Supplementary Statement

Public Accounts of Canada 2013 Volume I - Top of the page Navigation

Employment Insurance Operating Account

Management's Responsibility for Financial Statements - Employment Insurance Operating Account

The financial statements of the Employment Insurance Operating Account are prepared in accordance with Canadian public sector accounting standards by the management of the Canada Employment Insurance Commission. Management is responsible for the integrity and objectivity of the information in the financial statements, including the amounts which must, of necessity, be based on best estimates and judgement. The significant accounting policies are identified in Note 2 to the financial statements.

To fulfill its accounting and reporting responsibilities, management has developed and maintains books of account, financial and management controls, information systems and management practices. These systems are 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 Employment Insurance Act and regulations, as well as the Financial Administration Act and regulations.

The Auditor General of Canada, the external auditor of the Employment Insurance Operating Account, conducts an independent audit of the financial statements in accordance with Canadian generally accepted auditing standards and provides a report to the Minister of Employment and Social Development.

The financial statements of the Employment Insurance Operating Account are an integral part of the Public Accounts of Canada, which are tabled in the House of Commons and are referred to the Standing Committee on Public Accounts for examination purposes.

Ian Shugart
Chairperson of the Canada
Employment Insurance Commission

Alain P. Séguin, MBA, CPA, CGA
Chief Financial Officer
Human Resources and Skills
Development Canada

Gatineau, Canada
August 28, 2013

Independent Auditor's Report - Employment Insurance Operating Account

To the Minister of Employment and Social Development

I have audited the accompanying financial statements of the Employment Insurance Operating Account, which comprise the statement of financial position as at 31 March 2013, and the statement of operations and accumulated deficit, statement of change in net debt and statement of cash flow for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

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

Auditor's Responsibility

My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

In my opinion, the financial statements present fairly, in all material respects, the financial position of the Employment Insurance Operating Account as at 31 March 2013, and the results of its operations, changes in its net debt, and its cash flows for the year then ended in accordance with Canadian public sector accounting standards.

Michael Ferguson, CPA, CA
FCA (New Brunswick)
Auditor General of Canada

28 August 2013
Ottawa, Canada

Table Summary

The table presents, in thousands of dollars, a two-year comparative of the Statement of financial position as at March 31. It consists of three columns; a detailed listing of components; current year and previous year. The first series of rows list the financial assets followed by a subtotal. The second series of rows list the liabilities followed by a subtotal. The next row shows the net debt. The next row shows the non-financial assets. The final row represents the accumulated deficit.

(in thousands of dollars)

Statement of Financial Position as at March 31

  2013 2012
Financial assets    
Premiums receivable 1,465,060 1,345,019
Due from claimants (Note 4) 696,804 555,005
Amounts receivable from Canada — Benefit enhancement measures — Budget 2009 (Note 9)   291,648
Subtotal 2,161,864 2,191,672
Liabilities    
Balance with Receiver General for Canada 7,476,191 9,454,820
Benefits payable 599,855 596,566
Amounts payable (Note 5) 49,279 88,496
Subtotal 8,125,325 10,139,882
Net debt (negative 5,963,461) (negative 7,948,210)
Non-financial assets    
Advances — Employment benefits and support measures   59
Accumulated deficit (negative 5,963,461) (negative 7,948,151)
Contractual obligations (Note 13)
Contingent liabilities (Note 14)
The accompanying notes and schedules are an integral part of these financial statements.

Approved by:

Ian Shugart
Chairperson of the Canada
Employment Insurance Commission

Alain P. Séguin, MBA, CPA, CGA
Chief Financial Officer
Human Resources and Skills Development Canada

Table Summary

The table presents, in thousands of dollars, a two-year comparative of the Statement of operation and accumulated deficit for the year ended March 31. It consists of four columns; a detailed listing of components; current year's budget; current year's actual; previous year's actual. The first series of rows list the revenues followed by a subtotal. The second series of rows list the expenses followed by a subtotal. The next row shows the net deficit for the year before funding from the Government of Canada. The next row shows the funding from the Government of Canada. The next row shows the net deficit for the year. The two final rows represent the accumulated deficit at the beginning of the year and at the end of the year.

