NRCan 2019-2020 Consolidated Financial Statements

Natural Resources Canada
Notes to the Consolidated Financial Statement (Unaudited)
For the year ended March 31

1. Authority and objectives

   The Department of Natural Resources Canada (NRCan) was created on June 25, 1993 by the merger of the Department of Energy, Mines and Resources and the Department of Forestry. This organizational change was effected by Order in Council, pending the passage of legislation which occurred in 1994. The Department’s mandate is primarily based on the Department of Natural Resources Act, the Resources and Technical Surveys Act and the Forestry Act.

   NRCan works to improve the quality of life of Canadians by ensuring that our natural resources are developed sustainably, providing a source of jobs, prosperity and opportunity, while preserving our environment and respecting our communities and Indigenous People.

   NRCan fulfills its mandate through the following Core Responsibilities:

   Innovative and Sustainable Natural Resources Development: Lead the transformation to a low-carbon economy by improving the environmental performance of Canada’s natural resource sectors through innovation and sustainable development and use.

   Globally Competitive Natural Resource Sectors: Advance and promote market access, inclusiveness and competitiveness for Canada’s natural resource sectors, in support of jobs and economic growth.

   Natural Resource Science and Risk Mitigation: Lead foundational science and share expertise for managing Canada’s natural resources, reducing the impacts of climate change and mitigating risks from natural disasters and explosives.

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

2. Summary of significant accounting policies

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

   Significant accounting policies are as follows:

   1. Parliamentary authorities

      The Department is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Department do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Consolidated Statement of Operations and Departmental Net Financial Position and in the Consolidated Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. The planned results amounts in the “Expenses” and “Revenues” sections of the Consolidated Statement of Operations and Departmental Net Financial Position are the amounts reported in the Consolidated Future-oriented Statement of Operations included in the 2019-2020 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 2019-2020 Departmental Plan.

   2. Consolidation

      These consolidated financial statements include the accounts of the sub-entities for which the Deputy Minister is accountable. The accounts of the Geomatics Canada Revolving Fund have been consolidated with those of the Department, and all inter-organizational balances and transactions have been eliminated.

   3. Net cash provided by Government

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

   4. Amounts due from or to the CRF

      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 Department is entitled to draw from the CRF without further authorities to discharge its liabilities.

   5. Revenues

      • Revenues from regulatory fees are recognized based on the services provided in the year.
      • Funds received are recorded as deferred revenue, provided the Department has an obligation to other parties for the provision of goods, services or the use of assets in the future.
      • Other revenues are recognized in the period the event giving rise to the revenue occurred.
      • Revenues that are non-respendable are not available to discharge the Department’s liabilities. While the Deputy Minister is expected to maintain accounting control, he has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented as a reduction of the Department’s gross revenues.

   6. Expenses

      Expenses are recorded on the accrual basis:

      1. Transfer payments are recorded as an expense in the year the transfer is authorized and all eligibility criteria have been met by the recipient. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.
      2. Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.
      3. Services provided without charge by other government departments for accommodation, employer contributions to the health and dental insurance plans, and workers’ compensation are recorded as operating expenses at their carrying value.

   7. Environmental liabilities

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

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

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

   8. Employee future benefits

      1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government of Canada. 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 financial statements of the Government of Canada, as the Plan’s sponsor.
      2. Severance benefits: The accumulation of severance benefits for voluntary departures ceased for applicable employee groups. The remaining obligation for employees who did not withdraw benefits is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government of Canada as a whole.

   9. Accounts receivable

      Accounts receivables and advances are initially recorded at cost. An allowance for valuation is recorded to reduce the carrying value of accounts receivable to amounts that approximate their net recoverable value.

   10. Non-financial assets

       1. Prepayments are disbursements made before the completion of the work, delivery of the goods or rendering of the services. They are accounted for as non-financial assets until the related services are rendered, goods are consumed, or terms of the contractual agreement are fulfilled.
       2. Inventory:
          • Inventory held for consumption consists of parts, materials and supplies held for future program delivery. It is valued at cost using the average cost method. If there is no longer any service potential, inventory is valued at the lower of cost or net realizable value.
          • Inventory held for resale consists of maps, which is valued at the lower of cost or net realizable value, with cost being determined using the weighted average cost of each title.
       3. Tangible capital assets – The cost of acquiring land, buildings, equipment and other capital property are capitalized as tangible capital assets and, except for land, are amortized to expense over the estimated useful lives of the assets, as described in Note 11. All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Tangible capital assets do not include immovable assets located on reserves as defined in the Indian Act, works of art, museum collection, insect collection, and Crown land to which no acquisition cost is attributable; and intangible assets.

   11. Contingent liabilities

       Contingent liabilities, including the allowance for loan guarantees and an insurance program, are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, a provision is accrued and an expense is recorded to other operating 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 guarantees and the insurance program, an allowance is recorded when it is determined that a loss is likely and the amount of the allowance is estimated taking into consideration the nature of the guarantee and insurance program, loss experience and current conditions. The allowance is reviewed on an ongoing basis and changes in the allowance are recorded as expenses in the year they become known.

   12. Contingent assets

       Contingent assets are possible assets which may become actual assets when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, the contingent asset is disclosed in the notes to the consolidated financial statements.

   13. Transactions involving foreign currencies

       Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars using the rate of exchange in effect at March 31st. Gains and losses resulting from foreign currency transactions are reported on the Consolidated Statement of Operations and Departmental Net Financial Position and note 16 in other operating expenses according to the activities to which they relate.

