Chapter 5: 2024-25 Financial overview

Financial review and highlights

We are funded mainly through assessments charged to financial institutions and private pension plans that we regulate, as well as a user-pay program for legislative approvals and other select services.

The amount charged to individual financial institutions is established in regulations and covers our main activities, including:

• Risk assessment and intervention (supervision)
• Approvals and precedents
• Regulation and guidance

Our system generally allocates costs according to the approximate time spent supervising and regulating each industry. Within each industry, costs are then assessed to individual financial institutions based on a formula that considers both the industry and the size of the institution. Financial institutions classified as staged incur an additional surcharge on their base assessment to reflect the extra supervision resources they require.

In addition to our annual financial statements, we publish quarterly financial statements to maintain transparency about our financial position and activities. We generate revenues through cost-recovered services, which include fees from federal Crown corporations such as the Canada Mortgage and Housing Corporation—which we supervise under the National Housing Act, as well as from provinces that contract with us to oversee their financial institutions. Additionally, we receive revenues from other federal organizations to which we provide administrative services.

We collect administrative monetary penalties from financial institutions when they contravene provisions of a financial institutions act. These penalties are charged pursuant to the Administrative Monetary Penalties (OSFI) Regulations and are collected and remitted to the Consolidated Revenue Fund. These funds cannot be used to reduce the overall assessment costs for the industries we regulate.

The OCA operates as a separate unit within our organization and provides a range of actuarial valuation and advisory services under legislation such as the Canada Pension Plan Act and the Public Pensions Reporting Act. These services are delivered to the CPP and some federal government entities. Among its responsibilities, the OCA prepares actuarial reports that are tabled in Parliament, providing expert and independent actuarial advice. These services are funded by fees charged to either the underlying pension plan or the federal government entity receiving the advisory services, as well as by a small parliamentary appropriation.

Significant activities for 2024-25

During 2024-25, we completed the implementation of our 2022-2025 Strategic Plan and began the implementation of our 2024-2027 Strategic Plan. The 2022-2025 Strategic Plan established goals and priorities for the 2022-25 period, centered around six priority initiatives:

• Culture
• Risk Strategy and Governance
• Strategic Stakeholder and Partner Engagement
• Policy Innovation
• Supervisory Framework
• Data Management and Analytics

Building on this foundation, our 2024-27 Strategic Plan emphasizes the advancement of key initiatives such as supervision renewal, culture, data management and analytics, and supports for our expanded mandate. It also emphasizes proactive risk mitigation by prioritizing critical functions and strengthening operational resilience. These initiatives have not resulted in significant growth in personnel or expenditures; rather, 2024-25 was a year focused on consolidating and refining the changes implemented during the previous two years.

2024-25 Financial overview

Our financial statements for the 2024-25 fiscal year can be found in Annex A. Our total costs were $314.4 million, a $2.7 million or 0.9% increase from the previous year. Personnel costs, OSFI’s largest expense, rose by $4.6 million, or 1.8%. This variance reflects normal economic and merit increases, offset in part by a slight decrease in the number of full-time equivalent (FTE) employees as OSFI capped its number of FTE employees at 1,300. Professional services costs decreased by $2.4 million or 8.1% as OSFI’s spend rate decreased following the implementation of the initiatives outlined in the Blueprint and Strategic plan over the last 2 years. All other costs, in total, increased by $0.5 million.

OSFI’s FTE employees in 2024-25 were 1,278, a 2.9% decrease from the previous year.

Federally regulated financial institutions

Revenues

Total revenues from financial institutions were $287.5 million, an increase of $0.2 million or 0.1% from the previous year. Base assessments on financial institutions, which are recorded at an amount necessary to balance revenue and expenses after all other sources of revenue are considered, decreased by $5.5 million or 1.9% from the previous year.

Revenue from user fees and charges increased by $5.5 million or 411.5% because of an increase in the number of surcharge assessments for staged institutions.

Revenue from cost recovered services increased by $0.2 million or 12.2% because of an increase in the amount of work done for federal crown corporations.

Costs

Total costs attributed to financial institutions were $287.5 million, an increase of $0.2 million or 0.1% from the previous year. The increase is primarily due to higher personnel costs ($3.5 million) offset by lower professional services ($2.9 million), as explained above.

Federally regulated private pension plans

Assessments

Our costs for regulating and supervising pension plans are recovered through an annual assessment charged to plans, based on the number of beneficiaries. Plans are assessed at the time of application for registration under the PBSA, and annually thereafter.

