount.

(h) Employee future benefits

• Pension benefits: Eligible employees participate in the Public Service Pension Plan (the Plan), a multi-employer pension plan administered by the Government. The CNSC’s contributions to the Plan are charged to expenses in the year incurred and represent the total CNSC obligation to the Plan. The CNSC’s responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan’s sponsor.
• Severance benefits: Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. The CNSC estimates the obligation using employee-specific data to determine the amount that will be due to employees upon departure from the public service.
• Maternity/parental leave: Employees are entitled to maternity/parental leave benefits as provided for under labour contracts and conditions of employment. The benefits earned are event driven, meaning the CNSC’s obligation for the cost of the entire benefit arises upon occurrence of a specific event being the commencement of the maternity/parental leave. Management has determined the accrued benefit obligation and benefit expenses based on its best estimates. The unpaid portions of maternity/parental leave at year-end are expected to be paid from future parliamentary authorities.

(i) Accounts receivable

Accounts receivable are stated at the lower of cost and net recoverable value. A valuation allowance is recorded for receivables where recovery is considered uncertain.

Credit risk refers to the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The CNSC is not exposed to significant credit risk as all debtors require CNSC licences for their continued operation. The maximum exposure the CNSC has to credit risk is equal to the carrying value of its accounts receivable.

(j) Contingent liabilities

Contingent liabilities are potential liabilities that 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 if an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

(k) Tangible capital assets

The costs of acquiring equipment and other capital property are capitalized as tangible capital assets and are amortized to expense over the estimated useful lives of the assets. All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Internally developed and externally purchased software are capitalized as tangible capital assets. The cost of internally developed software consists of directly attributable costs necessary to create, produce, and prepare the software to be capable of operating in the manner intended by the CNSC.

Amortization of tangible capital assets is calculated on a straight-line basis over the estimated useful life of the asset as follows:

Asset class	Amortization period
Furniture and equipment	10 to 20 years
Informatics equipment and software	2 to 10 years
Leasehold improvements	Lesser of the remaining term of lease or useful life of the improvement
Motor vehicles	7 to 9 years
Other vehicles	20 years

(l) Asset retirement obligation

The CNSC provides for its legal obligation, under a lease agreement, to return the premises to their original state. The asset retirement obligation is recognized in the year in which the associated leasehold improvement capital asset is put into use. The obligation is recorded at the net present value of the estimated future cost of retiring the capital asset at the expiry of the lease period. The estimated cost of retirement is added to the carrying amount and amortized over the related assets’ useful life. The cost estimate is subject to periodic review, and any material changes in the estimated amount or timing of the underlying future cash flow are recorded as an adjustment to the provision. Upon settlement of the liability, a gain or loss will be recorded. The estimated future cash flows are adjusted for inflation using a rate that is derived on the basis of consensus forecasts and Bank of Canada historical and target inflation rates. The discount rate is a weighted average rate reflecting the Government of Canada’s cost of borrowing on initial recognition and on subsequent changes to expected cash flows, which is most closely associated with the period to settlement of the obligation. Change to the liability recognized due to discounting is recognized as accretion expense on the Statement of Operations and Net Financial Position. Details of the liability are provided in note 7 of these financial statements.

(m) Measurement uncertainty

The preparation of these 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 financial statements and accompanying notes at March 31. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are the likelihood of occurrence for contingent 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 financial statements in the year they become known.

3. Parliamentary authorities

The CNSC receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Net Financial Position and the Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, the CNSC 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
(in thousands of dollars)

	2022	2021
Net cost of operations before government funding and transfers	41,977	43,824
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets	(2,903)	(3,807)
Decrease (increase) in vacation pay, compensatory leave and accrued liabilities	3,632	(1,445)
Services provided without charge by other government departments (note 11a)	(16,359)	(15,402)
Revenues pursuant to paragraph 21(3) of the Nuclear Safety and Control Act	115,635	114,005
Decrease in employee future benefits	253	300
Refund of prior years' expenditures	473	367
Loss on disposal of tangible capital assets including adjustments	(5)	(175)
Other	(479)	(383)
	100,247	93,460
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets (note 9)	1,076	1,588
Salary overpayments	40	134
Increase in prepaid expenses	200	521
	1,316	2,243
Current year authorities used	143,540	139,527

