NRCan 2024-2025 Consolidated Financial Statements

Table of contents

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, 2025, and all information contained in these consolidated statements rests with the management of Natural Resources Canada (Department). These consolidated financial statements have been prepared by management using the Government’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 fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the Department’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Department’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 Department; and through conducting an annual risk-based 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 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, 2025 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 Department’s system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of the Department’s operations, and by the Departmental Audit Committee, which oversees management’s responsibilities for maintaining adequate control systems and quality of financial reporting.

The consolidated financial statements of Natural Resources Canada have not been audited.

Original signed by
Michael Vandergrift
Deputy Minister

Ottawa, Canada
Date signed: September 11, 2025

Original signed by
Francis Brisson
Chief Financial Officer

Ottawa, Canada
Date signed: September 11, 2025

Natural Resources Canada
Consolidated Statement of Financial Position (Unaudited)
As at March 31

(in thousands of dollars)

  2025 2024
Liabilities
Accounts payable and accrued liabilities (note 4) 1,506,238 1,153,183
Vacation pay and compensatory leave 45,225 41,961
Environmental liabilities and asset retirement obligations (note 5) 26,384 24,354
Lease obligation for tangible capital assets (note 7) 42,550 46,187
Employee future benefits (note 8) 13,639 12,965
Other liabilities (note 9) 40,339 43,342
Total liabilities 1,674,375 1,321,992
Financial assets
Due from Consolidated Revenue Fund 1,538,992 1,184,147
Accounts receivable and advances (note 10) 187,632 69,305
Loans receivable (note 11) 104,689 123,646
Total gross financial assets 1,831,313 1,377,098
Financial assets held on behalf of Government
Accounts receivable and advances (note 10) (166,113) (46,255)
Loans receivable (note 11) (104,689) (123,646)
Total financial assets held on behalf of Government (270,802) (169,901)
Total net financial assets 1,560,511 1,207,197
Departmental Net debt 113,864 114,795
Non-financial assets
Prepayments 4,470 4,998
Inventory (note 13) 536 397
Tangible capital assets (note 14) 356,585 337,224
Total non-financial assets 361,591 342,619
Departmental net financial position (note 15) 247,727 227,824

Contractual obligations and contractual rights (note 16)

Contingent liabilities and contingent assets (note 17)

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

Original signed by
Michael Vandergrift
Deputy Minister

Ottawa, Canada
Date signed: September 11, 2025

Original signed by
Francis Brisson
Chief Financial Officer

Ottawa, Canada
Date signed: September 11, 2025

Natural Resources Canada
Consolidated Statement of Operations and Departmental Net Financial Position (Unaudited)
For the year ended March 31

(in thousands of dollars)

  2025
Planned
Results		 2025
Actual		 2024
Expenses
Innovative and Sustainable Natural Resources Development 2,156,705 2,257,939 1,901,432
Globally Competitive Natural Resource Sectors 2,087,192 1,266,157 875,162
Natural Resource Science and Risk Mitigation 600,801 630,618 472,299
Internal services 227,122 248,671 244,788
Total expenses 5,071,820 4,403,385 3,493,681
Revenues
Rights and privileges 1,646,166 798,119 309,313
Other, such as revenue pursuant to agreements 5,100 97,944 215,161
Revenue from services of a non-regulatory nature 11,441 13,196 14,000
Proceeds from sales of goods and information products 5,424 1,440 1,258
Revenue from services of a regulatory nature 1,014 2,413 2,225
Services to other government departments 86 172 194
Revenues earned on behalf of Government (1,643,830) (889,471) (518,265)
Total net revenues (note 6) 25,401 23,813 23,886
Net cost of operations before government funding and transfers 5,046,419 4,379,572 3,469,795
Government funding and transfers
Net cash provided by Government of Canada 3,977,264 3,143,384
Change in due from Consolidated Revenue Fund 354,845 260,635
Services provided without charge by other government departments (note 18a) 67,261 66,557
Transfer of the transition payments for implementing salary payments in arrears - (2)
Transfers of capital assets from other government departments 8 -
Other transfers of assets from/(to) other government departments 97 (292)
Total government funding and transfers 4,399,475 3,470,282
Net revenue of operations after government funding and transfers (19,903) (487)
Departmental net financial position - Beginning of year 227,824 227,337
Departmental net financial position - End of year 247,727 227,824

Segmented information (note 19)

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

Natural Resources Canada
Consolidated Statement of Change in Departmental Net Debt (Unaudited)
For the year ended March 31

(in thousands of dollars)

  2025 2024
Net revenue of operations after government funding and transfers (19,903) (487)
Change due to tangible capital assets
Acquisition of tangible capital assets (note 14) 48,715 33,813
Amortization of tangible capital assets (note 14) (30,395) (28,735)
Proceeds from disposal of tangible capital assets (504) (250)
Net gain (loss) on disposal of tangible capital assets including adjustments 1,537 (3,348)
Transfers of capital assets from other government departments 8 -
Total change due to tangible capital assets 19,361 1,480
Change due to inventory 139 (19)
Change due to prepayments (528) 874
(Decrease) increase in departmental net debt (931) 1,848
Departmental net debt - Beginning of year 114,795 112,947
Departmental net debt - End of year 113,864 114,795

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

Natural Resources Canada
Consolidated Statement of Cash Flows (Unaudited)
For the year ended March 31

(in thousands of dollars)

  2025 2024
Operating activities
Net cost of operations before government funding and transfers 4,379,572 3,469,795
Non-cash items:
Amortization of tangible capital assets (note 14) (30,395) (28,735)
Net gain (loss) on disposal of tangible capital assets including adjustments 1,537 (3,348)
Services provided without charge by other government departments (note 18a) (67,261) (66,557)
Other transfers of assets (from)/to other government departments (97) 292
Variations in Statement of Financial Position:
Decrease in net accounts receivable and advances (1,531) (949)
(Decrease) increase in prepayment (528) 874
Increase (decrease) in inventory 139 (19)
Increase in accounts payable and accrued liabilities (353,055) (255,868)
Increase in vacation pay and compensatory leave (3,264) (2,604)
Increase in employee future benefits (674) (719)
(Increase) decrease in environmental liabilities and asset retirement obligations (2,030) 1,941
Decrease (increase) in other liabilities 3,003 (7,862)
Cash used in operating activities 3,925,416 3,106,243
Capital investing activities
Acquisitions of tangible capital assets (note 14) 48,715 33,813
Proceeds from disposal of tangible capital assets (504) (250)
Cash used in capital investing activities 48,211 33,563
Financing activities
Payments on lease obligation for tangible capital assets 3,637 3,578
Cash used in financing activities 3,637 3,578
Net cash provided by Government of Canada 3,977,264 3,143,384

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

Natural Resources Canada
Notes to the Consolidated Financial Statements (Unaudited)
For the year ended March 31

1. Authority and objectives

The Department of Natural Resources Canada (NRCan) was created on June 25, 1993 by the merger of the Department of Energy, Mines and Resources and the Department of Forestry. This organizational change was effected by Order in Council, pending the passage of legislation which occurred in 1994. The Department’s mandate is primarily based on the Department of Natural Resources Act, the Resources and Technical Surveys Act and the Forestry Act.

