2019-20 Departmental Results Report

Office of the Superintendent of Financial Institutions

2019–20 Departmental Results Report

© Her Majesty the Queen in Right of Canada, as represented by the Minister of Finance, 2020

Catalogue No. IN3-32E-PDF

ISSN 2561-0716

Superintendent’s message

I am pleased to present to Parliament and Canadians the 2019–20 Departmental Results Report for the Office of the Superintendent of Financial Institutions (OSFI).

This report outlines the work that we have done in support of our mandate, which is to protect depositors, policyholders, financial institution creditors and pension plan beneficiaries while allowing financial institutions to compete and take reasonable risks.

With less than a month before the end of the fiscal year, the COVID-19 pandemic took root and began causing significant disruptions to the operations of federally regulated financial institutions and the economy. At OSFI, our business is to prepare for scenarios that can disrupt the financial system. In the decade that followed the global financial crisis of 2008, we strengthened our regulation and supervision of financial institutions. While this pandemic is an extreme event that has negative consequences for the economy, OSFI was and is prepared to meet the challenges it poses.

For example, March 2020, OSFI responded quickly by unveiling a series of measures to bolster the resiliency of financial institutions and the industry. We provided regulatory flexibility and reduced one of our capital cushions called the Domestic Stability Buffer so that banks could keep lending and the economy could keep working for Canadians. We also paused briefly our policy consultations and other planned initiatives to allow institutions resources to adapt to changing realities of life and work during a pandemic.

Being ready means having a clear plan and last year we publicly released our Strategic Plan. It sets out a framework for our work; provides a vision for the future; confirms our purpose and values; and, it sets clear objectives for us to achieve. As you will see elsewhere in this report, we are meeting the plan’s four goals. We are investing in our people and modern tools for the work they carry out, data management and analytics, and crisis management. We are also working to be more transparent about our work to enhance trust and confidence in the federal sector of the Canadian financial system.

A primary reason for the resilience of our financial sector is the collaboration we undertake with our federal partners – the Department of Finance, the Bank of Canada, the Financial Consumer Agency of Canada and the Canada Deposit Insurance Corporation. We also worked closely with Canada Mortgage and Housing Corporation, provincial counterparts and industry groups. Each of these organizations play a unique and vital role that helps maintain the strength, stability and integrity of the Canadian financial system. They are key partners in the important work OSFI does.

While the COVID-19 pandemic has created significant uncertainty, Canadians can be confident that OSFI is working hard to protect depositors, policyholders, financial institution creditors and pension plan members for both today and tomorrow: preserving confidence, and always improving. Risks are everywhere, but through careful and constant planning and prudent execution of those plans, OSFI is ready for the challenge.

Jeremy Rudin

Results at a glance and operating context

OSFI’s total actual spending for 2019-20 was $193.6 million and the total actual full-time equivalents was 793. When OSFI submitted its 2019-20 Departmental Plan, it was in the process of preparing a new three year strategic plan. The new OSFI Strategic Plan focused on charting a path for the future, building on the many achievements and learnings of the past. It set the following four goals over the 2019-2022 timeframe:

Goal 1: Federally regulated financial institution and pension plan preparedness and resilience to financial risks is improved, both in normal conditions and in the next financial stress event.

• The objective of this goal is to ensure that federally regulated financial institutions (FRFIs) are able to provide financial services to Canadians and maintain market confidence, both in normal conditions and in times of stress. Pension plans continue to enhance their awareness of emerging risks and related risk management processes.

Goal 2: Federally regulated financial institutions and pension plans are better prepared to identify and develop resilience to non-financial risks before they negatively affect their financial condition.

• Through this goal, OSFI is focused on the resiliency of FRFIs and pension plans to non-financial risks.

Goal 3: OSFI’s agility and operational effectiveness are improved.

• The objective of this goal is to ensure that OSFI has the right people, skills, and infrastructure to meet the needs of the organization and that these can be leveraged in a timely and effective manner.

Goal 4: Support from Canadians and cooperation from the financial industry are preserved.

• The objective of this goal is ensuring that Canadians have trust in the safety and soundness of financial institutions and pension plans.

The new Strategic Plan entailed an increase in full-time equivalent employees and an upward revision to OSFI’s budget. As a result of the implementation of the Plan and collective bargained compensation increases greater than those anticipated in the original budget, actual spending in 2019-20 was $28.2 million (or 17.1%) higher than OSFI’s original budget of $165.4 million as per its 2019-20 Departmental Plan. That said, actual spending was $5.5 million (or 2.7%) lower than revised planned expenditures of $199.1 million under the new Strategic Plan; details of the new Strategic Plan have been disclosed in the planning highlights of the 2020-21 Departmental Plan.

