Canadian Intellectual Property Office Revolving Fund

Public Accounts of Canada 2025 Volume III—Top of the page Navigation

Statement of management responsibility

We have prepared the accompanying financial statements of the Canadian Intellectual Property Office Revolving Fund (the Fund) as required by and in accordance with the Receiver General Instructions related to Volume III of the Public Accounts of Canada. These financial statements were prepared by the management of the Fund in accordance with the significant accounting policies set out in note 2 of the statements, on a basis consistent with that of the preceding year.

Responsibility for the integrity and objectivity of these financial statements rests with the management of the Fund. The information included in these financial statements is based on management's best estimates and judgement with due consideration given to materiality. To fulfill its accounting and reporting responsibilities, the Fund maintains a set of accounts, which provides a centralized record of the Fund's financial transactions. Financial information contained in the ministerial statements and elsewhere in the Public Accounts of Canada is consistent with that in these financial statements, unless indicated otherwise.

The Fund's Directorate of Financial Services develops and disseminates financial management and accounting policies and issues specific directives, which maintain standards of accounting and financial management. The Fund maintains systems of financial management and internal control which gives due consideration to costs, benefits and risks. They are designed to provide reasonable assurance that transactions are properly authorized by Parliament, are executed in accordance with prescribed regulations, and are properly recorded to maintain accountability of Government funds and safeguard the assets under the Fund's administration. The Fund also seeks to assure the objectivity and integrity of data in its financial statements by the careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility and by communication programs aimed at ensuring that its regulations, policies, standards and managerial authorities are understood throughout the organization.

At the request of the Fund, these financial statements have been examined by external auditors, their role being to express an opinion as to whether the financial statements present fairly the financial position as at March 31, 2025 and the results of operations and cash flows for the year then ended in accordance with the significant accounting policies as described in note 2 to the financial statements.

Approved by:

Konstantinos Georgaras
Chief Executive Officer
Canadian Intellectual Property Office

Douglas McConnachie
Chief Financial Officer
Innovation, Science and Economic Development Canada

June 9, 2025
Gatineau, Canada

Table 1:Statement of authority used (unaudited) for the year ended March 31, 2025
(in thousands of dollars)

  2025 2024
EstimatesLinks to footnote 1 in Table 1 Actual EstimatesLinks to footnote 1 in Table 1 Actual
Net results (negative 19,122) (negative 11,903) (negative 29,540) (negative 41,061)
Items not requiring use of funds 10,809 7,669 10,644 10,820
Operating use of funds (negative 8,313) (negative 4,234) (negative 18,896) (negative 30,241)
Items requiring use of funds
Net tangible capital assets acquisitions (negative 8,262) (negative 17,080) (negative 7,527) (negative 24,729)
Net other assets and liabilities 1,251 21,081 15,041 19,102
Authority used (negative 15,324) (negative 233) (negative 11,382) (negative 35,868)

Table 1 notes

Table note 1

The amounts in the current and previous year "Estimates" columns result from, when available, the current year's Estimates, Part II—Main Estimates.

Return to table note 1 referrer in Table 1

Table 2:Reconciliation of unused authority (unaudited) for the year ended March 31, 2025
(in thousands of dollars)

  2025 2024
Debit balance in the accumulated net charge against the Fund's authority 52,167 51,690
Payables charged against the appropriation at year-end (negative 14,864) (negative 14,507)
Receivables credited to the appropriation at year-end 17 258
Other items (negative 9,509) (negative 9,397)
Net authority provided, end of year 27,811 28,044
Authority limit 5,000 5,000
Unused authority carried forward 32,811 33,044

Independent auditor's report

To the Deputy Minister, Innovation, Science and Economic Development Canada

Our opinion

We have audited the financial statements of the Canadian Intellectual Property Office Revolving Fund (the Fund), which comprise the statement of financial position as at March 31, 2025, and the statement of operations and net liabilities, and the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying financial statements are prepared, in all material respects, in accordance with the financial reporting provisions of Section 1 of the Receiver General for Canada Instructions for Volume III of the Public Accounts of Canada.