NRCan works to improve the quality of life of Canadians by ensuring that our natural resources are developed sustainably, providing a source of jobs, prosperity and opportunity, while preserving our environment and respecting our communities and Indigenous People.

NRCan fulfills its mandate through the following Core Responsibilities:

Innovative and Sustainable Natural Resources Development: Lead the transformation to a low-carbon economy by improving the environmental performance of Canada’s natural resource sectors through innovation and sustainable development and use.

Globally Competitive Natural Resource Sectors: Advance and promote market access, inclusiveness and competitiveness for Canada’s natural resource sectors, in support of jobs and economic growth. Also includes statutory payments for offshore petroleum.

Natural Resource Science and Risk Mitigation: Lead foundational science and share expertise for managing Canada’s natural resources, reducing the impacts of climate change and mitigating risks from natural disasters and explosives.

Internal Services: Internal services are the services that are provided within a department so that it can meet its corporate obligations and deliver its programs. There are 10 categories of internal services: management and oversight services; communications services; legal services; human resources management services; financial management services; information management services; information technology services; real property management services; materiel management services; acquisition management services.

2. Summary of significant accounting policies

These consolidated financial statements are prepared using the Department’s accounting policies stated below, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

(a) Parliamentary authorities

The Department is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Department 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 Consolidated Statement of Operations and Departmental Net Financial Position and in the Consolidated Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. The planned results amounts in the “Expenses” and “Revenues” sections of the Consolidated Statement of Operations and Departmental Net Financial Position are the amounts reported in the Consolidated Future-oriented Statement of Operations included in the 2024-2025 Departmental Plan. Planned results are not presented in the “Government funding and transfers” section of the Consolidated Statement of Operations and Departmental Net Financial Position and in the Consolidated Statement of Change in Departmental Net Debt because these amounts were not included in the 2024-2025 Departmental Plan.

(b) Consolidation

These consolidated financial statements include the accounts of the sub-entities for which the Deputy Minister is accountable. The accounts of the Geomatics Canada Revolving Fund have been consolidated with those of the Department, and all inter-organizational balances and transactions have been eliminated.

(c) Net cash provided by Government

The Department operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Department is deposited to the CRF and all cash disbursements made by the Department 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 of Canada.

(d) Amounts due from or to the 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 the Department is entitled to draw from the CRF without further authorities to discharge its liabilities.

(e) Revenues and deferred 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.
  • Deferred revenue consists of amounts received in advance of the delivery of goods and rendering of services that will be recognized as revenue in a subsequent fiscal year as it is earned.
  • Other revenues are recognized in the period the event giving rise to the revenue occurred.
  • Revenues that are non-respendable are not available to discharge the Department’s liabilities. While the Deputy Minister is expected to maintain accounting control, he has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are earned on behalf of the Government of Canada and are therefore presented as a reduction of the Department’s gross revenues.

(f) Expenses

Transfer payments are recorded as an expense in the year the transfer is authorized and all eligibility criteria have been met by the recipient. 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 contributions to the health and dental insurance plans, and workers’ compensation are recorded as operating expenses at their carrying value.

(g) Environmental liabilities and asset retirement obligations

An environmental liability for the remediation of contaminated sites is recognized when all of the following criteria are satisfied: an environmental standard exists, contamination exceeds the environmental standard, the Department 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 the Department’s best estimate of the amount required to remediate the sites to the current minimum standard for its use prior to contamination.

An asset retirement obligation is recognized when all of the following criteria are satisfied: there is a legal obligation to incur retirement costs in relation to a tangible capital asset, the past event or transaction giving rise to the retirement liability has occurred, it is expected that future economic benefits will be given up and a reasonable estimate of the amount can be made. The costs to retire an asset are normally capitalized and amortized over the asset’s estimated remaining useful life. An asset retirement obligation may arise in connection with a tangible capital asset that is not recognized or no longer in productive use. In this case, the asset retirement cost would be expensed. The measurement of the liability is the government’s best estimate of the amount required to retire a tangible capital asset.

When the future 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 rate used reflects 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.

(h) Employee future benefits

  1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government of Canada. The Department’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 contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan’s sponsor.
  2. 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 of Canada as a whole.

(i) 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, accounts payable and accrued liabilities and the capital lease obligation.

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. Loans receivable are subsequently measured at amortized cost.

See Note 12 Risk Management for risks related to the Department's financial instruments.

(j) Non-financial assets

  1. Prepayments are disbursements made before the completion of the work, delivery of the goods or rendering of the services. They are accounted for as non-financial assets until the related services are rendered, goods are consumed, or terms of the contractual agreement are fulfilled.
  2. Inventory:
    • Inventory held for consumption consists of parts, materials and supplies held for future program delivery. It is valued at cost using the average cost method. If there is no longer any service potential, inventory is valued at the lower of cost or net realizable value.
    • Inventory held for resale consists of maps, which is valued at the lower of cost or net realizable value, with cost being determined using the weighted average cost of each title.
  3. Tangible capital assets – The cost 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 14. 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, insect collection, and Crown land to which no acquisition cost is attributable; and intangible assets.

(k) Contingent liabilities

Contingent liabilities, including the allowance for loan guarantees and an insurance program, are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, a provision is accrued and an expense is recorded to other operating expenses. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the consolidated financial statements.

For loan guarantees and the insurance program, an allowance is recorded when it is determined that a loss is likely and the amount of the allowance is estimated taking into consideration the nature of the guarantee and insurance program, loss experience and current conditions. The allowance is reviewed on an ongoing basis and changes in the allowance are recorded as expenses in the year they become known.

(l) Contingent assets

Contingent assets are possible assets which may become actual assets when one or more future events 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 consolidated financial statements.

(m) Transactions involving foreign currencies

Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars using the rate of exchange in effect at March 31st. Gains and losses resulting from foreign currency translation are reported directly on the Statement of Operations and Departmental Net Financial Position and in note 19 in other operating expenses according to the activities to which they relate.

(n) Measurement uncertainty

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

(o) Related party transactions

  1. Related party transactions, other than inter-entity transactions, are recorded at the exchange amount.
  2. 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:
    • Services provided on a recovery basis are recognized as revenues and expenses on a gross basis and measured at the exchange amount.
    • Certain services received on a without charge basis are recorded for departmental consolidated financial statement purposes at the carrying amount.

