Supplementary statement

Public Accounts of Canada 2016 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 Employment and Social Development Canada (ESDC). 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, Workforce Development and Labour.

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.

Louise Levonian
Chairperson of the Canada
Employment Insurance Commission

Alain P. Séguin, MBA, CPA, CGA
Chief Financial Officer
Employment and Social Development Canada

Gatineau, Canada
September 1, 2016

Independent Auditor's Report — Employment Insurance Operating Account

To the Minister of Employment, Workforce Development and Labour

I have audited the accompanying financial statements of the Employment Insurance Operating Account, which comprise the statement of financial position as at 31 March 2016, and the statement of operations and accumulated surplus, statement of change in net financial assets 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 2016, and the results of its operations, changes in its net financial assets, and its cash flows for the year then ended in accordance with Canadian public sector accounting standards.

Vicki Clement, CPA, CA
Principal
for the Auditor General of Canada

1 September 2016
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; previous year. The first series of rows presents the financial assets. The second series of rows presents the liabilities. The final row presents the net financial assets and accumulted surplus.

Statement of financial position as at March 31
(in thousands of dollars)

  2016 2015
Financial assets
Balance of the account with Receiver General for Canada 924,112
Premiums receivable 1,994,721 1,823,656
Due from claimants (Note 3) 746,636 712,477
Subtotal 3,665,469 2,536,133
Liabilities
Balance of the account with Receiver General for Canada 1,401,786
Benefits payable 676,547 536,613
Amounts payable (Note 4) 73,993 76,028
Subtotal 750,540 2,014,427
Net financial assets and accumulated surplus 2,914,929 521,706

Approved by:

Louise Levonian
Chairperson of the Canada
Employment Insurance Commission

Alain P. Séguin, MBA, CPA, CGA
Chief Financial Officer
Employment and Social Development Canada

Table summary

The table presents, in thousands of dollars, a two-year comparative of the statement of operations and accumulated surplus 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 presents the revenues. The second series of rows presents the expenses. The following rows present the net surplus for the year and the accumulated surplus (deficit) at the beginning of the year. A final row presents the accumulated surplus at the end of the year.

Statement of operations and accumulated surplus for the year ended March 31
(in thousands of dollars)

  2016
Budget (Note 6)
2016
Actual
2015
Actual
Revenues
Premiums (Note 7) 23,795,000 23,491,100 22,962,274
Penalties (Note 3) 45,000 57,220 39,666
Interest on overdue accounts receivable (Note 3) 28,000 37,791 12,786
Subtotal 23,868,000 23,586,111 23,014,726
Expenses
Benefits and support measures (Schedule I)
Income benefits (Note 8) 16,313,000 17,632,921 16,235,790
Transfers to provinces and territories related to Labour Market Development Agreements 1,950,000 1,938,683 1,930,727
Support measures 124,000 111,660 116,096
Benefits repayments from higher income claimants (negative 233,000) (negative 264,639) (negative 230,430)
Administration costs (Note 9) 1,605,000 1,653,336 1,657,055
Bad debts 25,000 120,927 50,051
Subtotal 19,784,000 21,192,888 19,759,289
Net surplus for the year 4,084,000 2,393,223 3,255,437
Accumulated surplus (deficit) at the beginning of the year 521,706 521,706 (negative 2,733,731)
Accumulated surplus at the end of the year 4,605,706 2,914,929 521,706
Table summary

The table presents, in thousands of dollars, a two-year comparative of the statement of change in net financial assets 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 row presents the net surplus for the year. The second row presents the net financial assets (net debt) at beginning of the year. A final row presents the net financial assets at the end of the year.