   14. Measurement uncertainty

       The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the consolidated financial statements and accompanying notes at March 31. The estimates are based on facts and circumstances, historical experience, general economic conditions and reflect the Department's best estimate of the related amount at the end of the reporting period. The most significant items where estimates are used are contingent liabilities, environmental liabilities, the liability for employee future benefits, the useful life of tangible capital assets, and the allowance for doubtful accounts. 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.

   15. Related party transactions

       1. Related party transactions, other than inter-entity transactions, are recorded at the exchange amount.
       2. 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 consolidated financial statement purposes at the carrying amount.

3. Parliamentary authorities

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

   1. Reconciliation of net cost of operations to current year authorities used

      (in thousands of dollars)

      	2020	2019
      	Net cost of operations before government funding and transfers	1,514,503	2,413,266
      Adjustments for items affecting net cost of operations but not affecting authorities:
      Amortization of tangible capital assets	(28,818)	(26,602)
      Net loss on disposal of tangible capital assets including adjustments	(675)	(697)
      Services provided without charge by other government departments	(51,821)	(45,896)
      Increase in prepayments	22	449
      (Decrease) increase in inventory	(309)	5
      Decrease (increase) in accrued liabilities	56,919	(23,184)
      Increase in vacation pay and compensatory leave	(7,469)	(1,842)
      (Increase) decrease in employee future benefits	(454)	1,626
      Increase in environmental liabilities	(66)	(45)
      Refund of prior years' expenditures	672	1,012
      Revenues and expenses for restricted accounts	284	1,238
      Year-end accrual — pending Budget Implementation Act	950,000	(950,000)
      Other adjustments	2,499	4,345
      Total items affecting net cost of operations but not affecting authorities	920,784	(1,039,591)
      Adjustments for items not affecting net cost of operations but affecting authorities:
      Acquisitions of tangible capital assets	16,155	25,980
      Decrease in lease obligation for tangible capital assets	3,349	3,295
      Transition payments for implementing salary payments in arrears	-	18
      Total items not affecting net cost of operations but affecting authorities	19,504	29,293
      Current year authorities used	2,454,791	1,402,968

   2. Authorities provided and used

      (in thousands of dollars)

      	2020	2019
      	Authorities Provided:
      Vote 1 – Program expenditures	622,683	592,381
      Vote 5 – Capital expenditures	17,143	32,072
      Vote 10 – Grants and contributions	522,629	437,573
      Vote 15 – Encouraging Canadians to use Zero Emission Vehicles	131	-
      Vote 20 – Engaging Indigenous communities in Major Resource Projects	717	-
      Vote 25 – Ensuring Better Disaster Management Preparation and Response	3,270	-
      Vote 35 – Protecting Canada’s Critical Infrastructure from Cyber Threats	809	-
      Statutory amounts	1,420,120	468,230
      Less:
      Authorities available for future years	(6,289)	(6,267)
      Lapsed – Operating expenditures	(13,357)	(9,710)
      Lapsed – Capital expenditures	(1,107)	(6,784)
      Lapsed – Grants and contributions	(107,031)	(104,527)
      Lapsed – Budget Implementation	(4,927)	-
      Current year authorities used	2,454,791	1,402,968

4. Accounts payable and accrued liabilities

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

   (in thousands of dollars)

   	2020	2019
   	Accounts payable – Other government departments and agencies	8,141	13,810
   Accounts payable – External parties	176,353	146,532
   Total accounts payable	184,494	160,342
   Year-end accrual – pending Budget Implementation Act Footnote 1	-	950,000
   Accrued liabilities	224,005	296,718
   Total accounts payable and accrued liabilities	408,499	1,407,060

5. Environmental liabilities

   With respect to environmental liabilities for the 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 11 sites (11 sites in 2019) where contamination may exist and assessment, remediation and monitoring may be required. Of these, the Department has identified 7 sites (7 sites in 2019) where action is required and for which a gross liability of $719 thousand ($653 thousand in 2019) has been recorded. This liability estimate has been determined based on site assessments performed by environmental experts.

   There is 1 site that has not been assessed by environmental experts (1 site in 2019) for which the department has estimated and recorded a liability of $1,148 thousand ($1,148 thousand in 2019).

   These two estimates combined, totaling $1,867 ($1,801 in 2019) 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 consolidated financial statement date.

   For the remaining 3 sites (3 sites in 2019), no liability for remediation has been recognized. These sites are at early 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, the associated expected recoveries and the total undiscounted future expenditures as at March 31, 2020, and March 31, 2019. When the liability estimate is based on a future cash requirement, the amount is adjusted for inflation using a forecast Consumer Price Index (CPI) rate of 2.0% (2.2% in 2019). 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 2020 rates range from 0.64% for a 7 year term to 0.86% for a 11 year term.