3. Parliamentary authorities

The Department receives most of its funding through annual parliamentary authorities. Items recognized in the Consolidated Statement of Operations and Departmental Net Financial Position and the Consolidated Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, the Department has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

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

(in thousands of dollars)

  2025 2024
Net cost of operations before government funding and transfers 4,379,572 3,469,795
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (30,395) (28,735)
Net gain (loss) on disposal of tangible capital assets including adjustments 1,537 (3,348)
Services provided without charge by other government departments (67,261) (66,557)
(Decrease) increase in prepayment (528) 874
Increase (decrease) in inventory 139 (19)
Decrease in accrued liabilities 43,329 29,199
Increase in vacation pay and compensatory leave (3,264) (2,604)
Increase in employee future benefits (674) (719)
(Increase) decrease in environmental liabilities and asset retirement obligations (2,030) 1,941
Refund of prior years' expenditures 51,029 22,588
Revenues and expenses for restricted accounts (1,021) (620)
Other adjustments (3,156) 7,422
Total items affecting net cost of operations but not affecting authorities (12,295) (40,578)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets 48,715 33,813
Decrease in lease obligation for tangible capital assets 3,637 3,578
Transition payments for implementing salary payments in arrears - 2
Total items not affecting net cost of operations but affecting authorities 52,352 37,393
Current year authorities used 4,419,629 3,466,610

(b) Authorities provided and used

(in thousands of dollars)

  2025 2024
Authorities provided:
Vote 1 – Program expenditures 960,267 956,694
Vote 5 – Capital expenditures 59,217 54,856
Vote 10 – Grants and contributions 3,011,385 2,813,051
Statutory amounts: 1,086,032 734,370
Less: Authorities available for future years (8,101) (8,572)
Lapsed – Operating expenditures (36,071) (54,588)
Lapsed – Capital expenditures (6,944) (18,522)
Lapsed – Grants and contributions (646,156) (1,010,679)
Current year authorities used 4,419,629 3,466,610

4. Accounts payable and accrued liabilities

The following table presents details of the Department's accounts payable and accrued liabilities:

(in thousands of dollars)

  2025 2024
Accounts payable - Other government departments and agencies 23,738 26,804
Accounts payable - External parties 462,484 387,162
Total accounts payable 486,222 413,966
Accrued liabilities 1,020,016 739,217
Total accounts payable and accrued liabilities 1,506,238 1,153,183

5. Environmental liabilities and asset retirement obligations

Environmental liabilities and asset retirement obligations include:

(in thousands of dollars)

  2025 2024
Remediation liability for contaminated sites 1,850 1,776
Asset retirement obligations 24,534 22,578
Total environmental liabilities and asset retirement obligations 26,384 24,354

(a) Remediation of contaminated sites

With respect to environmental liabilities for the 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. This systematic approach aids in identification of the high risk sites in order to allocate limited resources to those sites which pose the highest risk to human health and the environment.

The Department has identified 11 sites (11 sites in 2024) where contamination may exist and assessment, remediation and monitoring may be required. Of these, the Department has identified 7 sites (7 sites in 2024) where action is required and for which a gross liability of $626 thousand ($576 thousand in 2024) has been recorded. This liability estimate has been determined based on site assessments performed by environmental experts.

There is 1 site that has not been assessed by environmental experts (1 site in 2024) for which the department has estimated and recorded a liability of $1,224 thousand ($1,200 thousand in 2024).

The estimate of $1,850 thousand ($1,776 thousand in 2024) represents management’s best estimate of the costs required to remediate sites to the current minimum standard for its use prior to contamination, based on information available at the consolidated financial statement date.

For the remaining 3 sites (3 sites in 2024), no liability for remediation has been recognized. These sites are at early stages of testing and evaluation and if remediation is required, liabilities will be reported as soon as a reasonable estimate can be determined.

The following table presents the total estimated amounts of these liabilities by nature and source, the associated expected recoveries and the total undiscounted future expenditures as at March 31, 2025, and March 31, 2024. When the liability estimate is based on a future cash requirement, the amount is adjusted for inflation using a forecast Consumer Price Index (CPI) rate of 2.0% (2.0% in 2024). Inflation is included in the undiscounted amount. The Government of Canada’s cost of borrowing by reference to the actual zero-coupon yield curve for Government of Canada bonds has been used to discount the estimated future expenditures. The March 2025 rates range from 2.88% for a 8 year term to 2.72% for a 6 year term.

(in thousands of dollars)

Nature and Source Total number of Sites 2025 Number of Sites with a liability 2025 Estimated Liability 2025 Estimated Total Undiscounted Expenditures 2025 Estimated Recoveries 2025
Office/Commercial/Industrial OperationsTable 5 note(1) 11 8 1,850 1,968 -
Totals 11 8 1,850 1,968 -

(in thousands of dollars)

Nature and Source of Liability Total number of Sites 2024 Number of Sites with a liability 2024 Estimated Liability 2024 Estimated Total Undiscounted Expenditures 2024 Estimated Recoveries 2024
Office/Commercial/Industrial OperationsTable 5a note (1) 11 8 1,776 1,944 -
Totals 11 8 1,776 1,944 -

Table 5a Note

Table 5a Note

Contamination associated with the operations of the office/commercial/industrial facilities 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, BTEX, etc. These sites often have multiple sources of contamination.

Return to footnote (1) referrer

(b) Asset Retirement Obligations

The Department has recorded asset retirement obligations for the removal of asbestos in buildings and removal of leasehold improvements.

The changes in asset retirement obligations during the year are as follows

(in thousands of dollars)

  2025 2024
Asbestos in buildings Removal of Leasehold Improvements Total -
Opening balance 16,853 5,725 22,578 25,703
Liabilities Incurred - 4 4 -
Revisions in estimates 948 193 1,141 (3,435)
Accretion expense(1a) 593 218 811 310
Closing balance 18,394 6,140 24,534 22,578

Table 5b Note

Table 5b Note

Accretion expense is the increase in the carrying amount of an asset retirement obligation due to the passage of time.

Return to footnote (1a) referrer

The undiscounted future expenditures, adjusted for inflation, for the planned projects comprising the liability are $38,126 thousand ($38,117 thousand as at March 31, 2024). Estimated recoveries related to asset retirement obligations amounted to $0 as at year end ($0 in 2024).

Key assumptions used in determining the provision are as follows:

(in thousands of dollars)

  2025 2024
Discount rate 2.46% - 3.19% 3.51% - 4.88%
Discount period and timing of settlement 1 to 17 Years 1 to 18 years
Long-term rate of inflation 2% 2%

The Department’s ongoing efforts to assess contaminated sites and asset retirement obligations may result in additional environmental liabilities and asset retirement obligations.

6. Revenues

The department has the following major types of revenues: Rights and privileges, revenue from services of a non-regulatory nature, proceeds from sales of goods and information products, revenue from services of a regulatory nature and services to other government departments. They are recorded as performance obligations are satisfied.

Departmental revenues also include other revenues which consist of revenues from fines, lease and use of public property, revenues from restricted accounts, other fees and charges and gains on the sale of assets. They are recorded when earned.