Statement of change in net financial assets for the year ended March 31
(in thousands of dollars)

  2016
Budget (Note 6)
2016
Actual
2015
Actual
Net surplus for the year 4,084,000 2,393,223 3,255,437
Net financial assets (net debt) at beginning of year 521,706 521,706 (negative 2,733,731)
Net financial assets at end of year 4,605,706 2,914,929 521,706
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 presents the operating activities by cash receipts. The second series of rows presents the operating activities by cash payments. The following row presents the net change in the balance of the account with Receiver General for Canada—result obtained by substracting cash payments from cash receipts. A final series of rows presents the balance of the account with the Receiver General for Canada at the beginning and at the end of the year.

Statement of cash flow for the year ended March 31
(in thousands of dollars)

  2016 2015
Operating activities
Cash receipts:
Premiums 23,320,035 22,714,896
Recoveries of benefit overpayments and penalties 327,868 302,190
Benefits repayments received from higher income claimants 233,656 208,336
Subtotal 23,881,559 23,225,422
Cash payments:
Income benefits (negative 17,856,628) (negative 16,327,014)
Transfers to provinces and territories related to Labour Market Development Agreements (negative 1,938,683) (negative 1,930,727)
Support measures (negative 108,491) (negative 111,187)
Administration costs (negative 1,651,859) (negative 1,608,593)
Subtotal (negative 21,555,661) (negative 19,977,521)
Net change in balance of the account with Receiver General for Canada 2,325,898 3,247,901
Balance of the account with Receiver General for Canada
Beginning of year (negative 1,401,786) (negative 4,649,687)
End of year 924,112 (negative 1,401,786)

Notes to the financial statements for the year ended March 31, 2016

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 consists of four commissioners: the Deputy Minister of Employment and Social Development (ESD), an Associate Deputy Minister of ESD, a person representing the interest of workers and a person representing the interest of employers. The objective of the Act is to provide short-term financial assistance and other assistance to eligible workers. The financial transactions relating to this objective are reported through the Employment Insurance Operating Account (the 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. In these financial statements, the Consolidated Revenue Fund is represented by the Balance of the account with Receiver General for Canada.

The Minister of Employment, Workforce Development and Labour is responsible for the Employment Insurance Program as per her Mandate Letter and the delegated authorities that she holds.

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. Under these agreements, the Government of Canada provides contributions to provincial and territorial governments to be used to pay for all or a portion of the costs of their benefits and measures provided they are similar with the employment benefits and support measures established under Part II of the Act. The contributions can also be used to pay for any administration costs incurred in providing these similar benefits and measures.

The Act also requires the Commission to make regulations to provide a system to reduce employer's and employee's premiums when payments under a provincial law would have the effect of reducing or eliminating the special benefits payable under the Act.

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.

(a) Basis of accounting

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

(b) Premiums

Premiums are recognized as revenue in the period in which they are earned, when workers, through their employment, generate these premiums and the related employer's contribution. Premiums earned in the period are measured from amounts assessed by the Canada Revenue Agency (CRA) and from estimates of amounts not assessed. Premium revenue also includes adjustments between actual and estimated premiums of previous years.

(c) Benefits and support measures

Benefits and support measures include income benefits (or benefits under Part I of the Act) and employment benefits and support measures (benefits under Part II of the Act). Those benefit expenses are recorded when the recipients become entitled to the benefits. An estimate of the benefits earned by the recipients related to the current fiscal year but not yet paid is recorded as benefits payable. This estimate is based on actual payments made subsequent to year-end.

Income benefits 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 expenses represent the amounts paid and payable to claimants for the period relating to the fiscal year, based on the weeks the claimants were entitled to the payments. Overpayments established during the year are deducted from these expenses.

Transfer payments to the provinces and territories under the Labour Market Development Agreements are made 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 to provinces and territories are recovered and recorded in reduction of expenses.

Support measures 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.

Claimants with income levels higher than those stated in the Act have to repay benefits received. Benefit repayments received and the estimated benefit repayments receivable are assessed by the CRA based on tax returns assessed and an estimate of tax returns not yet assessed. These benefit repayments are disclosed in the Statement of operations and accumulated surplus and the Schedule I as benefit repayments from higher income claimants.