The assessment rate is established based on our estimate of current year costs to supervise these pension plans, adjusted for any accumulated excess or shortfall of assessments in the preceding years. The estimate is then divided by the anticipated number of assessable beneficiaries to arrive at a base fee rate. The rate established for 2024-25 was $11.00 per assessable beneficiary, unchanged from the previous year. Total fees assessed during the fiscal year were $8.3 million ($8.0 million in 2023-24) whereas total fees recognized as revenue in 2024-25 were $9.1 million (up from $7.6 million in 2023-24). The difference between revenue recognized and fees assessed gives rise to unearned or accrued assessments, as discussed below.

Any excess or shortfall of assessments in a given year is amortized over five years in accordance with the assessment formula set out in regulations. Under this approach, the annual shortfall or excess is recovered from or returned to pension plans over a five-year period, staring one year after it is established, through an adjustment to the annual fee rate. The rate established and published in the Canada Gazette in September 2024 for 2025-26 is set at $12.00 per assessable beneficiary, up from $11.00 for 2024-25. We anticipate that the rate for 2025-26 will fully recover the estimated annual costs of this program; however, variations between actual and estimated costs or plan beneficiaries in any particular year will cause an excess or shortfall of assessments.

Costs

The cost of administering the PBSA for 2024-25 was $9.1 million, an increase of $1.5 million or 20.2% from the previous year and reflects the staffing of vacant positions and normal escalation and merit increases.

Costs were significantly lower than normal in 2022-23 due to significant vacancies in the pension division caused by retirements and employee turnover. As those vacancies have been filled, costs are returning to expected levels.

Actuarial valuation and advisory services

The OCA is funded by fees charged for actuarial valuation and advisory services and by an annual parliamentary appropriation. Total expenses in 2024-25 were $17.8 million, an increase of $0.9 million, or 5.4%, from the previous year due primarily to an increase in the number of FTE employees in accordance with the new strategic plan, normal economic and merit increases, and an increase in associated overhead costs.

Annex: Consolidated financial statements and Independent auditor's report

Statement of management responsibility including internal control over financial reporting

The accompanying financial statements for the year ended March 31, 2025 and all information contained in these statements are the responsibility of the management of the Office of the Superintendent of Financial Institutions (OSFI). These financial statements have been prepared by management using the Government of Canada’s accounting policies, which are based on Canadian Public Sector Accounting Standards (PSAS).

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

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

To ensure the integrity and objectivity of financial data, management emphasizes the recruitment, training, and development of qualified staff; maintains an organizational structure that provides clearly defined responsibilities and appropriate segregation of responsibilities; and promotes awareness of regulations, policies, standards, and managerial authorities. An annual assessment of the effectiveness of the system of OSFI's ICFR system is also conducted.

The ICFR system is designed to mitigate risks to a reasonable level through an on-going process of identifying key risks, assessing the effectiveness of associated key controls, and implementing any necessary improvements.

Under the responsibility of the Chief Financial Officer, a risk based assessment of the ICFR system for the year ended March 31, 2025 was completed in accordance with the Treasury Board Policy on Financial Management. The results and action plans are summarized in the annex.

The effectiveness and adequacy of OSFI’s system of internal control is reviewed by the internal audit staff, who conduct periodic risk based audits of different areas of OSFI’s operations, and by OSFI’s Audit Committee, which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting, and which reviews and provides advice to the Superintendent on the audited financial statements.

Deloitte LLP has audited the financial statements of OSFI and reports on their audit to the Minister of Finance. This report does not include an audit opinion on the annual assessment of the effectiveness of OSFI's internal controls over financial reporting.

Adelle Laniel CPA
Chief Financial Officer

Peter Routledge
Superintendent of Financial Institutions

Ottawa, Canada
July 28, 2025

Independent auditor’s report

To the Superintendent of Financial Institutions and the Minister of Finance

Opinion

We have audited the financial statements of the Office of the Superintendent of Financial Institutions (“OSFI”), which comprise the statement of financial position as at March 31, 2025, and the statements of operations, changes in net financial assets and cash flow for the year then ended, and notes to the financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of OSFI as at March 31, 2025, and the results of its operations and its cash flows for the year then ended in accordance with Canadian public sector accounting standards (“PSAS”).

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards (“Canadian GAAS”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of OSFI in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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

Management is responsible for the preparation and fair presentation of the financial statements in accordance with Canadian accounting standards for public sector, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing OSFI’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate OSFI or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing OSFI’s financial reporting process.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Canadian GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Deloitte LLP
Chartered Professional Accountants
Licensed Public Accountants
July 28, 2025

Financial statements: March 31, 2025

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

Adelle Laniel CPA
Chief Financial Officer

Peter Routledge
Superintendent of Financial Institutions

Revenue and Expense by Major Classification: Note 7

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

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

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

Notes to the financial statements

For the year ended March 31, 2025 (in thousands of Canadian dollars)

1. Authority and objectives

The Office of the Superintendent of Financial Institutions (OSFI) was established by the Office of the Superintendent of Financial Institutions Act (OSFI Act) in 1987. Pursuant to the Financial Administration Act (FAA), OSFI is a division of the Government of Canada for the purposes of that Act and is listed in schedule I.1 of the Act. The Government of Canada is OSFI’s parent and the ultimate controlling party of OSFI.