   			(in thousands of dollars)
   Nature and Source	Total Number of Sites 2020	Number of Sites with a liability 2020	Estimated Liability 2020	Estimated Total Undiscounted Expenditures 2020	Estimated Recoveries 2020
   Fuel Related Practices1	1	1	1,148	1,148	-
   Office/ Commercial/ Industrial Operations2	10	7	719	729	-
   Totals	11	8	1,867	1,877	-
   			(in thousands of dollars)
   Nature and Source	Total Number of Sites 2019	Number of Sites with a liability 2019	Estimated Liability 2019	Estimated Total Undiscounted Expenditures 2019	Estimated Recoveries 2019
   Fuel Related Practices 1	1	1	1,148	1,148	-
   Office/Commercial/Industrial Operations 2	10	7	653	784	-
   Totals	11	8	1,801	1,932	-

6. Lease obligations for tangible capital assets

   The Department has entered into an agreement to lease a building under a capital lease with a cost of $95,993 thousand as at March 31, 2020 ($95,993 thousand in 2019) and accumulated amortization of $34,853 thousand as at March 31, 2020 ($30,909 thousand in 2019). Interest on this obligation of $1,022 thousand ($1,077 thousand in 2019) is reported in the Consolidated Statement of Operations and Departmental Net Financial Position as part of Innovative and Sustainable Natural Resources Development expenses. The obligation related to the upcoming years includes the following:

   (in thousands of dollars)

   	2020
   	2021	4,372
   2022	4,372
   2023	4,372
   2024	4,372
   2025	4,372
   2026 and subsequent	46,415
   Total future minimum lease payments	68,275
   Less: imputed interest (1.65%)	8,124
   Lease obligation for tangible capital assets	60,151

7. Employee future benefits

   1. Pension benefits

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

      Both the employees and the Department contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Canada’s 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 2020 expense amounts to $42,139 thousand ($37,916 thousand in 2019). For Group 1 members, the expense represents approximately 1.01 times (1.01 times in 2019) the employee contributions and, for Group 2 members, approximately 1.00 times (1.00 times in 2019) 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 Financial Statements of the Government of Canada, as the Plan’s sponsor.

   2. Severance benefits

      Severance benefits provided to the Department’s employees were previously based on an employee’s eligibility, years of service and salary at termination of employment. However, since 2011 the accumulation of severance benefits for voluntary departures progressively ceased for substantially all employees. Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service. By March 31, 2020, substantially all settlements for immediate cash out were completed. Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities. The change in the obligation during the year is as follows:

      (in thousands of dollars)

      	2020	2019
      	Accrued benefit obligation - Beginning of year	16,791	18,417
      Expense for the year	3,000	1,686
      Benefits paid during the year	(2,546)	(3,312)
      Accrued benefit obligation - End of year	17,245	16,791

8. Other liabilities

   The following table presents a detail of the Department’s other liabilities:

   (in thousands of dollars)

   	2020	2019
   	Contractor security deposits – Cash	13	17
   Guarantee deposits – Oil and gas	13,511	15,438
   Shared costs projects	377	1,454
   Market development and incentive payments – Alberta	207	558
   Shared costs agreements – Research	5,954	5,802
   Total other liabilities	20,062	23,269

   Contractor security deposits – Cash: This account was established to record contractor security deposits that are required for the satisfactory performance of work in accordance with Government Contracts Regulations.

   Guarantee deposits – Oil and gas: This account was established to record securities in the form of cash, which are required to be issued to, and held by the Government of Canada pursuant to an Exploration License in accordance with section 24 of the Canada Petroleum Resources Act. These securities are a performance guarantee that the agreed exploration will be performed in the manner and time frame specified. Interest is not paid on these deposits.

   Shared-cost projects: This account was established to facilitate the retention and disbursement of funds received from private organizations and other governments for cost-sharing scientific non-research projects.

   Market development incentive payments – Alberta: This account records funds received from the Government of Alberta to encourage the expansion of natural gas market in Alberta and provinces to the East, in accordance with an agreement between the Government of Canada and the Government of Alberta dated September 1, 1981 and pursuant to section 39 of the Energy Administration Act. The original term of the agreement was from November 1, 1981 to January 31, 1987. As a result of the Western Accord of March 25, 1985, payments from the Government of Alberta terminated as of April 30, 1986; however, payments continued to be made from the account for selected programs which encouraged the use of natural gas for vehicles.

   In 2009-10, a strategy for the expenditure of these funds was agreed upon. This strategy consists of expending the remaining funds in support of expanding the use of natural gas in transportation and combined heat and power applications across Canada. It is anticipated that all remaining funds will be spent by March 31, 2021.

   Shared-cost agreements – Research: This account was established to facilitate the retention and disbursement of funds received from private industry and other governments for joint research projects or shared-cost research agreements.

9. Accounts receivable and advances

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

   (in thousands of dollars)

   	2020	2019
   	Receivables – Other government departments and agencies	10,220	11,062
   Receivables – External parties	37,938	66,760
   Employee advances	841	790
   Subtotal	48,999	78,612
   Allowance for doubtful accounts on receivables from external parties	(260)	(140)
   Gross accounts receivable and advances	48,739	78,472
   Accounts receivable held on behalf of Government	(25,828)	(60,162)
   Net accounts receivable and advances	22,911	18,310

10. Inventory

    The following table presents details of the inventory:

    (in thousands of dollars)

    	2020	2019
    	Inventories held for consumption	379	687
    Inventories held for re-sale	48	49
    Total inventory	427	736

    The cost of consumed inventory recognized as an expense in the Consolidated Statement of Operations and Departmental Net Financial Position is $395 thousand in 2020 ($115 thousand in 2019).

