Consolidated Departmental Financial Statements for year ended March 31, 2023 (unaudited) (2024)

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Statement of management responsibility including internal control over financial reporting

Responsibility for the integrity and objectivity of the accompanying consolidated financial statements for the year ended March31,2023, and all information contained in these financial statements rests with Public Services and Procurement Canada (PSPC) management. These consolidated financial statements have been prepared by management using the Government of Canada's accounting policies, which are based on Canadian public sector accounting standards.

Management is responsible for the integrity and objectivity of the information in these consolidated financial statements. Some of the information in the consolidated financial statements is based on management's best estimates and judgment and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of PSPC's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada and included in PSPC's Departmental Results Report, is consistent with these consolidated financial statements.

One of the government’s top priorities remains the health and safety of Canadians as the COVID-19 pandemic evolves. As central purchasing agent, PSPC continued to play a key role in supporting the Government of Canada’s response to the COVID-19 pandemic by ensuring sufficient supply of COVID-19 vaccines and therapeutics for Canadians. This procurement was primarily done on behalf of other government departments and the impacts are reflected in their respective financial results.

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 and other applicable legislation, regulations, authorities, and policies.

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 throughoutPSPC, and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.

The system of ICFRis 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 ICFRfor the year ended March31,2023 was completed in accordance with the Treasury Board Policy on Financial Management, and the results and action plans are summarized in Annex A: Assessment of internal controls over financial management.

As in previous years, we have not identified significant deficiencies in the operation of the internal controls of sub-processes related to the COVID-19 pandemic, which could have a material impact on PSPC’s consolidated departmental financial statements.

The annex also provides information on the status of the risk-based assessment of the controls over common services provided by the department that have a bearing on a recipient's departmental financial statements.

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

The consolidated financial statements ofPSPChave not been audited.

Consolidated statement of financial position (unaudited) as at March31

This financial statement in table format, presents the assets and liabilities that the department is responsible for administering, the departmental net debt, and the departmental net financial position as at March31,2023 and 2022.

Contingent liabilities (note10).

Contractual obligations and contractual rights (note15).

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

Consolidated statement of operations and departmental net financial position (unaudited) for the year ended March31

This financial statement in table format, presents the expenses by core responsibility and revenues by major type of revenue, as well as net cost of operations for the years ended March31,2023 and 2022.

Segmented information (note 17).

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

Consolidated statement of change in departmental net debt (unaudited) for the year ended March31

This financial statement in table format, presents the difference between the department's net cost of operations and the change in departmental net debt for the years ended March31,2023 and 2022.

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

Consolidated statement of cash flows (unaudited) for the year ended March31

This financial statement in table format, presents how the department generated and used cash in the accounting periods ended March31,2023 and 2022.

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

Notes to the consolidated financial statements (unaudited) for the year ended March31

The following notes contain information in addition to the consolidated financial statements.

Note 1. Authorities and objectives

The Department of Public Works and Government Services Canada (PWGSC) was established effective June20,1996, under the Department of Public Works and Government Services Act. This legislation specifies thatPWGSCshall provide common, central and shared services to other government departments and agencies, thereby enabling them to provide programs and services to Canadians. Since November2015, PWGSChas been operating as Public Services and Procurement Canada (PSPC). PSPC's services are delivered through the following core responsibilities:

Purchase of goods and services

PSPCpurchases goods and services on behalf of the Government of Canada.

Payments and accounting

PSPCcollects revenues and issues payments, maintains the financial accounts of Canada, issues financial reports, and administers payroll and pension services for the Government of Canada.

Property and infrastructure

PSPCprovides federal employees and Parliamentarians with work space, builds, maintains and manages federal properties and other public works such as bridges and dams, and provides associated services to federal organizations.

Government-wide support

PSPCprovides administrative services and tools to federal organizations that help them deliver programs and services to Canadians.

Procurement Ombudsman

The Office of the Procurement Ombudsman operates at arm's-length from federal organizations. It is legislated to review the procurement practices of federal organizations, review complaints from Canadian suppliers, and provide dispute resolution services.

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.

For additional context, including details on PSPC’s role in supporting the Government of Canada’s response to theCOVID-19pandemic, these consolidated financial statements should be read in conjunction with PSPC’s 2022 to 2023 Departmental Results Report (DRR), which highlights the department’s achievements in delivering on its diverse mandate and serves as the annual report to Parliamentarians and Canadians. This report is available as part of thedepartment's published reports.