(in thousands of dollars)

Statement of Operations and Accumulated Deficit for the year ended March 31

  2013
Budget (Note 7)
2013
Actual
2012
Actual
Revenues      
Premiums (Note 8) 20,800,000 20,795,737 18,938,288
Penalties (Note 4) 53,000 59,140 49,683
Interest on overdue accounts receivable (Note 4) 22,000 27,553 20,897
Subtotal 20,875,000 20,882,430 19,008,868
Expenses      
Benefits and support measures (Note 10 and Schedule I) 18,437,000 17,099,106 17,647,651
Administration costs (Note 11) 1,685,000 1,791,070 1,906,773
Bad debts 41,000 (negative 2,997) 122,919
Subtotal 20,163,000 18,887,179 19,677,343
Net surplus (deficit) for the year before funding from the Government of Canada 712,000 1,995,251 (negative 668,475)
Funding from the Government of Canada      
Benefit enhancement measures — Budget 2009 (Note 9)   (negative 10,561) 117,719
Net surplus (deficit) for the year 712,000 1,984,690 (negative 550,756)
Accumulated deficit at the beginning of the year (negative 7,948,151) (negative 7,948,151) (negative 7,397,395)
Accumulated deficit at the end of the year (negative 7,236,151) (negative 5,963,461) (negative 7,948,151)
The accompanying notes and schedules are an integral part of these financial statements.
Table Summary

The table presents, in thousands of dollars, a two-year comparative of the Statement of change in net debt for the year ended March 31. It consists of four columns; a detailed listing of components; current year's budget; current year's actual; previous year's actual.

(in thousands of dollars)

Statement of Change in Net Debt for the year ended March 31

  2013
Budget (Note 7)
2013
Actual
2012
Actual
Net surplus (deficit) for the year 712,000 1,984,690 (negative 550,756)
Change due to advances — Employment benefits and support measures   59 (negative 37)
Decrease (increase) in net debt 712,000 1,984,749 (negative 550,793)
Net debt at beginning of year (negative 7,948,210) (negative 7,948,210) (negative 7,397,417)
Net debt at end of year (negative 7,236,210) (negative 5,963,461) (negative 7,948,210)
The accompanying notes and schedules are an integral part of these financial statements.
Table Summary

The table presents, in thousands of dollars, a two-year comparative of the Statement of cash flow for the year ended March 31. It consists of three columns; a detailed listing of components; current year; previous year. The first series of rows lists the operating activities by cash receipts followed by a subtotal; and cash payments followed by a subtotal. The next row shows the net decrease in cash and cash equivalents. The next two rows show the cash and cash equivalents at the beginning of the year and at the end of the year. The next series of rows list the composition of the cash and cash equivalents at the end of the year. The final row represents the total.

(in thousands of dollars)

Statement of Cash Flow for the year ended March 31

  2013 2012
Operating activities    
Cash receipts:    
Premiums 20,675,696 18,835,220
Recoveries of benefit overpayments and penalties 320,444 311,130
Benefit repayments received from higher income claimants 218,030 208,747
Funding from the Government of Canada — Benefit enhancement measures — Budget 2009 281,087  
Subtotal 21,495,257 19,355,097
Cash payments:    
Benefits and support measures (negative 17,687,276) (negative 18,141,096)
Administration costs (negative 1,829,352) (negative 1,856,439)
Subtotal (negative 19,516,628) (negative 19,997,535)
Net increase (decrease) in balance with Receiver General for Canada 1,978,629 (negative 642,438)
Balance with Receiver General for Canada    
Beginning of year (negative 9,454,820) (negative 8,812,382)
End of year (negative 7,476,191) (negative 9,454,820)
The accompanying notes and schedules are an integral part of these financial statements.