11. Tangible capital assets

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

    Asset Class	Amortization period
    Buildings	15 to 40 years
    Works and infrastructure	20 to 40 years
    Machinery and equipment	5 to 15 years
    Vehicles	3 to 10 years
    Leasehold improvements	Lesser of the remaining term of lease or useful life of the improvement
    Leased tangible capital assets	Over term of lease/useful life
    Assets under construction	Once in service, in accordance with asset class

     

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

    Cost

    (in thousands of dollars)

    	Opening Balance	Acquisitions	Adjustments1	Disposals and Write-offs	Closing Balance
    Capital asset class
    Land	7,800	-	-	-	7,800
    Buildings	285,750	-	15,607	16	301,341
    Works and Infrastructure	5,261	-	5,140	-	10,401
    Machinery and equipment	276,171	4,698	426	12,977	268,318
    Vehicles	9,930	406	1,205	416	11,125
    Leasehold improvements	68,161	-	925	-	69,086
    Leased tangible capital assets	95,993	-	-	-	95,993
    Assets under construction	24,646	11,051	(22,972)	600	12,125
    Total	773,712	16,155	331	14,009	776,189

    Accumulated Amortization

    (in thousands of dollars)

    	Opening Balance	Amortization	Adjustments1	Disposals and Write-offs	Closing Balance
    Capital asset class
    Buildings	147,274	6,548	9	14	153,817
    Works and Infrastructure	290	258	-	-	548
    Machinery and equipment	208,916	12,957	147	12,605	209,415
    Vehicles	7,544	495	-	398	7,641
    Leasehold improvements	20,563	4,616	-	-	25,179
    Leased tangible capital assets	30,909	3,944	-	-	34,853
    Assets under construction	-	-	-	-	-
    Total	415,496	28,818	156	13,017	431,453

    Net book value

    (in thousands of dollars)

    Capital asset class
    	2020	2019
    Land	7,800	7,800
    Buildings	147,524	138,476
    Works and Infrastructure	9,853	4,971
    Machinery and equipment	58,903	67,255
    Vehicles	3,484	2,386
    Leasehold improvements	43,907	47,598
    Leased tangible capital assets	61,140	65,084
    Assets under construction	12,125	24,646
    Total	344,736	358,216

12. Departmental net financial position

    A portion of the Department’s net financial position is used for a specific purpose. Related revenues and expenses are included in the Consolidated Statement of Operations and Departmental Net Financial Position.

    The Environmental Studies Research Fund account was established pursuant to subsection 76(1) of the Canada Petroleum Resources Act. The purpose of the Fund is to finance environmental and social studies pertaining to the manner in which, and the terms and conditions under which, exploration, development and production activities on frontier lands, authorized under this Act or any other act of Parliament, should be conducted.

    The Nuclear Liability Account is a continuation of the Nuclear Liability Reinsurance Account under the previous Nuclear Liability Act. It is established pursuant to sub-section 32(1) of the Nuclear Liability and Compensation Act, to record indemnity fees paid by operators and to provide for payment of any claims arising under the indemnity agreements entered into between the Government and nuclear installation operators.

    Legislation requires that the revenues of these accounts to be earmarked and that related payments and expenses be charged against such revenues. The transactions do not represent liabilities to third parties but are internally restricted for specified purposes.

    (in thousands of dollars)

    	2020	2019
    Environmental Studies Research Fund - Restricted
    Balance – Beginning of year	5,734	4,637
    Revenues	1,729	2,856
    Expenses	(1,589)	(1,759)
    Balance – End of year	5,874	5,734
    Nuclear Liability Account – Restricted
    Balance – Beginning of year	4,439	4,299
    Revenues	144	140
    Expenses	-	-
    Balance – End of year	4,583	4,439
    Subtotal – Restricted	10,457	10,173
    Unrestricted	236,076	(749,363)
    Departmental net financial position – End of year	246,533	(739,190)

13. Contractual obligations and contractual rights

    1. Contractual Obligations

       The nature of the Department’s activities may 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:

       (in thousands of dollars)

       	2021	2022	2023	2024	2025	2026 and subsequent	Total
       Other Transfer Payments	324,480	89,099	14,028	885	185	-	428,677
       Total	324,480	89,099	14,028	885	185	-	428,677

    2. Contractual rights

       The activities of the Department sometimes involve the negotiation of contracts or agreements with outside parties that result in the department having rights to both assets and revenues in the future. They principally involve leases of property, royalties, and sales of goods and services. The major contractual rights that will generate revenues in future years are the Loan Guarantee Agreements. The agreements that underpin the federal loan guarantee require the beneficiaries to pay Canada an annual fee of 0.5% of the net amount of guaranteed debt outstanding.

       Pursuant to Section 19.5(b) of the Net Profit Interest Agreement (NPI) and Section 18.5(b) of the Incidental Net Profit Interest Agreement (INPI), the Government of Canada has assigned the NPI and INPI Payments to the Crown in relation to the Hibernia Project to the Canada Development Investment Corporation (CDEV), which consisted of the contractual rights of NRCan in the past. In August 2019, NRCan signed a Memorandum of Understanding (MOU) with CDEV that assigns and transfers the NPI and INPI from the Minister of NRCan to CDEV.

       These major contractual rights that will generate revenues in future years and that can be reasonably estimated are summarized as follows:

       (in thousands of dollars)

       	2021	2022	2023	2024	2025	2026 and subsequent	Total
       Loan Guarantee Fees	14,500	14,424	14,195	13,889	13,579	240,815	311,402
       Total	14,500	14,424	14,195	13,889	13,579	240,815	311,402

14. Contingent liabilities and contingent assets

    1. Contingent liabilities

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

       1. Claims and litigation:

          Claims have been made against the Department in the normal course of operations. These claims include items with pleading amounts and others 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 where it is likely that there will be a future payment and a reasonable estimate of the loss can be made. Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amount to approximately $14,470 thousand in 2020 ($14,470 thousand in 2019).