Note 2. Summary of significant accounting policies

These consolidated financial statements are prepared using thePSPCaccounting 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

PSPCis financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided toPSPCdoes 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. Note3provides a reconciliation between the 2 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 future-oriented statement of operations included in the 2022 to 2023 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 2022 to 2023 departmental plan.

B. Consolidation

These consolidated financial statements include the accounts of 4 revolving funds as listed below, 1 of them being inactive. The 3 active revolving funds prepare a complete set of financial statements annually that are audited and published in the Public Accounts of Canada. The accounts of these revolving funds have been consolidated with those ofPSPCand intradepartmental balances and transactions have been eliminated.

The PSPCrevolving funds are as follows:

• Real Property Services revolving fund
• Translation Bureau revolving fund
• Optional Services revolving fund
• Defence Production revolving fund (inactive)

C. Net cash provided by Government of Canada

PSPCoperates within the consolidated revenue fund (CRF), which is administered by the Receiver General for Canada. All cash received byPSPCis deposited to theCRFand all cash disbursem*nts made by PSPCare paid from theCRF. The net cash provided by the government, with the exception of amounts held on behalf of government, is the difference between all cash receipts and all cash disbursem*nts, including transactions between departments of the government.

D. Amounts due from the consolidated revenue fund

These 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 theCRFrepresent the net amount of cash that PSPCis entitled to draw from the CRF, without further authorities, in order to discharge its liabilities.

E. Revenues

Revenues are recorded on an accrual basis of accounting:

Services of a regulatory nature

They are mainly comprised of cost recovery for services provided to administer the Public Service Superannuation Act(PSSA) and for payment services provided by the Receiver General to other government departments. Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.

Services of a non-regulatory nature

They are mainly comprised of special accommodation and real property services, real property project management services, translation services, as well as freight services, material transportation and travel procurement. They are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.

All other revenue types

They are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.

Revenues earned on behalf of government

They are non-respendable and are not available to dischargePSPC's liabilities. While the deputy minister ofPSPCis expected to maintain accounting control, the deputy minister has no authority regarding the disposition of non-respendable revenues. Therefore, those revenues are presented as a reduction ofPSPC's gross revenues.

F. Expenses

Expenses are recorded on an accrual basis of accounting:

Expenses for Public Services and Procurement Canada's operations

They are recorded when goods are received or services are rendered. This includes services provided without charge for employee contributions to health and dental insurance plans, legal services and workers' compensation, which are recorded as expenses at their estimated cost. Vacation pay and compensatory leave as well as severance benefits are accrued and expenses are recorded as the benefits are earned by employees under their respective terms of employment.

Payments in Lieu of Taxes Program

PSPCadministers the Payments in Lieu of Taxes (PILT) Program on behalf of all federal departments under the statutory authority of the Payments in Lieu of Taxes Act, which is disclosed under grants in the Main estimates. The Government of Canada voluntarily pays its fair share of the costs of local government, from which it is exempt, to municipalities and other taxation authorities having jurisdiction to levy and collect real property taxes in locations where federal lands and buildings are situated. The PILTissued by PSPCon behalf of other participating federal departments are recovered from them and are recorded as transfer payments in the Public Accounts of Canada.

Provisions

Expenses also include provisions to reflect changes in the value of assets, including provisions for bad debts on accounts receivable, advances and liabilities, including contingent liabilities, environmental liabilities and asset retirement obligations to the extent the future event is likely to occur and a reasonable estimate can be made.

G. Employee future benefits

Pension benefits

Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government of Canada. PSPC's contributions to the plan are charged to expenses in the year incurred and represent the total departmental obligation to the plan.PSPC's responsibility with regard to the plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the plan's sponsor.

Severance benefits

The accumulation of severance benefits for voluntary departures ceased for applicable employee groups. The remaining obligation for employees who did not withdraw benefits is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the government as a whole.

H. Financial instruments

A contract establishing a financial instrument creates, at its inception, rights and obligations to receive or deliver economic benefits. The financial assets and financial liabilities portray these rights and obligations in the financial statements. PSPC recognizes a financial instrument when it becomes a party to a financial instrument contract.

PSPC’s financial instruments consist of accounts receivable, accounts payable and accrued liabilities, and the obligation under public private partnership. PSPC does not engage in speculative transactions or use derivative financial instruments.