Notes to the Financial Statements for the year ended March 31, 2013

1. Authority, objective and responsibilities

The Canada Employment Insurance Commission (the Commission), a departmental corporation named in Schedule II to the Financial Administration Act, administers the Employment Insurance Act (the Act). The Commission is co-managed by the Government, workers and employers. The objective of the Act is to provide short-term financial relief and other assistance to eligible workers. The financial transactions relating to this objective are reported through the Employment Insurance Operating Account.

The Employment Insurance Operating Account (the Account) was established in the accounts of Canada by the Act. All amounts received under the Act are deposited in the Consolidated Revenue Fund and credited to the Account. The benefits and the costs of administration of the Act are paid out of the Consolidated Revenue Fund and charged to the Account.

The Minister of National Revenue is responsible for collecting premiums from employers and employees, and for administering and enforcing the provisions of the Act relating to benefit repayments receivable from higher income claimants.

The Act authorizes the Government of Canada to enter into Labour Market Development Agreements with each province and territory on the design and delivery of the active employment benefits and support measures contained in the Act. Agreements with full responsibility to the provinces and territories for delivering the active employment benefits and support measures have been implemented with all provinces and territories.

The Act also authorizes the Government of Canada to enter into a premium reduction agreement with a province, to allow for a regulatory scheme to make the necessary adjustments and modifications to the Act. This is required to harmonize it with a provincial law that has the effect of reducing or eliminating the special benefits payable under the Act.

Canada Employment Insurance Financing Board

The Canada Employment Insurance Financing Board (the Board) was a Crown corporation established by the Canada Employment Insurance Financing Board Act in June 2008. The Board was reporting to Parliament through the Minister of Human Resources and Skills Development.

The Board was created to improve the governance and management of Employment Insurance financing. Starting in 2011, the Board has been responsible for setting the Employment Insurance premium rate based on a new rate-setting mechanism.

On October 18, 2012, the Government of Canada tabled the Jobs and Growth Act, 2012 (Bill C-45), an act to implement certain provisions of the federal budget which was tabled in Parliament on March 29, 2012. The legislation, which received Royal Assent on December 14, 2012, outlines the Government's intention to dissolve the Board. The dissolution occurred on March 7, 2013 by issuance of an Order in Council by the Government.

2. Significant accounting policies

The Account is a component of the Government of Canada reporting entity. In this context, its operations are consolidated with those of the Government and are presented in the financial statements of the Government of Canada. The financial statements of the Account are also presented in Volume I of the Public Accounts of Canada.

a. Basis of accounting

The financial statements are prepared in accordance with Canadian public sector accounting standards (PSAS).

b. Revenue — Premiums

Premiums are recognized as revenue in the period in which they are earned. Premiums earned in the period are measured from amounts assessed by the Canada Revenue Agency (CRA) and from estimates of amounts not assessed based on cash received. Premium revenue also includes adjustments between actual and estimated premiums of previous years.

c. Funding from the Government of Canada — Benefit enhancement measures

The funding associated with the benefit enhancement measures included in the Budget 2009 is recognized in the period in which the benefit expenditures are incurred.

d. Expenses — Benefits and support measures

Income benefits (or benefits under Part I of the Act) provide temporary income support to claimants, including self-employed fishers, while they look for work. This includes work-sharing agreements for temporary work shortages. It also includes special benefits such as maternity, parental, sickness and compassionate care benefits. Income benefits represent the amounts paid and payable to claimants for the period relating to the financial year, less benefit overpayments established by the Commission during the year.