Revenues earned on behalf of the Government mainly consist of rights and privileges and revenues from fines. They are recorded when earned.

(a) Disaggregated revenues

(in thousands of dollars)

  2025 2024
Rights and privileges (Exchange) 798,119 309,313
Other, such as revenue pursuant to agreements
Revenues from Fines (non-exchange)(1) 91,209 208,753
Lease and use of public property (exchange) 1,366 1,270
Revenues from restricted accounts (exchange and non-exchange) 2,323 2,554
Other Fees and Charges (exchange) 2,566 2,356
Gains on the sale of assets (exchange)(1) 480 228
Total Other, such as revenue pursuant to agreements 97,944 215,161
Revenue from services of a non-regulatory nature (exchange) 13,196 14,000
Proceeds from sales of goods and information products (exchange) 1,440 1,258
Revenue from services of a regulatory nature (exchange) 2,413 2,225
Services to other government departments (exchange) 172 194
Revenues earned on behalf of Government (exchange and non-exchange) (889,471) (518,265)
Total net revenues 23,813 23,886

Table 6a note

Table 6a Note 1

Revenues from fines and Gains on the sales of assets are non-recurring revenues.

Return to table 6a (1) referrer

7. Lease obligation for tangible capital assets

The Department has entered into an agreement to lease a building under a capital lease with a cost of $95,993 thousand as at March 31, 2025 ($95,993 thousand in 2024) and accumulated amortization of $54,572 thousand as at March 31, 2025 ($50,628 thousand in 2024). Interest on this obligation of $735 thousand ($794 thousand in 2024) is reported in the Consolidated Statement of Operations and Departmental Net Financial Position as part of Innovative and Sustainable Natural Resources Development expenses. The obligation related to the upcoming years includes the following:

(in thousands of dollars)

  2025
2026 4,372
2027 4,372
2028 4,372
2029 4,372
2030 4,372
2031 and subsequent 24,555
Total future minimum lease payment 46,415
Less: imputed interest (1.65%) 3,865
Lease obligation for tangible capital assets 42,550

8. Employee future benefits

(a) Pension benefits

The Department’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 the Department 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 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.

The 2025 expense amounts to $57,592 thousand ($50,178 thousand in 2024). For Group 1 members, the expense represents approximately 1.02 times (1.02 times in 2024) the employee contributions and, for Group 2 members, approximately 1.00 times (1.00 times in 2024) the employee contributions.

The Department’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 of Canada, as the Plan’s sponsor.

(b) Severance benefits

Severance benefits provided to the Department’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, 2025, 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 change in the obligation during the year is as follows:

(in thousands of dollars)

  2025 2024
Accrued benefit obligation - Beginning of year 12,965 12,246
Expense for the year 2,457 2,859
Benefits paid during the year (1,783) (2,140)
Accrued benefit obligation - End of year 13,639 12,965

9. Other liabilities

The following table presents a detail of the Department’s other liabilities:

(in thousands of dollars)

  2025 2024
Contractor security deposits - Cash 17 22
Guarantee deposits - Oil and gas 20,768 20,309
Shared costs projects 12,917 16,286
Shared costs agreements – Research 6,637 6,725
Total other liabilities 40,339 43,342

Contractor security deposits – Cash: This account was established to record contractor security deposits that are required for the satisfactory performance of work in accordance with Government Contracts Regulations.

Guarantee deposits – Oil and gas: This account was established to record and hold financial securities in the form of cash, which are required to be issued to, and held by the Government of Canada pursuant to an Exploration Licence in accordance with section 24 of the Canada Petroleum Resources Act, section 67 of the Canada–Newfoundland and Labrador Atlantic Accord Implementation Act and section 70 of the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation and Offshore Renewable Energy Management Act. These securities are a performance guarantee that the agreed exploration will be performed in the manner and time frame specified. Interest is not paid on these deposits

Shared-cost projects: This account was established to facilitate the retention and disbursement of funds received from private organizations and other governments for cost-sharing scientific non-research projects.

Shared-cost agreements – Research: This account was established to facilitate the retention and disbursement of funds received from private industry and other governments for joint research projects or shared-cost research agreements.

10. Accounts receivable and advances

The following presents details of the Department’s accounts receivable and advances balances:

(in thousands of dollars)

  2025 2024
Receivables - Other government departments and agencies 7,256 12,008
Receivables - External parties 183,598 58,055
Employee advances 381 451
Subtotal 191,235 70,514
Allowance for doubtful accounts on receivables from external parties (3,603) (1,209)
Gross accounts receivable and advances 187,632 69,305
Accounts receivable held on behalf of Government (166,113) (46,255)
Net accounts receivable and advances 21,519 23,050

The following table provides an aging analysis of accounts receivable from external parties and the associated valuation allowances used to reflect their net recoverable value.

(in thousands of dollars)

  2025 2024
Accounts receivable from external parties
Not past due 173,566 55,628
Number of days past due
1 to 30 319 50
31 to 60 276 192
61 to 90 48 117
91 to 365 7,391 236
Over 365 1,998 1,832
Subtotal 183,598 58,055
Less: Valuation allowance 3,603 1,209
Total 179,995 56,846

11. Loans receivable

The following table presents details of the Department's loans receivable and unconditionally repayable contribution balances:

(in thousands of dollars)

  2025 2024
Unconditionally repayable contributions 108,431 123,646
Subtotal 108,431 123,646
Less: Allowance for uncollectibility (3,742) -
Gross loans receivable 104,689 123,646
Loans receivable held on behalf of Government (104,689) (123,646)
Net loans receivable - -

(a) Unconditionally repayable contributions

Unconditionally repayable contributions are, in substance, loans provided to stimulate economic development. The Department’s unconditionally repayable contributions are non-interest bearing and have annual repayment terms of up to 5 years from project completion date, with the final instalment no later than March 31, 2028. An allowance of $3,742 thousand ($0 in 2024) has been recorded.

The following table provides an aging analysis of unconditionally repayable contributions that are either past due or impaired and the associated valuation allowances used to reflect their net recoverable value:

(in thousands of dollars)

  2025 2024
Unconditionally repayable contributions
Not past due 103,536 123,646
Number of days past due
1 to 90 4,134 -
91 to 365 761 -
Over 365 - -
Impaired - -
Subtotal 108,431 123,646
Less: Valuation allowance 3,742 -
Total 104,689 123,646

12. Risk Management

The Department has exposure to the following risks from its use of financial instruments: credit risk, market risk and liquidity risk.

(a) Credit Risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss.

The Department’s maximum exposure to credit risk at March 31, 2024 and March 31, 2025 is the carrying amount of its financial assets.

The Department has determined that there is no significant concentration of credit risk related to accounts receivable from external parties. An analysis of the age of these financial assets and the associated valuation allowances used to reflect these accounts at their net recoverable value is disclosed in Note 10.