All financial assets and liabilities are recorded at cost or amortized cost.

For financial instruments measured at amortized cost, the effective interest method is used to determine interest revenue or expense.

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

I. Lease inducements

Lease inducements represent incentives received byPSPCto enter into a lease. Lease inducements include incentives such as: free rent, cash received to be applied to rent, lump sum cash, leasehold improvements and moving costs paid by the lessor.

Lease inducements are accounted for as follows:

• rent-free periods or periods of significantly reduced rent are allocated over the term of the lease on a straight-line basis
• cash payments from the lessor to the lessee are accounted by the lessee, as reductions in rental expense over the term of the lease
• leasehold improvements are amortized over the remaining life of the lease or the useful life of the improvement, whichever is shorter

J. Contingent liabilities

Contingent liabilities are potential liabilities which may become actual liabilities when 1 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, an estimated liability is accrued, and an expense recorded. However, 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.

K. Contingent assets

Contingent assets are possible assets which may become actual assets when 1 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.

L. Environmental liabilities and asset retirement obligations

An environmental liability for the remediation of contaminated sites is recognized when all of the following criteria are satisfied: an environmental standard exists, contamination exceeds the environmental standard, the government 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 management's best estimate of the amount required to remediate the sites to the current minimum environmental standard for its use prior to contamination.

An asset retirement obligation is recognized when all of the following criteria are satisfied: there is a legal obligation to incur retirement costs in relation to a tangible capital asset, the past event or transaction giving rise to the retirement liability has occurred, it is expected that future economic benefits will be given up and a reasonable estimate of the amount can be made. The costs to retire an asset are normally capitalized and amortized over the asset’s estimated remaining useful life. An asset retirement obligation may arise in connection with a tangible capital asset that is not recognized or no longer in productive use. In this case, the asset retirement cost would be expensed. The measurement of the liability is the management’s best estimate of the amount required to retire a tangible capital asset.

When the future cash flows required to settle or otherwise extinguish a liability are estimable, predictable, and expected to occur over extended future periods, a present value technique is used. The discount rate used reflects the government's cost of borrowing, associated with the estimated number of years to complete remediation of contaminated sites or to settle the asset retirement obligations.

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

M. Tangible capital assets

Tangible capital assets are recorded at their acquisition cost according to the following capitalization threshold:

• betterments and leasehold improvements carried out on buildings and on works and infrastructure, having an initial cost of $25,000 or more
• all other tangible capital assets having an initial cost of $10,000 or more

Asset pooled items are tangible capital assets that have a lower value, per unit, than the capitalization threshold, but are typically purchased or held in large quantities so as to represent significant expenditures overall. These assets are grouped in a given asset class or pool in order to be capitalized as 1 asset.

Effective April1,2018, significant parts of a Crown-owned building are accounted for as separate items (components) with each component having its own useful life. All other asset types remain on the whole asset approach.

Tangible capital assets do not include works of art or other unrecognized assets to which no acquisition cost is attributable and where no reasonable estimate of the future benefits associated with such property can be made. These items consist primarily of paintings, sculptures, drawings, prints, photographs, monuments, and other non-operational heritage assets such as artifacts found on the Parliament Hill grounds.

Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of each asset, as described in the table below. Amortization is recognized at the component level for Crown-owned buildings, the amortization periods noted below incorporate those applicable to components, if any, contained within the overall asset.

The following table presents the tangible capital asset classes with their respective amortization period.

Assets under construction are recorded in the applicable capital asset class in the year that they become ready for use and are not amortized until they become ready for use.

N. Seized property working capital account

The seized property working capital account was established pursuant to section 12 of the Seized Property Management Act. Expenses incurred, and advances made, to maintain and manage any seized or restrained property and other properties subject to a management order or forfeited to His Majesty, are charged to this account. The seized property working capital account is credited when expenses and advances to third parties are repaid or recovered and when revenues from these properties or proceeds from their disposal are received and credited with seized cash upon forfeiture.

The total amount authorized to be outstanding at any time is $50million.

Any shortfall between the proceeds from the disposition of any property forfeited to His Majesty and the amounts that were charged to this account and that are still outstanding, is charged to a seized property proceeds account and credited to the seized property working capital account.