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Fund in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Emphasis of matter—basis of accounting and restriction on distribution and use

We draw attention to note 2 to the financial statements, which describes the basis of accounting. The financial statements are prepared to assist the Fund with the financial reporting provisions of Section 1 of the Receiver General for Canada Instructions for Volume III of the Public Accounts of Canada. As a result, the financial statements may not be suitable for another purpose. Our report is intended solely for the management of the Fund, Innovation, Science and Economic Development Canada, the Treasury Board of Canada, and the Receiver General for Canada, and should not be used by parties other than the Fund, Innovation, Science and Economic Development Canada, the Treasury Board of Canada and the Receiver General of Canada. Our opinion is not modified in respect to this matter.

Responsibilities of management and those charged with governance for the financial statements

Management is responsible for the preparation of these financial statements in accordance with the financial reporting provisions of Section 1 of the Receiver General for Canada Instructions for Volume III of the Public Accounts of Canada, 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.

In preparing the financial statements, management is responsible for assessing the Fund's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Fund or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Fund's financial reporting process.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Ernst & Young LLP
Chartered Professional Accountants,
Licensed Public Accountants

Ottawa, Canada
June 9, 2025

Table 3:Statement of financial position as at March 31, 2025
(in thousands of dollars)

  2025 2024
Assets
Financial assets
Accounts receivable (note 3) 2,710 3,633
Unbilled revenues 287 529
Total financial assets 2,997 4,162
Non-financial assets
Prepaid expenses 942 1,065
Tangible capital assets (note 4) 77,046 67,633
Total non-financial assets 77,988 68,698
Total assets 80,985 72,860
Liabilities and net liabilities
Liabilities
Deposit accounts 8,245 3,948
Accounts payable and accrued liabilities (note 5) 15,413 20,340
Vacation pay 7,804 7,591
Obligation for employee future benefits (note 6) 1,640 1,643
Deferred revenues 203,631 182,706
Total liabilities 236,733 216,228
Net liabilities (note 7) (negative 155,748) (negative 143,368)
Total liabilities and net liabilities 80,985 72,860
Table 3 notes

General notes:

  • Contractual obligations (note 8)
    Related party transactions (note 9)
    Contingent liabilities (note 10)
  • The accompanying notes are an integral part of these financial statements.

Table 4:Statement of operations and net liabilities for the year ended March 31, 2025Links to footnote * in Table 4
(in thousands of dollars)

  2025 2024
Revenues 214,288 184,494
Operating expenses
Salaries and employee benefits 162,910 154,602
Employee future benefits 462 (negative 127)
Professional services 42,119 46,241
Amortization of tangible capital assets 7,667 10,875
Accommodation 5,687 6,498
Information 3,874 3,703
Rentals 1,139 756
Materials and supplies 970 1,307
Training 565 543
Travel 546 451
Repairs and maintenance 232 307
Communications 29 29
Bad debt expense 23 379
Other adjustments – (negative 5)
Gain on disposal of tangible capital assets (negative 12) –
Freight and postage (recovery) (negative 20) (negative 4)
Total operating expenses 226,191 225,555
Net results (negative 11,903) (negative 41,061)
Net liabilities, beginning of year (negative 143,368) (negative 139,085)
Net financial resources used and change in the accumulated net charge against the Fund's authority during the year (negative 477) 36,778
Net liabilities, end of year (negative 155,748) (negative 143,368)
Table 4 notes

General notes:

  • The accompanying notes are an integral part of these financial statements.
Table note *

The dash means that the amount is 0 or is rounded to 0.