In 2019-20, FRFIs experienced challenging business conditions, the headwinds of a flat yield curve and slower economic growth. These were mitigated by a favourable credit environment, which helped sustain profitability and financial stability.

The declaration by the World Health Organization of a global pandemic caused by COVID-19 in March 2020 triggered a global economic shutdown. Business strategies have had to quickly adjust to new remote work environments, with an increased focus on efficiency improvements and reaping benefits from investment in technology. OSFI adapted quickly both internally and externally.

OSFI continues to execute on its mandate through implementation of its Strategic Plan to ensure that financial institutions can withstand severe but plausible risk scenarios that may affect their financial health and the stability of the broader financial system. OSFI introduced a number of measures in response to the COVID-19 pandemic. Notably, it reduced the Domestic Stability Buffer (DSB) to 1% (from 2.25%) to provide systemically important banks with greater lending capacity while at the same time signaling its readiness to lower the DSB further if required. OSFI monitored the economic environment to ensure that any regulatory adjustments followed its principles of being credible, consistent, necessary and fit-for-purpose. OSFI took actions to support the objectives of its federal partners. For example, OSFI supported banks’ access to Bank of Canada funding support by increasing the covered bond limit to 10 % from 5.5 % of bank assets for a one-year period. Furthermore, to enhance financial resilience and stability, OSFI introduced flexibility through capital treatment adjustments for Canadian financial institutions that introduced payment deferral programs. Finally, OSFI suspended all of its consultations and policy development on new or revised guidance to allow institutions to prioritize operational resilience until conditions stabilized.

Other measures taken by OSFI during 2019-20 to support regime effectiveness included the following:

• Enhanced guidance to FRFIs through the release of various guidelines including the Liquidity Adequacy Requirements, the Large Exposure Limits - Domestically Systemically Important Banks Guideline, Liquidity Principles Guideline, Net Stable Funding Ratio Disclosure Requirements Guideline and the Interest Rate Risk Management Guideline.
• In support of the resiliency of FRFIs to non-financial risks, OSFI continued to build up its technology risks and culture and conduct capabilities.
• The implementation of phase 1 of a new system for performing core supervisory activities designed to modernize OSFI’s supervisory technology.
• An increased focus on leadership, culture and transparency through the continued roll out of existing and new programs under OSFI’s human capital strategy.

For more information on OSFI’s plans, priorities and results achieved, see the “Results: what we achieved” section of this report.

Results: what we achieved

Financial Institution and Pension Plan Regulation and Supervision

Description:

The Office of the Superintendent of Financial Institutions advances a regulatory framework designed to control and manage risk to federally regulated financial institutions and private pension plans and evaluates system-wide or sectoral developments that may have a negative impact on their financial condition. It also supervises financial institutions and pension plans to determine whether they are in sound financial condition and meeting regulatory and supervisory requirements. The Office promptly advises financial institutions and pension plan administrators if there are material deficiencies, and takes corrective measures or requires that they be taken to expeditiously address the situation. It acts to protect the rights and interests of depositors, policyholders, financial institution creditors and pension plan beneficiaries, while having due regard for the need to allow financial institutions to compete effectively and take reasonable risks.

Results:

During 2019-20, in support of its mandate, OSFI led a number of initiatives to respond to financial and non-financial risks; these dealt with key areas such as capital, accounting, reinsurance, governance, crisis management, and private pension plans’ supervision.

In an effort to enhance the effectiveness of its capital regime, over the reporting period, OSFI consulted industry on specific elements of its capital adequacy requirements and conducted domestic quantitative impact studies to assess the impact of certain changes (including for International Financial Reporting Standard (IFRS) 17 Insurance Contracts, Segregated Funds requirements and the implementation of Basel III). OSFI improved the monitoring of models of domestic systemically important banks (D-SIBs) by developing an enterprise-wide model risk dashboard, enhanced the assessment of governance and oversight controls for regulatory capital models and leveraged its approval approach for development of a broader model risk assessment framework.

