Consolidated financial statements - March 31, 2024

Table of contents

• Statement of management responsibility including internal control over financial reporting
• Independent auditor's report
• Consolidated statement of financial position as of March 31
• Consolidated statement of operations and departmental net financial position for the year ended March 31
• Consolidated statement of change in departmental net financial assets for the year ended March 31
• Consolidated statement of cash flows for the year ended March 31
• Notes to consolidated financial statements for the year ended March 31, 2024
• Annex to the statement of management responsibility including internal control over financial reporting (unaudited)

Statement of management responsibility including internal control over financial reporting

Responsibility for the integrity and objectivity of the accompanying consolidated financial statements for the year ended March 31, 2024 and all information contained in these consolidated statements rests with the management of the National Research Council Canada (NRC). These consolidated financial statements have been prepared by management using the Government of Canada's accounting policies, which are based on Canadian public sector accounting standards.

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

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

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

The system of ICFR is designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, to assess the effectiveness of associated key controls and to make any necessary adjustments.

A risk-based assessment of the system of ICFR for the year ended March 31, 2024 was completed in accordance with the Treasury Board Policy on Financial Management and the results and action plans are summarized in the annex.

The effectiveness and adequacy of the NRC's system of internal control is reviewed by the work of Internal Audit and Financial Monitoring staff, who conduct periodic audits of different areas of the NRC's operations and by the NRC Departmental Audit Committee, which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting, and which reviews the consolidated financial statements.

Ernst & Young LLP has expressed an opinion on the fair presentation of the consolidated financial statements of the NRC for the year ended March 31, 2024, which does not include an audit opinion on the annual assessment of the effectiveness of the NRC's ICFR.

Ottawa, Canada
June 28, 2024

Independent auditor's report to the National Research Council Canada

Opinion

We have audited the consolidated financial statements of the National Research Council Canada ["NRC"], which comprise the consolidated statement of financial position as at March 31, 2024, the consolidated statement of operations and departmental net financial position, the consolidated statement of change in departmental net financial assets and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of NRC as at March 31, 2024, and its consolidated results of operations, and its consolidated cash flows for the year then ended in accordance with Canadian public sector accounting standards.

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 consolidated financial statements section of our report. We are independent of NRC in accordance with the ethical requirements that are relevant to our audit of the consolidated 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 opinion.

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

Management is responsible for the preparation and fair presentation of the consolidated 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 consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing NRC'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 NRC or to cease operations, or has no realistic alternative but to do so.

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

Auditor's responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated 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 consolidated 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:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit 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 NRC's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on NRC's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause NRC to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the NRC to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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 28, 2024

Consolidated statement of financial position as of March 31

Contractual rights (note 11)
Contractual obligations (note 12)
Environmental liabilities (note 13a)
Contingent liabilities (note 14)

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

Ottawa, Canada
June 28, 2024

8. Employee future benefits

a) Pension benefits

Eligible NRC employees participate in the Public Service Pension Plan (the Plan), which is sponsored and administered by the Government. Pension benefits accrue up to a maximum of 35 years at a rate of 2% per year of pensionable service, times the average of the best 5 consecutive years of earnings. The benefits are integrated with Canada/Quebec Pension Plans benefits and they are indexed to inflation.

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

The 2023-24 expense amounts to $42,259,921 ($44,885,513 in 2023). For Group 1 members, the expense represents approximately 1.02 times (1.02 times in 2023) the employee contribution and, for Group 2 members, approximately 1.00 times (1.00 times in 2023) the employee contribution.

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

b) Severance benefits

The NRC provides severance benefits to its employees based on 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. 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.

The latest actuarial valuation of the NRC's severance benefits obligation was conducted as at March 31, 2024 using the projected benefit method. The significant actuarial assumptions adopted in measuring the severance benefit obligation are as follows:

c) Sick leave benefits

The NRC provides benefits for sick leave to its eligible employees consisting of one and one-quarter (1 1/4) days of sick leave per calendar month. Sick leave can only be used for paid time off at the employee's normal rate of pay when the employee is unable to perform their duties because of illness or injury. Unused sick leave benefits accumulate during the employee's period of service and no payment is due to employees upon termination of employment for unused days. The changes in the obligation during the year were as follows.