Return to table note * referrer in Table 4

Table 5:Statement of cash flows for the year ended March 31, 2025Links to footnote * in Table 5
(in thousands of dollars)

  2025 2024
Operating activities
Net results (negative 11,903) (negative 41,061)
Add (deduct) items not requiring use of funds
Amortization of tangible capital assets 7,667 10,875
Other adjustments – (negative 5)
Subtotal (negative 4,236) (negative 30,191)
Variations in statement of financial position
Decrease (increase) in accounts receivable 923 (negative 764)
Decrease in unbilled revenues 242 237
Decrease (increase) in prepaid expenses 123 (negative 8)
Increase (decrease) in deposit accounts 4,297 (negative 2,967)
(Decrease) increase in accounts payable and accrued liabilities (negative 4,927) 2,602
Increase in vacation pay 213 759
(Decrease) in obligation in employee severance benefits (negative 3) (negative 357)
Increase in deferred revenues 20,925 18,640
Total variations in statement of financial position 21,793 18,142
Cash provided by (used in) operating activities 17,557 (negative 12,049)
Capital investing activity
Acquisitions of tangible capital assets (negative 17,080) (negative 24,729)
Net financial resources used by capital investing activities (negative 17,080) (negative 24,729)
Net financial resources used and change in the accumulated net charge against the Fund's authority during the year 477 (negative 36,778)
Accumulated net charge against the Fund's authority, beginning of year 51,690 88,468
Accumulated net charge against the Fund's authority, end of year (note 7) 52,167 51,690
Table 5 notes

General notes:

  • The accompanying notes are an integral part of these financial statements.
Table note *

The dash means that the amount is 0 or is rounded to 0.

Return to table note * referrer in Table 5

Notes to the financial statements for the year ended March 31, 2025

1. Authority and purpose

The Canadian Intellectual Property Office (CIPO) grants or registers exclusive ownership of intellectual property in Canada. In exchange, CIPO acquires intellectual property information and state-of-the-art technology, which it disseminates to Canadian firms, industries and individuals to improve economic performance and competitiveness and to stimulate further invention and innovation.

The Canadian Intellectual Property Office is financed through a revolving fund authority (the Fund), which was established on April 1, 1994. The authority to make expenditures out of the Consolidated Revenue Fund was granted on February 22, 1994, and had an authorized limit of $15 million. During the fiscal year ended March 31, 2002, the Fund's authorized limit was reduced from $15 million to $5 million. The Fund has continuing non-lapsing authority from Parliament to make payments out of the Consolidated Revenue Fund for working capital, capital acquisitions and the temporary financing of accumulated operating deficits. The Fund may retain surpluses to continue to automate operations.

The Fund is not subject to income taxes.

2. Significant accounting policies

The financial statements have been prepared in accordance with the reporting requirements for revolving funds prescribed by the Receiver General for Canada. The basis of accounting used in these financial statements differs from Canadian public accounting standards because:

The significant accounting policies are as follows:

(a) Revenue recognition

Fees received for processing patent, trademark and industrial design applications are recorded as deferred revenues until the Fund has satisfied the performance obligation(s) at which time they are recorded as revenue. Detailed inventory counts of applications are used to determine the amount of deferred revenue taking into account the fee schedule related to the application. Different rates may be charged depending on the size of the entity. Abandonments during the application process are recorded as earned revenue. When work is completed prior to the receipt of the fee, the amount is recorded as unbilled revenue. All other fees are recognized upon receipt. Fees are prescribed by various Orders in Council. Revenues are reflected on the statement of operations and net liabilities, net of remissions of fees as per requirements of the Service Fees Act.

(b) Tangible capital assets

Tangible capital assets are recorded at cost and are amortized on a straight-line basis over their estimated useful lives, beginning in the month after acquisition, as follows:

Depreciation policy
Asset class Years
Leasehold improvements Over the term of the lease
Informatics software 3 to 10 years
Hardware 5 to 10 years
Machinery and equipment 10 years
Furniture 10 years

The costs for assets under construction are capitalized as incurred with amortization commencing in the month after they are put into service. The cost of a constructed asset includes direct construction or development costs (such as materials and labour) and overhead costs directly attributable to the construction or development activity. The activities necessary to prepare a tangible capital asset for its intended use encompass more than the physical construction of the tangible capital asset. They include the technical and administrative work prior to the commencement of and during construction.

