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2008-09
Departmental Performance Report

Office of the Superintendent of Financial Institutions Canada

Supplementary Information (Tables)

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Table of Contents

• Sources of Respendable and Non-respendable Revenue
• User Fees/External Fees
• Green Procurement
• Internal Audits and Evaluations

Table: Sources of Respendable and Non-Respendable Revenue

This table identifies revenues by program activity received from sources both internal and external to the government. For 2008-2009, OSFI’s total revenues were $100.6 million, including non-respendable revenue of $486 thousand for the collection of late and erroneous filing penalties. The respendable revenues are largely comprised of asset- or premium-based industry assessments, surcharge assessments to staged institutions, and user fees for specific services related to Regulatory Approvals. The majority of cost-recovered services under Regulation and Supervision of Federally Regulated Financial Institutions in 2006-2007 and 2007-2008 relate to implementing the internal ratings-based approach of the New Basel Capital Accord. Ongoing Basel costs are recovered through base assessments effective November 30, 2007, following the expiry of the Memorandum of Understanding with the major banks.

Respendable Revenues

OSFI matches its revenue to its operating costs. The increase in respendable revenues in 2008-2009 from the previous year is explained in the “Performance Summary” and “Expenditure Profile” sections of OSFI’s 2008-2009 Departmental Performance Report.

Respendable Revenue
($ thousands)

Program Activity	Actual 2006-2007	Actual 2007-2008	2008-2009
			Main Estimates	Planned Revenue	Total Authorities	Actual
1) Regulation and Supervision of Federally Regulated Financial Institutions
Base Assessments	60,375	70,080	76,516	76,516	76,516	81,695
User Fees and Charges	3,588	3,226	2,185	2,185	2,185	2,471
Cost-Recovered Services	4,248	3,403	915	915	915	1,401
(2) Regulation and Supervision of Federally Regulated Private Pension Plans
Pension Plan Fees	5,281	7,220	6,521	6,521	6,521	8,216
(3) International Assistance
Base Assessments	93	-	461	461	461	-
Cost-Recovered Services	1,610	1,582	1,440	1,440	1,440	1,623
(4) Office of the Chief Actuary
User Fees and Charges	145	21	55	55	55	69
Cost-Recovered Services	3,919	4,527	4,757	4,757	4,757	4,662
Total Respendable Revenue	79,259	90,059	92,850	92,850	92,850	100,137

Total 2008-2009 respendable revenues were $100.1 million, an increase of $10.0 million (11.2%) over the previous year’s total of $90.1 million. Base Assessments of $81.7 million accounted for 81.6% of total revenue, representing an increase of $11.6 million over the previous year and attributed to higher costs in the Regulation and Supervision of Federally Regulated Financial Institutions program activity, as well as decreases in both cost recovered services and in user fees and charges.

Cost recovered services revenue was $7.7 million, down $1.8 million (19.2%) from the previous year, largely due to the expiry of the Memorandum of Understanding with the major banks related to the implementation of the internal ratings-based approach of the New Basel Capital Accord. User pay and charges were $2.5 million, down $0.7 million (21.8%) from the previous year, while pension plan fees increased by $1.0 million (13.8%) to $8.2 million, driven mainly by increased pension plan membership and higher cash receipts from pension plan fee billings.

Base assessments increased from 78.0% of total revenue in 2005-2006 to 81.6% in 2008-2009, while pension plan fees increased from 4.4% to 8.2%. Both cost recovered services and user fees and charges decreased over the same time period from 10.2% to 7.7%, and from 7.3% to 2.5%, respectively.