O. 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 March31. The estimates are based on facts and circ*mstances, historical experience, general economic conditions and reflect the government's best estimate of the related amount at the end of the reporting period. The most significant items where estimates are used are the allowance for doubtful accounts, contingent liabilities, environmental liabilities and asset retirement obligations, accounts receivable held on behalf of government, the liability for vacation pay and compensatory leave, the liability for employee future benefits and the useful life of tangible capital assets.

Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the consolidated financial statements in the year they become known.

Environmental liabilities and asset retirement obligations are subject to measurement uncertainty as discussed in note5 due to the evolving technologies used in the estimation of the costs for remediation of contaminated sites or for the retirement of tangible capital assets, the use of discounted present value of future estimated costs, inflation, interest rates and the fact that not all contaminated sites have had a complete assessment of the extent and nature of remediation or asset retirement costs. Changes to underlying assumptions, the timing of the expenditures, the technology employed, or the revisions to environmental standards or changes in regulatory requirements could result in significant changes to the environmental liabilities and asset retirement obligations recorded.

P. Related party transactions

Related party transactions, other than inter-entity transactions, are recorded at the exchange amount.

Inter-entity transactions are transactions between commonly controlled entities. Inter-entity transactions, other than restructuring transactions, are recorded on a gross basis, and are measured at the carrying amount, except for the following:

• services provided on a recovery basis are recognized as revenues and expenses on a gross basis and measured at the exchange amount
• certain services received on a without charge basis are recorded for consolidated departmental financial statement purposes at the carrying amount

Q. Adoption of new public sector accounting standards

Q.a Section public sector 3280—Asset retirement obligations

Effective April1,2022, PSPC adopted the new public sector (PS) accounting standard PS3280 Asset Retirement Obligations. This standard requires public sector entities to recognize legally obligated costs associated with the retirement of tangible capital assets on acquisition, construction or development and expense those costs systematically over the life of the asset.

PSPC applied the modified retrospective transitional approach. On initial application of the standard, PSPC recognized:

• a liability for any existing asset retirement obligations, adjusted for accumulated accretion to that date
• an asset retirement cost capitalized as an increase to the carrying amount of the related tangible capital assets
• accumulated amortization on that capitalized cost
• an adjustment to the opening balance of the accumulated surplus or deficit (departmental net financial position)

These amounts were measured using information, assumptions and discount rates that are current at the beginning of the fiscal year. The amount recognized as an asset as a result of the adoption of this standard, is measured as of the date the asset retirement obligation was incurred. Accumulated accretion and amortization are measured for the period from the date the liability would have been recognized had the provisions of this standard been in effect to the date as of which this standard is first applied.

A reconciliation of the restatement for the significant consolidated financial statement line items follows:

Q.b Section public sector 3450—Financial instruments

Effective April1,2022, PSPC adopted the new accounting standard PS3450 Financial Instruments. This section establishes standards for the recognition, measurement, presentation and disclosure of all types of financial instruments. The standard requires the categorization and measurement of financial instruments based either on fair value (derivatives and certain equity instruments) or cost/amortized cost (financial assets and liabilities). The standard also emphasizes a significant increase in quantitative and qualitative disclosures, including information on exposure to credit, liquidity, and market risks as well as the processes for managing them. Note12 provides information on risk management.

The adoption of PS3450 does not have a material impact on PSPC’s consolidated financial statements.

R. Future changes to accounting standards

The Public Sector Accounting Board (PSAB) issued new accounting standards, coming into effect on April1,2023, that will or may have a material effect on PSPC’s financial reporting results in future years.

R.aSection public sector 3160—Public private partnerships

This section establishes standards for the recognition, measurement, presentation and disclosure of infrastructure procured through public private partnership arrangements. Typically, the private sector is engaged to design, build, acquire or better new/existing infrastructure, finance the infrastructure for at least a portion of the time in use, and maintain and/or operate the infrastructure. PSPCis currently analyzing the impact of this standard on the accounting of its current public private partnership agreement (Royal Canadian Mounted PoliceEdivision building) and other agreements. Based on the assessment of the work completed to date, the adoption of PS3160 is not expected to have a material impact on PSPC’s consolidated financial statements.

R.b Section public sector 3400—Revenue

This section establishes standards for the recognition, measurement, presentation and disclosure of revenues, including the requirement to differentiate between revenue arising from transactions that include performance obligations to provide specific goods or services and transactions without performance obligations. In addition, the department needs to evaluate the characteristics of transactions to determine if it is acting as a principal or an agent. When acting as a principal, revenue is recognized on a gross basis and, when acting as an agent, revenue is recognized on a net basis.PSPCis currently analyzing the impact of this standard on its consolidated financial statements. Based on the assessment of the work completed to date, the adoption of PS3400 is expected to have a minor impact on revenues since PSPC is acting as an agent in some circ*mstances.