OSFI strengthened its Liquidity Adequacy Ratio guideline in particular as it pertains to retail deposits that may be subject to sudden withdrawal in a stressed environment. OSFI also engaged industry stakeholders on future capital and liquidity requirements for small and medium-sized deposit-taking institutions. It also revised its liquidity risk management expectations to ensure they are current and relevant as well as appropriate for the scale and complexity of financial institutions. OSFI’s Liquidity Adequacy Requirements also included the publication of a new Net Stable Funding Ratio measure. OSFI finalized a new large exposure guideline for D-SIBs, which established expectations for the effective measurement and control of risks associated with large exposures at these institutions. Updates to OSFI’s Interest Rate Risk Management guideline were also completed to reflect changes in market and supervisory practices to be used by institutions for identifying, measuring, managing, monitoring and controlling interest rate risks.

OSFI bolstered resilience in the banking system by raising the level of the DSB twice in 2019, which required banks to build their capital to use when risks materialized. The countercyclical design of the DSB requires banks to build up capital during good times so they can draw down on the buffer in times of economic stress.

In the area of accounting, OSFI consulted industry stakeholders on the Basel Committee on Banking Supervision’s (BCBS) Pillar 3/ phase II and III disclosure requirements in advance of a draft guideline for public consultation. To ensure OSFI maintains effective supervision of FRFIs following the implementation of IFRS 17, work advanced towards the development of an effective regulatory policy framework through the transition. While the International Accounting Standards Board (IASB) eventually announced the deferral of the effective date of IFRS 17 to January 1, 2023, OSFI regularly communicated with, and engaged the industry on implications to accounting guidelines and capital frameworks caused by the standard.

OSFI proposed draft revisions to a guideline on reinsurance (Sound Reinsurance Practices and Procedures) following feedback on a discussion paper. OSFI also reduced inconsistency between registered and unregistered reinsurance in the 2019 Minimum Capital Test guideline.

OSFI improved preparedness for responding to deposit-taking institution crises by developing a framework and playbook based on best practices, recent experiences and simulation exercises.

OSFI deepened its assessment of the impacts of climate-related risks on financial institutions and undertook supervisory practices benchmarking in this area. OSFI contributed to climate risk initiatives by international bodies such as the International Association of Insurance Supervisors (IAIS), the BCBS, the Financial Stability Board (FSB) and the Sustainable Insurance Forum (SIF).

With respect to non-financial risks, OSFI continued to build out its technology risk and culture and conduct risk capabilities. As part of its culture and conduct work, OSFI continued to work closely with the industry to monitor FRFI governance practices and assess whether expectations set out in the Corporate Governance guideline were achieved. In that regard, OSFI conducted a culture scan with a cross-section of 20 financial institutions to assess culture initiatives, frameworks and processes, and began culture-focused reviews targeting strategic decision making.

As part of its technology risk work, OSFI promoted and shared best practices in cyber risk management with financial institutions. OSFI issued multiple intelligence bulletins and conducted a cyber tabletop exercise with federal government agencies and industry to enhance the Incident Response Protocol.

OSFI also participated in the Operational Resilience Group of the BCBS to develop operational resilience principles for banks. OSFI collaborated with prudential regulators, analyzing operational resilience practices and approaches in other jurisdictions and conducting a study of approaches to regulation and supervision of technology and non-financial risks. A dialogue with industry stakeholders was initiated and a draft discussion paper on technology risk was completed. While the paper was due to be released at the end of March, it, along with all other policy consultations were put on hold due to COVID-19. In addition, OSFI garnered a better understanding of the range of third-party risk management practices at financial institutions by conducting research and a study to help guide future work.

OSFI undertook a survey on the use of artificial intelligence and machine learning (AI/ML) technologies by financial institutions. This work will help build OSFI’s knowledge of AI/ML approaches and challenges and ultimately inform regulatory and supervisory expectations.

OSFI established a new Risk and Data Analytics Division and staffed its new Chief Data Officer role. This division will implement the new enterprise data strategy that provides a long-term roadmap for modernizing the collection, transformation and use of data. This included launching a new technology exploration platform to enable users to trial new data technologies, including the testing of advanced analytical tools and methodologies as well as improving the Regulatory Returns System and related data collection capabilities.

OSFI continued its review of how it supervises the investments of private pension plans. As part of the review, a comparison of OSFI’s approach to supervising pension plan investments and insurance company investments was completed, raising and/or reconfirming challenges relating to the supervision of pension investments. As well, OSFI continued to examine the supervisory approaches taken by international regulatory authorities, and conducted exploratory pension investment examinations of two large plans. The goal of this review, which will continue in 2020-21, is to develop recommendations to enhance OSFI’s principles and risk-based approach to supervising pension plan investments.