OSFI's purpose is to contribute to public confidence in the Canadian financial system by regulating and supervising approximately 400 federally regulated financial institutions (FRFIs) and 1200 federally regulated pension plans (FRPPs).

OSFI’s mandate is to:

• ensure FRFIs and FRPPs remain in sound financial condition
• ensure FRFIs protect themselves against threats to their integrity and security, including foreign interference
• act early when issues arise and require FRFIs and FRPPs to take necessary corrective measures without delay
• monitor and evaluate risks and promote sound risk management by FRFIs and FRPPs

In exercising its mandate:

• for FRFIs, OSFI strives to protect the rights and interests of depositors and creditors while having due regard for the need to allow FRFIs to compete effectively and take reasonable risks
• for FRPPs, OSFI strives to protect the rights and interests of pension plan members, former members and entitled beneficiaries

Revenue and spending authority

Pursuant to Section 17 of the OSFI Act, the Minister of Finance may spend any revenues collected under Sections 23 and 23.1 of the OSFI Act to defray the expenses associated with the operation of OSFI. The Act also establishes a ceiling for expenses at $100,000 above the amount of revenue collected to be drawn from the Consolidated Revenue Fund (CRF) of Canada.

OSFI’s revenues comprise assessments, service charges and fees. The expenses against which assessments may be charged include those in connection with the administration of the Bank Act, the Cooperative Credit Associations Act, the Green Shield Canada Act, the Insurance Companies Act, the Protection of Residential Mortgage or Hypothecary Insurance Act and the Trust and Loan Companies Act. The formula for the calculation of assessments is included in regulations.

Subsections 23(1.1) and 23(5) of the OSFI Act provide that assessments may be charged for the administration of the Pension Benefits Standards Act, 1985 (PBSA, 1985) and the Pooled Registered Pension Plans Act. The assessments for the administration of pension plans subject to the PBSA are set annually in accordance with the Assessment of Pension Plans Regulations.

Section 23.1 of the OSFI Act provides that the Superintendent may assess against a person a prescribed charge (service charge) and applicable disbursements for any service provided by or on behalf of the Superintendent for the person’s benefit or the benefit of a group of persons of which the person is a member. “Person” includes individuals, corporations, funds, unincorporated associations, His Majesty in Right of Canada or of a province, and a foreign government. The service charges are detailed in the regulations.

The Office of the Chief Actuary (OCA) provides a range of actuarial valuation and advisory services, under the Canada Pension Plan Act and the Public Pensions Reporting Act to the Canada Pension Plan (CPP), public pension plans and some federal government entities, including the provision of advice in the form of reports tabled in Parliament. The costs of providing these services are recovered through fees charged to either the underlying pension plans or the federal government entity to which advisory services are provided. Pursuant to Section 16 of the OSFI Act, Parliament has provided annual appropriations to fund the cost of certain actuarial valuations prepared by the Office of the Chief Actuary on behalf of the Government of Canada.

2. Significant accounting policies

The financial statements of OSFI have been prepared in accordance with the Government of Canada’s accounting policies, which are based on Canadian Public Sector Accounting Standards (PSAS) as issued by the Public Sector Accounting Board (PSAB). The accounting policies used in the financial statements are based on the PSAS applicable as at March 31, 2025. The policies set out below are consistently applied to all periods presented.

The significant accounting policies of OSFI are set out below:

a) Cash entitlement (Cash overdraft)

OSFI does not have its own bank account. The financial transactions of OSFI are processed through the CRF. Cash entitlement represents the maximum amount OSFI is entitled to withdraw from the CRF without further authority.

OSFI has a statutory revolving expenditure authority pursuant to Section 17(4) of the OSFI Act. This authority establishes a ceiling for expenses at $100,000 above the amount of revenue collected to be drawn from the CRF. Drawings on this facility are presented as cash overdraft.