(b) Authorities approved and used
(in thousands of dollars)

	2022	2021
AUTHORITIES APPROVED:
Vote 1 – Program expenditures	43,439	42,678
STATUTORY:
Spending of revenues pursuant to section 21(3) of the Nuclear Safety and Control Act	99,312	95,260
Spending of proceeds from the disposal of surplus assets	68
Contributions to employee benefit plans	13,379	13,648
	156,198	151,586
LESS:
Authorities available for use in the subsequent year	4,331	4,292
Lapsed Vote 1 – Program expenditures	8,327	7,767
Current year authorities used	143,540	139,527

4. Accounts payable and accrued liabilities

The following table presents details of the CNSC’s accounts payable and accrued liabilities:

(in thousands of dollars)

	2022	2021
Other government departments and agencies	9,142	9,649
External parties	13,157	14,720
Licensees*	10,465	8,847
Total accounts payable and accrued liabilities	32,764	33,216

*Payable to licensees represents the calculation of the excess of collection of fees charged over the actual fees earned as at year-end.

5. Deferred revenue

Deferred revenue represents the balance at year-end of unearned revenues from amounts received from licensees for fees charged prior to services being performed. Revenue is recognized in the period in which these expenditures are incurred or in which service is performed. Details of the transactions related to this account are as follows:

(in thousands of dollars)

	2022	2021
Balance, beginning of year	4,332	4,251
Licence fee revenue recognized during the year	(4,277)	(4,211)
Licence fee received for future years	4,331	4,292
Balance, end of year	4,386	4,332

6. Employee future benefits

(a) Pension benefits

CNSC 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 five consecutive years of earnings. The benefits are integrated with Canada/Quebec Pension Plan benefits and they are indexed to inflation.

Both the employees and the CNSC 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 consists of existing plan members as of December 31, 2012; and Group 2 consists of members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.

The 2021–22 expense amounts to $9,039,071 ($9,313,707 in 2020–21). For Group 1 members, the expenses represent approximately 1.01 times (1.01 times in 2020–21) the employee contributions and, for Group 2 members, approximately 1.00 times (1.00 times in 2020–21) the employee contributions.

The CNSC’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 and parental leave benefits

The CNSC previously provided severance benefits to its employees based on eligibility, years of service and salary at termination of employment.

The accumulation of severance benefits for voluntary departures ceased for all employees in 2013–14. Employees were given the option to be immediately 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. The remaining balance represents the estimated obligation due to employees as at the reporting date. These severance benefits are not pre-funded, and consequently the outstanding obligation will be paid from future authorities.

The CNSC provides maternity/parental leave benefits as provided for under labour contracts and conditions of employment. Management determined the accrued benefit obligation and benefit expenses based on the difference between 93% of the employee's weekly rate of pay and the maternity/parental leave benefit they are entitled to receive under the Employment Insurance or the Québec Parental Insurance Plan.

Information about the future benefits, measured as at March 31, is as follows:

(in thousands of dollars)

	2022	2021
Accrued severance benefit obligation, beginning of year	2,743	3,039
Increase in severance benefits	390	118
Severance benefits paid during the year	(690)	(414)
Accrued severance benefit obligation, end of year	2,443	2,743
Maternity/Parental leave benefits	333	286
Accrued benefit obligation, end of year	2,776	3,029

7. Asset retirement obligation

The asset retirement obligation is based on the current cost estimate of $338,150 ($338,150 in 2020–21) of the site restoration plan. The estimate has been indexed for inflation using the forecasted Consumer Price Index rate of 2.00% to reflect the estimated future cost of the site restoration plan. The CNSC recognizes the net present value, using the actual zero-coupon yield curve for Government of Canada bonds of 2.34% (0.75% in 2020–21), of the estimated future cost of $358,847 ($366,024 in 2020–21), of restoring the leased premises at the expiry of the lease on March 31, 2025. As of March 31, 2022, the CNSC has an asset retirement obligation that can be reasonably estimated as follows:

(in thousands of dollars)

	2022	2021
Balance, beginning of year	355	362
Accretion expense	(20)	(7)
Balance, end of year	335	355

