Annex A - Statement of Management Responsibility Including Internal Control Over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2010, and all information contained in these statements rests with the management of the department. These financial statements have been prepared by management in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector.

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

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

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training, and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the department; and through conducting an annual assessment of the effectiveness of the system of internal control over financial reporting.

An assessment for the year ended March 31, 2010 was completed in accordance with the Policy on Internal Control and the results and action plans are summarized in Annex B.

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

The effectiveness and adequacy of the department’s system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of the department’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 financial statements of the department have not been audited.

Natural Resources Canada

Statement of Operations (Unaudited)
For the year ended March 31

(In thousands of dollars)
2010 2009
Expenses (Note 4)
Economic Opportunities for natural resources 2,009,356 3,529,283
Clean energy 776,213 464,039
Internal Services 265,687 290,467
Ecosystem risk management 160,530 149,715
Natural resource and landmass knowledge and systems 117,811 94,116
Adapting to a changing climate and hazard risk management 71,487 84,684
Natural resource-based communities 11,190 14,495
Geomatics Canada Revolving Fund 3,711 4,932
Total expenses 3,415,985 4,631,731
Revenues (Note 5)
Economic Opportunities for natural resources 1,458,277 2,688,169
Clean energy 15,585 11,796
Internal Services 4,599 6,404
Ecosystem risk management 3,723 898
Natural resource and landmass knowledge and systems 553 1,875
Adapting to a changing climate and hazard risk management 7,698 6,046
Natural resource-based communities 159 858
Geomatics Canada Revolving Fund 2,881 3,997
Total revenues 1,493,475 2,720,043
Net cost of operations 1,922,510 1,911,688

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

Natural Resources Canada

Statement of Financial Position (Unaudited)
As at March 31

(In thousands of dollars)
2010 2009
ASSETS
Financial assets
Accounts receivable and advances (Note 6) 210,458 166,536
Loans receivable (Note 7) 42,000 45,327
Investment (Note 8) 164,159 164,159
Total financial assets 416,617 376,022
Non-financial assets
Prepayments (Note 9) 65,809 3,099
Inventories 8,014 6,542
Tangible capital assets (Note 10) 96,496 72,333
Total non-financial assets 170,319 81,974
TOTAL 586,936 457,996
LIABILITIES
Accounts payable and accrued liabilities 701,717 706,668
Vacation pay and compensatory leave 27,135 23,086
Deferred revenue - 181
Employee severance benefits (Note 11) 99,268 80,536
Environmental liabilities (Note 12a) 349,948 359,416
Other liabilities (Note 13) 16,535 26,913
Total liabilities 1,194,603 1,196,800
Equity of Canada (607,667) (738,804)
TOTAL 586,936 457,996

Contingent Liabilities (Note 12b)

Contingent Recoveries (Note 15)

Contractual Obligations (Note 16)

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

Natural Resources Canada

Statement of Equity of Canada (Unaudited)
As at March 31

(In thousands of dollars)
2010 2009
Equity of Canada, beginning of year (738,804) (609,002)
Net cost of operations (1,922,510) (1,911,668)
Current year appropriations used (Note 3) 3,491,265 4,677,486
Revenue not available for spending (1,459,479) (2,686,556)
Change in net position in the Consolidated Revenue Fund (Note 3) (30,157) (257,025)
Services received without charge from other government departments (Note 17) 52,018 47,981
Equity of Canada, end of year (607,667) (738,804)

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

Natural Resources Canada

Statement of Cash Flow (Unaudited)
For the year ended March 31
(In thousands of dollars)
Operating activities 2010 2009
Net cost of operations 1,922,510 1,911,688
Non-cash items:
Amortization of tangible capital assets (13,272) (16,629)
Gain on disposal and write-offs of tangible capital assets 966 1,289
Services provided without charge (52,018) (47,981)
Variations in Statement of financial position:
Increase (decrease) in accounts receivable and advances 43,922 (167,433)
Decrease in loans receivable and investments (3,327) (45,246)
Increase (decrease) in prepayments 62,710 (3,550)
Increase (decrease) in inventory 1,472 (2,079)
Decrease in liabilities 2,196 90,902
Cash used by operating activities 1,965,159 1,720,961
Capital investment activities
Acquisitions of tangible capital assets 37,006 13,358
Proceeds from disposal of tangible capital assets (536) (414)
Cash used by capital investment activities 36,470 12,944
Financing activities
Net cash provided by Government of Canada (2,001,629) (1,733,905)

Natural Resources Canada

Notes to the Financial Statements (Unaudited)
For the year ended March 31, 2009

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’s mandate is to ensure the sustainable development and responsible use of Canada’s natural resources. Through innovation and partnership, the department plays a pivotal role in helping shape the enormous contributions of the natural resource sectors and related industries to the high quality of life of Canadians. NRCan fulfills its mandate through eight main programs:

  • Economic Opportunities for natural resources contains programs designed to promote innovation, investment, and the enhancement of the competitiveness of Canada’s natural resources and related products to industries through the provision of know-how and tools, along with trade promotion and market acceptance, at home and abroad.
  • Clean energy includes the development and delivery of energy science and technology, policies, programs, legislation and regulations to mitigate air emissions and to reduce other environmental impacts associated with energy production and use.
  • Ecosystem risk management includes programs that help to understand the risks to our environment and the protection of critical resources such as groundwater.
  • Natural resources and landmass knowledge and systems carries out the Minister’s obligation to provide a property rights infrastructure on all lands for which the department has this responsibility, along with the provision and access to accurate and precise geographic information on the Canadian landmass.
  • Adapting to a changing climate and hazard risk management provides geoscience and geospatial information that contributes to the reduction of risks from natural hazards, such as earthquakes, tsunamis and floods, as well as hazards arising from human activities, and works with front-line responders to provide geographical information in the event of an emergency.
  • Natural resource-based communities is targeted to increasing Canada’s knowledge of the impacts of natural resource sector evolution on communities that have a substantial reliance on resource-based industries and to improve the capacity and knowledge for increasing the number of opportunities through value-added products and services.
  • The Geomatics Canada Revolving Fund allows Geomatics Canada to shift the costs from taxpayers at large to specific users who benefit directly from the goods and services provided. These goods and services include aeronautical charts and publications which contribute to the safety and security of the traveling public and Canadians.
  • Internal services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization.

This mandate is delivered by the Department’s 4,522 full time employees located in offices across Canada.

2. Summary of Significant Accounting Policies

The financial statements have been prepared in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

Significant accounting policies are as follows:

  1. Parliamentary Appropriations – NRCan is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to NRCan do not parallel financial reporting according to generally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the statement of operations and the statement of financial position are not necessarily the same as those provided through appropriations from Parliament. Note 3 provides a high-level reconciliation between the bases of reporting.
  2. Consolidation – The accounts of the Geomatics Canada Revolving Fund have been consolidated with those of NRCan. NRCan also records an investment in Atomic Energy of Canada Limited (AECL) that is recorded at cost. The results of AECL are not consolidated in these financial statements due to the fact that NRCan is not deemed to control the Crown Corporation.
  3. Net Cash Provided by Government - NRCan operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by NRCan is deposited to the CRF and all cash disbursements made by NRCan are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions with other departments of the federal Government made by NRCan during the year.
  4. Change in net position in the Consolidated Revenue Fund is the difference between the net cash provided by Government and appropriations used in a year, excluding the amount of non respendable revenue recorded by NRCan. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.
  5. Revenues:
    • Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.
    • Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.
    • Return on investment in Crown Corporation is recognized in the period in which the income is received.
    • Revenues that have been received but not yet earned are recorded as deferred revenues.
  6. Expenses – Expenses are recorded on the accrual basis:
    • Grants are recognized in the year in which the conditions for payment are met. In the case of grants which do not form part of an existing program, the expense is recognized when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements;
    • Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement;
    • Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment; and
    • Services provided without charge by other government departments for accommodation, the employer’s contribution to the health and dental insurance plans, workers compensation, and legal services are recorded as operating expenses at their estimated cost.
  7. Employee future benefits
    1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi employer plan administered by the government of Canada. NRCan’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Current legislation does not require the department to make contributions for any actuarial deficiencies to the Plan.
    2. Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability employee severance benefits for the Government as a whole.
  8. Accounts receivables are stated at amounts expected to be ultimately realized; a provision is made for receivables where recovery is considered uncertain.
  9. Loans with significant concessionary terms are recorded on the Statement of Financial Position at their estimated net present value. A portion of this unamortized discount is brought into income each year to reflect the change in the present value of the loan outstanding. An estimated allowance for uncollectibility is recorded where appropriate. Interest revenue is recognized when earned.
  10. Repayable contributions are contributions where the recipient is expected to repay the amount advanced. Depending on their nature, they are classified as either unconditionally repayable or conditionally repayable and are accounted for differently.
    1. Unconditionally repayable contributions are contributions that must be repaid without qualification. Normally, these contributions are provided with a low or no interest clause. They are in substance loans with significant concessionary terms and accounted for as such. They are recorded on the statement of financial position as loans at their estimated present value. A portion of this unamortized discount is brought into income each year to reflect the change in the present value of the contributions outstanding. An estimated allowance for un-collectibility is also recorded where appropriate.
    2. Conditionally repayable contributions are contributions that, all or part of which become repayable, if conditions specified in the contribution agreement come into effect. Accordingly, they are not recorded on the Statement of Financial Position until such time as the conditions specified in the agreement are satisfied at which time they are then recorded as a receivable and a reduction in transfer payment expenses. An estimated allowance for un-collectibility is recorded where appropriate.
  11. Contingent liabilities – Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. To the extent that 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. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.
  12. Environmental liabilities – Environmental liabilities reflect the estimated costs related to the management and remediation of environmentally contaminated sites. Based on management’s best estimates, a liability is accrued and an expense recorded when the contamination occurs or when the department becomes aware of the contamination and is obligated, or likely to be obligated to incur such costs. If the likelihood of NRCan’s obligation to incur these costs is not determinable, or if an amount cannot be reasonably estimated, the costs are disclosed as contingent liabilities in the notes of the financial statements.
  13. Inventories – Inventories consist of parts, material and supplies held for future program delivery and not intended for re-sale. They are valued at cost. If they no longer have service potential, they are valued at the lower of cost or net realizable value.
  14. Foreign currency transactions - 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 a foreign currency are translated into Canadian dollars using the rate of exchange in effect on March 31. Gains and losses resulting from foreign currency transactions are included in the statement of operations.
  15. Tangible capital assets – All tangible capital assets and leasehold improvements having an initial cost of $10,000.00 or more ($1,000.00 or more for the Geomatics Canada Revolving Fund) are recorded at their acquisition cost. The department does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections.
    Amortization of 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
    Machinery and equipment 5 to 15 years
    Vehicles 3 to 10 years
    Assets under construction Once in service, in accordance with asset class
  16. Measurement uncertainty – The preparation of financial statements in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are contingent liabilities, environmental liabilities, the liability for employee severance benefits and the useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management’s estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3. Parliamentary Appropriations