(d) Administration costs

Administration costs are accounted for and charged to the Account in accordance with various memoranda of understanding.

(e) Balance of the account 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 of the account with Receiver General for Canada is the difference between all cash receipts and all cash disbursements, including transactions with departments of the Government.

(f) 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. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant estimates are related to premiums revenues and receivables, administration costs, benefit repayments, allowances for doubtful accounts, estimated overpayments and underpayments of benefits disclosed in Note 8, contingent liabilities and the amounts presented in Schedule II. Actual results could differ significantly from those estimates.

3. Due from claimants

Table summary

The table presents, in thousands of dollars, a two-year comparative of employment insurance benefit overpayments due from claimants. It consists of three columns: a detailed listing of components; current year; previous year. The first series of rows presents the benefit overpayments and interest receivable plus the amount of penalties and interest receivable. The following rows present the allowance for doubtful accounts to be subtracted and the estimated benefit repayment receivable from higher income claimants. A final row presents the total for this table.

(in thousands of dollars)

  2016 2015
Benefit overpayments and interest receivable 569,409 559,516
Amount of penalties and interest receivable 138,799 130,688
Subtotal 708,208 690,204
Less: allowance for doubtful accounts 336,583 321,756
Total 371,625 368,448
Estimated benefit repayments receivable from higher income claimants 375,011 344,029
Total 746,636 712,477

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.

Table summary

The table presents, in thousands of dollars, a two-year comparative of overpayments on claims processed during the current and preceding years. It consists of three columns: a detailed listing of components; current year; previous year. The first series of rows presents the benefit overpayments and interest receivable at beginning of the year plus the benefit overpayments, interest accrued, benefit overpayments recovered, and uncollectable benefit overpayment written off during the year. A final row presents the total for this table.

(in thousands of dollars)

  2016 2015
Benefit overpayments and interest receivable at the beginning of the year 559,516 560,786
Benefit overpayments established during the year 356,982 263,358
Interest accrued in the year 29,214 9,416
Benefit overpayments recovered during the year (negative 291,738) (negative 266,258)
Uncollectible benefit overpayments written off during the year (negative 84,565) (negative 7,786)
Benefit overpayments and interest receivable 569,409 559,516

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 Account charges interest on outstanding employment insurance debts caused through misrepresentation and on penalties. The Act sets the maximum amounts that may be imposed in these cases.

Table summary

The table presents, in thousands of dollars, a two-year comparative of penalties imposed by the Canada Employment Insurance Commission on claimants or employers when false or misleading information is provided, and interest on outstanding debts charged by the Account . It consists of three columns: a detailed listing of components; current year; previous year. The first series of rows presents the penalties and interest receivable at beginning of the year plus the penalties imposed, interest accrued, penalty recovered, and uncollectable penalty written off during the year. A final row presents the total for this table.

(in thousands of dollars)

  2016 2015
Penalties and interest receivable at the beginning of the year 130,688 126,168
Penalties imposed during the year 57,220 39,665
Interest accrued during the year 10,802 3,370
Penalties recovered during the year (negative 36,130) (negative 35,932)
Uncollectable penalties written off during the year (negative 23,781) (negative 2,583)
Penalties and interest receivable at the end of the year 138,799 130,688

An allowance for doubtful accounts is recorded for benefit overpayments and penalties receivable, and is estimated 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.

During 2015–2016, the Account charged a total $40.0 million ($12.8 million in 2014–2015) of interest. The interest on overdue accounts receivables (interest revenue) presented in the Statement of operations and accumulated surplus ($37.8 million) is net of interest charged on accounts receivable deemed unrecoverable ($2.2 million in 2015–2016 and $0 million in 2014–2015) and the allowance for doubtful accounts was increased by this amount.

4. Amounts payable

Table summary

The table presents, in thousands of dollars, a two-year comparative of amounts payable. It consists of three columns: a detailed listing of components; current year; previous year. The first series of rows presents the various amounts payable to Canada. The second series of rows presents the various amounts payable to provinces. A final row presents the total for this table.