Employment benefits and support measures (or benefits under Part II of the Act) provide financial assistance, through government transfers, to eligible persons to help them re-integrate into the labour market and to third parties to help them provide employment assistance services to unemployed workers and employed persons if they are facing a loss of their employment. These expenses include the direct costs of financial and employment assistance programs and related measures provided to eligible persons and third parties. Government transfers are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement and the transfer is authorized. Overpayments established during the year are deducted from these expenses. Part II expenses also include the transfer payments to the provinces and territories under the Labour Market Development Agreements, pursuant to section 63 of the Act. Similar to the employment benefits and support measures, these transfer payments are recorded as expenditures in the year in which the provinces/territories met the eligibility criteria and the transfers are authorized. Overpayments from provinces and territories are recovered and recorded in reduction of expenses the following fiscal year.

Claimants with higher income levels than those stated in the Act have to repay benefits received. Estimated benefit repayments received or receivable from those claimants are deducted from benefits and support measures.

e. Administration costs

The administration costs of the Act are based on a formula allocating the expenses between the Department of Human Resources and Skills Development and the Account. The expense allocation formula takes into consideration the source of funding, from the Account or from the Consolidated Revenue Fund. In addition, the administration costs incurred by the provinces and the territories to administer the Labour Market Development Agreements are included in the administration costs for the year based on provisions in the agreements.

f. Balance with Receiver General for Canada

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

The balance with Receiver General for Canada is reduced as the revenues exceed charges to the Account.

The balance with Receiver General for Canada also includes an amount relating to Unredeemed Warrants, which represents the warrants issued that are still outstanding at the end of the fiscal year. All amounts paid as or on account of benefits under the Act are paid by special warrants drawn on the Receiver General and issued by the Commission by electronic means or bearing the printed signature of the Chairperson and Vice-Chairperson of the Commission.

g. Measurement uncertainty

The preparation of financial statements in accordance with Canadian public sector accounting standards requires that management makes estimates and assumptions that affect the reported amounts of assets and liabilities as at the date of the financial statements and revenues and expenses during the reporting period. The most significant estimates are related to premiums, administration costs, benefit repayments, allowances for doubtful accounts, benefit enhancement measures relating to work-sharing, estimated overpayments and underpayments of benefits disclosed in note 10, contingent liabilities and the amounts presented in Schedule II. Actual results could differ significantly from these estimates.

h. Canada Employment Insurance Financing Board

The financial statements of the Employment Insurance Operating Account do not include the operations of the Canada Employment Insurance Financing Board. However, as per section 77(1) of the Employment Insurance Act, the costs to the Board of administering the Canada Employment Insurance Financing Board Act are paid out of the Consolidated Revenue Fund and charged to the Account. These charges are included in the administration costs of the Account.

3. Accounting change

The Account has prospectively applied the amendments to PSAS 3410 — Government Transfers, which came into effect for periods beginning on or after April 1st, 2012. As a result of implementation, government advances are now recognized as an expense in the period the transfer is authorized and all eligibility criteria have been met by the recipient. This accounting change did not have a significant impact on these financial statements.

4. Due from claimants

Table Summary

The table provides, in thousands of dollars, a two-year comparative of information on due from claimants. It consists of three comparative columns; a detailed listing of components; current year; previous year. The two first rows show the benefits overpayments receivable and the amount of penalties receivable. The third row is the subtotal. The fourth row shows the allowance for doubtful accounts. The fifth row is the subtotal. The sixth row shows the estimated benefit repayments receivable from higher income claimants. The final row represents the total.

(in thousands of dollars)

  2013 2012
Benefit overpayments receivable 569,071 523,051
Amount of penalties receivable 137,879 138,711
Subtotal 706,950 661,762
Less: allowance for doubtful accounts 335,301 432,269
Total 371,649 229,493
Estimated benefit repayments receivable from higher income claimants 325,155 325,512
Total 696,804 555,005

The Commission detects overpayments on claims processed during the current and preceding years. These overpayments are accounted for by reducing the benefit expenses during the year in which they are established. During the year, overpayments totalling $343 million were established ($295 million in 2011-2012). Interest charges on overpayments totalled $20 million ($15 million in 2011-2012).