The department receives most of its funding through annual Parliamentary appropriations. Items recognized in the statement of operations and the statement of financial position in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, the Department has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

a) Reconciliation of net cost of operations to current year appropriations used
In thousands of dollars
2010 2009
Net cost of operations 1,922,510 1,911,688
Adjustments for items affecting net cost of operations but not affecting appropriations:
Add (Less):
Revenue not available for spending 1,459,479 2,686,556
Adjustment for amounts to be charged later - 135,507
Refunds of prior years expenditures 19,403 53,904
Services provided without charge (52,018) (47,981)
Adjustment for prepaid expenses 4,359 (34,932)
Allowance for environmental liabilities 9,468 (22,738)
Amortization of tangible capital assets (13,272) (16,629)
Employee severance benefits (18,732) (16,545)
Adjustments of prior year accounts payable 8,917 11,821
Reductions from prepaid expenses (713) (6,527)
Amortization of unamortized discount loans 3,333 5,772
Expenses related to provisions devolved to Departments - 5,000
Adjustments of previous years inventory 1,473 (2,080)
Vacation pay and compensatory leave (4,050) 1,535
Adjustment for expenses related to claims 56,500 -
Other adjustments (1,189) (833)
1,472,958 2,751,830
Adjustments for items not affecting net cost of operations but affecting appropriations
Add (Less):
Receivables, Advances, and Prepayments 58,791 610
Acquisitions of tangible capital assets 37,006 13,358
95,797 13,968
Current year appropriations used 3,491,265 4,677,486
b) Appropriations provided and used
In thousands of dollars
Appropriations Provided
2010 2009
Vote 1 – Operating expenditures 927,603 851,248
Vote 2 - Capital expenditures 8,934 -
Vote 5 – Transfer payments 806,565 449,921
Statutory amounts 1,839,866 3,585,779
Less:
Appropriations available for future years (7,701) (9,481)
Lapsed appropriations – Operating (57,924) (132,073)
Lapsed appropriations - Capital (14) -
Lapsed appropriations – Transfer payments (26,064) (67,908)
Current year appropriations used 3,491,265 4,677,486
c) Reconciliation of net cash provided by Government to current year appropriations used
In thousands of dollars
2010 2009
Net cash provided by Government 2,001,629 1,733,905
Revenue not available for spending 1,459,479 2,686,556
Change in net position in the Consolidated Revenue Fund
Variation in accounts receivable and advances (43,922) 167,433
Variation in accounts payable and accrued liabilities (4,951) (123,647)
Other adjustments 79,030 213,239
30,157 257,025
Current year appropriations used 3,491,265 4,677,486

4. Expenses

The following table presents details of expenses by category:
In thousands of dollars
2010 2009
Transfer payments
Other level of government 1,773,680 3,368,278
Industry 349,411 180,591
Individuals 266,772 89,495
Non-profit organizations 73,197 93,597
Other countries and international organizations 1,470 1,179
Total transfer payments 2,464,530 3,733,140
Operating expenses
Salary and employee benefits 512,821 473,506
Professional and special services 296,403 243,598
Transportation and communication 34,848 36,875
Rentals 33,138 30,451
Utilities, materials and supplies 24,251 24,774
Acquisitions 18,804 16,601
Repairs and maintenance 14,125 10,319
Amortization 13,272 16,629
Information 10,648 7,305
Allowance for environmental liabilities (9,468) 22,738
Other 2,613 15,795
Total operating expenses 951,455 898,591
Total Expenses 3,415,985 4,631,731

5. Revenues

The following table presents details of revenues by category:
In thousands of dollars
2010 2009
Sales of goods and services – external parties:
Rights and privileges 1,129,654 2,609,908
Services of non-regulatory nature 25,538 19,965
Sales of goods and information products 3,254 3,365
Services of regulatory nature 1,352 1,353
Lease and use of public property 385 150
Other fees and charges 864 803
Interest 323,881 51,266
Fines 3,794 27,209
Amortization of discount loans 3,333 5,772
Other 1,420 252
Total 1,493,475 2,720,043

6. Accounts Receivable and Advances

The following presents details of accounts receivable and advances:
In thousands of dollars
2010 2009
Receivables from external parties 206,282 165,987
Less: Allowance for doubtful accounts on external receivables (1,588) (2,657)
204,694 163,330
Receivables from other federal government departments and agencies 5,688 3,112
Employee advances 76 94
Total 210,458 166,536

7. Loans Receivable

Loans Receivable
In thousands of dollars
2010 2009
Unconditional Repayable Contribution to Hibernia Interest Assistance - 2,660
Unamortized discount -
Net unconditional repayable contribution - 2,660
Loan to Nordion International Inc. 62,000 66,000
Unamortized discounts (20,000) (23,333)
Loan balance – Nordion 42,000 42,667
Total 42,000 45,327

Hibernia Interest Assistance Loan

Unconditional repayable contribution; interest free; first instalments paid on March 31, 2001. Repayment starts eight years from the first annual instalment; the first repayment date is March 1, 2009. As of March 31, 2010, the Hibernia Interest Assistance Loan had been repaid.

Nordion International Inc. (loan)

Interest Free Loan Agreement; to be repaid over 30 semi-annual payments commencing October 1, 2000; fully secured by a financial instrument in Canada’s name which guarantees that the loan will be repaid. Balance remaining as of March 31, 2010 is $62,000,000. Due to the concessionary terms of this loan, the estimated present value is $42,000,000 as at March 31, 2010.

