Financial Statements for the Year Ended March 31, 2026

(a) Parliamentary authorities

CIRNAC is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to CIRNAC do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides reconciliation between the bases of reporting.

The planned result amounts in the "Expenses" and "Revenues" sections of the Statement of Operations and Departmental Net Financial Position are consistent with the amounts reported in the Future-Oriented Statement of Operations included in the 2025-2026 Departmental Plan. Planned results are not presented in the "Government funding and transfers" section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2025-2026 Departmental Plan.

(b) Net cash provided by Government of Canada

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

(c) Amounts due from/to the Consolidated Revenue Fund (CRF)

Amounts due from or to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that CIRNAC is entitled to draw from the CRF without further authorities to discharge its liabilities.

(d) Revenues

Revenues are comprised of revenues earned from non-tax sources. They include exchange transactions where goods or services are provided for consideration where a performance obligation exists, and non-exchange transactions where no performance obligations exist to provide a good or service. These transactions can be recurring or non-recurring in nature. Recurring transactions are viewed as ongoing, routine activities that form part of the normal course of operations and can be used to indicate if they can be reasonably expected to be earned again in future years.

Other revenues are recognized in the period the event giving rise to the revenues occurred.

Revenues that are non-respendable are not available to discharge CIRNAC's liabilities. While the Deputy Head is expected to maintain accounting control, they have no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of CIRNAC's gross revenues. Revenues earned on behalf of Government consist of the sale of services and gains on the sale of assets. These are recognized when earned.

(e) Expenses

Expenses are recorded on an accrual basis:

• Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.
• Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.
• Services provided without charge by other government departments for accommodation, employer contribution to the health and dental insurance plans, legal services, and workers' compensation are recorded as operating expenses at their carrying value.

(f) Employee future benefits

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

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

(g) Contingent liabilities

Contingent liabilities are potential liabilities which may become actual liabilities when confirmed by one or more future events not wholly within the Government's control occuring or failing to occur. If the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

(h) Contingent assets

Contingent assets are possible assets which may become actual assets when one or more future events not wholly within the Government's control occur or fail to occur. If the future event is likely to occur or fail to occur, the contingent asset is disclosed in the notes to the financial statements.

(i) Environmental liabilities

An environmental liability for remediation of contaminated sites is recognized when all of the following criteria are satisfied:

• an environmental standard exists,
• contamination exceeds the environmental standard,
• CIRNAC is directly responsible or accepts responsibility,
• it is expected that future economic benefits will be given up, and
• a reasonable estimate of the amount can be made.

The liability reflects CIRNAC's best estimate of the amount required to remediate the sites to the current minimum standard for its use prior to contamination. When the cash flows required to settle or otherwise extinguish a liability are estimable, predictable and expected to occur over extended future periods, a present value technique is used. The discount rates used reflect the Government's cost of borrowing associated with the estimated number of years to complete remediation. The recorded liabilities are adjusted each year, for present value adjustments, inflation, new obligations, changes in management estimates and actual costs incurred. If the likelihood of CIRNAC's responsibility is not determinable, a contingent liability is disclosed in the notes to the financial statements.

(j) Financial instruments

A contract establishing a financial instrument creates, at its inception, rights, and obligations to receive or deliver economic benefits. The financial assets and financial liabilities portray these rights and obligations in the financial statements. The Department recognizes a financial instrument when it becomes a party to a financial instrument contract. Financial instruments consist of accounts and loans receivable, and accounts payable and accrued liabilities.

All financial assets and liabilities are recorded at cost or amortized cost. Any associated transaction costs are added to the carrying value upon initial recognition. For financial instruments measured at amortized cost, the effective interest method is used to determine interest revenue or expense.