Non-Respendable Revenues

The non-respendable revenues are all related to late and erroneous filing penalties. Effective 2002-2003, OSFI began collecting late and erroneous filing penalties from financial institutions that submit late and/or erroneous financial and corporate returns. On August 31, 2005 the Administrative Monetary Penalties Regulations (OSFI) came into force. These Regulations implement an administrative monetary penalties regime pursuant to which the Superintendent can impose penalties in respect of specific violations, as designated in the schedule to the Regulations. These Regulations incorporate the late and erroneous filing penalty regime and replace the Filing Penalties Regulations (OSFI). These penalties are billed quarterly, collected and remitted to the Consolidated Revenue Fund. By regulation, OSFI cannot use these funds to reduce the amount that it assesses the industry in respect of its operating costs.

Non-Respendable Revenue
($ thousands)

Program Activity	Actual 2006-2007	Actual 2007-2008	2008-2009
			Main Estimates	Planned Revenue	Total Authorities	Actual
1) Regulation and Supervision of Federally Regulated Financial Institutions
Filing Penalties	227	374	450	450	450	486
Total Non-respendable Revenue	227	374	450	450	450	486

Table A: User Fees
($ thousands)

User Fee	Fee Type	Fee-setting Authority	Date Last Modified	2008-2009					Planning Years
				Forecast Revenue	Actual Revenue	Full Cost	Performance Standards1	Performance Result1	Fiscal Year	Forecast Revenue	Estimated Full Cost
Category 2 – Superintendent Non-deemed Approvals Except Deposit and Trust Agreements and Letters of Credit
Approval to maintain a representative office of a foreign bank	R	OSFI Act	April 28, 2006	59	46	46	90% will be processed in less than 60 calendar days of receipt	98% were processed in less than 60 calendar days of receipt	2008-2009 2009–2010 2010–2011	65 65 65	65 65 65
Reservation of a name
Accreditation of a provincial reinsurer
Category 4 – Ministerial Approvals
Letters patent of incorporation	R	OSFI Act	April 28, 2006	1,125	492	492	80% will be processed in less than 90 calendar days of receipt	99% were processed in less than 90 calendar days of receipt	2008-2009 2009–2010 2010–2011	1,352 1,352 1,352	1,352 1,352 1,352
Letters patent of continuance
Order permitting a foreign bank to carry on banking business in Canada
Order approving the insuring in Canada of risks by a foreign body corporate
Exemption from material banking group status
Approval for a foreign bank or entity associated with a foreign bank to have a financial establishment in Canada
Approval for a foreign bank or entity associated with a foreign bank in respect of investments and activities in Canada
Category 5 – Precedents/ Rulings/ Interpretations
Written, precedent-setting ruling relating to the quality of capital	R	OSFI Act	Aug 13, 2003	40	36	36	80% will be processed in less than 180 calendar days of receipt	82% were processed in less than 180 calendar days of receipt	2008-2009 2009–2010 2010–2011	40 40 40	40 40 40
Written interpretation of Acts, regulations, guidelines or rulings
Category 6 – Non-precedential Confirmations of Quality of Capital
Written, non-precedent-setting confirmation of quality of capital	R	OSFI Act	Aug 13, 2003	273	340	340	90% will be processed in less than 60 calendar days of receipt	100% were processed in less than 60 calendar days of receipt	2008-2009 2009–2010 2010–2011	276 276 276	276 276 276
Category 7 – Copies of Corporate Documents and Certificates of Confirmation
Copies of any one of the following corporate documents (per request and per body corporate): (a) a certificate of confirmation; (b) a certified copy of letters patent or of incorporation or amalgamation documents; and (c) the corporate history of a body corporate	O	OSFI Act	Aug 13, 2003	102	104	104	90% will be processed within 2 business days of receipt	100% were processed within 2 business days of receipt	2008-2009 2009–2010 2010–2011	102 102 102	102 102 102
				1,497 (R) 102 (O) Total – 1,599	914 (R) 104 (O) Total - 1,018	914 (R) 104 (O) Total - 1,018			2008-2009 2009–2010 2010–2011	1,835 1,835 1,835 Total - 5,505	1,835 1,835 1,835 Total - 5,505
Category 7 – Access to Information User Fees
Fees charged for the processing of access requests filed under the Access to Information Act (ATIA)	Other products and services (O)	Access to Information Act	1992	4	1	241	Response provided within 30 days following receipt of request; the response time may be extended pursuant to section 9 of the ATIA. Notice of extension to be sent within 30 days after receipt of request. The Access to Information Act provides fuller details: http://laws.justice.gc.ca/en/A-1/218072.htm.	Statutory deadline of 30 days met 91% of the time	2008-2009 2009–2010 2010–2011	4 4 4	254 266 280
Total				4	1	241				12	800
B. Date Last Modified: 1992