8. Investment

Investment in Atomic Energy Canada Limited (AECL)

NRCan has purchased common shares of Atomic Energy of Canada Limited, a Crown Corporation, for a total value of $164,159,000.

9. Prepayments

Prepayments
In thousands of dollars
2010 2009
Prepaid transfer payments 58,790 713
Prepaid expenses 7,019 2,386
Total 65,809 3,099

10. Tangible Capital Assets

(in thousands of dollars)

Tangible Capital Assets
Cost Accumulated amortization 2010 2009
Capital asset class Opening balance Acqui-
sitions
Disposals, write-offs and other Closing balance Opening balance Amorti-
zation
Disposals, write-offs and other Closing balance Net book value Net book value
Land 7,915 8 7,923 - - - - 7,923 7,915
Buildings 142,411 6,054 26 148,439 120,499 3,183 128 123,554 24,885 21,912
Machinery and equipment 232,938 14,303 2,001 245,240 194,792 9,052 2,603 201,241 43,999 38,146
Vehicles 11,824 1,501 1,805 11,520 7,465 1,037 1,531 6,971 4,549 4,360
Assets under construction - 15,140 - 15,140 - - - - 15,140 -
Total 395,088 37,006 3,832 428,262 322,756 13,272 4,262 331,766 96,496 72,333

Amortization expense for the year ended March 31, 2010 is $ 13,272 (2009 - $16,629).

11. Employee Benefits

(a) Pension benefits: NRCan employees participate in the Public Service Pension 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 Plans benefits and they are indexed to inflation.

Both the employees and the department contribute to the cost of the plan. The 2009-10 expense amounts to $67,242,000 ($58,466,000 in 2008-09), which represents approximately 1.9 times (2.0 in 2008-09) the contributions by employees.

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.

(b) Severance benefits: The department provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future appropriations. Information about the severance benefits, measured as at March 31, is as follows:

Employee Benefits
In thousands of dollars
2010 2009
Accrued benefit obligation, beginning of year 80,536 63,991
Expense for the year 18,473 16,182
Benefits paid during the year 259 363
Accrued benefit obligation, end of year 99,268 80,536

12. Contingent liabilities

(a) Contaminated sites

Liabilities are accrued to record the estimated costs related to the management and remediation of contaminated sites where the department is obligated or likely to be obligated to incur such costs. The department has identified approximately 11 sites (11 sites in 2009) where such action is possible and for which a liability of $349,948,000 ($359,416,000 in 2009) has been recorded. NRCan’s ongoing efforts to assess contaminated sites may result in additional environmental liabilities related to newly identified sites, or changes in the assessments or intended use of existing sites. These liabilities will be accrued by the department in the year in which they become known.

(b) Claims and litigation

Claims have been made against the department in the normal course of operations. Legal proceedings for claims totaling approximately $14,500,000 ($90,394,000 in 2009) were still pending at March 31, 2010. Some of these potential liabilities may become actual liabilities when one or more future events occur or fail to occur. To the extent that 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 in the financial statements.

13. Other Liabilities

Other Liabilities
In thousands of dollars
April 1, 2009 Receipts and other credits Payments and other charges March 31, 2010
Guarantee deposits – Oil and gas 9,788 496,995 (502,149) 4,634
Shared costs projects 11,667 - (9,661) 2,006
Market development and incentive payments – Alberta 4,664 4,664 (4,664) 4,664
Shared costs agreements – Research 794 19,953 (15,516) 5,231
Total 26,913 521,612 (531,990) 16,535

Guarantee deposits – Oil and gas: This account was established to record securities in the form of cash, promissory notes, and bonds 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 moneys received from private organizations and other governments for cost-sharing scientific projects.

Market development incentive payments – Alberta: This account records money 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 at April 30, 1986, however, payments are being made from the account for selected programs which encourage the use of natural gas for vehicles.

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

14. Equity of Canada

NRCan includes in its revenues and expenses the transactions of certain consolidated accounts established for specified purposes. Legislation required that the revenues of these specified purpose 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. NRCan has one such account entitled Environmental Research Fund. This 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 land, authorized under this Act or any other Act of Parliament, should be conducted.

Equity of Canada
In thousands of dollars
2010 2009
Restricted – Environmental Studies Research Fund
Opening balance 2,739 2,185
Revenues 1,271 2,722
Expenses (31) (2,168)
Closing balance 3,979 2,739
Unrestricted equity (611,646) (741,543)
Total equity of Canada (607,667) (738,804)

15. Contingent Recoveries

NRCan issues conditionally repayable contributions that become repayable if conditions specified in the contribution agreement come into effect.

Lloydminster Bi-Provincial Upgrader - Canada sold its interests in the Lloydminster Bi-Provincial Upgrader to Husky Oil in 1995. The terms of sale included an upside interest provision whereby Canada would be eligible to receive additional payments for a period of up to 20 years if the differential between light and heavy crude oil reached a certain threshold. As a result of the increase in oil prices since the date of sale, the upside interest provision was triggered and eligible payments to Canada have increased. Canada's eligibility for upside interest payments ends in 2015.

Vancouver Island Pipeline Contribution - Canada provided $50 million in support of the construction of Vancouver Island Pipeline in the early 1990's. This support was provided in the form of a repayable contribution. Repayment was contingent upon the proponent meeting certain financial conditions. Full repayment is expected to be received by 2014.