(c) Employee future benefits

Employee severance benefits

Employees of the Fund are entitled to severance benefits, calculated based on salary levels in effect at the time of termination as provided for under collective agreements and conditions of employment. These benefits are accrued as employees render the services necessary to earn them. In Budget 2012, the Government of Canada announced that it was eliminating the accumulation of severance benefits for voluntary resignation and retirement for federal government employees. As part of the implementation of this measure, collective agreements had provided three options to address the balances accumulated to date. These included:

  1. a single payment at the rate of pay of the employee's substantive position as of the coming into force of the collective agreement; or
  2. a single payment at the time of the employee's termination of employment from the core public administration, based on the rate of pay of the employee's substantive position at the date of termination of employment from the core public administration; or
  3. a combination of (1) and (2).

With the introduction of captions (1) and (3), the Fund was required to draw down on the obligation for employee future benefits as the collective agreements came into force. The obligation relating to the benefits earned by employees is calculated using information such as salary and years of service and represents management's best estimate of the liability.

Pension benefits

Employees of the Fund are covered by the Public Service Superannuation Plan (the Plan) administered by the Government of Canada. Under present legislation, contributions made by the Fund to the Plan are limited to an amount equal to the employee's contributions on account of current service. These contributions represent the total pension obligations of the Fund and are charged to operations on a current basis. The Fund is not required under present legislation to make contributions with respect to actuarial deficiencies of the Public Service Superannuation Account and/or with respect to charges to the Consolidated Revenue Fund for the indexation of payments under the Supplementary Retirement Benefits Act. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

(d) Use of estimates

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Revenues, unbilled revenues, deferred revenues, remissions, the estimated useful lives of tangible capital assets and salary-related liabilities are the most significant items for which estimates are used. Actual results could differ from these estimates. These estimates are reviewed annually, and as adjustments become necessary, they are recorded in the financial statements in the period in which they become known.

(e) Sick leave

Employees are permitted to accumulate unused sick leave. However, such leave entitlements do not vest and can be used only in the event of illness.. As per current government practice, unused sick leave upon employee termination is not payable to the employee. Accordingly, no amount has been accrued in these financial statements.

(f) Foreign currency transactions

Foreign currency transactions are translated into Canadian dollars at the exchange rate prevailing at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the exchange rate prevailing at the financial statement date. Gains and losses resulting from foreign currency transactions are recognized in the statement of operations and net liabilities under each respective financial statement line item.

3. Accounts receivable

Table 7:Accounts receivable
(in thousands of dollars)
  2025 2024
Government of Canada 17 258
Outside parties 3,308 3,967
Subtotal 3,325 4,225
Allowance for doubtful accounts from outside parties (negative 615) (negative 592)
Total 2,710 3,633

4. Tangible capital assets

Table 8:CostLinks to footnote * in Table 8
(in thousands of dollars)
Captial asset categories Balance at beginning of year Acquisitions Transfers Disposals Balance at end of year
Leasehold improvements 22 – – – 22
Informatics software 72,996 16,398 56,496 – 145,890
Hardware 912 85 – – 997
Machinery and equipment 158 14 – – 172
Furniture 92 – – – 92
Assets under construction 56,497 583 (negative 56,496) – 584
Total 130,677 17,080 – – 147,757

Table 8 notes

Table note *

The dash means that the amount is 0 or is rounded to 0.