No interest is earned or charged on these amounts.

b) Financial instruments

i. Recognition

All financial instruments are recognized initially at fair value. The fair value of financial instruments on initial recognition is based on the transaction price, which represents the fair value of the consideration given or received. Subsequent to initial recognition, financial instruments are measured based on the accounting treatment corresponding to their classification.

ii. Classification and measurement

OSFI's financial instruments are classified at either fair value or amortized cost based on the purpose for which the financial assets were acquired, or liabilities incurred.

c) Impairment of financial assets

OSFI assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset (an incurred ‘loss event’) and that the loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

For financial assets carried at amortized cost, OSFI first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If OSFI determines that there is objective evidence of impairment for an individual financial asset, it must be assessed for impairment either individually, or in a group of financial assets with similar credit risk characteristics. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognized are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss has occurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. The impairment assessment must be based on the best estimates available in light of past events, current conditions, and taking into account all circumstances known at the date of the preparation of the financial statements. If a future write-off is later recovered, the recovery is credited to the Statement of Operations.

d) Tangible capital assets

Tangible capital assets are stated at historical cost, net of accumulated amortization and any accumulated impairment losses. Historical cost includes the costs of replacing parts of property and equipment when incurred, if the recognition criteria are met. Repair and maintenance costs are recognized in the Statement of Operations as incurred.

Amortization is recorded using the straight-line method over the estimated useful lives of the assets as follows:

Internally developed and externally purchased software are capitalized as tangible capital assets. Software acquired separately is measured on initial recognition at cost. The cost of internally developed software consists of directly attributable costs necessary to create, produce, and prepare the software to be capable of operating in the manner intended by OSFI. Amortization of the assets begins when development is complete and the assets are available for use. Costs incurred during the pre-development or post-implementation stages are expensed in the period incurred.

The assets’ residual values, useful lives and methods of amortization are reviewed at each financial year end and adjusted prospectively, if appropriate.

e) Impairment of non-financial assets

OSFI assesses at each reporting date whether there is an indication of impairment. If any indication exists, or when annual impairment testing for an asset is required, OSFI estimates the asset’s recoverable amount. When a non- financial asset no longer contributes to OSFI's ability to provide goods and services, or the value of future economic benefits associated with the non-financial asset is less than its net book value, the cost of the non-financial asset is reduced to reflect the decline in the asset's value. Impairment losses are reflected in the Statement of Operations in the period the decline is recognized.

OSFI assesses internally developed software not yet in use for impairment on an annual basis.

f) Employee benefits

Short-term benefits are recorded in the Statement of Operations when an employee has rendered the service. Unpaid short-term compensated leave that has vested at the reporting date is accrued at the reporting date and not discounted. OSFI contributes to the Government of Canada sponsored Public Service Health Care Plan and Dental Service Plan for employees. These contributions represent the total obligation of OSFI with respect to these plans.

Pension benefits

Substantially all of the employees of OSFI are covered by the Public Service Pension Plan (the Plan), a contributory defined benefit plan established through legislation and sponsored by the Government of Canada. Contributions are required by both the employees and OSFI to cover current service cost. Pursuant to legislation currently in place, OSFI has no legal or constructive obligation to pay further contributions with respect to any past service or funding deficiencies of the Plan. Consequently, contributions are recognized as an expense in the year when employees have rendered service and represent the total pension obligation of OSFI.

Severance

On termination of employment, employees are entitled to certain benefits provided for under their conditions of employment through a severance benefits plan. The cost of these benefits is accrued as the employees render their services necessary to earn severance benefits. The severance benefits are based upon the final salary of the employee.

The projected accrued benefit obligation is determined using an accrued benefit method which incorporates management’s best estimate of salary, retirement age and discount rate.

Other benefits

The Government of Canada sponsors a variety of other benefit plans from which former employees may benefit upon retirement. The Public Service Health Care Plan and the Pensioners’ Dental Service Plan are the two major plans available to OSFI retirees. These are defined benefit plans sponsored by the Government of Canada. Contributions are required by OSFI to cover current service costs. Pursuant to legislation currently in place, OSFI has no legal or constructive obligation to pay further contributions with respect to any past service or funding deficiencies of the Plan. Consequently, contributions are recognized as an expense in the year when employees have rendered service and represent the total obligation of OSFI with respect to these plans.

Sick leave

Employees are eligible to accumulate sick leave until retirement or termination. Unused sick leave is not eligible for payment on retirement or termination, nor can it be used as vacation. All sick leave is an accumulating non-vesting benefit. A liability is recorded for sick leave balances expected to be taken in excess of future allotments.

The cost of sick leave as well as the present value of the obligation are determined using an actuarial valuation.

g) Leases

Leases in which a significant portion of the risks and rewards of ownership related to the leased property are substantially retained by the lessor shall be accounted for as operating leases. OSFI records the costs associated with operating leases in the Statement of Operations in the period in which they are incurred. Any lease incentives received from the lessor are charged to the Statement of Operations on a straight-line basis over the period of the lease.