       2. Loan guarantees:

          (in thousands of dollars)

          	Authorized Limit	Outstanding guarantees
          		2020	2019
          Lower Churchill Hydroelectric Projects	9,200,000	9,173,519	8,649,907

          The Government of Canada provided loan guarantee support for the construction of the Lower Churchill Hydroelectric Projects, including two projects sponsored by Nalcor Energy ([1] Muskrat Falls and Labrador Transmission Assets and [2] Labrador-Island Link) and one project sponsored by Emera Inc. (Maritime Link). In 2013, the financing was completed for the Nalcor-led projects, raising $5 billion of guaranteed debt in the form of a bond financing. These bonds have a life varying from about 15 years to 40 years. In 2014, the bond financing was completed for the Maritime Link, raising $1.3 billion of guaranteed debt for a life of about 39 years.

          Further to an announcement made by the Minister of Natural Resources in November 2016, in May 2017, the Minister of Natural Resources signed two additional Guarantee Agreements to provide additional loan guarantee support to the Nalcor-sponsored projects. On May 25, 2017, the financing was completed, raising $2.9 billion of guaranteed debt in the form of a bond financing. These bonds have terms varying from 3½ years to 40 years. As per the terms of the bonds that were issued under both the original guarantees and the additional guarantees, only interest payments are being made on the guaranteed debt. The commencement of principal payments on the guaranteed debt has been scheduled to begin shortly after the expected commissioning dates of the projects, with the schedule of these payments depending on the specific terms and conditions of each of the guaranteed bonds. Among the many safeguards put in place to protect Canada’s interests, all of the project entities’ shares, assets and agreements have been pledged as security to Canada.

          The Maritime Link project has successfully completed all construction activities and was commissioned on February 9, 2018. As per the terms of the loan guarantee agreements, principal repayments will begin on December 1, 2020. These principal and interest payments will be made on a semi-annual basis until maturity date of December 1, 2052. As of March 31, 2020, $9.17 billion of guaranteed debt has been released to the project entities ($8.65 billion in 2019).

          No allowance for losses has been recorded for these loan guarantees as, at this time, no costs are likely to occur. An allowance will be recorded if it becomes likely that Canada will incur costs under the guarantee and when the amount of the loss can be reasonably estimated.

       3. Insurance program:

          Under the Nuclear Liability and Compensation Act (NLCA), which entered into force on January 1, 2017, and replaced the Nuclear Liability Act (NLA), operators of designated nuclear installations are required to maintain financial security against the liability imposed on them by the NLCA.

          The NLCA establishes that the operator’s liability for damages resulting from a nuclear incident is limited to $1 billion. This amount applies to the “Power Reactor Class” of nuclear installations prescribed in the Nuclear Liability and Compensation Regulations (NLCR). Lower liability amounts for lower-risk installations, based on their commensurate risk, are prescribed in the NLCR. The Minister of Natural Resources is required to review the operator’s liability limit at least once every five years, and the Government may increase the limit by regulation.

          Financial security covers all the categories of damage that are compensable under the NLCA, with the exception of damage arising from normal emissions, and bodily injury occurring 10 to 30 years after a nuclear incident. Through the indemnity agreement, entered into with 10 operators, the federal government covers the liability associated with the two exceptions. It also covers the difference between the lower liability amount prescribed in the NLCR for lower-risk installations and the $1 billion liability amount assigned in the NLCA. The federal government charges each operator an annual fee for providing this indemnity coverage.

          The Department of Natural Resources administers the Nuclear Liability Account (Account) on behalf of the federal government through a consolidated specified purpose account. This Account is a continuation of the Nuclear Liability Reinsurance Account under the previous NLA. All fees paid by the operators of nuclear installations are credited to this Account. The closing balance of this Account as at March 31, 2020, is $4,582,955. Any claims under an indemnity agreement could be up to the level of the liability amount assigned in the NLCA; however, there is no limit to the number of incidents to which the indemnity could apply. There have been no claims against – or payments out of – the Account since its creation under the NLA.

    2. Contingent assets

       The Department issued conditionally repayable contributions with proponents for early stage research and development (R&D) activities. Repayments are determined upon the successful commercialization of products generated by the R&D. There are no amounts estimated to be repaid as at March 31, 2020 ($0 in 2019).

15. Related party transactions

    The Department is related as a result of common ownership to all government departments, agencies, and Crown corporations. Related parties also include individuals who are members of key management personnel or close family members of those individuals, and entities controlled by, or under shared control of, a member of key management personnel or a close family member of that individual.

    The department enters into transactions with these entities in the normal course of business and on normal trade terms.

    1. Common services provided without charge by other government departments:

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

       (in thousands of dollars)

       	2020	2019
       Employer’s contribution to the health and dental insurance plans	34,298	28,833
       Accommodation	17,328	16,843
       Workers' compensation	195	220
       Total common services provided without charge	51,821	45,896

       The Government of Canada 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 of Canada 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 payroll and cheque issuance services provided by Public Services and Procurement Canada and audit services provided by the Office of the Auditor General, are not included in the Department’s Consolidated Statement of Operations and Departmental Net Financial Position.

    2. Administration of programs on behalf of other government departments

       The Department has a number of Memoranda of Understanding with other government departments for the administration of their programs. The Department issued approximately $21,419 thousand ($23,263 thousand in 2019) in payments on behalf of the other government departments. These expenses are not reflected in the Departmental Consolidated Financial Statements, but rather in the Financial Statements of the respective government departments.