The latest actuarial valuation of the NRC's sick leave benefit obligation was conducted as at March 31, 2024 using the projected benefit method prorated on services. The significant actuarial assumptions adopted in measuring the employee sick leave benefit obligation are as follows.

9. Endowment fund investments

This account was established pursuant to paragraph 5(1)(f) of the NRC Act to record the residue of the estate of the late H.L. Holmes. Up to two-thirds of the endowment fund's annual net income (maximum of $100,000) is used to finance the H.L. Holmes award on an annual basis. The award provides the opportunity to post-doctoral students to study at world-famous graduate schools or research institutes under outstanding researchers. The monetary value and number of awards granted are established by the H.L. Holmes selection committee.

The portfolio for endowment fund investments had an average effective return of 2.70% (2.20% in 2023) and an average term to maturity of 3.82 years as at March 31, 2024 (2.30 years as at March 31, 2023). The fair value of the endowment fund investments as at March 31, 2024 was $5,520,144 ($5,338,675 in 2023).

10. Tangible capital assets

Amortization expense for the year ended March 31, 2024 is $67,426,187 ($66,507,117 in 2023).

As at March 31, 2024, the NRC held 8 land lease agreements (8 in 2023) for a nominal annual cost with universities. In these instances, the NRC owns the building on the leased land. The fair value of the land leases for these non-monetary transactions could not be determined at the inception of the lease; therefore, they are recorded at a nominal value.

On May 23, 2006, the NRC took possession of a new facility and entered into a non-monetary transaction with the University of Alberta at a nominal cost of 1 dollar per year. The lease provides a  1-year term with options to renew on 10 sequential occasions, each of the first 9 renewals to be for a period of 5 years and the 10th renewal for a period of 4 years (to May 22, 2031). The building was recorded as a leased tangible capital asset at its fair value of $44,400,000. The annual amortization of $1,776,000 for the leased tangible capital asset is exactly offset by the amortization of the deferred contribution related to the leased building.

On September 1, 2006, the NRC took possession of a new facility and entered into a non-monetary transaction with the University of Prince Edward Island at a nominal cost of 1 dollar per year. The latest lease starting April 1, 2023 provides a 3-year term with a renewal option for 1 additional period of 1 year. The building was recorded as a leased tangible capital asset at its fair value of $9,300,000. The annual amortization of $372,000 for the leased tangible capital asset is exactly offset by the amortization of the deferred contribution related to the leased building.

11. Contractual rights

The activities of the NRC sometimes involve the negotiation of contracts or agreements with outside parties that result in the NRC having rights to both assets and revenues in the future. They principally involve research and technical services, and intellectual property, royalties and fees. Major contractual rights that will generate revenues in future years and that can be reasonably estimated are summarized as follows:

12. Contractual obligations

The nature of the NRC's activities can result in some large multi-year contracts and obligations whereby the NRC will be obligated to make future payments in order to carry out its transfer payment programs or when the services/goods are received. Transfer payments and significant operating contractual obligations that can be reasonably estimated are summarized as follows:

Transfer payments contractual obligations to CFHT and TIO as shown in notes 15c) and 15d) have been excluded from the contractual obligations.

13. Environmental liabilities

a) Remediation of contaminated sites

The Government's "Federal Approach to Contaminated Sites" sets out a framework for management of contaminated sites using a risk-based approach. Under this approach, the Government has inventoried the contaminated sites identified on federal lands, allowing them to be classified, managed and recorded in a consistent manner. The systematic approach aides in the identification of the high-risk sites in order to allocate limited resources to those sites that pose the highest risk to the environment and human health.

The NRC has identified 2 sites (2 sites in 2023) where action is possible and for which a liability of $3,291,950 ($3,434,851 in 2023) has been recorded. The estimated liability is based on either external scientific/engineering consultants or NRC environmental officers with contaminated site experience reviewing the results of the assessments and underlying assumptions, and estimating the cost of the most likely remediation or risk management scenario. No additional sites were identified during 2023-24.