OSFI does not have borrowing authority and therefore cannot enter into lease agreements that are classified as leased tangible assets. OSFI has established procedures to review all lease agreements and identify if the proposed terms and conditions would result in a transfer to OSFI of substantially all the benefits and risks incidental to ownership.

h) Revenue recognition

OSFI recognizes revenue on a cost recovery basis. Amounts that have been billed and for which costs have not been incurred are classified as unearned on the Statement of Financial Position. Revenue is recognized in the accounting period in which it is earned (service provided) whether or not it has been billed or collected. At the end of the period, amounts may have been collected in advance of the incurrence of costs or provision of services, or alternatively, amounts may not have been collected and are owed to OSFI.

Base assessments – Revenue from federally regulated financial institutions base assessments is recognized based on actual costs incurred as services are charged based on cost recovery and all costs are considered recoverable. Base assessments are typically billed annually based on an estimate of the current fiscal year’s operating costs (an interim assessment) together with adjustments related to the final accounting of the previous year’s assessment for actual costs incurred. Assessments are calculated prior to December 31 of each year, in accordance with Section 23(1) of the OSFI Act and the Assessment of Financial Institutions Regulations, 2017. Differences between billed estimates and actual costs incurred at the end of the period are recorded as accrued base assessments or unearned base assessments.

Pension plan assessments are earned from registered pension plans. Assessment rates are set annually by regulation based on budgeted expenses, pension plan membership and actual results from previous years. Pension plan assessments are charged in accordance with Section 23(1.1) and 23(5) of the OSFI Act. Revenue from pension plan assessments is recognized based on actual costs incurred as services are charged based on cost recovery and all costs are considered recoverable. Differences between the amounts billed to industry and actual costs incurred at the end of the period are recorded as accrued pension plan assessments or unearned pension plan assessments.

User fees and charges include revenue earned pursuant to the Charges for Services Provided by the Office of the Superintendent of Financial Institutions Regulations, 2002 – as amended from time to time – in respect of legislative approvals and approvals for supervisory purposes, and surcharges assessed to federally regulated financial institutions assigned a “stage” rating other than "zero" pursuant to the Guide to Intervention for Federal Financial Institutions. Assessment surcharges are charged in accordance with the Assessment of Financial Institutions Regulations, 2017. Revenue from user fees is recognized at the completion of the service.

Administrative monetary penalties are penalties levied to financial institutions when they contravene a provision of a financial institutions Act and are charged in accordance with the Administrative Monetary Penalties (OSFI) Regulations. Penalties levied are not available to reduce the net costs that OSFI assesses the industry (i.e., they are non-respendable) and are remitted to the CRF when collected. OSFI assesses its Administrative monetary penalties revenue against specific criteria in order to determine if it is acting as principal or agent. OSFI has concluded that it is acting as a principal for Administrative monetary penalty revenue.

Cost-recovered services represent revenue earned from sources other than those listed above. These services are provided in accordance with the terms and conditions agreed to by the transacting parties. Revenue from cost- recovered services is recognized based on actual costs incurred, and all costs are considered recoverable. Revenue and the matching expenses from cost-recovered services not specifically related to the regulation and supervision of FRPPs or Actuarial valuation and advisory services are grouped with the regulation and supervision of FRFIs on the Statement of Operations. This includes costs recovered from other government entities such as the Canada Mortgage and Housing Corporation for OSFI's supervisory oversight in accordance with the National Housing Act.

i) Government funding

Government funding, including parliamentary appropriations, is recognized in the period that the appropriation was authorized, and any eligibility criteria met. Parliamentary appropriations for operating purposes are considered to be without stipulations restricting their use and are recognized as revenue when the appropriations are authorized.

j) Contingent liabilities

Contingent liabilities are potential liabilities, which may become liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

k) Budget figures

The 2024-2025 budget is reflected in the Statement of Operations and the Statement of Changes in Net Financial Assets as approved by OSFI’s Executive Committee.

l) Significant judgments, estimates and assumptions

The preparation of OSFI’s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. Estimates and assumptions are reviewed on an ongoing basis. Revisions will be recognized in the financial statements of a future fiscal period in which the estimates or assumptions are revised.

In the process of applying its accounting policies, management has made certain judgments. The following specific judgments have the most significant effect on the amounts recognized in the financial statements:

• Recognition of internally developed software;
• Lease classification;
• Estimated useful lives of tangible capital assets;
• Actuarial assumptions used to value sick leave and severance obligations;
• Likelihood of occurrence for contingent liabilities;
• Estimates for the allowance for doubtful accounts; and,
• Estimates related to accrued salary increases.

3. Trade and other receivables

The breakdown of all amounts owing to OSFI, by type, is as follows:

The majority of OSFI's revenue is comprised of assessments, which are typically invoiced once a year, usually in the second quarter. As a result, trade receivable balances will vary significantly during the year and may also vary from year to year depending on the timing of the invoicing.