    3. Other transactions with other government departments and agencies

       (in thousands of dollars)

       	2020	2019
       Expenses	126,409	121,844
       Revenues	6,166	6,398

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

16. Segmented information

    Presentation by segment is based on Core responsibilities. 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 core responsibilities, by major object of expense and by major type of revenue. The segment results for the period are as follows:

    (in thousands of dollars)

    	Natural Resource Science and Risk Mitigation	Innovative and Sustainable Natural Resources Development	Globally Competitive Natural Resource Sectors	Internal Services	2020	2019
    Transfer payments
    Industry	2,216	196,247	21,074	-	219,537	222,211
    International	280	1,699	1,106	-	3,085	2,513
    Non-profit organizations	6,629	37,882	58,142	-	102,653	1,016,154
    Other levels of government	1,866	29,512	377,962	-	409,340	447,201
    Individuals	134	14,604	38,522	-	53,260	21,711
    Total transfer payments	11,125	279,944	496,806	-	787,875	1,709,790
    Operating expenses
    Salaries and employee benefits	154,623	203,860	58,956	112,788	530,227	476,378
    Information	1,000	6,743	1,251	4,627	13,621	10,331
    Professional and special services	23,290	45,119	7,909	29,187	105,505	112,885
    Rentals	13,628	10,174	2,590	5,349	31,741	29,953
    Transportation and communication	7,096	4,164	3,423	2,247	16,930	19,512
    Utilities, material and supplies	9,549	12,031	1,074	1,985	24,639	23,090
    Purchased repairs and upkeep	2,720	3,207	192	289	6,408	6,727
    Acquisitions of non-capital assets	4,143	5,611	1,031	2,548	13,333	14,253
    Amortization	12,430	13,205	747	2,436	28,818	26,602
    Other	3,073	4,614	(22,759)	(1,916)	(16,988)	11,289
    Total Operating expenses	231,552	308,728	54,414	159,540	754,234	731,020
    Total expenses	242,677	588,672	551,220	159,540	1,542,109	2,440,810
    Revenues
    Rights and privileges	1,649	145	346,979	-	348,773	337,935
    Other, such as revenue pursuant to agreements	1,337	18,740	94,472	291	114,840	322,381
    Revenue from services of a non-regulatory nature	7,255	11,797	-	-	19,052	18,508
    Proceeds from sales of goods and information products	384	913	-	-	1,297	1,363
    Revenue from services of a regulatory nature	-	1,798	-	-	1,798	1,669
    Services to other government departments	-	-	-	159	159	129
    Revenues earned on behalf of Government	(443)	(16,128)	(441,451)	(291)	(458,313)	(654,441)
    Total net revenues	10,182	17,265	-	159	27,606	27,544
    Net cost of operations	232,495	571,407	551,220	159,381	1,514,503	2,413,266

17. Subsequent events

    The outbreak of the Coronavirus disease [“COVID-19”] has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. The duration and impact of the COVID-19 outbreak is unknown at this time. As a result, it is not possible to reliably estimate the length and severity of the impact on NRCan’s financial position and financial results in future periods.

    As announced through the Government of Canada Covid-19 Economic Response Plan, NRCan received approval for the following new programs and initiatives in support of Canada’s COVID-19 pandemic response during the first two quarters of fiscal year 2020-21:

    • Youth Employment and Skills Strategy Enhancement ($15.8M): this funding will support the NRCan's Science and Technology Internship Program, as part of the overall Youth Employment and Skills Strategy investments. Funding will be used to create 500 Science, Technology, Engineering and Maths (STEM) internships and training opportunities for Canadian youth between 15 and 30 years in the natural resources sector.
    • Emissions Reduction Fund ($750M): the government will provide up to $750 million over two years, starting in 2020-21, to create a new proposed Emissions Reduction Fund to reduce emissions in Canada’s oil and gas sector, with a focus on methane. This fund will provide primarily repayable contributions to conventional and offshore oil and gas firms to support their investments to reduce greenhouse gas emissions.

18. Comparative information

    Comparative figures have been reclassified to conform to the current year presentation.

Annex to the Statement of Management Responsibility Including Internal Control over Financial Reporting of Natural Resources Canada for fiscal year 2019-20 (unaudited)

Summary of the assessment of effectiveness of the system of internal control over financial reporting and the action plan

1. Introduction

   This document summarizes the measures taken by Natural Resources Canada (NRCan) to maintain an effective system of internal control over financial management (ICFM), including internal control over financial reporting (a subset of the system of ICFM), as well as information on internal control management, assessment results, and related action plans.

   Detailed information on NRCan’s authority, mandate and Core Responsibilities can be found in the 2020-21 Departmental Plan and the 2019-20 Departmental Results Report.

2. Departmental system of internal control over financial reporting

   2.1 Internal control management

   NRCan has a well-established governance and accountability structure to support departmental assessment efforts and oversight of its system of internal control. The NRCan Framework for ICFM, approved by the Deputy Minister (DM), is in place and comprises:

   • organizational accountability structures relating to internal control management that support sound financial management, including roles and responsibilities of senior departmental managers for internal control management in their areas of responsibility;
   • values and ethics that describes the expected behaviors that guide employees in all activities related to their professional duties;
   • ongoing communication and training on statutory requirements, and policies and procedures for sound financial management and control; and
   • at least semi-annual monitoring of, and regular updates to, internal control management, with related assessment results and action plans provided to the DM and senior departmental management, and as applicable, the Departmental Audit Committee (DAC).

   The DAC provides advice to the DM on the adequacy and functioning of the department’s risk management, control and governance frameworks and processes.