Other contingent recoveries relate to agreements entered into with proponents for early stage research and development (R&D) activities. Recoveries are contingent upon the successful commercialization of products generated by the R&D activities.

The department has estimated the contingent recoverable amounts as $104,705,000 ($119,201,000 in 2009). Contingent recoveries are not recorded in the financial statements.

16. Contractual Obligations

The nature of the department’s activities can result in some large mutli-year contracts and obligations whereby the department will be obligated to make future payments when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

Contractual Obligations
(in thousands of dollars) 2011 2012 2013 2014 2015 and thereafter TOTAL
Future capital lease 6,000 6,000 6,000 6,000 126,000 150,000
Transfer payments 433,294 359,471 268,079 246,368 781,847 2,089,059
Total 439,294 365,471 274,079 252,368 907,847 2,239,059

17. Related party transactions

The department is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The department enters into transactions with these entities in the normal Course of business and on normal trade terms. Also, during the year, the department received services which were obtained without charge from other Government departments as presented in part (a).

(a) Services provided without charge:

During the year the department received without charge from other departments, accommodations, legal fees and the employer’s contribution to the health and dental insurance plans. These services received without charge are as follows:

Related party transactions
Services provided without charge Amount
(in thousands of dollars)
2010 2009
Accommodation provided by Public Works and Government Services Canada 16,848 15,671
Contributions covering employer's share of employees' insurance premiums and costs paid by Treasury Board Secretariat 33,073 31,186
Worker's compensation cost provided by Human Resources Canada 263 299
Legal services provided by Department of Justice 1,834 825
Total 52,018 47,981

The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge. The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General, are not included as an expense in the department’s Statement of Operations.

(b) Payables outstanding at year-end with related parties:
Payables outstanding at year-end with related parties: Amount
(in thousands of dollars)
2010 2009
Accounts payable to other government departments and agencies 29,466 12,830

18. Comparative information

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

Annex B

Summary of the assessment of effectiveness of the systems of internal control over financial reporting and the action plan of Natural Resources Canada for fiscal year 2009-2010

Annex to the Statement of Management Responsibility Including Internal Control Over Financial Reporting

Note to the reader

With the new Treasury Board Policy on Internal Control, effective April 1, 2009, departments are now required to demonstrate the measures they are taking to maintain an effective system of Internal Control over Financial Reporting (ICFR).

As part of this policy, departments are expected to conduct annual assessments of their system of ICFR, establish action plans to address any necessaryadjustments, and to attach to their Statements of Management Responsibility a summary of their assessment results and action plan.

Effective systems of ICFR aim to ensure that:

  • Financial information is reliable;
  • Assets are safeguarded;
  • Transactions are properly authorized; and,
  • Transactions are recorded in accordance with the Federal Administration Act and other applicable legislation, regulations, authorities and policies.

It is important to note that the system of ICFR is not designed to eliminate all risks, rather to mitigate risk to a reasonable level with controls that are balanced with and proportionate to the risks they aim to mitigate.

The maintenance of an effective system of ICFR is an ongoing process, designed to identify key risks and controls, assess their effectiveness and adjust as required as well as to monitor performance in support of continuous improvement. As a result, the scope, pace and status of the departmental assessments of the effectiveness of their system of ICFR will vary from one organization to another based on risks and taking into account their unique circumstances.

1. Introduction

This document is attached to the Natural Resources Canada (NRCan) Statement of Management Responsibility Including Internal Control Over Financial Reporting for the fiscal-year 2009-2010. As required by the new Treasury Board Policy on Internal Control, effective April 1st 2009, this document provides, for the first time, summary information on the measures taken by NRCan to maintain an effective system of internal control over financial reporting (ICFR). In particular, it provides summary information on the assessments conducted by NRCan as at March 31, 2010, including progress, results and related action plans along with some financial highlights pertinent to understanding the control environment unique to the department.

1.1 Authority, Mandate and Program Activities

Detailed information on NRCan’s authority, mandate and program activities can be found in its Departmental Performance Report and Report on Plans and Priorities.

1.2 Financial Highlights

Information can also be found in the Public Accounts of Canada.

  • Total expenses are $3.42 B
  • Transfer payments comprise the majority (72%) of the expenses for a value of $2.46 B
  • Salary expenses are $512 M; there are approximately 4,500 employees at NRCan.
  • Total revenues for NRCan are $1.49 B
  • Net book value of total assets is $587 M
  • NRCan has total liabilities of $1.19 B which includes an accrual of $350 M to record the estimated costs related to the management and remediation of contaminated sites.
  • NRCan has one revolving fund whose financial statements are audited annually. The financial results are consolidated into the departmental financial statements.
  • NRCan has a strong regional presence. There is a decentralized finance and accounting function in each of the 6 regional offices that initiate, approve, process and/or record a significant portion of operating expenses.
  • NRCan utilizes a financial system called Government Financial System (GFS); this system interfaces with the departmental Grants & Contributions system of NRCan as well as some program-specific systems. The Department plans to migrate to a SAP-based solution as of April 4, 2011.

1.3 Service arrangements relevant to the financial statements

NRCan relies on other organizations and their internal controls for the processing of certain transactions that are recorded in its financial statements:

  • Public Works and Government Services Canada centrally administers the payments of salaries.
  • Treasury Board Secretariat provides the Department with information used to calculate various accruals and allowances, such as the accrued severance liability.