OSFI records an allowance for doubtful accounts considering the age of an outstanding receivable and the likelihood of its collection. An allowance for doubtful accounts is also made where collection of the receivable is doubtful based on information gathered through collection efforts. An allowance is reversed once collection of the debt is successful or the amount is written off. Net impairment losses on trade and other receivables recognized during the year ended March 31, 2025 were $645 (Year ended March 31, 2024 - $380).

A receivable is written off when OSFI is certain that collection will not occur and all requirements of the OSFI Act or the Debt Write-Off Regulations, 1994 have been met. No amounts were written off during the year ended March 31, 2025 (Year ended March 31, 2024 - $ Nil). During the period, no interest was earned on impaired assets and none of the past due amounts were renegotiated. Those that are neither past due nor provided for or impaired are considered to be fully collectible.

The aging of trade receivables was as follows:

Refer to Note 11 b) for further information on credit risk applicable to OSFI.

4. Related party transactions

OSFI is related, in terms of common ownership, to all Government of Canada departments, agencies and crown corporations. OSFI enters into transactions with these entities in the normal course of business and on normal trade terms. These transactions are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

During the year ended March 31, 2025, OSFI purchased goods and services for $69,278 (2024 - $73,729) and earned revenue of $18,659 (2024 - $17,899) from transactions with other government entities. Although most transactions or groups of similar transactions are not individually significant, OSFI did have the following individually significant transactions:

As at March 31, 2025, the amount of trade and other receivables and trade and other payables from related parties was $417 (March 31, 2024 - $2,105) and $7,681 (March 31, 2024 - $6,617), respectively.

OSFI receives an annual parliamentary appropriation pursuant to Section 16 of the OSFI Act to support its mandate relating to the OCA. During the year ended March 31, 2025, OSFI was granted $1,403 (2024 - $1,244) which was recognized into net results and shown on the Statement of Operations. There are no unfulfilled conditions or stipulations attached to this appropriation.

5. Tangible capital assets

None of the assets held have any restriction on title and none of the assets have been pledged as security for liabilities. As at March 31, 2025, OSFI had $35,515 (2024 - $38,901) of tangible capital assets at cost that were fully amortized and still in use. These assets are primarily fully amortized leasehold improvements and internally developed software applications that are near the end of their useful life and are scheduled to be replaced. Their fair value is insignificant.

6. Employee benefits

a) Post-employment benefits

i. Pension benefits

Substantially all of the employees of OSFI are covered by the Public Service Pension Plan (the Plan), a contributory defined benefit plan established through legislation and sponsored by the Government of Canada. Contributions are required by both the employees and OSFI. The President of the Treasury Board of Canada sets the required employer contributions based on a multiple of the employees’ required contribution. The general contribution rate, on pensionable earnings, effective as at March 31, 2025 was 9.656% (2024 - 8.994%). Total contributions of $19,724 were recognized as expense for the year ended March 31, 2025 (2024 - $17,905).

The Government of Canada holds a statutory obligation for the payment of benefits relating to the Plan. Pension benefits generally accrue up to a maximum period of 35 years at an annual rate of 2 percent of pensionable service times the average of the best five consecutive years of earnings. The benefits are coordinated with Canada/Québec Pension Plan benefits and are indexed to inflation.

ii. Severance benefits

OSFI used to administer a severance benefits plan for its employees. On termination of employment, eligible employees were entitled to certain benefits provided for under their conditions of employment based on their years of service. The plan was substantially curtailed in 2013 and employees no longer accumulate years of service. OSFI’s remaining liability in regards to this plan relates primarily to employees who chose to defer receipt of their entitlement until departure. Current service benefit costs relate to the cost of involuntary departures.

Information about OSFI’s severance benefit plan is presented in the table below.

The most recent actuarial valuation for severance benefits was completed as at March 31, 2025. OSFI measures its accrued benefit obligation for accounting purposes as at March 31 of each year.

The significant actuarial assumption adopted in measuring OSFI’s accrued benefit obligation is a discount rate of 3.01% (2024 - 3.44%). For measurement purposes, management’s best estimate for the general salary increases to estimate the current service cost and the accrued benefit obligation as at March 31, 2025 is an annual economic increase of 2.00% for the plan year 2026 (2024 - 2.25% for the plan year 2025). Thereafter, an annual economic increase of 2.5% is assumed (2024 - 2.0% to 2.7%). The average remaining service period of active employees covered by the benefit plan is 15 years (2024 - 14 years).

b) Other long-term benefits

i. Sick leave

Information about OSFI’s sick leave plan is presented in the table below.

The most recent actuarial valuation for sick leave benefits was completed as at March 31, 2025. OSFI measures its accrued benefit obligation for accounting purposes as at March 31 of each year.