In addition, OSFI continued its examination of the defined contribution plans it supervises. An analysis of the results of OSFI’s 2018-19 survey of those plans was completed, with a focus on plan fees and investment options. OSFI has begun to develop recommendations and an action plan based on the observations from this analysis, and will be extending the scope of this project in 2020-21 by participating in a coordinated consultation to obtain feedback from the industry.

Experimentation:

OSFI continued to support the Government of Canada’s commitment to innovation. While continuous improvement is generally sought through consultations and lessons learned exercises, where possible, OSFI explored new ways to enhance its efficiency and effectiveness. For example, OSFI undertook to review what and how it communicates to better support transparency and effective messaging to its stakeholders. In addition, OSFI began experimenting with its processes to roll out new guidance faster in an effort to be more agile in regulatory development.

Actuarial Services to Federal Government Organizations

Description:

The Office of the Chief Actuary provides a range of actuarial services, including statutory actuarial valuations required by legislation and checks and balances on the future costs of programs for the Canada Pension Plan, Old Age Security, Employment Insurance and Canada Student Loans programs, as well as pension and benefits plans covering the Federal Public Service, the Canadian Forces, the Royal Canadian Mounted Police, federally appointed judges, and Members of Parliament.

Results:

In 2019-20, the Office of the Chief Actuary (OCA) continued to provide independent, accurate, high quality and timely actuarial reports and professional actuarial services and advice. With the view of maintaining high quality services, and as recommended by the Canada Pension Plan (CPP) independent peer review panel, the OCA continued to maintain its programs of research on subjects relevant to the preparation of future actuarial reports.

This year, the OCA completed its work on the triennial CPP Actuarial Report as at December 31, 2018 (30th Report), which was submitted to the Minister of Finance and was tabled in Parliament on December 20, 2019. This triennial report projects CPP revenues and expenditures over a 75-year period in order to assess the future impact of historical and projected demographic and economic trends. The CPP is one of the cornerstones of Canada’s retirement income system and is financed by contribution revenues and investment returns. For the first time, the report covers two parts of the CPP: the base CPP and the additional CPP, which covers the enhancements to the CPP agreed upon by the federal and provincial Ministers of Finance in June 2016 and implemented on January 1, 2019. The OCA also commissioned an independent peer review of this report. This is the eighth review of this kind and the results were released early in fiscal year 2020-21. The independent panel’s findings confirm that the work performed by the OCA on the report meets professional standards of practice and statutory requirements, and that the assumptions and methods used are reasonable. The panel also stated that the report fairly communicates the results of the work performed by the Chief Actuary and her staff.

The legislation following proposals in the 2019 federal budget has enhanced the income exemption for the Guaranteed Income Supplement and Allowance. Following this change in legislation and as required by law, the OCA has prepared the 15th Actuarial Report Supplementing the Actuarial Report on the Old Age Security Program as at December 31, 2015, which was tabled before Parliament on August 21, 2019. The report finds that the above amendments are projected to increase total OAS program expenditures by $473 million by 2030, which represents an increase of 0.01% of GDP.

This year, as part of its statutory requirements, the OCA completed the Actuarial Report on the Pension Plan for the Royal Canadian Mounted Police as at March 31, 2018 which was submitted to the President of the Treasury Board and was tabled in Parliament on December 12, 2019. This report provides actuarial information to decision makers, parliamentarians and the public, thereby increasing transparency and confidence in Canada’s retirement income system. The report finds that the annual cost of the plan, borne jointly by contributors and the government, is $521 million for calendar year 2020, which represents 23.2% of pensionable payroll.

Further, the OCA presented to the Canada Insurance Commission the 2020 Actuarial Report on the Employment Insurance Premium Rate, which was tabled in Parliament on December 9, 2019. This report provides the forecast break-even premium rate for the upcoming year and a detailed analysis. The report finds that the 2020 seven-year forecast break-even rate, which is the rate needed to generate just enough premium revenue such that the projected Employment Insurance Operating Account balances out as of December 31, 2026, is 1.6% of insurable earnings.

As part of its ongoing research, the OCA published the Old Age Security (OAS) Mortality Fact Sheet, which notes that increases in life expectancy were relatively stable between 2004 and 2013 but that between 2014 and 2018 there has been a recent slowing trend in the pace of these increases.