The following table presents the total estimated amounts of these liabilities by nature, the associated expected recoveries and the total undiscounted future expenditures as at March 31, 2024 and March 31, 2023. When the liability estimate is based on future cash requirements, the amount is adjusted for inflation using a forecast Consumer Price Index rate of between 2.1% and 2.4%. Inflation is included in the undiscounted amount. The source of the contamination is associated with the operations and maintenance where activities such as fuel storage/handling, waste sites and use of metal-based paint resulted in former or accidental contamination, e.g., metals, petroleum hydrocarbons, polyaromatic hydrocarbons, etc. Sites often have multiple sources of contamination.

There were no expected recoveries in 2023 and 2024.

b) Asset retirement obligations

The NRC has recorded asset retirement obligations for the removal of asbestos and other hazardous materials in buildings, removal of the storage fuel tanks and the retirement activities linked to machinery and equipment. The changes in the asset retirement obligations during the year are as follows:

The undiscounted future expenditures, adjusted for inflation, for the planned projects comprising the liability are $29.1 million ($22.5 million as at March 31, 2023).

Key assumptions used in determining the provision are as follows:

14. Contingent liabilities

Claims have been made against the NRC in the normal course of operations. Legal proceedings for 5 claims were pending as at March 31, 2024 (1 in 2023). The NRC has no claims that it believes will likely result in a liability (none in 2023), no claims that it believes will likely result in a liability where the amount is indeterminable (none in 2023) and 5 claims that it believes the outcome is indeterminable, as is the liability amount (1 in 2023). In 2024, the NRC has no claims that it believes the outcome is unlikely (none in 2023).

15. Related party transactions

The NRC is related as a result of common ownership to all government departments, agencies and Crown corporations. The NRC enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the NRC received common services that were obtained without charge from other government departments (OGDs) as disclosed below.

a) Common services provided without charge by OGDs and agencies

During the year, the NRC received services without charge from OGDs and agencies. These services have been recognized in the NRC's consolidated 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 economic 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 PSPC, are not included in the NRC's consolidated statement of operations and departmental net financial position.

b) Other transactions with related parties

Expenses and revenues disclosed in b) exclude common services provided without charge, which are already disclosed in a).

c) Canada‑France‑Hawaii Telescope Corporation

The NRC has a related party relationship with the following non-federal government entity:

The NRC was a founding member of the Canada-France-Hawaii Telescope Corporation (CFHT), a tax-exempt, not-for-profit organization established under Hawaii state law to design, construct and operate a large optical telescope near the summit of Mauna Kea, Hawaii, USA, along with laboratories, equipment and associated installations. CFHT was established in 1974 by a Tripartite Agreement among the NRC, the Centre National de la Recherche Scientifique of France and the University of Hawaii. The NRC makes annual contributions to fund its 42.5% share of the cost of operations of the telescope and receives no direct benefit in return. However, as a result of the NRC's contributions, Canada receives access to telescope observation hours for Canadian astronomers. As a founding member, the NRC can appoint 4 of the 10 members of the Board of Directors. The NRC's relationship with CFHT is considered a government partnership for accounting purposes and CFHT results are proportionally consolidated in these consolidated financial statements. In 2024, the NRC contributed $4.9 million to CFHT ($4.7 million in 2023). These contributions are eliminated upon consolidation. CFHT's condensed financial information for the year ended December 31 is as follows.

The NRC's future contractual obligations to CFHT are not included in the transfer payment contractual obligations (note 12) and are as follows:

d) TMT International Observatory, LLC

The NRC has a related party relationship with the following non-federal government entity:

The NRC is a member since April 2015 of the TMT International Observatory, LLC (TIO), a tax-exempt, not-for-profit organization established under the state law of Delaware, USA. TIO was incorporated in May 2014 and formed for the purpose of the execution of the Thirty Meter Telescope Project through the construction, commissioning and operation of an observatory. TIO was established in 2014 by the Regents of the University of California, the California Institute of Technology, the National Institutes of Natural Sciences (Japan) and the National Astronomical Observatories of the Chinese Academy of Sciences. The Department of Sciences of Technology, Government of India and the NRC subsequently became members in 2014 and 2015, respectively. The NRC's relationship with TIO is considered a government partnership for accounting purposes and TIO results are proportionally consolidated in these consolidated financial statements. The NRC's membership participation was 19.5% as of December 31, 2023 based on the aggregate pledged by all current parties. In 2024, the NRC contributed $1.0 million to TIO's assets under construction ($9.8 million in 2023). TIO's condensed financial information for the year ended December 31 is as follows.