The Commission may impose penalties on a claimant or an employer when it becomes aware that information they have provided is false or misleading. The Act sets the maximum amounts that may be imposed in these cases. During the year, the Commission imposed penalties totalling $59 million ($50 million in 2011-2012). Interest charges on penalties totalled $8 million ($6 million in 2011-2012).

During 2012-2013, the Commission recovered $279 million ($271 million in 2011-2012) of benefit overpayments and $42 million ($40 million in 2011-2012) of penalties. Uncollectible benefit overpayments and penalties written off during the year amounted to $94 million ($62 million in 2011-2012).

The Commission establishes an allowance for doubtful accounts by aging the balance of the accounts receivable outstanding and by applying varying percentages based on past recovery experience to the aging categories so determined.

In accordance with Treasury Board regulations, the Account charges interest on outstanding employment insurance debts caused through misrepresentation.

5. Amounts payable

Table Summary

The table presents, in thousands of dollars, a two-year comprative of information on amounts payable. It consists of three columns; a detailed listing of components; current year; previous year. The first series of rows list the amounts payable to Canada followed by a subtotal. The second series of rows list the amounts payable to provinces followed by a subtotal. The final row represents the total.

(in thousands of dollars)

  2013 2012
To Canada    
Administration costs 36,208 66,776
Tax deductions from warrants 4,070 4,937
Recoupments from warrants 339 446
Amounts payable related to Labour Market Development Agreements 6,346 5,608
Subtotal 46,963 77,767
To provinces    
Recoupments from warrants 1,515 1,424
Quebec tax deductions from warrants 801 852
Amounts payable related to Labour Market Development Agreements   8,453
Subtotal 2,316 10,729
Total 49,279 88,496

6. Financial instruments

Fair value

The fair values of the premiums receivable, due from claimants, amounts receivable, benefits payable and amounts payable are considered by management to be comparable to their carrying values due to their short term to maturity. All of these financial instruments arose in the normal course of business.

7. Comparison of results against budget

The budget amounts included in the Statement of Operations and Accumulated Deficit and the Statement of Change in Net Debt are derived from the amounts that were originally budgeted in the Human Resources and Skills Development Canada Report on Plans and Priorities for 2012-2013, tabled in Parliament in May 2012.

8. Premiums

Premiums for the fiscal year are measured by the Canada Revenue Agency (CRA) based on amounts assessed and reassessed at the time of preparation of its financial statements and an estimate of premiums earned in the period but not yet assessed or reassessed. The estimate of premiums earned but not yet assessed or reassessed is based on cash amounts received at the time of preparation of the financial statements that relate to the fiscal year. These estimates are based on economic indicators such as employment and earnings growth. Actual premiums may differ from these estimates.

Actual premium revenue for calendar years 2012 and 2013 will only be known once the CRA has processed all employer declarations of premiums for these years. An adjustment for the difference between actual and estimated premiums will be recorded in the fiscal year in which the actual assessment or reassessment results are known.

Employers with qualified wage loss insurance plans are entitled to premium reductions. They are required to share this reduction with their employees. For the calendar year 2012, the total amount of reductions is estimated at $941 million ($873 million in 2011). Actual reductions for the calendar year 2011 were $905 million ($859 million in 2010). Employees insured under a qualified wage loss insurance plan are entitled to allowances because of illness, injury, pregnancy or child care, depending on the plan. These allowances have the effect of reducing the special benefits payable by the Account to the insured persons.

For the calendar years 2011, 2012 and 2013, the premium rates were set by the Canada Employment Insurance Financing Board under section 66 of the Employment Insurance Act. Pursuant to section 66(8) of the Act, for the years 2011 and 2012, the Governor in Council, considering that it was in the public interest to do so, on the recommendation of the Minister of Human Resources and Skills Development and the Minister of Finance, changed the maximum percentage referred to in section 66(7) of the Act by which the premium rate may be increased or decreased from one year to the next. In 2012, the maximum percentage referred to in section 66(7) of the Act was modified through the Jobs, Growth and Long-term Prosperity Act. Consequently, for 2011, 2012 and 2013, the premium rates could not be increased by more than $0.05 per $100 of insurable earnings.