In 2019-20, the OCA also published a fact sheet on Registered Pension Plans (RPP) and Other Types of Savings Plans in Canada. The fact sheet shows that the number of active RPP members has increased over the last 10 years, with the number of women increasing faster than number of men. Despite this, the number of active RPP members as a percentage of the labour force and as a percentage of employees has slightly decreased. The proportion of active RPP members in DB plans has decreased over the last ten years due to a significant decrease in DB coverage in the private sector.

The Office of the Auditor General (OAG) informed the OCA that it would be using the work that the OCA performed for the Public Accounts of Canada 2019, which were tabled in the House of Commons on December 12, 2019. This included utilizing OCA’s work as independent evidence for the OAG’s audit of the Public Accounts of Canada, specifically for the public sector pension and insurance programs, the Canada Student Loans program and Government Annuities. As part of their audit work, the OAG reviews the methods and assumptions used by the OCA. Comments and recommendations put forward by the OAG in the fall of 2019 on actuarial reports prepared for Public Accounts purposes will be reflected in future actuarial reports, as appropriate.

Experimentation:

OSFI continued to support the Government of Canada’s commitment to innovation. Given the OCA’s primary responsibility is to provide actuarial advice including the preparation of actuarial reports for federal government organizations, continuous improvement is generally sought through consultations and lessons learned exercises rather than experimental projects.

Financial, human resources and performance information for OSFI’s Program Inventory is available in GC InfoBase.

Internal Services

Description:

Internal Services are those groups of related activities and resources that the federal government considers to be services in support of programs and/or required to meet corporate obligations of an organization. Internal Services refers to the activities and resources of the 10 distinct service categories that support Program delivery in the organization, regardless of the Internal Services delivery model in a department. The 10 service categories are:

• Acquisition Management Services
• Communications Services
• Financial Management Services
• Human Resources Management Services
• Information Management Services
• Information Technology Services
• Legal Services
• Materiel Management Services
• Management and Oversight Services
• Real Property Management Services

Results:

In 2019-20, OSFI delivered effective and efficient internal services in support of program delivery, as evidenced by the following key achievements.

In November 2019, four new senior-level governance committees were launched and are supported by a new central Strategic Governance Office. OSFI refined its new strategic planning framework to ensure OSFI’s efforts and resources moving forward are focused and aligned in the achievement of its mandate. Work began to enhance the integration of enterprise risk management into OSFI’s planning process. A review and refresh of OSFI’s performance reporting to senior management was also undertaken. Planning and integration work continued towards the introduction of a new resource management solution. OSFI also implemented phase one of a new application to improve internal financial management oversight.

In response to OSFI’s goal to preserve support from Canadians and cooperation from the financial services industry by being transparent and accountable, OSFI communicated and disclosed information about its plans, programs and activities to Canadians through its website, traditional and social media, public events, speeches and parliamentary appearances. The Executive Committee and senior officials delivered a number of presentations and remarks across Canada and internationally. OSFI engaged regulated entities by organizing and hosting 26 events and presentations, including risk management seminars, colleges of supervisors, crisis management groups and information sessions.

OSFI published its external newsletter The OSFI Pillar twice in 2019-20. It provides updates and reminders on the latest guidelines, industry notices, public statements and other pertinent information, including feature articles and speeches.

OSFI responded to more than 6,000 correspondence and telephone inquiries and requests for information, including 102 inquiries from members of Parliament; 182 from news media; 39 access to information requests; and 52 access to information consultations from government departments or other governments. OSFI also sought feedback from regulated entities through regular surveys and consultations to identify issues and to improve our performance.

OSFI continued the roll out of its multi-year human capital strategy, which was launched in 2017. The objective of the strategy is to ensure that that its programs, policies and practices are modern and conducive to a productive and inclusive work environment where all employees have the support and tools they need to meet their full potential.

The strategy consists of five priority areas: leadership development; talent management; learning and development; culture and community; and enterprise change management. In 2019-20, activities under each area focused on the expansion of some of the new programs implemented the previous year, and development of new programs. Highlights include:

• The design and development of a talent management program for the non-executive group of employees, and the launch of several pilots of the process and its supporting tools.
• An enhanced onboarding program to support the integration of new employees.
• A new management essentials program to provide training and support to people leaders.
• A comprehensive suite of coaching services, both in-house and through external parties, aimed at building a coaching culture.
• Continued investments to promote and support employee wellness, and diversity and inclusion. The Inclusion Network held many events, activities and awareness campaigns to celebrate diversity in such streams as accessibility, diversity of thought, family responsibilities, gender, invisible differences, LGBTQI2S, mental health, multiculturalism and unconscious bias.
• The refresh of OSFI’s corporate values and the completion of an organizational culture assessment.