Accounts and loans receivable are initially recorded at cost and, where necessary, are discounted to reflect their concessionary terms. Concessionary terms of loans include cases where loans are made on a long-term, low interest or interest-free basis or include forgiveness clauses. Unconditionally repayable contributions are recognized as loans receivable. When necessary, an allowance for valuation is recorded to reduce the carrying value of accounts and loans receivable to amounts that approximate their net recoverable value. The amount of allowance on loans receivable is determined on an assessment of collectability of each loan on an annual basis using a standard set of criteria to assess the default risk. Interest on loans receivable is calculated in accordance with the terms and conditions of each individual program. Loans receivable are subsequently measured at amortized cost.

If loans and interest receivables cannot be used to discharge CIRNAC's liabilities or to issue new loans, they are considered to be held on behalf of the Government and are therefore presented as an offsetting amount to CIRNAC's financial position.

(k) Non-Financial assets

The costs of acquiring land, buildings, equipment, and other capital property are capitalized as tangible capital assets and, except for land, are amortized to expense over the estimated useful lives of the assets, as described in Note 13. All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Tangible capital assets do not include immovable assets located on reserves as defined in the Indian Act, works of art, museum collection and Crown land to which no acquisition cost is attributable, and intangible assets.

Purchased intangibles are identifiable non-monetary economic resources without physical substance that are acquired in exchange transactions from arm's length third parties. Purchased intangibles exclude software, which is included in tangible capital assets. Commencing April 1, 2023, the cost of a purchased intangible is capitalized as an asset when the department controls the intangible and the intangible contributes to the capacity of the government to deliver services and products, generate future cash inflows or reduce cash outflows. Purchased intangible assets are amortized to expense over the estimated useful life of the assets. Prior to April 1, 2023, purchased intangibles were expensed as incurred.

Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the assets as follows:

Assets under construction are recorded in the applicable capital asset class in the year they are put into service and are not amortized until they are put into service.

(l) Measurement uncertainty

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported and disclosed amounts of assets, liabilities, revenues and expenses reported in the financial statements and accompanying notes at March 31. The estimates are based on facts and circumstances, historical experience, general economic conditions and reflect the Government's best estimate of the related amount at the end of the reporting period. They are determined according to methodologies that were applied consistently with the previous year. The most significant items where estimates are used are contingent liabilities, environmental liabilities, contractual obligations, the liability for employee future benefits, the allowance for doubtful accounts and the useful life of tangible capital assets. Actual results could differ significantly from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

Environmental liabilities (note 6) are subject to measurement uncertainty due to the evolving technologies used in the estimation of the costs for remediation of contaminated sites, the use of discounted present value of future estimated costs, and the fact that not all sites have had a complete assessment of the extent and nature of remediation. Changes to underlying assumptions, the timing of the expenditures, the technology employed, or the revisions to environmental standards or changes in regulatory requirements could result in significant changes to the environmental liabilities recorded.

Contingent liabilities (Note 5) are subject to measurement uncertainty. For claims where the estimate of loss is based on a range of possible outcomes, the amount accrued within the range is management's best estimate of the potential loss which may be at an amount lesser than the maximum of the range.

(m) Related party and inter-entity transactions

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

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

1. Services provided on a recovery basis are recognized as revenues and expenses on a gross basis and measured at the exchange amount.
2. Certain services received on a without charge basis are recorded for departmental financial statement purposes at the carrying amount.

(a) Reconciliation of net cost of operations to current year authorities used

(b) Authorities provided and used

(a) Contingent liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown. They are grouped into two categories: claims and pending and threatened litigation, and environmental liabilities for contaminated sites.

(b) Contingent assets

Contingent assets arise in the normal course of operations and their ultimate disposition is unknown. CIRNAC has made claims against external parties for which a recovery or gain could materialize, however a reasonable estimate cannot be made. CIRNAC has 0 (0 in 2025) likely contingent assets as at March 31, 2026.

Guarantee deposits

In fulfilling its duties under various acts that govern the use of federal Crown land, including land use activities, water resources, and water rights, CIRNAC may issue licences, permits, and other instruments to individuals and organizations that propose to undertake resource exploration and other types of development projects.