For the following calendar years, premium rates for each $100 of insurable earnings were set at:

Table Summary

The table presents, to the nearest dollar, a three-year comparative of the premium rates for each $100 of insurable earnings. It consists of four columns; a detailed listing of components; current year and the previous two years. The first series of rows list the premium rates for residents of provinces without a provincial plan, by employees and employers. The second series of rows list the premium rates for residents of provinces with a provincial plan, by employees and employers.

(in dollars)

  2013 2012 2011
Residents of provinces without a Provincial Plan      
For employees 1.88 1.83 1.78
For employers (calculated at 1.4 times the employee rate) 2.63 2.56 2.49
Residents of provinces with a Provincial Plan      
For employees 1.52 1.47 1.41
For employers (calculated at 1.4 times the employee rate) 2.13 2.06 1.97

The annual maximum insurable earnings for 2013 is $47,400 ($45,900 in 2012 and $44,200 in 2011).

9. Benefit enhancement measures — Budget 2009

Table Summary

The table presents, in thousands of dollars, a two-year comparative of the Budget 2009 benefits enhancement measures. It consists of three columns: a detailed listing of components; current year; previous year.

(in thousands of dollars)

  2013 2012
Increase in regular benefits duration —    
Extra five weeks (negative 926) 115,966
Employment Insurance Training Programs —    
Labour Market Development Agreements increased funding (negative 9,863) (negative 22,478)
New measures for long-tenured workers —    
Career transition assistance 228 24,231
Total (negative 10,561) 117,719

The Budget 2009 included various temporary measures to support Canadian workers affected by the global economic downturn. The increase in the Regular Benefits Duration measure was implemented in March 2009. The other types of measures were implemented and began being paid to eligible claimants in 2009-2010. The cost of these enhancement measures is not funded from the Account. Pursuant to section 73.1 of the Act, an amount of $2.9 billion has been recovered from the Government of Canada in August 2010. A final amount of $292 million was recovered in March 2013 for the remaining balance of the Amount receivable, based on actual final cost of these measures. Over-contributions from increased Labour Market Development Agreements funding for 2010-2011 and 2011-2012 were recovered from the provinces and territories during 2012-2013.

10. Estimated overpayments and underpayments of benefits

Given the large volume of claims and the need for prompt service, the Commission applies a risk-based approach to its control procedures. The verification of claims is conducted both prior to and after claimants have begun to receive benefits, using a dynamic combination of up-front and automated control measures and post-payment verification activities.

In order to measure the accuracy of benefit payments, the Commission has a program in place which establishes an annual payment accuracy rate and estimates, through statistical extrapolation, the most likely value of incorrect benefit payouts. For benefits paid during the twelve months ended March 31, 2013, these undetected overpayments and underpayments are estimated to be $748 million and $176 million respectively ($578 million and $195 million for the twelve months ended March 31, 2012). The annual payment accuracy rate (which is comprised of three error sources: claimant, employer and administrative) and estimated value of errors are used by the Commission to assess the quality of decisions and the need, if any, to improve its systems and practices of processing claims.

The overpayments established during the year, as indicated in Note 4, are not directly linked to the above noted estimated overpayments and underpayments of benefits for the same period.

11. Administration costs

Table Summary

The table presents, in thousands of dollars, the administration costs. It consists of three columns; a detailed listing of components; current year; previous year. The first six rows list different administration costs followed by a subtotal. The following row shows the recovery of costs. The last row represents a total.