8. Accounts receivable

The following table presents details of the CNSC’s accounts receivable:

(in thousands of dollars)

	2022	2021
Receivables – Licence fees	2,107	2,587
Receivables – Other government departments and agencies	69	14
Receivables – Others	25	264
	2,201	2,865
Allowance for doubtful accounts on receivables	(501)	(407)
Net accounts receivable	1,700	2,458

9. Tangible capital assets

(in thousands of dollars)

Cost	Opening balance	Acquisitions	Adjustments	Disposal / Write-offs	Work in progress transfers	Closing balance
Furniture and equipment	8,537	540	-	(194)	-	8,883
Informatics equipment and software	20,002	-	-	-	-	20,002
Leasehold improvements	16,031	100	-	-	-	16,131
Motor vehicles	818	-	-	-	-	818
Other vehicles	77	-	-	-	-	77
Work-in-progress – software		-	-	-	-	-
Work-in-progress – construction	362	436	-	-	-	798
Total	45,827	1,076	-	(194)	-	46,709

(in thousands of dollars)

Accumulated amortization	Opening balance	Amortization	Adjustments	Disposals / Write-offs	Closing balance
Furniture and equipment	5,890	424		(185)	6,129
Informatics equipment and software	15,891	1,953		-	17,844
Leasehold improvements	12,666	430		-	13,096
Motor vehicles	495	92		-	587
Other vehicles	39	4		-	43
Total	34,981	2,903		(185)	37,699

(in thousands of dollars)

Net book value	2021	2022
Furniture and equipment	2,647	2,754
Informatics equipment and software	4,111	2,158
Leasehold improvements	3,365	3,035
Motor vehicles	323	231
Other vehicles	38	34
Work-in-progress – software	-	-
Work-in-progress – construction	362	798
Total	10,846	9,010

The capital costs associated with improvements to leased accommodations are recorded as work-in-progress until they are completed and put into use.

The acquisition of tangible capital assets and the decrease in accounts payables and accrued liabilities presented in the Statement of Cash Flows excludes an amount of $27,880 ($1,180,754 in 2020–21) in relation to the acquisition of tangible capital assets, as the amount relates to capital investing activities in 2021–22 that remain to be paid as at March 31, 2022.

10. Summary of segmented expenditures and revenues by cost recovery fee category

Presentation by segment and method used to allocate costs is based on the CRFR. The presentation by segment is also 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 groupings of the CNSC’s main regulatory activities related to the four CRFR fee categories: Regulatory Activity Plans, Formula Fees, Fixed Fees and Special Projects.

(in thousands of dollars)

	Revenue	Licences provided free of charge (note 11(b) and note 14)	2022 total value of licences and other revenue	2021 total value of licences and other revenue	2022 cost of operations	2021 cost of operations
LICENCE FEES
Power reactors	70,875	-	70,875	73,052	70,875	73,052
Non-power reactors	-	984	984	632	984	632
Nuclear research and test establishments	10,454	-	10,454	9,637	10,454	9,637
Particle accelerators	-	1,109	1,109	641	1,109	641
Uranium processing facilities	4,824	-	4,824	4,085	4,824	4,085
Nuclear substance processing facilities	1,870	-	1,870	1,558	1,870	1,558
Radioactive waste facilities	6,119	-	6,119	5,117	6,119	5,117
Uranium mines and mills	6,367	-	6,367	5,260	6,367	5,260
Waste nuclear substance	921	3,025	3,946	3,738	3,946	3,738
Total regulatory activity plan fees	101,430	5,118	106,548	103,720	106,548	103,720
Nuclear substances and Class II nuclear facilities
Academic and research	168	1,833	2,001	2,067	3,520	3,165
Commercial	1,155	611	1,766	1,822	3,562	3,606
Industrial	7,628	210	7,838	7,842	9,578	9,694
Medical	709	5,143	5,852	5,531	5,075	5,458
Dosimetry services	292	18	310	305	520	629
Total formula fees	9,952	7,815	17,767	17,567	22,255	22,552
Transport licences and transport package certificates	157	-	157	190	1,093	883
Radiation device and prescribed equipment certificates	79	-	79	72	988	992
Exposure device operator certificates	67	-	67	46	1,029	980
Total fixed fees	303	-	303	308	3,110	2,855
TOTAL LICENCE FEES	111,685	12,933	124,618	121,595	131,913	129,127
NON-LICENCE FEES
Other non-licence fees	41	-	41	32	21,557	25,189
Special projects and related expenses	3,950	-	3,950	4,102	4,183	3,545
TOTAL NON-LICENCE FEES	3,991	-	3,991	4,134	25,740	28,734
TOTAL	115,676	12,933	128,609	125,729	157,653	157,861