The NRC's future contractual obligations to TIO are based on parliamentary authorities granted in 2015. NRC is aware of delays in the project, but no impact to future obligations has been identified at the completion date of these consolidated financial statements. The contractual obligations for TIO as of March 31, 2024 total $133,561,993 ($134,676,894 in 2023). Future payments are expected to occur as construction of the Thirty Meter Telescope progresses. These contractual obligations for TIO are not included in the transfer payment contractual obligations in note 12.

16. Transfers from/to OGDs

Transfers of tangible capital assets between OGDs and the NRC have occurred in 2023 and 2024.

The transactions are as follows:

17. Segmented information

Presentation by segment is based on the NRC's core responsibility. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 2. The following table presents the expenses incurred and revenues generated for the main core responsibilities, by major object of expense and by major type of revenues. The segment results for the year are as follows.

18. Financial instruments

The NRC's financial instruments consist of due from CRF, accounts receivable, investments and accounts payable and accrued liabilities. Unless otherwise noted, it is management's assessment that the NRC is not exposed to significant interest rate risk, currency risk or credit risk arising from these financial instruments. Unless otherwise disclosed in these consolidated financial statements, management estimates that the carrying value of the financial instruments approximates their fair value due to their short-term nature.

19. Comparative information

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

20. Additional information

On February 16, 2023, the Government announced that the NRC Industrial Research Assistance Program (IRAP) will be integrated into the new Canada Innovation Corporation (CIC). This will include the transfer of all IRAP transfer payments and the employees administering the transfer payment program. In December 2023, the Government announced that they are postponing the IRAP transition to the CIC until 2026-27. IRAP will remain part of the NRC and IRAP activities will continue as usual until the transfer.

On April 1, 2023, the NRC transferred the maintenance and operational activities of the Biologics Manufacturing Centre to the not-for-profit entity Biologics Manufacturing Centre Inc. (BMC Inc.). The NRC maintains the ownership of the facility and equipment, which is being leased to BMC Inc. In addition, the NRC signed a 10-year contribution agreement totalling $171.7 million to support general operations, which is already included in note 12 in contractual obligations.

21. Subsequent events

On April 14, 2024, Canada became a full member of the Square Kilometre Array Observatory (SKAO) radio astronomy project. Canada, through the NRC, is investing $269 million over 8 years as part of its membership in the SKAO for an expected membership participation of 6% of the project.

On June 4, 2024, the Government announced it is transferring Sustainable Development Technology Canada (SDTC) programming to the NRC. Over the coming months, responsibility for SDTC's support of cleantech companies will transition to IRAP. The transition will be phased in to ensure continuity for current cleantech projects and stability for SDTC employees. SDTC and IRAP will transition to the CIC once it is established.

Annex to the statement of management responsibility including internal control over financial reporting (unaudited)

For the year ended March 31, 2024

1. Introduction

This document provides summary information on the measures taken by the NRC to maintain an effective system of internal control over financial reporting, including information on internal control management, assessment results and related action plans.

Detailed information on the NRC's authority, mandate and program activities can be found in the 2024-25 Departmental Plan and the 2023-24 Departmental results report.

2. Departmental system of internal control over financial reporting

2.1 Internal control management

The NRC has a well-established governance and accountability structure to support departmental assessment efforts and oversight of its system of internal control. A departmental financial management framework is in place which includes:

• organizational accountability structures as they relate to internal control management to support sound financial management, including roles and responsibilities of senior departmental managers for control management in their areas of responsibility
• values and ethics
• ongoing communication and training on statutory requirements, and policies and procedures for sound financial management and control
• monitoring of regular updates to internal control management, as well as the 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 provides advice to the deputy head on the adequacy and the functioning of the NRC's risk management, control and governance frameworks and processes.