(in thousands of dollars)

  2013 2012
Personnel related costs 947,866 1,125,611
Operations and maintenance 317,767 246,403
Administration costs incurred by provinces and territories under the Labour Market Development Agreements 189,025 205,856
Canada Revenue Agency administrative costs 208,708 201,591
Accomodation and rental costs 134,015 133,536
Canada Employment Insurance Financing Board 546 1,733
Subtotal 1,797,927 1,914,730
Deduct: recovery of costs for maintaining the social insurance number registry and issuing replacement cards 6,857 7,957
Total 1,791,070 1,906,773

12. Related party transactions

The Account is a component of the Government of Canada reporting entity and is therefore related to all departments, agencies and Crown corporations. The Account enters into transactions with these entities in the normal course of operations under the same terms and conditions that apply to unrelated parties. The transactions are measured at the exchange amount.

Related party transactions disclosed in these financial statements include administration costs of $134 million ($134 million in 2011-2012) charged by Public Works and Government Services Canada for accommodation and rental costs, and $209 million ($202 million in 2011-2012) by the Canada Revenue Agency for collecting premiums from employers and employees and other related activities. These costs are charged to the Account based on memoranda of understanding with the Department of Human Resources and Skills Development.

Employment Insurance premiums include the employer's share of premiums paid by the federal government of $401 million ($382 million in 2011-2012).

13. Contractual obligations

The nature of the Account activities can result in some large multi-year agreements whereby the Account will be obligated to make future payments in order to carry out its transfer payment programs. Significant contractual obligations that can be reasonably estimated are summarized as follows:

Table Summary

The table presents, in thousands of dollars, the contractual obligations. It consists of seven columns; a detailed listing of components; the next four consecutives years and the fifth and thereafter years; total.

(in thousands of dollars)

  2014 2015 2016 2017 2018 and thereafter Total
Labour Market Development Agreements 1,950,000         1,950,000
Other transfer payments 279,876 88,803       368,679
Total 2,229,876 88,803       2,318,679

14. Contingent liabilities

In the normal course of the operations of the Account, numerous appeals against or by the Commission are presently outstanding. The outcome of these appeals is not presently determinable. Any claims resulting from the resolution of these appeals will be accounted for as an expense in the period in which the claim will be determinable. However, in the opinion of management, the result of these appeals should not have a significant impact on the operations of the Account.

During 2011-2012, two Quebec Unions filed a claim with the Quebec Superior Court against Her Majesty the Queen contesting the constitutional validity of certain provisions of the Jobs and Economic Growth Act enacted in 2010 relating to amendments to the Employment Insurance Act. The Quebec Superior Court has dismissed the claim and the Unions successfully appealed that decision to the Quebec Court of Appeal. The Supreme Court of Canada has accepted to hear the appeal filed by the Attorney General of Canada of the decision of the Quebec Court of Appeal. A hearing is expected in late 2013 or early 2014. The outcome of this claim is not determinable at this time.

Also, during 2011-2012, a proposed class action was filed with the Federal Court seeking damages of $450 million plus interest. Both representative plaintiffs allege that they were improperly denied sickness benefits for an illness, injury or disability suffered while on parental leave, despite an amendment in 2002 to the Employment Insurance Act. As well, both representative plaintiffs were diagnosed with serious illnesses immediately prior to giving birth or in the following months. Both were found eligible for 50 weeks of combined maternity and parental benefits but ineligible for sickness benefits during their parental leave as they were not otherwise available for work. A motion seeking the determination of a question of law will be heard by the Court in the fall of 2013. The outcome of this claim is not determinable at this time.

15. Comparative Information

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

Table Summary

The table presents, in thousands of dollars, a two-year comparatif of the information on benefits and support measures for the year ended March 31. It consists of three columns; a detailed listing of components; current year's budget; current year's actual; previous year's actual. The first series of rows (Part I) list the income benefits followed by a subtotal. The following rows list the special benefits followed by a subtotal. The next row is the benefit subtotal. The next series of rows (Part II) list the employment benefits and support measures followed by a subtotal. The next row shows the transfer payments to provinces and territories. The next row shows the subtotal. The next row shows the benefit and support measures. The next row shows the benefits repayments received or receivable from higher income claimants. The final row represents the total.