(b) Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk is comprised of currency risk and interest rate risk.

  1. Currency Risk

    Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in the foreign exchange rates. The Department has determined that there is no significant concentration of currency risk related to foreign denominated financial instruments.

  2. Interest Rate Risk

    Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Department’s loans receivable do not bear interest. Although the fair value of these financial instruments will be affected by changes in market interest rates, there is no impact on the Department’s consolidated financial statements as these items are measured at cost or amortized cost.

(c) Liquidity Risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting its obligations associated with financial liabilities. As the funding for the Department’s financial liabilities is drawn from the Consolidated Revenue Fund, its exposure to liquidity risk is fully mitigated.

13. Inventory

The following table presents details of the inventory:

(in thousands of dollars)

  2025 2024
Inventories held for consumption 490 350
Inventories held for re-sale 46 47
Total inventory 536 397

The cost of consumed inventory recognized as an expense in the Consolidated Statement of Operations and Departmental Net Financial Position is $3 thousand in 2025 ($156 thousand in 2024).

14. Tangible capital assets

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

Asset Class Amortization Period
Buildings 10 to 40 years
Works and infrastructure 20 to 30 years
Machinery and equipment 5 to 10 years
Informatics hardware 4 to 10 years
Informatics software 4 years
Vehicles 4 to 10 years
Leasehold improvements Lesser of the remaining term of lease or useful life of the improvement
Leased tangible capital assets Over term of lease/useful life
Assets under construction Once in service, in accordance with asset class

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.

Cost

(in thousands of dollars)

  Opening Balance Acquisitions Adjustmentstable 14 note (1) Disposals and Write-offs Closing Balance
Capital asset class
Land 7,800 201 - - 8,001
Buildings 317,164 183 (8,023) - 309,324
Works and Infrastructure 21,682 - - - 21,682
Machinery and equipment 268,993 17,328 12,818 8,117 291,022
Informatics hardware 21,563 1,626 - 418 22,771
Informatics software 14,635 211 - 180 14,666
Vehicles 18,307 2,741 130 1,353 19,825
Leasehold improvements 75,520 - 669 10 76,179
Leased tangible capital assets 95,993 - - - 95,993
Assets under construction 33,843 26,425 (4,388) - 55,880
Total 875,500 48,715 1,206 10,078 915,343

Accumulated Amortization

(in thousands of dollars)

  Opening
Balance		 Amortization Adjustmentstable 14 note(1) Disposals
and
Write-offs		 Closing
Balance
Capital asset class
Buildings 187,144 7,375 (11,818) - 182,701
Works and Infrastructure 3,327 789 - - 4,116
Machinery and equipment 205,998 11,432 11,817 8,113 221,134
Informatics hardware 19,708 756 - 418 20,046
Informatics software 13,851 255 - 167 13,939
Vehicles 11,132 1,279 130 1,314 11,227
Leasehold improvements 46,488 4,565 (20) 10 51,023
Leased tangible capital assets 50,628 3,944 - - 54,572
Total 538,276 30,395 109 10,022 558,758

Net book value

(in thousands of dollars)

Net book value
2025 2024
Capital asset class
Land 8,001 7,800
Buildings 126,623 130,020
Works and Infrastructure 17,566 18,355
Machinery and equipment 69,888 62,995
Informatics hardware 2,725 1,855
Informatics software 727 784
Vehicles 8,598 7,175
Leasehold improvements 25,156 29,032
Leased tangible capital assets 41,421 45,365
Assets under construction 55,880 33,843
Total 356,585 337,224

Table 14 Note

Table 14 Note 1

Adjustments include assets under construction of $3,853 thousand that were transferred to the other categories upon completion of the assets. It also includes transfers of tangible capital assets with other government departments with a net effect of $8 thousand on the departmental net financial position.

Return to table 14 note (1) referrer

15. Departmental net financial position

A portion of the Department’s net financial position is used for a specific purpose. Related revenues and expenses are included in the Consolidated Statement of Operations and Departmental Net Financial Position.

The Environmental Studies Research Fund account was established pursuant to subsection 76(1) of the Canada Petroleum Resources Act. The purpose of the Fund is to finance environmental and social studies pertaining to the manner in which, and the terms and conditions under which, petroleum exploration, development and production activities on frontier lands, authorized under this Act or any other act of Parliament, should be conducted.

The Nuclear Liability Account is established pursuant to sub-section 32(1) of the Nuclear Liability and Compensation Act, to record indemnity fees paid by operators and to provide for payment of any claims arising under the indemnity agreements entered into between the government and nuclear installation operators. This account is a continuation of the Nuclear Liability Reinsurance Account under the previous Nuclear Liability Act, now repealed.

Legislation requires that the revenues of these accounts be earmarked and that related payments and expenses be charged against such revenues. The transactions do not represent liabilities to third parties but are internally restricted for specified purposes.

(in thousands of dollars)

  2025 2024
Environmental Studies Research Fund - Restricted
Balance - Beginning of year 4,615 5,401
Revenues 2,153 2,387
Expenses (3,343) (3,173)
Balance - End of year 3,425 4,615
Nuclear Liability Account - Restricted
Balance - Beginning of year 5,209 5,042
Revenues 169 167
Balance - End of year 5,378 5,209
Subtotal - Restricted 8,803 9,824
Unrestricted 238,924 218,000
Departmental net financial position - End of year 247,727 227,824

16. Contractual obligations and contractual rights

(a) Contractual obligations

The nature of the Department’s activities may result in some large multi-year contracts and obligations whereby the Department 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:

(in thousands of dollars)

  2026 2027 2028 2029 2030 2031 and
subsequent		 Total
Other Transfer Payments 1,479,730 1,278,990 478,714 334,027 258,214 206,407 4,036,082
Total 1,479,730 1,278,990 478,714 334,027 258,214 206,407 4,036,082

(b) Contractual rights

The activities of the Department sometimes involve the negotiation of contracts or agreements with outside parties that result in the department having rights to both assets and revenues in the future. They principally involve leases of property, royalties, and sales of goods and services. The major contractual rights that will generate revenues in future years are the Loan Guarantee Agreements. The agreements that underpin the federal loan guarantee for the Maritime Link project require the beneficiaries to pay Canada an annual fee of 0.5% of the net amount of guaranteed debt outstanding.