Other Information

In July 2000, the Canada Customs and Revenue Agency ruled that most of the service charges are exempted from GST under the Excise Tax Act.

A fee is either identified as “Regulatory” (R) or “Other Products and Services” (O). A Regulatory fee relates to an activity undertaken by a department that is integral to the effectiveness of a program and successful achievement of the program mandate requires moderating, directing, testing, or approving the actions of external parties. All OSFI service fees are classified as “Regulatory” except those found in category 7.

The full cost is based on the fiscal year salary levels according to collective agreements, the fiscal year Treasury Board benefit factors and OSFI’S factor for indirect costs.

1. Note:

According to prevailing legal opinion, where the corresponding fee introduction or most recent modification occurred prior to March 31, 2004:

• the performance standard, if provided, may not have received parliamentary review; and
• the performance standard, if provided, may not respect all establishment requirements under the User Fee Act (e.g. international comparison; independent complaint address).
• the performance result, if provided, is not legally subject to section 5.1 of the UFA regarding fee reductions for unachieved performance.
  
  

 

Table B: 2008-2009 User Fee Reporting - External Fees
($ thousands)

A. External Fee	Service Standard1	Performance Results2	Stakeholder Consultation
Category 2 – Superintendent Non-deemed Approvals Except Deposit and Trust Agreements and Letters of Credit			In March 2005, paying and non-paying stakeholders were asked to review and comment on the proposed service standards that were developed in response to the government’s policy that all user fees should be subject to an appropriate standard. Stakeholders were generally supportive of OSFI’s proposed service standards and supported OSFI’s early implementation of the government’s policy. OSFI believes that having specific service standards serve to enhance OSFI’s accountability and transparency. In 2006, the Regulations setting out OSFI’s user fees were substantially amended to reduce the number of services from 52 to 14, recognizing that the initial charges did not result in a significant redistribution of OSFI’s costs among FRFIs and that the charges did not recover a meaningful percentage of OSFI’s annual operating costs, which are primarily recovered through base assessments on FRFIs. However, it is OSFI’s intention to keep the service standards in place for the services provided regardless of whether there is an associated fee. OSFI continues to monitor and review the standards on an ongoing basis.
Approval to maintain a representative office of a foreign bank	90% will be processed in less than 60 calendar days of receipt	98% were processed in less than 60 calendar days of receipt
Reservation of a name
Accreditation of a provincial reinsurer
Category 4 – Ministerial Approvals
Letters patent of incorporation	80% will be processed in less than 90 calendar days of receipt	99% were processed in less than 90 calendar days of receipt
Letters patent of continuance
Order permitting a foreign bank to carry on banking business in Canada
Order approving the insuring in Canada of risks by a foreign body corporate
Exemption from material banking group status
Approval for a foreign bank or entity associated with a foreign bank to have a financial establishment in Canada
Approval for a foreign bank or entity associated with a foreign bank in respect of investments and activities in Canada
Category 5 – Precedents/ Rulings/ Interpretations
Written, precedent-setting ruling relating to the quality of capital	80% will be processed in less than 180 calendar days of receipt	82% were processed in less than 180 calendar days of receipt
Written interpretation of Acts, regulations, guidelines or rulings
Category 6 – Non-precedential Confirmations of Quality of Capital
Written, non-precedent-setting confirmation of quality of capital	90% will be processed in less than 60 calendar days of receipt	100% were processed in less than 60 calendar days of receipt
Category 7 – Copies of Corporate Documents and Certificates of Confirmation
Copies of any one of the following corporate documents (per request and per body corporate): (a) a certificate of confirmation; (b) a certified copy of letters patent or of incorporation or amalgamation documents; and (c) the corporate history of a body corporate	90% will be processed within 2 business days of receipt	100% were processed within 2 business days of receipt
Category 8 – Access to Information Requests Policy on Service Standards for External Fees
Fees charged for the processing of access requests filed under the Access to Information Act (ATIA).	Response provided within 30 days following receipt of request; the response time may be extended pursuant to section 9 of the ATIA. Notice of extension to be sent within 30 days after receipt of request. The Access to Information Act provides fuller details: http://laws.justice.gc.ca/en/A-1/index.html	Statutory deadlines met 91% of the time.	The service standard is established by the Access to Information Act and the Access to Information Regulations. Consultations with stakeholders were undertaken by the Department of Justice and the Treasury Board Secretariat for amendments done in 1986 and 1992.