R.c Accounting guideline: Public sector guideline 8–Purchased intangibles

This new guideline explains the scope of intangibles allowed to be recognized in financial statements. Purchased intangibles are identifiable non-monetary economic resources without physical substance acquired through an arm's length exchange transaction between knowledgeable, willing parties who are under no compulsion to act. Based on the assessment of the work completed to date, the guideline is not expected to have a material impact on PSPC’s consolidated financial statements.

Note 3. Parliamentary authorities

PSPCreceives part 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 1year may be funded through parliamentary authorities in prior, current, or future years. Accordingly,PSPChas 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 2tables:

Note 4. Accounts payable and accrued liabilities

The following table presents details ofPSPC's accounts payable and accrued liabilities:

Note 5. Environmental liabilities and asset retirement obligations

This note presents the departmental environmental liabilities.

A. Remediation of contaminated sites

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

The department has identified 200sites (197 sites in 2022) where contamination may exist and assessment, remediation and monitoring may be required. Of these,PSPChas assessed 71sites (70sites in 2022) where action is required and for which a gross liability of $172,664thousand ($175,786thousand in 2022) has been recorded. This liability estimate has been determined based on site assessments performed by environmental experts.

In addition, a statistical model based upon a projection of the number of sites that will proceed to remediation and upon which current and historical costs are applied is used to estimate the liability for a group of unassessed sites. As a result, there are 62unassessed sites (71sites in 2022) where a liability estimate of $20,486thousand ($27,893thousand in 2022) has been recorded using this model.

These 2estimates combined, totaling $193,150thousand ($203,679thousand in2022), represent management's best estimate of the costs required to remediate sites to the current minimum standard for its use prior to contamination, based on information available at the financial statement date.

For the remaining 67sites (56sites in 2022), no liability for remediation has been recognized. Some of these sites are at various stages of testing and evaluation and if remediation is required, liabilities will be reported as soon as a reasonable estimate can be determined.

For other sites,PSPCdoes not expect to give up any future economic benefits (there is likely no significant environmental impact or human health threats). These sites will be re-examined and if it is determined that future economic benefits will be given up a liability for remediation will be recognized.

The following table presents the total estimated amounts of these liabilities by nature and source and the total undiscounted future expenditures as at March31,2023 and March31,2022. Undiscounted expenditures only reflect the liabilities of the sites assessed byPSPCand do not include the liabilities estimated by the statistical model. When the liability estimate is based on a future cash requirement, the amount is adjusted for inflation using an expected Consumer Price Index (CPI) rate of 2.0% (2.0% in 2022). 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 March2023 rates range from 4.50% for a 1year term to 3.01% for a 30year or greater term.

Also, during the year, 14sites (0sitesin2022) were closed as they were either remediated or assessed to confirm that they no longer meet all the criteria required to record a liability for contaminated sites.

PSPC's ongoing efforts to assess contaminated sites, asset retirement obligations and unexploded explosive ordnance (UXO) affected sites may result in additional environmental liabilities and asset retirement obligations.

B. Asset retirement obligations

PSPC has recorded asset retirement obligations for the removal of asbestos and other hazardous materials in buildings, closure and post-closure obligations associated with other works and infrastructure, and removal of leasehold improvements.

The changes in asset retirement obligations during the year are as follows:

The undiscounted future expenditures, adjusted for inflation, for the planned projects comprising the liability are $580,847thousand ($584,168thousand as at March31,2022).

Key assumptions used in determining the provision are as follows:

Note 6. Other liabilities

This note presents the departmental other liabilities.

Seized property—cash

This account was established pursuant to the Seized Property Management Act, to record seized cash. These funds will be deposited in the consolidated revenue fund and credited to the account until returned to the owner or forfeited.

Deposits

This account was established to record transactions associated with deposits on disposals and rent security deposits for PSPC.

Contractors' security deposits—cash

This account was established to record contractors' security deposits that are required for the satisfactory performance of work in accordance with the government contracts regulations.

The workplace network

This account was established pursuant to section21(1) of the Financial Administration Act, to record funds received for specific purposes from the participating members countries of The workplace network (TWN) and to record the costs associated with hosting TWN’s annual conference on the management of public real estate portfolios and workplaces. Once the duration of the mandate is completed, all remaining funds are to be transferred to the next presiding country.