These major contractual rights that will generate revenues in future years and that can be reasonably estimated are summarized as follows:

(in thousands of dollars)

  2026 2027 2028 2029 2030 2031 and
subsequent		 Total
Loan Guarantee Fees 2,500 2,414 2,325 2,236 2,146 24,680 36,301
Total 2,500 2,414 2,325 2,236 2,146 24,680 36,301

17. Contingent liabilities and contingent assets

(a) Contingent liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown. They are grouped into these categories as follows:

i. Claims and litigation:

Claims have been made against the Department in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. The Department records an allowance for claims and litigations where it is likely that there will be a future payment and a reasonable estimate of the loss can be made. Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amount to approximately $50,000 thousand in 2025 ($50,000 thousand in 2024).

ii. Loan guarantees:

(in thousands of dollars)

Authorized Limit Outstanding guarantees
2025 2024
Lower Churchill Hydroelectric Projects 10,700,000 9,204,198 8,828,241

From 2013 to 2017, the Government of Canada guaranteed a total of $9.2 billion in debt issued to support the construction of the Lower Churchill Hydroelectric Projects, including two projects sponsored by Nalcor Energy ([1] Muskrat Falls and Labrador Transmission Assets and [2] Labrador-Island Link) and one project sponsored by Emera Inc. (Maritime Link).

Interest payments on these bonds began immediately after issuance, occurring every six months on June 1 and December 1 of every year. Principal repayments began in 2020. In some cases, principal repayments are made directly to bondholders every six months; in other cases, the entire principal amount of the bond is repaid on the maturity date – in these cases, funds are gradually set aside every six months to ensure that the full principal amount can be paid on the maturity date.

In March 2022, the Government of Canada issued a subsequent federal loan guarantee for $1 billion in debt. The proceeds of this debt issuance will be used to make principal repayments for the Muskrat Falls and Labrador Transmission Assets project that come due on or before June 1, 2029. Interest payments on this subsequent guarantee began on June 1, 2022 and will occur every six months until the debt is retired. The principal amounts will be repaid beginning on December 1, 2037, with the final payment occurring on June 1, 2057.

In December 2024, the Government of Canada issued a second loan guarantee for $500 million in debt for the Maritime Link. Interest and principal payments on this second tranche of guaranteed debt will begin on June 1, 2025 and will occur every six months until the debt is retired on December 1, 2052.

Among the many safeguards put in place to protect Canada's interests, all of the project entities' shares, assets and agreements have been pledged as security to Canada.

The net amount of debt remaining outstanding, having been reduced by both principal repayments to bond holders as well as funds held in escrow for future principal repayments, is $9.2 billion as at March 31, 2025.

iii. Insurance program:

Under the Nuclear Liability and Compensation Act (NLCA), which entered into force on January 1, 2017, and replaced the Nuclear Liability Act (NLA), now repealed, operators of designated nuclear installations are required to maintain financial security against the liability imposed on them by the NLCA.

The NLCA establishes that the operator’s liability for damages resulting from a nuclear incident is limited to $1 billion. This amount applies to the “Power Reactor Class” of nuclear installations prescribed in the Nuclear Liability and Compensation Regulations (NLCR). Lower liability amounts for lower-risk installations, based on their commensurate risk, are prescribed in the NLCR. The Minister of Energy and Natural Resources is required to review the operator’s liability limit at least once every five years, and the government may increase the limit by regulation.

Financial security covers all the compensable damage under the NLCA up to the limit imposed on operators under the NLCA or that is set out in the NLCR, with the exception of damage arising from routine emissions, and bodily injury occurring 10 to 30 years after a nuclear incident.

Through the indemnity agreements, entered into with 9 operators, the federal government covers the liability associated with the two exceptions. It also covers the difference between the lower liability amount prescribed in NLCR for lower-risk installations and, as applicable, the $1 billion liability assigned in the NLCA. The federal government charges each operator an annual fee for providing this indemnity coverage.

The Department of Natural Resources administers the Nuclear Liability Account (Account) on behalf of the federal government through a consolidated specified purpose account. This Account is a continuation of the Nuclear Liability Reinsurance Account under repealed NLA. All fees paid by the operators of nuclear installations are credited to this Account. The closing balance of this Account as at March 31 2025, is $5,377,535. Any claims for a nuclear incident under an indemnity agreement could be up to the level of the liability amount assigned in section 24 of the NLCA; however, there is no limit to the number of incidents to which the indemnity could apply. There have been no claims against – or payments out of – the Account since its creation under the NLA.

(b) Contingent assets

The Department issued conditionally repayable contributions with proponents for early stage research and development (R&D) activities. Repayments are determined upon the successful commercialization of products generated by the R&D. There are no amounts estimated to be repaid as at March 31, 2025 ($0 in 2024).

18. Related party transactions

The Department is related as a result of common ownership to all government departments, agencies, and Crown corporations. Related parties also include individuals who are members of key management personnel or close family members of those individuals, and entities controlled by, or under shared control of, a member of key management personnel or a close family member of that individual.

The department enters into transactions with these entities in the normal course of business and on normal trade terms.

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

During the year, the Department received services without charge from certain common service organizations, related to accommodation, the employer’s contribution to the health and dental insurance plans, and workers’ compensation coverage. These services received without charge have been recorded at the carrying value in the Department’s Consolidated Statement of Operations and Departmental Net Financial Position as follows:

(in thousands of dollars)

  2025 2024
Employer's contribution to the health and dental insurance plans 49,515 49,491
Accommodation 17,621 16,925
Workers' compensation 125 141
Total common services provided without charge 67,261 66,557

The Government of Canada 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 of Canada 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 payroll and cheque issuance services provided by Public Services and Procurement Canada and audit services provided by the Office of the Auditor General, are not included in the Department’s Consolidated Statement of Operations and Departmental Net Financial Position.

(b) Administration of programs on behalf of other government departments:

The Department has a number of Memoranda of Understanding with other government departments for the administration of their programs. The Department issued approximately $18,354 thousand ($19,587 thousand in 2024) in payments on behalf of the other government departments. These expenses are not reflected in the Departmental Consolidated Financial Statements, but rather in the Financial Statements of the respective government departments.

(c) Other transactions with other government departments and agencies

(in thousands of dollars)

  2025 2024
Expenses 202,941 184,750
Revenues 5,666 4,861

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

19. Segmented Information

Presentation by segment is based on Core responsibilities. 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 core responsibilities, by major object of expense and by major type of revenue. The segment results for the period are as follows:

(in thousands of dollars)