(in thousands of dollars)

  2016 2015
To Canada
Administration costs 33,703 32,277
Federal tax deductions from benefits 29,026 30,188
Other deductions from benefits 248 1,791
Amounts payable related to Labour Market Development Agreements 5,918 5,868
Subtotal 68,895 70,124
To provinces
Quebec tax deductions from benefits 4,148 4,803
Other deductions from benefits 950 1,101
Subtotal 5,098 5,904
Total 73,993 76,028

5. Financial instruments

The fair values of the premiums receivable, benefits payable and amounts payable are considered by management to be comparable to their carrying values because of the short term maturity of these instruments. These financial instruments will either be received or paid in the next fiscal year.

Benefits overpayments and penalties are usually recovered over a period longer than one year. As interest is only applicable to overpayments caused through misrepresentation and on penalties, and as the allowance for doubtful accounts reduces the carrying value, the due from claimants is assumed to approximate its fair value.

All of these financial instruments arose in the normal course of business.

6. Comparison of results against budget

The budget amounts included in the Statement of operations and accumulated surplus and the Schedule I—Benefits and support measures, are part of the amounts reported in the Employment and Social Development Canada's future oriented consolidated financial statements included in the 2015–2016 Report on Plans and Priorities.

7. 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.

Premiums revenue includes an estimate of premiums earned in the fiscal year but not yet assessed or reassessed at the time of preparation of the financial statements. Fiscal year 2015–2016 includes $8,224 million in forecasted premium revenues for the 3-month period from January to March 2016 ($8,120 million in 2015), or approximately 34.55 per cent (34.59 per cent in 2015) of the total forecast premium revenues of $23,805 million for calendar year 2016 ($23,472 million for 2015), net of reductions and refunds. This estimate is based on the forecasted total insurable earnings of $584,844 million in calendar year 2016 ($567,785 million in 2015). The total insurable earnings forecasts are mainly dependent upon the projected growth in both employment (0.71 per cent in 2016 and 0.74 per cent in 2015) and average wages (1.68 per cent in 2016 and 2.58 per cent in 2015).

A variation in these assumptions would have an impact on the total insurable earnings forecasted and consequently, forecasted premium revenues. The sensitivity analysis below was determined based on changes to the respective assumptions while holding all other assumptions constant:

Table summary

The table presents an analysis of assumption sensitivity based on changed and constant assumptions. It consists of three columns: Variable; Variation; Forecasted Premium Revenues—January-March 2016. The first row presents the employment growth. The second row presents the average wages.

Variable Variation Forecasted premium revenues
January-March 2016
Employment growth +/- 0.1% +/- 8 million
Average wages +/- 0.1% +/- 3 million

Actual premium revenue for calendar years 2015 and 2016 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. The difference between estimated and actual premium revenues for calendar year 2014, as known at the time of the preparation of the financial statements and included in these financial statements, is an increase in revenues of $99 million ($28 million decrease for calendar year 2013 in 2014–2015 financial statements).

For the following calendar years, premium rates for each $100 of insurable earnings were set under section 66 of the Act at:

Table summary

The table presents, in dollars, 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 presents the premium rates for residents of provinces without a provincial plan, by employees and by employers. The second series of rows presents the premium rates for residents of provinces with a provincial plan, by employees and by employers.

(in dollars)

  2016 2015 2014
Residents of provinces without a provincial plan
For employees 1.88 1.88 1.88
For employers (calculated at 1.4 times the employee rate) 2.63 2.63 2.63
Residents of provinces with a provincial plan
For employees 1.52 1.54 1.53
For employers (calculated at 1.4 times the employee rate) 2.13 2.16 2.14

The annual maximum insurable earnings for 2016 is $50,800 ($49,500 in 2015 and $48,600 in 2014).

8. 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 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, 2016, these undetected overpayments and underpayments are estimated to be $864 million and $232 million respectively ($624 million and $145 million in 2014–2015). 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 3, are not directly linked to the above noted estimated overpayments and underpayments of benefits for the same period.