1.4 Material changes in fiscal-year 2009-2010

Significant changes that have occurred within NRCan during fiscal year 2009-2010 have been:

  • Bill Merklinger was appointed Chief Financial Officer on August 4, 2009.
  • A Departmental Audit Committee with external members was established on April 1, 2009, see Section 2.1 for details.
  • A Resource Management Committee (RMC) was established in this fiscal year. The responsibilities of this committee are further described in Section 2.1.
  • The Department received additional funding as a result of the Economic Action Plan; refer to the Departmental Performance Report for details.

2. NRCan's control environment relevant to ICFR

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

Key positions, roles and responsibilities

Below are NRCan’s key positions and committees with responsibilities for maintaining and reviewing the effectiveness of its system of ICFR.

Deputy Minister (DM) NRCan's Deputy Minister, as Accounting Officer, assumes overall responsibility and leadership for the measures taken to maintain an effective system of internal control. In this role, the DM chairs the Departmental Management Committee; the DM also chaired the Departmental Audit Committee during the 2009-2010 fiscal year.

Associate Deputy Minister (Associate DM) – The Associate Deputy Minister supports the Deputy Minister with respect to the stewardship of NRCan including financial management. In this role, the Associated Deputy Minister chairs the Resource Management Committee.

Chief Financial Officer (CFO)NRCan's CFO reports directly to the DM and provides leadership for the design and maintenance of an effective and integrated system of ICFR, including its annual assessment. The CFO provides leadership to the financial management of NRCan including roles such as secretary of the Resource Management Committee and chair of the Transfer Payment Review Committee.

Assistant Deputy Ministers - NRCan’s senior departmental managers in charge of program delivery are responsible for maintaining a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable, assets are safeguarded, transactions are in accordance with the Financial Administration Act (FAA) and executed in accordance with prescribed regulations, within parliamentary authorities and are properly recorded to maintain accountability of Government funds.

Chief Audit Executive (CAE) – NRCan’s CAE reports directly to the DM and provides assurance through periodic internal audits, as identified by the Risk-Based Audit Plan, which are instrumental to the maintenance of an effective system of ICFR

Departmental Audit Committee (DAC) - The DAC is an advisory committee that provides objective views on the Department’s risk management, control and governance frameworks. It is comprised of three external members and was established in April 1, 2009. As such, it provides advice to the DM and reviews NRCan’s Corporate Risk Profile and its system of internal control, including the assessment and action plans relating to the system of ICFR.

Departmental Management Committee (DMC)The DMC is the Department's key governance committee and primary decision-making group. DMC members participate in the top level strategic planning of NRCan's activities; they form the Department's policies, objectives and plans; they allocate and revise program priorities; and they determine the financial, person-year and materiel resources required to support departmental activities.

Resource Management Committee (RMC) – The RMC establishes NRCan’s budget priorities and requirements in accordance with the integrated Business Plan, oversees the allocation and control of the Department's financial resources, and oversees the management and progress of major investment projects.

Transfer Payment Review Committee (TPRC) – The TPRC, a newly revitalized committee, serves as a forum for Senior Departmental Officials to provide corporate direction in the selection, design, implementation and performance monitoring of transfer payment programs managed within various sectors of the Department.

Key measures taken by NRCan

NRCan’s control environment includes a series of measures (often referred to as entity-level controls) to help the Department manage risks through the establishment of an appropriate control environment, risk management processes, use of information systems and communication of key information and overall monitoring mechanisms. Key measures include:

Control Environment

  • Code of conduct and values and ethics code are in place and communicated to employees;
  • A senior officer has been appointed as values and ethics champion;
  • Annual performance agreements are established, including financial management responsibilities;
  • Training is provided to employees in core areas of financial management and control; and,
  • Delegated authorities are clearly defined for financial matters.

Risk Management

  • A departmental Corporate Risk Profile is in place, including the identification of mitigating strategies for key risks; and,
  • A Centre of Expertise on risk management has been established within the department to support ongoing risk management efforts.

Information Systems and Communications

  • Financial management systems are in place to support the communication of key financial results;
  • Financial updates are provided regularly throughout the year to departmental managers, senior management, and oversight committees;
  • Financial analysts are in place to support the analysis and communication of financial information throughout the department;
  • A forecasting process is in place to update projected financial results throughout the year; and,
  • An internal disclosure process is in place with a designated Disclosure Officer identified.

Monitoring

  • An internal audit function is in place and monitors departmental activity through the execution of risk-based internal audits; the annual Internal Audit Plan is approved by the Deputy Minister;
  • Verification and monitoring procedures are in place for key financial processes/transactions;
  • Management oversight committees are in place (e.g. Resource Management Committee, Transfer Payment Review Committee);
  • A Departmental Audit Committee has been put in place, with its scope including departmental internal controls; and,
  • An Internal Controls over Financial Reporting program is in place to document and test the effectiveness of key financial controls.

3. Assessment of NRCan's system of ICFR

3.1 Assessment baseline

In 2004, the Government of Canada commenced an initiative to determine the ability of departments to sustain control-based audits of their financial statements, thus placing reliance on well functioning internal controls. As a result, preparations were commenced and in 2007, NRCan formalized its approach to managing its system of ICFR. To determine NRCan’s assessment baseline (i.e. scope of ICFR initiative), a comprehensive scoping and planning exercise was undertaken to identify key business processes, entity-level control areas and general computer control areas.

The following key business processes were identified: Payroll and Benefits, Capital Assets, Financial Close and Reporting, Revenues, Grants and Contributions, Operating Expenditures, Environmental Liabilities, Planning & Budgeting, Loans and Advances, Inventory, and Offshore Royalty Revenues and corresponding statutory transfers.