  Natural
Resource
Science and
Risk
Mitigation 		Innovative
and
Sustainable
Natural
Resources
Development 		Globally
Competitive
Natural
Resource
Sectors 		Internal
services 		2025 2024
Transfer payments
Industry 19,903 1,017,950 63,591 - 1,101,444 648,517
International 214 5,373 6,924 - 12,511 17,332
Non-profit organizations 65,448 128,013 48,718 - 242,179 202,239
Other levels of government 157,260 257,368 990,515 - 1,405,143 986,147
Individuals 60,668 389,093 52,091 - 501,852 529,778
Total transfer payments 303,493 1,797,797 1,161,839 - 3,263,129 2,384,013
Operating expenses
Salaries and employee benefits 203,337 319,716 89,762 175,712 788,527 756,926
Information 3,628 16,335 2,902 3,466 26,331 19,957
Professional and special services 52,708 59,177 4,467 50,272 166,624 182,283
Rentals 20,254 10,645 2,368 6,032 39,299 35,339
Transportation and communication 8,909 4,703 1,665 3,084 18,361 17,529
Utilities, material and supplies 13,218 13,471 768 1,681 29,138 30,604
Purchased repairs and upkeep 1,693 3,091 117 257 5,158 6,573
Acquisitions of non-capital assets 5,173 9,174 332 3,889 18,568 22,432
Amortization 14,669 13,526 972 1,228 30,395 28,735
Other 3,536 10,304 965 3,050 17,855 9,290
Total Operating expenses 327,125 460,142 104,318 248,671 1,140,256 1,109,668
Total expenses 630,618 2,257,939 1,266,157 248,671 4,403,385 3,493,681
Revenues
Rights and privileges
 2,486 79 795,554 - 798,119 309,313
Other, such as revenue pursuant to agreements
 1,678 4,036 91,312 918 97,944 215,161
Revenue from services of a non-regulatory nature
 6,351 6,812 33 - 13,196 14,000
Proceeds from sales of goods and information products
 400 1,040 - - 1,440 1,258
Revenue from services of a regulatory nature
 - 2,413 - - 2,413 2,225
Services to other government departments
 - - - 172 172 194
Revenues earned on behalf of Government
 (622) (1,068) (886,864) (917) (889,471) (518,265)
Total net revenues 10,293 13,312 35 173 23,813 23,886
Net cost of operations 620,325 2,244,627 1,266,122 248,498 4,379,572 3,469,795

Annex to the Statement of Management Responsibility Including Internal Control over Financial Reporting of Natural Resources Canada for fiscal year 2024-2025 (unaudited)

Summary of the assessment of effectiveness of the system of internal control over financial reporting and the action plan

1. Introduction

This document summarizes the measures taken by Natural Resources Canada (NRCan) to maintain an effective system of internal control over financial management (ICFM), including internal control over financial reporting (ICFR), as well as information on internal control management, assessment results, and related action plans.

Detailed information on NRCan’s authority, mandate and core responsibilities can be found in the 2025- 2026 Departmental Plan and the 2024-2025 Departmental Results Reports.

2. Departmental system of internal control over financial management

2.1 Internal control management

NRCan has established a robust governance and accountability structure to support departmental assessment efforts and oversee its system of internal control. The NRCan Framework for ICFM, approved by the Deputy Minister (DM), is in place and comprises:

  • organizational accountability structures for internal control management, including roles and responsibilities of senior departmental managers for their areas of responsibility to support sound financial management governance and oversight;
  • values and ethics (V&E) that define expected behaviors, including preventing conflicts of interest (COI) and disclosure of wrongdoing, to guide employees in all professional activities and duties;
  • ongoing communication and training on the legislative and policy requirements for sound financial management compliance; and
  • at least semi-annual monitoring and regular updates on the implementation progress of outstanding corrective actions, current year assessment results, and action plans to the DM, Chief Financial Officer (CFO), and the Departmental Audit Committee (DAC).

The DAC provides independent advice to the DM on the effectiveness of the department’s risk management, control and governance frameworks and processes.

2.2 Service arrangements relevant to financial statements

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

2.2.1 Common service arrangements
  • Public Services and Procurement Canada administers the payment of salaries, the procurement of goods and services, and provides accommodation services.
  • Shared Services Canada provides information technology (IT) infrastructure services.
  • Department of Justice Canada provides legal services.
  • Treasury Board (TB) of Canada Secretariat provides information on public service insurance and centrally administers payment of the employer’s share of contributions toward statutory employee benefit plans.
2.2.2 Specific arrangement

NRCan relies on Agriculture and Agri-Food Canada for the provision of a financial system platform to capture and report all financial transactions.

Readers of this annex may refer to the annexes of the above-noted departments in section 2.2.1 and 2.2.2 for a greater understanding of the systems of ICFR related to these common and specific services.

3. Departmental internal control assessment results for fiscal year 2024-2025

The following table summarizes the status of the ongoing monitoring activities according to the previous fiscal year’s rotational plan.

Progress during fiscal year 2024-2025

Previous fiscal year’s rotational ongoing monitoring
plan for current fiscal year		 Status

Entity Level Controls – Risk Assessment

  • Audit of NRCan’s Risk Management Practices

Performed by the Audit and Evaluation Branch (AEB).

 Completed as planned; remedial actions started. Audit report is published on NRCan’s Website.
  • Information Technology General Controls (ITGCs)
  • Pay and Benefits (P&B)
  • Proactive Publication of Contracts (PPC)

Performed by the Financial Management Internal Control (FMIC) unit.

 Completed as planned, except for certain PPC controls; remedial actions started as summarized in Section 3.2.

3.1 New or significantly amended key controls

3.1.1 Entity level controls – Control environment - Values and Ethics Code

NRCan updated its V&E Code to emphasize expected standards of conduct regarding the use of generative artificial intelligence tools, management of COI during and after employment, resolution of V&E issues, and disclosure of wrongdoing.

3.1.2. Financial close process – Chief Financial Officer Sign-off on Public Accounts of Canada

The Office of the Comptroller General (OCG) of Canada introduced a new CFO sign-off process to brief the DM on critical departmental financial risk, including the risk of exceeding appropriations, significant accounting issues, unusual financial transactions, compliance challenges with the TB Policy on Financial Management suite, and mitigating ICFR to support the review and approval of the Public Accounts of Canada.

3.1.3 Pay and benefits – Monitoring of overdue time and labor transactions in Phoenix

The Human Resources Branch implemented a weekly monitoring process for outstanding time and labor transactions, working with responsibility center managers (RCM) to ensure prompt approvals and prevent underpayments, backlogs, overpayments, and recoveries.

3.2 Ongoing monitoring program

As per the previous year’s rotational ongoing monitoring plan (OMP), the FMIC unit completed its assessment of the key control areas listed below. In general, key controls were effective, with remediation required as follows.