9. Administration costs

Costs incurred for administering the Act are charged to the Account based on various memoranda of understanding with federal government departments and entities.

In addition, the administration costs paid to provinces and territories to administer the Labour Market Development Agreements are included in the administration costs for the year based on provisions of the agreements.

Table summary

The table presents, in thousands of dollars, a two-year comparative of the costs for administering the Act and the Labour Market Development Agreements. It consists of three columns: a detailed listing of components; current year; previous year. The first five rows list different administration costs, followed by a subtotal. The following row presents the subtracted recovery of costs for maintaining the social insurance number registry and issuing replacement cards. A final row presents the total for this table.

(in thousands of dollars)

  2016 2015
Program policy and delivery, accommodation and corporate services
Non-personnel related costs 376,646 370,460
Personnel related costs, including the Health Insurance Plan 862,854 883,027
Collection of premiums and rulings 218,630 212,268
Administrative services related to courts/tribunal 9,116 5,077
Administration costs incurred by provinces and territories under the Labour Market Development Agreements 191,556 190,957
Subtotal 1,658,802 1,661,789
Deduct: recovery of costs for maintaining the social insurance number registry and issuing replacement cards 5,466 4,734
Total 1,653,336 1,657,055

10. 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, which are recorded at the exchange value.

Table summary

The table presents, in thousands of dollars, a two-year comparative of the transactions recorded at the exchange value between the Account and related departments, agencies and Crown corporations included in the Government of Canada reporting entity. It consists of three columns: a detailed listing of components; current year; previous year. The series of rows presents related party transactions, followed by a subtotal. The next row presents the subtracted recovery of costs for maintaining the social insurance number registry and issuing replacement cards. A final row presents the total for this table.

(in thousands of dollars)

  2016 2015
Employment and Social Development Canada
Program policy and delivery, accomodation and corporate services 1,179,202 1,194,382
Canada Revenue Agency
Collection of premiums and rulings 218,630 212,268
Treasury Board Secretariat
Health Insurance Plan 60,297 59,105
Administrative Tribunals Support Service of Canada
Social Security Tribunal 8,019 4,350
Courts Administration Services
Courts Administration Services 1,097 727
Subtotal 1,467,245 1,470,832
Deduct: recovery of costs for maintaining the social insurance number registry and issuing replacement cards 5,466 4,734
Total 1,461,779 1,466,098

Employment Insurance premiums include the employer's share of premiums paid by the federal government of $421 million ($398 million in 2014–2015).

11. 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 Account's significant contractual obligations. It consists of seven columns: a detailed listing of components; the next four consecutive years; the fifth and thereafter years; and total. The first row presents the Labour Market Development Agreements. The second row presents other transfer payments. A final row presents the total for this table.

(in thousands of dollars)

  2017 2018 2019 2020 2021 and thereafter Total
Labour Market Development Agreements 2,266,745 2,266,745
Other transfer payments 105,904 416 106,320
Total 2,372,649 416 2,373,065

Labour Market Development Agreements (LMDA) with eight of the provinces and territories require a two year notice for cancellation of the agreements. The obligations for 2018 cannot be reasonably estimated.

On April 14, 2016, supplementary funding of $125 million for 2016–2017 for the LMDAs has been approved. The amount is included in the above figure.

12. 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.

In 2011–2012, a class action was filed with the Federal Court seeking damages of $450 million plus interest. The representative plaintiff alleges that she was 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. The proceeding has been certified as a class action. The outcome of this claim is not determinable at this time.

13. Subsequent event

The Budget Implementation Act 2016, No.1, received Royal Assent on June 22, 2016. This Act amends the Employment Insurance Act to, among other things:

  1. increase, until July 8, 2017, the maximum number of weeks for which benefits may be paid to eligible claimants in selected regions;
  2. eliminate the category of claimants who are new entrants and re-entrants; and
  3. reduce to one week the length of the waiting period during which claimants are not entitled to benefits.