The significant actuarial assumption adopted in measuring OSFI’s accrued benefit obligation is a discount rate of 2.95% (2024 - 3.46%). For measurement purposes, management’s best estimate for the general salary increases to estimate the current service cost and the accrued benefit obligation as at March 31, 2025 is an annual economic increase of 2.00% for the plan year 2026 (2024 - 2.25% for the plan year 2025). Thereafter, an annual economic increase of 2.5% is assumed (2024 - 2.0% to 2.7%). The average remaining service period of active employees covered by the benefit plan is 15 years (2024 - 15 years).

7. Revenue and expenses by major classification

8. Administrative monetary penalties

Administrative monetary penalties levied by OSFI are remitted to the CRF. The funds are not available for use by OSFI and are not included in the balance of the Cash entitlement. As a result, the penalties do not reduce the amount that OSFI assesses the industry in respect of its operating costs.

In the year ended March 31, 2025, OSFI levied $530 (2024 - $68) in administrative monetary penalties.

9. Operating lease arrangements

OSFI has entered into operating lease agreements for office space and office equipment in four locations across Canada. The minimum aggregate annual payments for future fiscal years are as follows:

10. Contingencies

A claim for unspecified damages was lodged against the Government of Canada and its constituent entities (including OSFI) during 2020-21. The claim has not advanced to a point where the potential outcome or the amount at risk can be determined, as such no provision for contingent liabilities has been accrued at the date of these financial statements.

11. Financial risk management

OSFI’s financial liabilities include: Accrued salaries and benefits, Trade and other payables, Unearned base assessments and Unearned pension plan assessments. These liabilities provide short-term financing for OSFI’s operations. Financial assets: include Cash entitlement, Trade and other receivables, Accrued base assessments, Accrued pension plan assessments.

OSFI is exposed to market risk, credit risk and liquidity risk in connection with its financial instruments. OSFI’s risk exposures and its processes to manage these risks did not change significantly during the year ended March 31, 2025.

a) 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 comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity risk. OSFI is exposed to currency risk on any amounts payable that are to be settled in a currency other than the Canadian dollar but is not exposed to interest rate risk nor to other price risk.

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. OSFI’s exposure to the risk of changes in foreign exchange rates relates primarily to OSFI’s operating activities (when expenses are denominated in a currency other than the Canadian dollar).

OSFI manages its exposure to currency risk by structuring its contracts in Canadian dollars wherever possible. The majority of OSFI’s transactions presented were denominated in Canadian dollars; as such, OSFI’s exposure to currency risk for all periods presented is insignificant.

There is no impact to revenues since all billings are in Canadian dollars.

b) Credit risk

Credit risk is the risk that the counterparty will not meet its obligations under a financial instrument, resulting in a financial loss. The maximum exposure OSFI has to credit risk as at March 31, 2025 is $11,614 (March 31, 2024 - $24,267) which is equal to the carrying value of its Trade and other receivables and Accrued base assessments.

All FRFIs and FRPPs are required to register with OSFI and pay the assessments as established by OSFI. Any loss incurred by OSFI as a result of a counterparty not meeting its obligations is recorded in the year incurred and collected in the following year through assessments to the industry to which the balance pertains, as outlined in the OSFI Act. All remaining receivables are with other Canadian federal and provincial government organizations, where there is minimal potential risk of loss. OSFI does not hold collateral as security.

c) Liquidity risk

Liquidity risk is the risk that OSFI will encounter difficulty in meeting its obligations associated with current and future financial liabilities. OSFI’s objective is to maintain sufficient Cash entitlement through its collection of base assessments, cost-recovered services and other fees and charges in order to meet its operating requirements. OSFI manages liquidity risk through detailed annual planning and billing processes that are structured to allow for sufficient liquidity from one billing period to the next. OSFI’s objective is to accurately estimate its operating costs and cash requirements for the current year and to recover these through its interim base assessments, fees and other sources of revenue.

OSFI’s policy is to satisfy liabilities by the following means (in decreasing order of priority):

• Disbursing payments from its Cash entitlement account; and,
• Drawing on its revolving expenditure authority, pursuant to Section 17.4 of the OSFI Act.

Drawings on this facility were $Nil as at March 31, 2025 (March 31, 2024 - $Nil).

Refer to Note 1 for further information on OSFI’s authority.

The table below summarizes the maturity profile of OSFI’s financial liabilities as at March 31, 2025 and March 31, 2024 based on contractual undiscounted payments. When the counterparty has a choice of when the amount is paid, the liability is allocated to the earliest period in which OSFI can be required to pay. When amounts are due in installments, each installment is allocated to the earliest period in which OSFI can be required to pay.

Unearned pension plan assessments represent the accumulation of in-year surplus or deficit against assessments collected. These are in turn paid or collected over a period of five years commencing one year from the year in which they were established. OSFI does not charge nor pay interest to the various pension plans over the five years.