   2.2 Service arrangements relevant to financial statements

   NRCan relies on other organizations for processing certain transactions that are recorded in its financial statements, as follows.

   2.2.1 Common service arrangements

   • Public Services and Procurement Canada, which administers the payment 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.
   • Treasury Board (TB) of Canada Secretariat, which provides information on public service insurance and centrally administers payment of the employer’s share of contributions toward statutory employee benefit plans.

   2.2.2 Specific arrangements

   NRCan relies on other departments for the processing of certain information or transactions that are recorded in its financial statements, as follows:

   • Agriculture and Agri-Food Canada provides NRCan with a SAP financial system platform to capture and report all financial transactions.

   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 (ICFR) related to these specific services.

3. Departmental internal control assessment results for fiscal year 2019-20

   The following table summarizes the status of the ongoing monitoring activities according to the previous fiscal year’s rotational plan.

   Progress during fiscal year 2019-20

   Previous year’s rotational ongoing monitoring plan for current year	Status
   Offshore royalty revenues/statutory transfers Grants and contributions (G&C), including repayable contributions. Performed by the Audit and Evaluation Branch (AEB) through continuous audits (CA).	Design effectiveness (DE) and operating effectiveness (OE) testing completed as planned; no remedial actions required.
   IT general controls (ITGCs) Budgeting and forecasting (B&F) Investment planning (IP) Performed by the Financial Management Internal Control (FMIC) unit.	DE and OE testing completed as planned for ITGC and B&F, and DE testing started for IP; remedial actions started.

   In addition to the progress made in ongoing monitoring, the AEB conducted the Audit of the Administration of the Lower Churchill Projects Loan Guarantees (LCPLG). The objective of the audit was to determine whether effective controls are in place to administer, monitor, and report on the LCPLG, including the adequate presentation of the related contingent liabilities note in NRCan’s financial statements.

   The key findings and remedial actions from the current fiscal year’s assessment activities are summarized in Section 3.2.

   3.1 New or significantly amended key controls

   3.1.1 Investment Planning Process

   The IP process is undergoing significant changes to meet the new requirements and mandatory procedures from the TB Policy on the Planning and Management of Investments and TB Directive on the Management of Projects and Programs (effective April 11, 2019). Consequently, the focus of the IP ICFM assessment was to assist business process owners (BPOs) by:

   • Assessing the risks associated with changes made to controls and processes;
   • Identifying where more, less, or different controls are required; and
   • Advising on new norms.

   3.1.2 COVID-19

   New emerging risk areas in NRCan’s control environment as a result of the novel coronavirus (COVID-19) pandemic were identified, such as governance and oversight during the pandemic and the return to workplace, business continuity planning, IM/IT security and capacity, and changes to the G&C process and controls due to flexibilities sought. In response, various advisory and audit projects are planned for 2020-21 by the AEB as per the NRCan 2020-25 Integrated Audit and Evaluation Plan and will be leveraged for reporting in the Annex.

   Additionally, logical access controls (i.e. access to programs and data and password configuration policies) and IT operation controls (e.g. incident and problem management, system jobs, and backups) for key financial systems were tested by the Financial Management Internal Control (FMIC) unit during the 2019-20 ITGC assessment. The objective was to help ensure that effective ITGCs are in place and functioning as intended to mitigate the risk of unauthorized access to systems and data, and system disruptions due to increased remote working.

   3.2 Ongoing monitoring program

   As part of its rotational ongoing monitoring plan (OMP), NRCan:

   • reassessed key ITGCs (i.e. program development, program changes, access to programs and data, and computer operations) under NRCan’s responsibility for SAP ( Departmental financial system), PeopleSoft ( Human resources management system), and documented and tested the design effectiveness (DE) and operating effectiveness (OE) of key ITGCs for Phoenix (Government payroll system);
   • documented and tested the DE and OE of key controls for the B&F business process;
   • assessed key risks associated with changes made to processes and controls for IP; and
   • reassessed key financial and monitoring controls for the Offshore royalty revenues/statutory transfers and G&Cs, including repayable contributions business processes;

   For the most part, the key controls that were tested performed as intended, with remediation required as follows; remediation by the BPOs is underway.

   ITGCs

   • Improve the timeliness of user access reviews and removals to key financial systems for employees that left the department.
   • Formally define and document procedures for IT Operations (e.g. problems and/or incidents management and system and interface jobs).
   • Strengthen the review of third party service organization reports for common and specific service providers.
   • Reinforce segregation of duties for the development and implementation of system changes.

   B&F

   • Strengthen the sufficiency and appropriateness of evidence to substantiate the performance of key challenge functions and further restrict and review user access to financial information used for financial management (FM) and resource allocation decision making.

   IP

   • As mentioned in Section 3.1.1, the IP process is undergoing significant changes to meet the new TB requirements and mandatory procedures, and so a follow-up assessment to complete the DE and OE testing is scheduled for 2022-23 in order to allow revised control activities to be put into place by the BPOs.

   Offshore royalty revenues/statutory transfers and G&Cs, including repayable contributions

   • Key financial and monitoring controls for selected Offshore revenues and transfers and G&C payments were deemed effective.
   • Please refer to the report titled “Continuous Auditing of Key Controls for Selected Processes Annual Report for 2019-20” on NRCan’s Website.

4. Departmental action plan for the next fiscal year and subsequent fiscal years

   NRCan’s rotational OMP for the next five fiscal years, based on an annual validation of the high-risk key control areas and related adjustments, as required, is shown in the following table. Note that the OMP includes planned advisory projects, and joint audit and evaluations, as per the NRCan 2020-25 IAEP, that will be leveraged to provide additional assurance over the effectiveness of risk management, control, and governance processes related to the system of ICFM.