These new measures will result in additional income benefit expenses starting in fiscal year 2016–2017. These additional future expenses, which cannot be reasonably estimated, will be recorded in the financial statements when the recipients will become entitled to the benefits.

14. 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 comparative of income benefits and related support measures 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 (Part I) presents the income benefits, followed by a subtotal. The second series of rows presents the special benefits, followed by a subtotal. The third series of rows presents the income benefits total minus the benefits repayments from higher income claimants, followed by the total for Part I. The fourth series of rows (Part II) presents the employment benefits and support measures, the subtotal, and the total for Part II. A final row presents the total for this table.

Schedule I—Benefits and support measures for the year ended March 31
(in thousands of dollars)

  2016
Budget (Note 6)
2016
Actual
2015
Actual
Part I—Income benefits
Regular 10,792,000 12,058,162 10,885,655
Fishing 266,000 287,070 276,198
Work-sharing 25,000 40,366 18,128
Subtotal 11,083,000 12,385,598 11,179,981
Special benefits
Parental 2,644,000 2,611,676 2,549,601
Sickness 1,408,000 1,444,042 1,357,369
Maternity 1,134,000 1,124,182 1,090,629
Adoption 21,452 21,159
Compassionate care 13,000 17,736 12,729
Self-employment 10,000 9,164 9,054
Parents of critically-ill children 21,000 19,071 15,268
Subtotal 5,230,000 5,247,323 5,055,809
Income benefits total 16,313,000 17,632,921 16,235,790
Less: benefit repayments from higher income claimants 233,000 264,639 230,430
Part I total 16,080,000 17,368,282 16,005,360
Part II—Employment benefits and support measures
Employment benefits
Transfer payments to provinces and territories related to Labour Market Development Agreements 1,950,000 1,938,683 1,930,727
Support measures
Labour market partnerships 110,286 112,657
Research and innovation 1,374 3,439
Subtotal 124,000 111,660 116,096
Part II total 2,074,000 2,050,343 2,046,823
Total Benefits and support measures 18,154,000 19,418,625 18,052,183

Benefit rates—Income benefits

The rates for income benefits are set on a calendar year basis. The maximum rate is $537 per week for the period from January to December 2016, and $524 per week for January to December 2015 ($514 per week for 2014). Benefits are paid at the lesser of 55 per cent of average insurable earnings and the maximum rate. For claimants who are in a low-income family with children, the rate may be increased up to the lessor of 80 per cent of average insurable earnings and the maximum rate.

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; previous calendar year; second previous calendar year. The first series of rows presents the revenues and the related subtotal. The second series of rows presents the expenses and the related subtotal. The next rows present the net surplus for the period, the accumulated deficit at the beginning of the period, and the accumulated surplus (deficit) at the end of the period.

Schedule II—Statement of operations and accumulated surplus (deficit) for the period of January 1st to December 31st
(in thousands of dollars)

  2015 2014
Revenues
Premiums 23,296,333 22,800,907
Penalties 43,634 38,971
Interest on overdue accounts receivable 10,838 25,062
Subtotal 23,350,805 22,864,940
Expenses
Income benefits 17,190,213 15,879,753
Transfers to provinces and territories related to Labour Market Development Agreements 1,938,870 1,929,977
Support measures 111,612 109,633
Benefits repayments from higher income claimants (negative 248,126) (negative 226,652)
Administration costs 1,654,314 1,663,134
Bad debts 103,131 41,637
Subtotal 20,750,014 19,397,482
Net surplus for the period 2,600,791 3,467,458
Accumulated deficit at the beginning of the period (negative 1,734,022) (negative 5,201,480)
Accumulated surplus (deficit) at the end of the period 866,769 (negative 1,734,022)

The estimates provided in this Schedule for calendar year 2015, which is prepared in accordance with Canadian public sector accounting standards, are 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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