The following table presents details of other liabilities:

Note 7. Lease obligations for tangible capital assets

PSPChas entered into capital lease agreements for tangible capital assets with a cost of $2,198,753thousand and accumulated amortization of $965,493thousand as at March31,2023 ($2,212,013thousand and $933,282thousand respectively as at March31,2022). The obligations related for the upcoming years include the following:

The following table presents the future minimum capital lease payments:

Note 8. Obligation under public private partnership

PSPCentered into a public private partnership agreement for the construction and management of the Royal Canadian Mounted PoliceEdivision building. Construction of the building was completed in 2013 and a cost of $295,588thousand was capitalized. The building was funded by a private partner ($142,797thousand) andPSPC($152,791thousand). The obligations for upcoming years include the following:

The following table presents the future minimum payments:

Note 9. Employee future benefits

This note presents the departmental employee future benefits.

A. Pension benefits

PSPCemployees 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 35years. The benefits are integrated with Canada/Québec Pension Plan benefits such that the combined pension benefits equate to a rate of approximately 2% per year of pensionable service, times the average of the best 5 consecutive years of earnings. Pension benefits are indexed to inflation.

Both the employees andPSPCcontribute to the cost of the plan. Due to the amendment of the Public Service Superannuation Actfollowing the implementation of provisions related to Economic Action Plan 2012, employee contributors have been divided into 2 groups—group 1 relates to existing plan members as of December31,2012, and group 2 relates to members joining the plan as of January1,2013. Each group has a distinct contribution rate.

The 2023 expense amounts to $147,817thousand ($145,892thousand in 2022). For group 1 members, the expense represents approximately 1.02 times (1.01 times in 2022) the employee contributions and, for group 2 members, approximately 1.00 times (1.00 times in 2022) the employee contributions.

PSPC'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.

B. Severance benefits

Severance benefits provided toPSPCemployees 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. Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities.

The changes in the obligation during the year were as follows:

Note 10. Contingent liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown.PSPCis involved in contingent liabilities for claims and litigations.

Claims and litigations

Claims have been made againstPSPCin 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.PSPChas recorded 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, with the exception of an unresolved claim where litigation is ongoing. Due to the magnitude of this latter claim, an allowance has been recorded centrally by the Office of the Comptroller General in the Consolidated Financial Statements of the Government of Canada which are audited by the Auditor General of Canada. Upon resolution in the future, any resulting liability for this claim will be recorded by the department and could be material. Claims and litigations for which the outcome is not determinable, and a reasonable estimate can be made by management amount to $18,620thousand at March31,2023 ($6,292thousand in 2022).

Note 11. Accounts receivable and advances

The following table presents details ofPSPC's accounts receivable and advances:

The following table provides an aging analysis of accounts receivable from external parties and the associated valuation allowances used to reflect their net recoverable value:

Note 12. Risk management

PSPC’s financial instruments consist of accounts receivable, accounts payable and accrued liabilities, and the obligation under public private partnership. PSPC has limited exposure to the following risks from its use of financial instruments:

A. Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss.

PSPC’s maximum exposure to credit risk at March31,2023 and March31,2022 is the carrying amount of its financial assets which consist of accounts receivable and advances.

The credit risk associated with accounts receivable and advances is minimized, as substantial amounts are from federal or provincial entities. PSPC has determined that there is no significant concentration of credit risk related to accounts receivable from external parties. An analysis of the age of these financial assets and the associated valuation allowances used to reflect these accounts at their net recoverable value is disclosed in note11.

B. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk includes 3 types of risk: currency risk, interest rate risk and other price risk. PSPC is exposed to currency risk and interest rate risk:

Currency risk: Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in the foreign exchange rates. PSPC has determined that there is no significant concentration of currency risk related to foreign denominated financial instruments.

Interest rate risk: Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. PSPC’s obligation under public private partnership bears fixed interest rates. There is no impact on PSPC’s financial statements as these items are measured at cost or amortized cost.

C. Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting its obligations associated with financial liabilities.

As the funding for PSPC’s financial liabilities is drawn from the Consolidated Revenue Fund, its exposure to liquidity risk is fully mitigated.