B. Other Information: None

1. As established pursuant to the Policy on Service Standards for External Fees:
   • service standards may not have received parliamentary review; and
   • service standards may not respect all performance standard establishment requirements under the User Fee Act (e.g. international comparison; independent complaint address).
2. Performance results are not legally subject to section 5.1 of the UFA regarding fee reductions for unachieved performance.
   

Table: Green Procurement

Meeting Policy Requirements

Green Procurement Targets

Table: Internal Audits and Evaluations

The most recent Audit Plan and Audit Reports are available on OSFI’s website: OSFI’s Internal Audit Reports.

The table below provides the list of key internal audits that pertain to OSFI’s work during the reporting period (2007-2008 and 2008-2009 IA planning period), including electronic links to completed internal audits.

Internal Audits (2008-2009 reporting period – covering 2007-2008 and 2008-2009 IA planning period)

Name of Internal Audit	Audit Type	Status	Completion Date	Electronic Link to Report
Superintendent’s office- Management Oversight	Superintendent’s Office	Completed	January 2009	2009 Jan - Superintendent Management Oversight Framework Review
Superintendent’s office- OSFI Planning Activities and Processes	Superintendent’s Office	Completed	April 2008	2008 April - Report on Planning Activities and Processes
Regulation Sector: Actuarial Division (support for Supervision)	Supervision – Risk Assessment and Interventions	Completed	June 2008	2008 June - RS - Actuarial Supervision Support - Life Insurance Review
Regulation Sector: Approvals & Precedents - Legislative Approvals	Regulation Sector - Approvals	Completed	October 2008	2008 Oct - RS - Approvals & Precedents - Legislative Approvals Review
Regulation Sector: Legislation and Policy Initiatives (LAPI) – Rule Making Division	Regulation Sector – Rule Making	Completed	July 2009	2009 July – LAPI: Management Control Framework Review
Regulation Sector: Accounting Rules & Supervision Support: Rule Making Process	Regulation Sector – Rule Making	In Progress	2009-2010
Corporate Services: Human Resources Planning Framework	Corporate Services – Human Services	Completed	January 2009	2009 Jan - Human Resources Planning Framework Review
Corporate Services: IM/IT - Infrastructure Technology Services (ITS) – ITS Planning	Corporate Services – Information Management and Information Technology	Completed	January 2009	2009 Jan - Infrastructure Technology Services Planning Activities and Processes Audit
Corporate Services: Portfolio Management	Corporate Services	Completed	July 2009	2009 July - Portfolio Management Framework Review
Office of the Chief Actuary (OCA): Professional Services – Statutory Actuarial Reports – Canada Pension Plan (CPP)	Office of the Chief Actuary (OCA)	Completed	June 2009	2009 June - OCA Statutory Actuarial Reports Review (CPP)