11. Related party transactions

The CNSC had the following transactions with related parties in addition to those disclosed elsewhere in these financial statements.

• (a) Common services provided without charge by other government departments
  During the year, the CNSC received services without charge from certain common service organizations. These services provided without charge have been recorded at the carrying value in the CNSC’s Statement of Operations and Net Financial Position as follows:

(in thousands of dollars)

	2022	2021
Accommodation provided by Public Services and Procurement Canada	5,782	5,611
Contributions for employer’s share of employee benefits provided by the Treasury Board Secretariat	8,444	7,837
Salary and associated costs of services provided by Shared Services Canada	1,666	1,499
Other	467	455
Total	16,359	15,402

The Government of Canada has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and the 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.

• (b) Licences provided without charge to other federal government departments and agencies
  The CNSC provided licences free of charge to other federal government departments and agencies in the amount of $701,752 ($705,833 in 2020–21). The forgone revenue is not included in the Statement of Operations and Net Financial Position.

• (c) Other transactions with related parties
  The CNSC enters into transactions with these entities in the normal course of business and on normal trade terms. These transactions are measured at the exchange amount.

(in thousands of dollars)

	2022	2021
Accounts receivable – Other government departments and agencies	69	14
Accounts payable – Other government departments, agencies and Crown corporations	9,142	9,649
Expenses – Other government departments and agencies	26,327	25,781

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

12. Contractual obligations

The nature of the CNSC’s activities can result in some large multi-year contracts and obligations whereby the CNSC will be obligated to make future payments in order to carry out its transfer payment programs or when services and goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

(in thousands of dollars)

	2023	2024	2025	2026 and subsequent	Total
Acquisitions of goods and services	7,764	1,634	1,124	1,106	11,628
Transfer payments	2,128	1,265	162	112	3,667
Operating leases	3,113	2,354	1,656	270	7,393
Total	13,005	5,253	2,942	1,488	22,688

The CNSC has multi-year contracts with related parties in the amount of $11,987,387

13. Contingent liabilities

Claims have been made against the CNSC in the normal course of operations. These claims include items with pleading amounts for which no amount is specified. Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amount to approximately $280,000 ($40,000 in 2020-2021) at March 31, 2022.

14. Other licences provided free of charge by the CNSC

The CNSC provides licences free of charge to those exempt under the CRFR and other organizations granted exemptions from paying fees under the NSCA. The total value of these licences amounted to $12,230,891 ($10,986,217 in 2020–21). The foregone revenue is not included in the Statement of Operations and Net Financial Position.

15. Impact of COVID-19

The CNSC management maintains comprehensive operational measures, risk analysis, and mitigation strategies as a consequence of the COVID-19 pandemic, allowing the CNSC to continue to safely and effectively maintain regulatory operations. While respecting the guidance of public health authorities and prioritizing the health and safety concerns of staff and licensees, CNSC management maintained extensive restrictions in authorized travel during much of 2021-22. Planned results for 2021-22 were established during uncertain conditions due to the COVID-19 pandemic, resulting in significant variances as compared with the actuals. Spending on personnel and professional services were less than planned, in part due to the impact of the pandemic on how the CNSC operates.

Annex to the statement of management responsibility including internal control over financial reporting 2021-22

1. Introduction

This document provides summary information on the measures taken by the Canadian Nuclear Safety Commission (CNSC) 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 CNSC’s authority, mandate and program activities can be found in the most recent Departmental Results Report ^{Footnote 1} and Departmental Plan ^{Footnote 2}. The CNSC 2021-22 audited financial statements ^{Footnote 3} are available on the CNSC website.