For Entity-Level Controls (ELCs), the overarching controls of the organization that set the “tone at the top”, the following areas were identified: control environment, risk management, information systems and communications, and monitoring.

For General Computer Controls (GCCs), some unique processes were identified: information systems operations; information security (physical and logical); business continuity planning; application systems implementation and maintenance; database implementation and support; network support; systems software support; and, relationships with outsourced vendors.

These processes are the baseline by which the Department is developing its testing and monitoring plan. Over time, this includes assessment of design and operating effectiveness of the system of ICFR which will lead to the on-going monitoring and continuous improvement of the departmental system of ICFR.

Design effectiveness aims to confirm that key control points are identified, documented, in place and aligned with key risks (i.e. controls are balanced with and proportionate to the risks they aim to mitigate) and that any necessary remediation to the design of ICFR is addressed.

Operating effectiveness means that the application of key controls has been tested over a defined period and that any required remediation is addressed.

3.2 Departmental assessment scope as of March 31st, 2010

As at March 31, 2010, the Department has assessed design effectiveness for some business processes and entity-level controls. The following list identifies those business processes, including a few examples of controls objectives that were assessed:

Business Processes

  • Payroll and Benefits;
    • Modifications to the payroll master file (e.g. additional, removals, transfers) are authorized by the right individuals, properly calculated, and are accompanied by supporting documentation.
    • Segregation of duties and proper access to the financial system and human resource system are in place.
  • Capital Assets;
    • Purchases of Capital Assets are authorized by the right individuals.
    • Capital Asset transactions (e.g. initial purchase, betterments, disposals, and depreciation) are recorded in a timely fashion, in the right amount, and are complete.
  • Financial Close and Reporting;
    • Year end timelines, and roles and responsibilities are communicated within the department.
    • Reconciliations are performed correctly and generally accepted accounting principles are followed.
  • Revenues;
    • Invoices are valid, accurately calculated, and recorded in the correct accounting period
    • Receipts of funds are valid, accurate and complete.
  • Grants and Contributions; and,
    • Controls are in place to ensure: 1) only eligible recipient funding requests are processed; 2) only eligible claims/advances relating to approved Contribution Agreements are accepted and approved; 3) payments are appropriately approved and accurately recorded.
    • Segregation of duties exists between those who review and assess eligibility and those who have authority to approve funding decisions.
  • Environmental Liabilities.
    • All expenditures related to environmental liabilities are approved by the authorized individual, recorded in a timely fashion, and in the right amount.
    • Each environmental liability is evaluated using a methodology and related assumptions that are consistent across NRCan and across accounting periods.

Entity-Level Controls

  • Control Environment;
    • Management maintains a code of conduct and other policies regarding acceptable business practices, conflicts of interest, and expected standards of ethical behavior.
    • Management establishes and enforces standards for hiring the most qualified individuals, with emphasis on educational background, prior work experience, past accomplishments, and evidence of integrity and ethical behavior.
  • Risk Management;
    • Management has a business planning process in place that examines existing objectives and establishes new objectives when necessary.
    • Management identifies risks related to each of the objectives established, including estimating the significance of the risks identified, assessing the likelihood of the risks occurring, and determining the need for action.
  • Information Systems and Communications;
    • Management adequately staffs the IT function and designs the IT department to support the entity's overall business objectives.
    • Management monitors user satisfaction with information provided (e.g., management monitors the frequency and nature of requests to change information); there is a process to request changes to information/reports; and changes are made as appropriate to meet information needs.
  • Monitoring
    • Management uses surveys and focus groups to understand employee perceptions.
    • Personnel that perform self-assessments regarding the control activities being performed by process owners complete the self-assessment based on “first-hand knowledge” of control activities that they have observed.


As at March 31, 2010, the Department has assessed design effectiveness of General Computer Controls (GCC) surrounding the following system, and examples of control objectives:

  • ecoENERGY Home Retrofit Program:
    • Security tools and techniques are implemented and administered in order to restrict access to program’s data, and other information resources.
    • The system and modifications to the system are appropriately implemented and function consistent with management’s intention.

As at March 31, 2010, the Department has also assessed the operating effectiveness of key controls within the Grants and Contributions business processes.

4. NRCan’s assessment results as at March 31st, 2010

The following summarizes key assessment results from the design and operating effectiveness testing completed by NRCan to date. The focus of these assessments was on the processes established at NRCan Headquarters.

4.1 Design effectiveness of key controls

When completing design effectiveness testing, NRCan:

  1. identified the control activities;
  2. conducted a brainstorming session with all key stakeholders in order to understand and map the complete process;
  3. performed a risk assessment of the process to focus the documentation on high risk areas;
  4. documented the process and the key controls;
  5. conducted a walkthrough in order to validate and assess the control design as discussed in the brainstorming session and documentation;
  6. identified issues of design effectiveness from the walkthrough;
  7. validated the documentation; and
  8. recommended remediation actions to address identified issues of design effectiveness.

Many controls were found to be in place and the design was appropriate. Some gaps or weaknesses were noted and remediation requirements were identified to enable corrective action.