OSFI has embarked on a transformation journey with the objective of becoming a digital regulator. That journey includes the modernization of its infrastructure and organization, along with digitization of its supervisory and regulatory capabilities. OSFI tabled a new information management and technology strategy in 2019-20 to provide a long-term plan for the continued evolution of IMIT’s people and OSFI’s processes and technology investments. This serves as an umbrella strategy for more specific blueprints that will guide the modernization of OSFI’s internal operations and evolution to digital services. Specific highlights included a refresh of the Office’s computer fleet; infrastructure, application and network upgrades in all four offices; the introduction of Skype for Business; a cloud adoption roadmap with pilot projects; and successful delivery of the first release of a supervisory case management system using an agile project methodology. Other achievements include:

• delivery of an enterprise system for supervisory activity
• new collaboration and data analytics capabilities
• multiple foundational technology refresh initiatives
• a cyber security awareness program
• implementation of new legislative requirements for information management and cloud computing

The continued rollout of Skype for Business, user training and significant improvements to the core network capacity (bandwidth) enabled most OSFI staff to transition to a full-time work from home scenario with only minor impacts to overall productivity during the COVID-19 pandemic.

Analysis of trends in spending and human resources

Actual expenditures

Departmental spending trend graph

The following graph presents planned (voted and statutory spending) over time.

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Departmental spending trend graph (dollars)

	2017-18	2018-19	2019-20	2020-21	2021-22	2022-23
Statutory	154,057,407	166,972,485	192,132,930	199,844,423	199,263,249	204,910,234
Voted	945,058	1,310,733	1,501,204	1,211,251	1,244,352	1,244,352
Total	155,002,485	168,283,218	193,634,134	201,055,674	200,507,601	206,154,586

The graph above presents OSFI’s actual spending from 2017-18 to 2019-20 and planned spending from 2020-21 to 2022-23. Statutory expenditures, which are recovered from respendable revenue, represent over 99% of total expenditures. The remainder, representing less than 1% of OSFI’s spending, is funded from a parliamentary appropriation for actuarial services related to federal public sector pension and benefits plans.

OSFI’s total expenditures, as presented in the 2019-20 Departmental Plan, were expected to decrease by 1.7% in 2019-20 and remain relatively stable the following year. However, OSFI completed a strategic planning exercise after the 2019-20 Departmental Plan was produced. The resulting Strategic Plan entailed increased spending over the 2019-22 horizon, largely driven by an increase in the number of full-time equivalent employees. This was reflected in the 2020-21 Departmental Plan.

The new Strategic Plan resulted in an increase of $33.7 million (or +20.4%) to the original 2019-20 budget; i.e. from $165.4 million to $199.1 million.

OSFI’s 2019-20 actual expenditures of $193.6 million were $28.2 million (or 17.1%) higher than its original plan but $5.5 million (or 2.7%) lower than its revised plan. The variance versus the original plan was driven by the implementation of the Strategic Plan, and compensation increases that exceeded those anticipated when the budget was drawn up (e.g., impacts of new collective agreement and costs related to a Phoenix damages settlement as it relates to current and former employees). These factors also drove the $25.4 million (or 15.1%) increase versus 2018-19 actual expenditures. These variances are consistent across all core responsibility areas and Internal Services.

Actual human resources

In 2019-20, OSFI’s full-time equivalents (FTEs) was 38 FTEs or 5.0% higher than planned. The FTE total represents a growth of 7.1% over 2018-19. This is largely due to the staffing of vacant positions and new positions created to address the requirements of the new three-year Strategic Plan for 2019-2022, which was completed after the 2019-20 Departmental Plan was produced. OSFI’s three-year strategic plan reflects and accounts for the continually evolving and increasingly complex environment within which OSFI operates. In order to keep pace with its environment, OSFI’s planned FTEs were increased for the 2019-2022 timeline. Those increases have been reflected in the 2020-21 Departmental Plan.

Expenditures by vote

For information on the OSFI’s organizational voted and statutory expenditures, consult the Public Accounts of Canada 2019–2020.

Government of Canada spending and activities

Information on the alignment of the OSFI’s spending with the Government of Canada’s spending and activities is available in GC InfoBase.

Financial statements and financial statements highlights

Financial statements

OSFI’s financial statements for the year ended March 31, 2020, are available on OSFI’s website.