   Rotational ongoing monitoring plan

   Key Control Areas	2020-21	2021-22	2022-23	2023-24	2024-25
   Entity level controls (ELCs) Control environment – governance and oversight Information and communication and Monitoring activities Risk assessment	Yes – AEB (1)	Yes – FMIC (2)	Yes – AEB (3)	No	No
   IT general controls (ITGCs) under departmental management Agreement Module Interface (G&C Financial System) Various ITGC related audits in response to Covid 19 risks Specimen Signature Record (SSR) and Etools (e.g. e- procurement, epar, epayment, and epaye) SAP, PeopleSoft, and Phoenix (under NRCan’s responsibility)	Yes – FMIC (1) and AEB (2)	Yes – FMIC (3)	Yes – AEB	Yes – FMIC (4)	No
   Financial close and reporting	No	No	Yes – FMIC	No	No
   Grants and contributions (G&C), including repayable contributions Repayable contributions (contingent assets) Expenditure management process for G&Cs, excluding Repayable contributions	Yes – FMIC (1) and AEB	No	No	Yes – FMIC (2)	Yes – AEB (1)
   Payroll (Pay) and benefits	Yes – FMIC and AEB	No	No	Yes – FMIC	No
   Procure to pay (formerly called Operating expenditures)	Yes – AEB	Yes – AEB	No	Yes – AEB	Yes – FMIC
   Offshore royalty revenues/statutory transfers	Yes – AEB	Yes – AEB	Yes – AEB	Yes – AEB	Yes – AEB
   Revenue and accounts receivable, including Costing for internal and external charging agreements	No	Yes – FMIC and AEB	Yes – FMIC	No	Yes – FMIC
   Environmental liabilities	No	No	Yes – FMIC	No	No
   Contingent liabilities Lower Churchill Projects Loan Guarantees and Nuclear Liability Account	No	No	No	Yes – FMIC (1)	No
   Capital assets	No	Yes – FMIC and AEB	No	No	Yes – FMIC
   Budgeting and forecasting	No	No	No	Yes – FMIC and AEB	No
   Investment planning	Yes – AEB	No	Yes – FMIC and AEB	Yes – AEB	No
   Chief financial officer attestations (included in Cabinet submissions), and related costing	Yes – FMIC	No	No	No	Yes – FMIC
   The OMP was amended as follows: changed duration from three to five years to better align with the NRCan 2020-25 IAEP, inform planning in order to maximize the use of resources between AEB and FMIC, and limit the burden on BPOs. advanced the assessment of repayable contributions (included in G&C business process) and ITGC testing of the G&C financial system (i.e. Agreement Module Interface) to 2021-22. deferred the assessment of the environmental liabilities business process from 2021-22 to 2022- 23 to prioritize the reassessment of ITGCs for the SSR and Etools in 2021-22. deferred the assessment of costing for internal and external charging agreements (included in Revenue and accounts receivable process) to 2021-22 to align with the planned Audit of NRCan’s Cost Recovery Projects in order to maximize efficiencies. Included AEB projects as per the NRCan 2020-25 IAEP to provide additional assurance on the effectiveness of NRCan’s control environment. The decision to leverage these audit projects will be based on the audit scope, objectives, and criteria included in the terms of references (ToR), which will be analyzed annually upon the finalization of the ToR to ensure a sufficient alignment with an ICFM assessment. Adjustments to the OMP will be made, as required.

5. Departmental status and action plan for the next fiscal year and subsequent fiscal years

   Building on progress to date, NRCan is well positioned to complete the full assessment of its system of ICFM, including ICFR by 2021-22, with the exception of IP which will take an additional year. At that time, NRCan will fully meet the requirements of the Treasury Board Policy on Financial Management and will be applying its rotational ongoing monitoring plan to reassess control performance on a risk basis across all key control areas. The status and action plan for the completion of the identified key control areas for the next fiscal year and for subsequent years are shown in the following table.

   Status and action plan for the next fiscal year and subsequent fiscal years

   Key control areas	Design effectiveness testing and remediation	Operational effectiveness testing and remediation	Ongoing monitoring rotation Footnote *
   Entity-level controls	Complete	Complete	2020-21, 2021-22, and 2022-23
   IT general controls under departmental management	Complete	Complete	2020-21, 2021-22, 2022-23, and 2023-24
   Financial close and reporting	Complete	Complete	2022-23
   Grants and contributions, including repayable contributions	Complete	Complete	2020-21, 2023-24, and 2024-25
   Payroll and benefits	Complete	Complete	2020-21 and 2023-24
   Procure to pay	Complete	Complete	2020-21, 2021-22, 2023-24, and 2024-25
   Offshore royalty revenues/statutory transfers	Complete	Complete	Annually
   Revenue and accounts receivable	Complete	Complete	2022-23
   Environmental liabilities	Complete	Complete	2022-23
   Contingent liabilities	Complete	Complete	2023-24
   Capital assets	Complete	Complete	2021-22 and 2024-25
   Budgeting and forecasting	Complete	Complete	2023-24
   Investment planning	2022-23	2022-23	Future fiscal years
   Costing for internal and external charging agreements (included in Revenue and receivables process, but presented separately until ongoing monitoring achieved)	2021-22	2021-22	2024-25
   Chief financial officer attestations (included in Cabinet submissions), and related costing.	2020-21	2020-21	2024-25