3.2.1 Information Technology General Controls
  • Access deprovisioning: Enhance the timely deprovisioning of user access to the network and eTools for internal transfers and departed employees.
  • Password management: Update network password policies by removing password complexity requirements (i.e., combination of upper case and lower-case letters, numbers, and special characters), promoting passphrases, eliminating mandatory password changes unless compromised, and increasing lockout duration after failed attempts.
  • Change management: Strengthen the separation between development and deployment and documentation of testing and approval for changes to eTools.
  • Backups and restoration testing: Coordinate with SSC to confirm successful backups and conduct periodic restoration testing for critical eTools according to a risk-based schedule.
  • Incident Management: Strengthen tracking, monitoring, resolution and reporting of IT incidents.
3.2.2 Pay and Benefits
  • Pre-approval of overtime: Reinforce the audit trail for overtime request approvals.
  • Pre-payment verification: Improve the audit trail for investigations and actions on large employee payments and significant payroll variances.
  • Salary forecast review: Strengthen guidance, consistency and audit trail requirements for the monthly RCM review of salary forecasts and actuals.
  • Reconciliation of salary forecast and actual expenditures: Enhance departmental reporting on reconciliation exercises, systemic issues, corrective actions for senior management oversight.
  • Trusted Source email box: Refine the review process for the Trusted Source email listing and restrict access to Trusted Source employees only.
  • Monitor and Clear bi-weekly Pay File Errors: Strengthen audit evidence to confirm timely monitoring and resolution of bi-weekly pay file errors.
  • Review Staffing Requests – MyGCHR: Maintain audit evidence confirming that Staffing Advisors verified the RCM’s financial and HR delegated authority against their specimen signature record for staffing requests.
3.2.3 Proactive Publication of Contracts
  • Framework, procedures, and instructions: Maintain up-to-date risk-based internal controls and reporting guidance for the proactive publication of contracts.
  • Tracking, monitoring, and corrections: Enhance the mechanisms for tracking and monitoring identified anomalies for investigation and correction, as applicable.
  • Business process reengineering: Optimize and automate the quality assurance processes for verifying contracting data elements.
  • Review and approval process: Refine senior management’s review and approval process and audit trail for quarterly proactive disclosure reports.
  • Restricted access: Strengthen access restrictions for uploading or modifying contracting information on the Open Government Portal.

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

NRCan’s rotational OMP for the next three fiscal years, based on an annual validation of the high-risk key control areas and related adjustments, as required, is shown in the following table. The OMP includes planned projects as per the NRCan 2025-2030 Integrated Audit Evaluation Plan (IAEP) to provide additional assurance on the effectiveness of risk management, control, and governance processes related to the system of ICFM.

Rotational ongoing monitoring plan

Key control areas 2025-2026 2026-2027 2027-2028
Entity level controls (ELCs) Yes- AEB Yes - AEB No
IT general controls (ITGCs) Yes - AEB Yes - FMIC & AEB No
Financial close and reporting (FCR) No No Yes - FMIC
Grants and contributions, including repayable contributions (G&C, incl RC) Yes- FMIC No No
Payroll and benefits (P&B) No No No
Procure to pay, including contracting (P2P, incl CNTR) Yes – FMIC & AEB Yes- FMIC No
Offshore royalty revenues/statutory transfers (ORST) No No Yes - FMIC
Revenue and accounts receivable, including costing for charging agreements (Rev & A/R, incl CSTG for CA) No No No
Environmental liabilities (EL) No No No
Contingent liabilities (CL) No No No
Capital assets, including asset retirement obligations (CA, incl ARO) No No Yes - FMIC
Budgeting and forecasting, including integrated business planning (B&F, incl IBP) Yes- FMIC No No
Investment planning and project management (IPPM) No Yes - FMIC No
Chief financial officer attestation (included in TB submissions), and related costing (CFO ATST, incl CSTG) No Yes - FMIC No

The OMP was amended as follows:

  • Planned AEB Projects: Updated the OMP to align with the planned AEB audit projects as per the NRCan 2025-2030 IAEP.
  • ELC: Increased the risk from moderate to high given that the components are foundational controls, interrelated, and have a pervasive impact on the department’s system of internal control.
  • FCR: Advanced the assessment planned for future fiscal years to 2027-2028 due to the implementation of the Public Sector Accounting Standard: PS 1202 Financial Statement Presentation by April 1, 2026.
  • G&C, incl RC: Reduced the risk level from high to moderate due to robust NRCan policy instruments, processes, templates, tools, and on-line training and expert advice from the Centre of Expertise for Grants and Contributions (CoE Gs&Cs).
  • P&B: Reduced the risk level from high to moderate due to ongoing monitoring and continuous audits, and the timely implementation of recommendations and action plans to address control gaps and mitigate risks.
  • Rev & A/R, incl CSTG for CA: Changed risk level from moderate to low due to immateriality of the revenue and receivables financial statement accounts, excluding offshore revenues.
  • ORST: Changed risk level from low to moderate due to material financial statements accounts and new offshore renewable energy revenue stream pursuant to Bill – C 49, and advanced the assessment planned for future fiscal years to 2027-2028.
  • CA, incl ARO: Deferred the CA assessment planned for 2026-2027 to 2027-2028 to allow the development and implementation of the Real Property Management and Materiel Management Frameworks by March 31, 2027.
  • IPPM: Advanced the IPPM assessment planned for future fiscal years to 2026-2027 due to planned completion of outstanding correction actions to reach ongoing monitoring.
  • CFO ATST, incl CSTG: Advanced the CFO attestation assessment planned for future fiscal years to 2026-2027 due to planned implementation of the new corporate costing model by the center of excellence for costing.

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

Building on progress to date, NRCan is positioned to complete the full assessment of its system of ICFM by 2026-2027. At that time, NRCan will fully meet the requirements of the TB Policy on Financial Management and will continue to apply its rotational ongoing monitoring plan to reassess control performance on a risk basis across all key control areas. The status and action plan for the completion of the identified key control areas for the next fiscal year and for subsequent years are shown in the following table.

Status and action plan for the next fiscal year and subsequent fiscal years

Key control areas Assessment and Documentation Design effectiveness testing and remediation Operational effectiveness testing and remediation Ongoing monitoring rotation*
Entity-level controls Complete Complete Complete 2025-2026 and
2026-2027
IT general controls under departmental management Complete Complete Complete 2025-2026 and
2026-2027
Financial close and reporting Complete Complete Complete 2027-2028
Grants and contributions, including repayable contributions Complete Complete Complete 2025-2026
Payroll and benefits Complete Complete Complete Future fiscal years
Procure to pay, including contracting Complete Complete Complete 2025-2026 and
2026-2027
Offshore royalty revenues/statutory transfers Complete Complete Complete 2027-2028
Revenue and accounts receivable, including costing for charging agreements Complete Complete Complete Future fiscal years
Environmental liabilities Complete Complete Complete Future fiscal years
Contingent liabilities Complete Complete Complete Future fiscal years
Capital assets, including asset retirement obligations Complete Complete Complete 2027-2028
Budgeting and forecasting, including integrated business planning Complete Complete Complete 2025-2026
Investment planning and project management Complete 2026-2027 2026-2027 2026-2027
Chief financial officer attestation (included in TB submissions), and related costing. Complete Complete Complete 2026-2027

Table 32 Notes

*

Ongoing monitoring rotation means that key controls have been documented, assessed for design effectiveness and operating effectiveness, and remedial actions to address weaknesses have been implemented. Once ongoing monitoring stage is reached, it will remain at this stage to ensure the continued effectiveness of key controls, even when new processes are implemented, or the scope of the program is adjusted to reflect changes in the department’s operations or to incorporate new elements of ICFM.

Return to footnote * referrer

 
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