2. System of Internal Control Over Financial Reporting

2.1 Internal Control Management

The CNSC has a well-established governance and accountability structure to support efforts to evaluate and monitor its internal control system. An internal control management framework, approved by the president, is in place, and includes:

• Organizational accountability structures as they relate to internal control management to support sound financial management, including roles and responsibilities of senior managers in their areas of responsibility
• An Ethics unit, part of the Internal Audit, Evaluation and Ethics Division, that manages values and ethics programs, internal disclosure, the Public Servants Disclosure Protection Act, and conflict of interest and post-employment policies
• Ongoing communication and training on statutory requirements, and policies and procedures for sound financial management and control
• Monitoring of and regular updates on internal control management, as well as the provision of related assessment results and action plans to the president, and as applicable, the Audit Committee

The Audit Committee provides advice to the president on the adequacy and functioning of the CNSC’s risk management, control and governance frameworks and processes.

2.2 Service Arrangements Relevant to Financial Statements

The CNSC relies on other organizations for the processing of certain transactions that are recorded in its financial statements, as follows:

Common Arrangements

• Public Services and Procurement Canada centrally administers the payments of salaries and the procurement of goods and services in accordance with the CNSC’s delegation of authority and provides accommodation services.
• The Treasury Board of Canada Secretariat provides services related to public sector insurance for CNSC employees and centrally administers payment of the employer’s share of contributions toward statutory employee benefit plans (i.e., the Public Service Pension Plan, Employment Insurance Plan, Canada Pension Plan, Quebec Pension Plan, and Public Service Supplementary Death Benefit Plan) on behalf of the CNSC.
• Shared Services Canada is responsible for managing and maintaining the CNSC’s information technology infrastructure.

Specific Arrangement

• Agriculture and Agri-Food Canada (AAFC) provides the CNSC with the SAP financial system platform to capture and report all financial transactions. Under this arrangement, CNSC relies on AAFC for the management of certain IT controls and procedures (e.g., security, configuration, change management, business continuity) and various master data functions in SAP on CNSC’s behalf.

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

3. Departmental Action Plan

3.1 Progress during Fiscal Year 2021-22

The CNSC continued to conduct its ongoing monitoring according to the established rotational plan, as shown in the following table.

Progress during fiscal year 2021-22

Key control areas	Status
Payroll	Completed as planned; remedial actions started (see section 3.2 for additional information)
Purchase to payment	Due to resource constraints, the assessment has progressed but will be completed during 2022-23

3.2 Assessment Results for Fiscal Year 2021-22

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

Ongoing monitoring program: As part of its rotational ongoing monitoring plan, the department completed its reassessment of the Payroll Business Process and has progressed on the Purchase to Payment Process. For the most part, the key controls that were tested performed as intended. The CNSC noted a need for improvement as follows:

• The strengthening of the approval process of letters of offer and retention of employee termination letters
• The completion of the salary variance review on a regular basis and the update of the review guidance document
• The implementation of a formal peer review process of pay transactions

Management is aware of the recommendations for improvement and actions are being taken to address them.

3.3 Progress Against Fiscal Year 2020-21 and 2019-20 Items

In addition to the progress made in ongoing monitoring, the department conducted a follow-up of the outstanding 2020-21 and 2019–20 action items:

• The implementation of a regular review process of TM1 users' access privileges
• The review and documentation of data back-up activities for the TM1 application
• The update and review, as required, of procedures around key ELC controls, including, for example: the finance position descriptions and hiring practices
• The completion of threat and risk assessments

All items were remediated as planned, except for the completion of threat and risk assessments. This remaining item is scheduled for completion by the end of fiscal year 2023-24.

3.4 Monitoring Plan for Fiscal Year 2022-23 and Subsequent Years

The CNSC’s rotational ongoing monitoring plan over the next three 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.

Rotational ongoing monitoring plan

Key control areas	Fiscal year 2022-23	Fiscal year 2023-24	Fiscal year 2024-25
Entity-level controls	Yes	No	No
IT general controls (under management of the CNSC)	Yes	No	No
Capital assets	No	Yes	No
Purchase to payment	Yes	No	No
Payroll	No	No	Yes
Revenue	No	Yes	No
Year-end financial close and statements preparation	No	Yes	No