As a result of these assessments, NRCan identified remediation requirements in the following key areas:

  • Documentation and evidence of controls
    • Greater consistency in the quality and availability of documentation of controls and procedures; and,
    • In some instances, enhanced evidence of performance of control activities.
  • Access controls
    • Strengthened controls related to user access, segregation of duties and the monitoring of user roles.
  • Appropriate or sufficient processes in place
    • Standardized approval process of projects proposals; and,
    • Strengthened processes around estimates included in the financial statements.
  • Monitoring and quality assurance of financial information
    • Enhanced and formalized monitoring activities within the department; and,
    • Enhanced review processes for accounting transactions, journal entries and departmental financial statement preparation.
  • Data integrity
    • Improved tracking and updating of asset master records and verifying existence of individual capital assets; and,
    • Enhanced tracking of Repayable Contributions data.
  • Reliance on Other Government Departments
    • Recognition of the reliance on internal control systems and financial information provided by other government departments and the need for assurance from those departments.
  • Integrated planning and budgeting process.
    • Enhanced integrated departmental planning, budgeting, forecasting and monitoring processes.

4.2 Operating effectiveness of key controls

NRCan has developed a multi-year, risk-based operating effectiveness testing plan that identifies the business processes, entity level controls and general computer controls to undergo testing in the next three years. When completing operating effectiveness testing, NRCan:

  1. developed a testing strategy based on the design effectiveness assessment results;
  2. selected a random sample of transactions in order to test key controls;
  3. tested the key controls of the transactions selected to determine if these were operating as intended;
  4. summarized the results and identified any gaps or weaknesses; and
  5. reported on the results and recommended remediation actions to address gaps or weaknesses.

Given that ‘Grants and Contributions’ comprise the majority (72%) of expenses for a value of $2.46 B, ‘Grants and Contributions’ was identified as an area of priority for operating effectiveness testing. As of March 31, 2010, operating effectiveness testing has been completed on all ‘Grants and Contributions’ business processes and select general computer controls supporting ‘Grants and Contributions’.

Many controls were found to be in place and operating effectively. Some gaps or weaknesses were noted and remediation requirements were identified to enable corrective action. As a result of these assessments, NRCan identified remediation requirements in the following key areas:

  • System access controls
    • Strengthened controls related to user access, segregation of duties and the monitoring of user roles,
    • Strengthened controls surrounding change management and logical security.
  • Documentation and evidence of controls
    • Improved consistency in regards to the evidence of performance of control activities.
  • Appropriate/sufficient processes in place
    • Clearer roles and responsibilities and processes surrounding key controls,
    • Enhanced review of transactions, and monitoring of activities.

The testing also confirmed that NRCan has increased its governance oversight and practices with respect to ‘Grants and Contributions’ on a department-wide basis, and will continue to evolve and enhance these practices over the next year.

5. NRCan's action plan for the next fiscal year and future years

5.1 Progress as of March 31, 2010

Since initiating efforts on its ICFR program, NRCan has made significant progress in assessing and improving its controls. Below is a summary of the progress made by the Department:

NRCan has completed work as follows:

  • Documentation of 9 out of 14 business processes including assessment of design effectiveness;
  • Documentation of Entity-Level Controls including assessment of design effectiveness;
  • An inventory count of the department’s lands, buildings and vehicles;
  • Depreciation expenses are processed in the correct accounting period;
  • Proper evidence of employees authorized to send the trial balance to the Receiver General is kept;
  • A grants and contribution template, used by all of NRCan, was implemented;
  • The CFO’s action plan to strengthen NRCan’s financial management and the action plan to implement the Policy on Internal Control have been presented to DAC;
  • Program status information submitted for the contingent gains report is approved by the Program Manager;
  • Contribution agreements used by NRCan allow for the conduct of an audit of a recipient for a sufficient amount of time after the project completion date;
  • Revitalization of the Transfer Payment Review Committee;
  • Revised forecast reports to enhance analysis and improve usefulness of information for use by the Resource Management Committee;
  • Procedures for enhancing forecasting and variance analysis have been produced;
  • Approval by the CFO of a new statistical sampling and quality assurance plan for Section 33 account verification which includes payroll and benefit transactions; and,
  • Approval of the implementation of a new financial system (SAP);

NRCan has commenced or partially completed work to address the following necessary adjustments:

  • An inventory count of the department’s capital asset machinery and equipment;
  • Developing a new process for Section 34 account verification applicable to claims under the ecoENERGY Home Retrofit Program;
  • Developing an approach to resolve data integrity issues and maintain data integrity for capital assets and completing counts for highest value assets; and,
  • Operating effectiveness testing.

5.2 Action plan for the next fiscal year and subsequent years:

NRCan has adopted a three year plan to implement the requirements of the Policy on Internal Control, with a completion date of 2013. This plan takes into consideration the implementation of a new financial system in 2011.

By the end of 2010-11 NRCan plans to:

  • Address remediation issues from the Grants and Contribution operating effectiveness testing completed in 2009-2010;
  • Complete documentation and design effectiveness testing of the following business processes: Operating Expenditures, Loans and Advances, Inventory, and Offshore Royalty Revenues and corresponding statutory transfers;
  • Document and review General Computers Controls for GFS User Friendly (GUFI);
  • Test operating effectiveness of the following business processes: Financial Close and Reporting, Environmental Liabilities and Grants and Contributions;
  • Complete remediation of data integrity issues with respect to capital assets;
  • Address remediation issues from previous design and operating effectiveness testing; and,
  • Review financial close and reporting process and integrate quarterly reporting requirements.

By the end of 2011-12 NRCan plans to:

  • Implement a new financial system (SAP);
  • Conduct design and operating effectiveness testing for remaining business processes and general computer controls;
  • Address remediation issues from previous design and operating effectiveness testing; and,
  • Develop an ongoing operating effectiveness testing plan.

By the end of 2012-13 NRCan plans to:

  • Execute the ongoing operating effectiveness testing plan.