Return to table note * referrer in Table 8

Table 9:Accumulated amortizationLinks to footnote * in Table 9
(in thousands of dollars)
Captial asset categories Balance at beginning of year Amortization Disposals Balance at end of year
Leasehold improvements 22 – – 22
Informatics software 62,501 7,496 – 69,997
Hardware 305 155 – 460
Machinery and equipment 126 16 – 142
Furniture 90 – – 90
Total 63,044 7,667 – 70,711

Table 9 notes

Table note *

The dash means that the amount is 0 or is rounded to 0.

Return to table note * referrer in Table 9

Table 10:Net book valueLinks to footnote * in Table 10
(in thousands of dollars)
  2025 2024
Leasehold improvements – –
Informatics software 75,893 10,495
Hardware 537 607
Machinery and equipment 30 32
Furniture 2 2
Assets under construction 584 56,497
Total 77,046 67,633

Table 10 notes

Table note *

The dash means that the amount is 0 or is rounded to 0.

Return to table note * referrer in Table 10

5. Accounts payable and accrued liabilities

Table 11:Accounts payable and accrued liabilities
(in thousands of dollars)
  2025 2024
Government of Canada 4,410 3,601
Outside parties 11,003 16,739
Total 15,413 20,340

6. Obligation for employee future benefits

Pension benefits

The Fund's 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% 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. Effective January 2013, the age at which a new employee who began participating in the public service pension plan on or after January 1, 2013 can receive an unreduced pension benefit was raised from age 60 to 65. Both plan members and the Fund contribute to the cost of the Plan. The Fund made contributions of $ $12,594,216 in 2025 (2024—$11,054,328) to the plan. 

Table 12:Employee severence benefits
(in thousands of dollars)
  2025 2024
Obligation for employee future benefits, beginning of year 1,643 2,000
Benefits paid during the year for retirements and departures from the Public Service (negative 465) (negative 230)
Expense for the year 462 (negative 127)
Obligation for employee future benefits, end of year 1,640 1,643

7. Net liabilities

Accumulated net charge against the Fund's authority

The accumulated net charge against the Fund's authority represents the cumulative receipts and disbursements over the life of the Fund.

Accumulated surplus (deficit)

The accumulated surplus (deficit) is an accumulation of the annual net results of operations including the absorption of the opening deficit of $9,448,000 upon establishment of the Fund.

Table 13:Net liabilities
(in thousands of dollars)
  2025 2024
Accumulated surplus (deficit), beginning of year (negative 91,678) (negative 50,617)
Net results (negative 11,903) (negative 41,061)
Accumulated surplus (deficit), end of year (negative 103,581) (negative 91,678)
Accumulated net charge against the Fund's authority, beginning of year (negative 51,690) (negative 88,468)
Net financial resources used and change in the accumulated net charge against the Fund's authority during the year (negative 477) 36,778
Accumulated net charge against the Fund's authority, end of year (negative 52,167) (negative 51,690)
Net liabilities, end of year (negative 155,748) (negative 143,368)

8. Contractual obligations

The Canadian Intellectual Property Office leases its premises under occupancy instruments. An occupancy instrument is a formal agreement between the Canadian Intellectual Property Office and Public Services and Procurement Canada recording the terms and conditions that govern the provision and occupancy of the accommodation. Expected future payouts by fiscal year are as follows:

Table 14:Contractual obligations
(in thousands of dollars)
   
2026 5,010
2027 4,680
2028 4,591
2029 4,323
2030 and thereafter 7,888
Total 26,492

9. Related party transactions

Through common ownership, the Fund is related to all Government of Canada created departments, agencies and Crown corporations. Payments for accommodation, legal services, compensation and benefits services, mail services, security services and mainframe and computing services are made to related parties in the normal course of business.

10. Contingent liabilities

In the normal course of its operations, the Canadian Intellectual Property Office may become involved in various legal actions and grievances with financial implications. 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 is recorded in the financial statements.

As at March 31, 2025, management has not identified legal actions and grievances with financial implications in the financial statements.

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