Financial statement highlights

The tables below provide highlights from OSFI’s Statement of Financial Position and Statement of Operations, as presented in its audited financial statements prepared in accordance with Public Sector Accounting Standards (PSAS). As such, there are differences between these tables and those presented in other sections of the Departmental Results Report, which are prepared on the appropriation (i.e., modified cash) basis of accounting, in accordance with the Guide to Preparation of Part III of the 2019-20 estimates. Typically, the differences stem from the accounting treatment of capital expenditures.

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Revenue by type

Base assessments	Cost-recovered services	Pension plan assessments	User fees and charges	Appropriation
89.2%	5.4%	3.5%	1.1%	0.8%

OSFI is mainly funded through assessments on the financial institutions and private pension plans that it regulates and supervises, and a user-pay program for legislative approvals and selected services. OSFI also receives revenues for cost-recovered services and a small parliamentary appropriation for actuarial services related to federal public sector pension and benefit plans. Overall, on an accrual basis of accounting, OSFI recovered all of its expenses for the year.

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Expenses by type

Human resources	Professional services	Rental	Other operating
75%	9%	7%	9%

In 2019-20, total expenses were $189.8 million (calculated in accordance with PSAS), a $19.4 million or 11.4% increase from the previous year, and $0.2 million lower than planned. The year-over-year increase is due to the creation of positions under OSFI’s new Strategic Plan, the staffing of vacant positions, normal escalation and merit increases and increases in accrued vacation liabilities resulting from the Phoenix Damages settlement.

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Financial assets by type

Cash entitlement	Trade and other receivables, net	Accrued base assessment
91%	8%	1%

Total financial assets at the end of 2019-20 were $57.8 million, an increase of $2.7 million from the previous year. The increment is driven by an increase in the Cash Entitlement account as a result of changes in various working capital accounts. The Cash Entitlement account represents the amount that OSFI is entitled to withdraw from the Consolidated Revenue Fund without further authority.

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Financial assets by type

Accrued salaries and benefits	Trade and other payables	Unearned / Deferred revenue	Employee benefits
59%	13%	2%	26%

Total financial liabilities were $52.0 million, which was $7.0 million higher than the previous year. The increase is driven by higher accrued salaries and benefits, largely due to the growth in staff complement and increases in accrued vacation liabilities as a result of the Phoenix Damages settlement.

Additional information

Organizational profile

Appropriate minister[s]: Chrystia Freeland

Superintendent: Jeremy Rudin

Ministerial portfolio: Finance

Enabling instrument: Office of the Superintendent of Financial Institutions Act (OSFI Act)

Year of incorporation / commencement: 1987

Raison d’être, mandate and role: who we are and what we do

“Raison d’être, mandate and role: who we are and what we do” is available on the OSFI’s website.

Reporting framework

OSFI’s Departmental Results Framework and Program Inventory of record for 2019–20 are shown below.

Supporting information on the program inventory

Financial, human resources and performance information for OSFI’s Program Inventory is available in GC InfoBase.

Supplementary information tables

The following supplementary information tables are available on OSFI’s website:

• Departmental Sustainable Development Strategy
• Gender-based analysis plus

Federal tax expenditures

The tax system can be used to achieve public policy objectives through the application of special measures such as low tax rates, exemptions, deductions, deferrals and credits. The Department of Finance Canada publishes cost estimates and projections for these measures each year in the Report on Federal Tax Expenditures. This report also provides detailed background information on tax expenditures, including descriptions, objectives, historical information and references to related federal spending programs. The tax measures presented in this report are the responsibility of the Minister of Finance.

Organizational contact information

Office of the Superintendent of Financial Institutions
255 Albert Street
Ottawa, Ontario K1A 0H2

Phone: 1-800-385-8647
Fax: 1-613-952-8219
E-mail: webmaster@osfi-bsif.gc.ca
Web: http://www.osfi-bsif.gc.ca/Eng/Pages/default.aspx

Appendix: definitions

appropriation (crédit)

Any authority of Parliament to pay money out of the Consolidated Revenue Fund.

budgetary expenditures (dépenses budgétaires)

Operating and capital expenditures; transfer payments to other levels of government, organizations or individuals; and payments to Crown corporations.

core responsibility (responsabilité essentielle)

An enduring function or role performed by a department. The intentions of the department with respect to a core responsibility are reflected in one or more related departmental results that the department seeks to contribute to or influence.