2.2 Service arrangements relevant to financial statements

The NRC relies on other organizations for processing certain transactions that are recorded in its financial statements, as follows:

Common service arrangements

• Public Services and Procurement Canada (PSPC) which administers the payments of salaries and the procurement of goods and services in accordance with the NRC's Delegation of Authority, and provides some accommodation services on behalf of the NRC
• Shared Services Canada (SSC), which provides IT infrastructure services
• The Department of Justice Canada which provides legal services
• The Treasury Board of Canada Secretariat, which provides information on public service insurance and centrally administers payment of the employer's share of contributions toward statutory employee benefit plans

Readers of this annex may refer to the annexes of the above-noted departments for a greater understanding of the system of internal control over financial reporting related to these specific services.

3. Departmental assessment results for the 2023-24 fiscal year

The following table summarizes the status of the ongoing monitoring activities conducted during the fiscal year:

In 2023-24, the NRC also followed up on the status of remedial plans from previous years.

The key findings and significant adjustments required from the current fiscal year's assessment activities are summarized in section 3.2.

3.1 New or significantly amended key controls

• Changes impacting the NRC's key financial controls during 2023-24 included:
• The Biologics Manufacturing Centre (BMC) operations were transferred from the NRC to a non-profit organization on April 1, 2023
• The Federal Government of Canada had announced that they are postponing the IRAP transition to the Canada Innovation Corporation (CIC) until 2026–2027
• The 2024 budget announced of $100 million over 5 years, starting in 2024-25, in support for IRAP's AI Assist Program to help Canadian small- and medium-sized businesses and innovators build and deploy new AI solutions
• The 2024 budget also announced on-going funding for TRIUMF of $399.8 million
• The NRC has obtained full procurement authorities which will come in effect on June 22, 2024.

3.2 Ongoing monitoring program

The NRC's rotational risk-based monitoring plan had been updated to reflect a refreshed risk assessment for all business processes impacting financial reporting and financial management. The plan covers a 5-year period (2020-21 to 2024-25). The NRC completed its planned annual assessment of controls that included Entity level controls, SAP and SONAR IT general controls, costing, salary forecasting, CFO attestation, procurement, expenses and payments, transfer payments – non-IRAP, and inventory. Overall, the key controls tested are working as intended, with opportunities for improvement noted.

Details of the assessment and the results are as follows:

• Entity level controls: The assessment determined that overall, the controls are working as intended. An opportunity for improvement was noted with respect to a risk assessment refreshment. Two minor opportunities for improvement were noted for the monitoring of expired training on financial signing authorities and ensuring that the most current financial policies are posted on the NRC intranet.
• SAP and SONAR IT general controls: The assessment determined that overall, the controls are effective.
• Costing: The assessment determined that overall, the process provides effective controls.
• Salary forecasting: The assessment determined that overall, the process provides effective controls.
• CFO attestation: The assessment determined that overall, the process provides effective controls.
• Procurement, expenses and payments: The assessment determined that overall, the process provides effective controls.
• Transfer payments, non-IRAP: The assessment determined that overall, the process provides effective controls.
• Inventory: The assessment determined that overall, the controls are working as intended. An opportunity for improvement was noted relating to access and segregation of duties associated with system roles. However, mitigating controls and testing performed provided support to conclude that the controls are working as intended.

4. Departmental action plan for the next fiscal year and subsequent years

During fiscal year 2020-21, the NRC reviewed its approach and developed an updated assessment plan covering internal controls over financial reporting and internal controls over financial management for fiscal years 2020-21 to 2024-25. A new 5-year plan representing fiscal years 2025-26 to 2029-30 will be established in the upcoming fiscal year.

Legend

RA

Risk assessment refresh

DE

Design effectiveness refresh & testing

OER

Operating effectiveness refresh & testing

OE

Operating effectiveness testing

OP

Documenting assessments conducted by other parties