Note 13. Tangible capital assets

This note to the financial statements in table format, presents the detail by category of acquisitions and other adjustments of the account "tangible capital assets" presented at the consolidated statement of financial position, and this, for the year ended March31,2023.

This note to the financial statements in table format, presents the detail by category of cumulated amortization of the account "tangible capital assets" presented at the consolidated statement of financial position, and this, for the year ended March31,2023 and the net book value for the years ended March31,2023 and 2022.

Note 14. Departmental net financial position

A portion ofPSPC's net financial position is restricted and earmarked for specified purposes.

The seized property proceeds account was established pursuant to section13 of the Seized Property Management Act. The net proceeds, fines or funds received from the disposition of seized and forfeited properties to His Majesty and governments of foreign states (respectively) pursuant to agreements for the purpose of the act are to be earmarked for specified purposes. Under the act, expenses to be charged against the revenues include: operating expenses incurred in carrying out the purpose of the act, amounts paid as a result of claims and repayments of advances from the minister of Finance, interest on the drawdown from the seized property working capital account and distribution of the proceeds to the relevant jurisdictions and the consolidated revenue fund.

Related revenues and expenses are included in the consolidated statement of operations and departmental net financial position. Activity in the account is as follows:

Note 15. Contractual obligations and contractual rights

A. Contractual obligations

The nature ofPSPC's activities may result in some large multi-year contracts and obligations whereby the department will be obligated to make future payments when the services/goods are received. Significant contractual obligations ($10million or more) that can be reasonably estimated are summarized as follows:

B. Contractual rights

The activities ofPSPCsometimes involve the negotiation of contracts or agreements with outside parties that result inPSPChaving rights to both assets and revenues in the future. They principally involve leases of property. At March31,2023, there are no major contractual rights ($10million or more) that will generate revenues in future years.

Note 16. Related party transactions

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

A. Common services provided without charge by other government departments

During the year,PSPCreceived services without charge from certain common service organizations related to legal services, the employer's contribution to the health and dental insurance plans and workers' compensation coverage. These services provided without charge have been recorded at the carrying value inPSPC's consolidated statement of operations and departmental net financial position as follows:

The government has centralized some of its administrative activities for efficiency, cost-effectiveness and economic delivery of programs to the public. As a result, the government uses central agencies and common service organizations so that 1department performs services for all other departments and agencies without charge. The costs of these services, such as the audit services provided by the Office of the Auditor General and information technology infrastructure services provided by Shared Services Canada are not included inPSPC's consolidated statement of operations and departmental net financial position.

B. Common services provided without charge to other government departments

As a federal common service provider,PSPCprovides accommodation without charge to other government departments. Throughout the fiscal year,PSPCprovided accommodation without charge to other government departments for a fair value amounting to $1,596,355thousand ($1,553,117thousand in 2022).

C. Administration of programs on behalf of other government departments

The Government of Canada voluntarily pays its fair share of the costs of local government, from which it is exempt, to municipalities and other taxation authorities having jurisdiction to levy and collect real property taxes in locations where federal lands and buildings are situated. Under the statutory authority of the Payments in Lieu of Taxes Act, which is disclosed under grants in the Main estimates,PSPCadministers thePILTProgram on behalf of other government departments. During the year,PSPCissued payments that amounted to $557,712thousand ($582,343thousand in 2022) on behalf of other participating government departments. Payments were subsequently recovered from participating departments and were recorded as statutory grants in the Public Accounts of Canada. These expenses are reflected in the financial statements of other participating government departments and are not recorded in these financial statements.

D. Other transactions with other government departments and agencies

PSPCenters into transactions with other government departments and agencies in the normal course of business and on normal trade terms.

Expenses and revenues disclosed above exclude common services provided without charge, which are already disclosed innote 16A and note 16B.

E. Transfers of tangible capital assets from (to) other government departments, agencies and Crown corporations

During the year,PSPC received furniture and a vehicle from other government departments and agencies; and transferred lands, vehicles, computer hardware, buildings, assets under construction and works and infrastructure to other government departments and agencies. Also, PSPC transferred assets under construction to Crown corporations. The transfers were measured at their net book value.

Note 17. Segmented information

Presentation by segment is based on PSPC's core responsibilities. The presentation by segment is based on the same accounting policies as described in the summary of significant accounting policies in note2.

The following table presents the expenses incurred and revenues generated by core responsibility, by major object of expense, and by major type of revenue. The segmented results for the period are as follows:

Note 18. Comparative figures

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