(in thousands of dollars)

Schedule I — Benefits and Support Measures for the year ended March 31

  2013
Budget (Note 7)
2013
Actual
2012
Actual
Part I — Income benefits      
Regular 11,687,000 10,503,590 11,220,832
Fishing 275,000 262,870 266,102
Work-sharing 27,000 25,601 33,501
Subtotal 11,989,000 10,792,061 11,520,435
Special benefits      
Parental 2,333,000 2,269,492 2,195,160
Sickness 1,153,000 1,165,319 1,106,565
Maternity 988,000 974,490 936,616
Adoption   20,474 21,059
Compassionate care 12,000 11,286 10,898
Self-employment   7,823 6,384
Subtotal 4,486,000 4,448,884 4,276,682
Total 16,475,000 15,240,945 15,797,117
Part II — Employment benefits and support measures      
Employment benefits   (negative 383) (negative 732)
Support measures      
Labour market partnerships   139,251 148,444
Research and innovation   11,525 6,320
Subtotal 173,000 150,393 154,032
Transfer payments to provinces and territories related to Labour Market Development Agreements 1,950,000 1,925,441 1,927,632
Total 2,123,000 2,075,834 2,081,664
Benefits and support measures 18,598,000 17,316,779 17,878,781
Less: benefit repayments received or receivable from higher income claimants 161,000 217,673 231,130
Total 18,437,000 17,099,106 17,647,651

Benefit rates — Income benefits

From January to December 2012, benefits paid represent the lesser of 55 percent of average insurable earnings or $485 per week ($468 per week in 2011). In January 2013, the maximum payment was increased to $501 per week. The benefit rate can be increased to a maximum of the lesser of 80 percent of average insurable earnings or $501 per week as of January 1st, 2013 ($485 per week in 2012 and $468 per week in 2011) for claimants who are in a low-income family with children.

Table Summary

The table presents, in thousands of dollars, the Statement of operations and accumulated deficit for the period of January 1st to December 31st. It consists of three columns: a detailed listing of components; current calendar year; previous calendar year. The first series of rows list the revenues followed by a subtotal. The second series of rows list the expenses followed by a subtotal. The next row shows the net deficit before funding from the Government of Canada. The next row shows the funding from the Government of Canada. The next row shows the net deficit for the period. The final two rows represent the accumulated deficit at the beginning of the period and at the end of the period.

(in thousands of dollars)

Schedule II — Statement of Operations and Accumulated Deficit for the period of January 1st to December 31st

  2012 2011
Revenues    
Premiums 20,152,892 18,547,520
Penalties 59,182 52,084
Interest on overdue accounts receivable 20,633 11,276
Subtotal 20,232,707 18,610,880
Expenses    
Benefits and support measures 15,410,925 16,078,776
Transfer to provinces and territories related to Labour Market Development Agreements 1,925,441 2,090,723
Administration costs 1,626,760 1,783,173
Administration costs transferred to provinces and territories 198,077 207,116
Bad debts 25,200 102,653
Subtotal 19,186,403 20,262,441
Net surplus (deficit) for the period before funding from the Government of Canada 1,046,304 (negative 1,651,561)
Funding from the Government of Canada —    
Benefit enhancement measures — Budget 2009 (negative 11,452) 420,715
Net surplus (deficit) for the period 1,034,852 (negative 1,230,846)
Accumulated deficit at the beginning of the period (negative 9,158,436) (negative 7,927,590)
Accumulated deficit at the end of the period (negative 8,123,584) (negative 9,158,436)

The information provided in this Schedule for calendar year 2012, which is prepared in accordance with Canadian public sector accounting standards, is used by the Government of Canada to establish the Employment Insurance premium rate for the following calendar year. The mechanism for setting the Employment Insurance premium rate is designed to ensure that revenues and expenditures break even over time.

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