In accordance with the terms and conditions of the instrument, CIRNAC may require security deposits to ensure the lands and waters are returned in a condition acceptable to CIRNAC. These guarantee deposits are received in the form of cash and are deposited to and held in the Consolidated Revenue Fund.

(a) Pension benefits

CIRNAC's employees participate in the Public Service Pension Plan (the "Plan"), which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plan benefits and they are indexed to inflation.

Both the employees and CIRNAC contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Economic Action Plan 2012, employee contributors have been divided into two groups – Group 1 relates to existing plan members as of December 31, 2012 and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.

CIRNAC's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the consolidated financial statements of the Government of Canada, as the Plan's sponsor.

The expense amounts to $19.2M ($19.5M in 2025). For Group 1 members, the expense represents approximately 1.01 times (1.02 times in 2025) the employee contributions and, for Group 2 members, approximately 1.00 time (1.00 time in 2025) the employee contributions.

(b) Employee severance benefits

Severance benefits provided to CIRNAC's employees were previously based on an employee's eligibility, years of service and salary at termination of employment. However, since 2011 the accumulation of severance benefits for voluntary departures progressively ceased for substantially all employees. Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service. By March 31, 2026, substantially all settlements for immediate cash out were completed. Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities.

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

(a) Common services provided without charge by other government departments

During the year, CIRNAC received services without charge from certain common service organizations. These services provided without charge have been recorded in CIRNAC's Statement of Operations and Departmental Net Financial Position as follows:

The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economical delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as the payroll and cheque issuance services provided by Public Services and Procurement Canada (PSPC) and audit services provided by the Office of the Auditor General are not included in the CIRNAC's Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with other government departments and agencies

(a) Contingent Liabilities - Claims and Litigation

Subsequent to year-end, CIRNAC settled claims totaling $324 million related to specific claims, special claims, and pending and threatened litigation claims. These claims were ongoing as of March 31, 2026, and a corresponding amount of $324 million was accrued in the statement of financial position.

2.1 Internal control management

CIRNAC has a well-established governance and accountability structure to support departmental assessment efforts and oversight of its overall system of internal control. A departmental internal control management framework, approved by the Deputy Head, is in place and comprises:

• Organizational accountability structures as they relate to internal control management to support sound financial management, including the roles and responsibilities of senior departmental managers for control management in their areas of responsibility;
• Values and ethics;
• Ongoing communication and training on the legislative and policy requirements for sound financial management and control; and
• Monitoring and regular updates on internal control management, as well as provision of related assessment results and action plans to the deputy head and senior departmental management and, as applicable, the Departmental Audit Committee.

The Departmental Audit Committee is an independent advisory committee to the deputy head. It is responsible to provide advice to the deputy head on the adequacy and functioning of the department's risk management, control and governance frameworks and processes.

2.2 Service arrangments relevant to financial statements

CIRNAC relies on other departments for the processing of certain transactions that are recorded in its financial statements, as follows:

3.1 New or significantly amended key controls

There were no new or significantly amended key controls.

In 2025-26, ISC undertook an External Fraud Risk Assessment (FRA) to assess fraud risks within the context of the department's mandate, organizational structure, operating environment and shared service responsibilities provided to CIRNAC, including transfer payments.

The objective of a fraud risk assessment is to systematically identify, analyze, and prioritize fraud risks that could affect an organization's programs, assets, and operations. Similar to the Assessments completed in 2025-26, the key internal controls that were tested performed as intended, with remediation required. Management action plans addressing the recommendations were developed by the business process owners.

3.2 Ongoing monitoring program

As part of its risk-based rotational ongoing monitoring program, CIRNAC completed a reassessment of the financial controls within the business processes of:

• Financial Close and Reporting
• Contingent Liabilities – General Litigation

For the most part, the key internal controls that were tested performed as intended, with some remediation required. Management action plans addressing the recommendations were developed by the business process owners.

In 2025-26, we finalized the implementation of the following Management Action Plans:

• 2022-23 Information Technology and General Controls
• 2023-24 Revenue Management and Guarantee Deposits