Departmental Plan (plan ministériel)

A report on the plans and expected performance of an appropriated department over a 3 year period. Departmental Plans are usually tabled in Parliament each spring.

departmental priority (priorité)

A plan or project that a department has chosen to focus and report on during the planning period. Priorities represent the things that are most important or what must be done first to support the achievement of the desired departmental results.

departmental result (résultat ministériel)

A consequence or outcome that a department seeks to achieve. A departmental result is often outside departments’ immediate control, but it should be influenced by program-level outcomes.

departmental result indicator (indicateur de résultat ministériel)

A quantitative measure of progress on a departmental result.

departmental results framework (cadre ministériel des résultats)

A framework that connects the department’s core responsibilities to its departmental results and departmental result indicators.

Departmental Results Report (rapport sur les résultats ministériels)

A report on a department’s actual accomplishments against the plans, priorities and expected results set out in the corresponding Departmental Plan.

experimentation (expérimentation)

The conducting of activities that seek to first explore, then test and compare the effects and impacts of policies and interventions in order to inform evidence-based decision-making, and improve outcomes for Canadians, by learning what works, for whom and in what circumstances. Experimentation is related to, but distinct from innovation (the trying of new things), because it involves a rigorous comparison of results. For example, using a new website to communicate with Canadians can be an innovation; systematically testing the new website against existing outreach tools or an old website to see which one leads to more engagement, is experimentation.

full-time equivalent (équivalent temps plein)

A measure of the extent to which an employee represents a full person year charge against a departmental budget. For a particular position, the full time equivalent figure is the ratio of number of hours the person actually works divided by the standard number of hours set out in the person’s collective agreement.

gender-based analysis plus (GBA+) (analyse comparative entre les sexes plus [ACS+])

An analytical process used to assess how diverse groups of women, men and gender-diverse people experience policies, programs and services based on multiple factors including race ethnicity, religion, age, and mental or physical disability.

government-wide priorities (priorités pangouvernementales)

For the purpose of the 2019–20 Departmental Results Report, those high-level themes outlining the government’s agenda in the 2019 Speech from the Throne, namely: Fighting climate change; Strengthening the Middle Class; Walking the road of reconciliation; Keeping Canadians safe and healthy; and Positioning Canada for success in an uncertain world.

horizontal initiative (initiative horizontale)

An initiative where two or more federal organizations are given funding to pursue a shared outcome, often linked to a government priority.

non-budgetary expenditures (dépenses non budgétaires)

Net outlays and receipts related to loans, investments and advances, which change the composition of the financial assets of the Government of Canada.

performance (rendement)

What an organization did with its resources to achieve its results, how well those results compare to what the organization intended to achieve, and how well lessons learned have been identified.

performance indicator (indicateur de rendement)

A qualitative or quantitative means of measuring an output or outcome, with the intention of gauging the performance of an organization, program, policy or initiative respecting expected results.

performance reporting (production de rapports sur le rendement)

The process of communicating evidence based performance information. Performance reporting supports decision making, accountability and transparency.

plan (plan)

The articulation of strategic choices, which provides information on how an organization intends to achieve its priorities and associated results. Generally, a plan will explain the logic behind the strategies chosen and tend to focus on actions that lead to the expected result.

planned spending (dépenses prévues)

For Departmental Plans and Departmental Results Reports, planned spending refers to those amounts presented in Main Estimates.

A department is expected to be aware of the authorities that it has sought and received. The determination of planned spending is a departmental responsibility, and departments must be able to defend the expenditure and accrual numbers presented in their Departmental Plans and Departmental Results Reports.

program (programme)

Individual or groups of services, activities or combinations thereof that are managed together within the department and focus on a specific set of outputs, outcomes or service levels.

program inventory (répertoire des programmes)

Identifies all the department’s programs and describes how resources are organized to contribute to the department’s core responsibilities and results.

result (résultat)

A consequence attributed, in part, to an organization, policy, program or initiative. Results are not within the control of a single organization, policy, program or initiative; instead they are within the area of the organization’s influence.

statutory expenditures (dépenses législatives)

Expenditures that Parliament has approved through legislation other than appropriation acts. The legislation sets out the purpose of the expenditures and the terms and conditions under which they may be made.

target (cible)

A measurable performance or success level that an organization, program or initiative plans to achieve within a specified time period. Targets can be either quantitative or qualitative.

voted expenditures (dépenses votées)

Expenditures that Parliament approves annually through an appropriation act. The vote wording becomes the governing conditions under which these expenditures may be made.