12. Accumulated surplus

OSFI was established on July 2, 1987 by the OSFI Act. OSFI was created through the merger of its two predecessor agencies – the Department of Insurance and the Office of the Inspector General of Banks. To help fund OSFI’s first year of operations and establish a pool of working capital necessary to support its annual assessment and expenditure cycle, OSFI was credited with the assessments that recovered the costs of its predecessors for the previous fiscal year. This amount is reflected as contributed surplus.

OSFI fully recovers its costs each year resulting in no in-year surplus or deficit. The accumulated deficit of $2,647 represents the net impact of transition adjustments arising from the transition to accrual accounting in 2000-2001 and the adoption of new or revised accounting standards since then. The balance has not changed since the transition to PSAS on April 1, 2017.

Annex to the Statement of Management Responsibility including Internal Control over Financial Reporting

(Unaudited)

Fiscal Year 2024-2025

1. Introduction

This document provides summary information on the measures taken by the Office of the Superintendent of Financial Institutions (OSFI) to maintain an effective system of internal control over financial reporting (ICFR) including information on internal control management, assessment results and related action plans.

Detailed information on OSFI’s authority, mandate and program activities are available in the Departmental Plan and the Departmental Results Report.

2. Departmental system of internal control over financial reporting

2.1 Internal Control Management

OSFI has a well-established governance and accountability structure to support the organizational assessment efforts and oversight of its system of internal control. An internal control management framework is in place and includes the following:

• Organizational accountability structures as they relate to internal control management to support sound financial management, including clear roles and responsibilities for employees in their areas of responsibility for control management;
• Commitment to integrity and ethical values, including the implementation of the Statement of Values and Code of Conduct which is a complement to the Values and Ethics Code for the Public Sector to strengthen the ethical culture and contribute to the public sector integrity;
• On-going communication and training on statutory requirements, policies and procedures for sound financial management and control; and,
• Monitoring and regular updates on internal control management, including the provision of related assessment results and action plans.

The Audit Committee is independent and provides advice to the Superintendent on the adequacy and functioning of the agency’s risk management, control and governance frameworks and processes.

2.2 Service arrangements relevant to financial statements

2.2.1 Reliance on other federal government organizations

OSFI relies on other organizations for the processing of certain transactions that are recorded in its financial statements, as follows.

Common Arrangements

• Public Services and Procurement Canada (PSPC) administers the payments of salaries, the shared travel system (STS), office space arrangement, and the procurement of certain types of goods and services falling outside OSFI’s contracting delegation of authority.
• Shared Services Canada (SSC) administers the procurement of certain goods related to information management and information technology falling outside OSFI’s contracting delegation of authority.
• The Department of Justice provides legal services to OSFI.
• Treasury Board Secretariat (TBS) provides OSFI with information used to calculate various accruals, such as employee benefits rate.

Specific Arrangements

• TBS provides OSFI with corporate financial systems support. The services relate to the support of the SAP financial system platform for capturing all financial transactions. As the service provider, TBS is responsible for ensuring that IT General Controls (ITGCs) over the SAP environment are designed and operating effectively. As a client, OSFI retains responsibility over certain ITGCs over the SAP environment, such as user access controls and segregation of duties.

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

2.2.2 Services that other organizations rely upon

Specific Arrangements

• OSFI provides financial services for the calculation of assessment revenue to the Financial Consumer Agency of Canada (FCAC). The Office of the Chief Actuary (OCA) also provides actuarial services to the FCAC.
• The OCA is an independent unit within OSFI that provides a range of actuarial valuation and advisory services to the Government of Canada. The OCA provides appropriate checks and balances on the future costs of the different pension plans and social programs that fall under its responsibility, including, but not limited to, the Canada Pension Plan (CPP), the Old Age Security Program and the Canada Student Financial Assistance Program.

3. OSFI’s assessment results during fiscal year 2024-2025

The following table summarizes the status of the ongoing monitoring activities according to OSFI’s Five-Year Risk-Based Plan for the Assessment, Remediation and Ongoing Monitoring of Internal Controls over Financial Reporting. The plan covers the five-year period from April 1, 2024 to March 31, 2029.

Monitoring results for 2024-2025

As part of its ongoing monitoring plan, OSFI completed its assessment of the financial controls within the following seven key business processes:

Overall, the key controls tested performed as intended, with some exceptions requiring remediation in the procurement and contracting and month-end/year-end accruals and reconciliations. Specifically, the areas requiring remediation are:

• Appropriate financial delegation approval and quality review of procurement actions
• Timely approval of the accruals and reconciliations

Management is aware of the remediations required and action plans have been started to address them. The risk of material misstatement due to these exceptions is low.

New or significantly amended key controls

In the current year, there were no significantly amended key controls in existing processes that required reassessment. There were only minor changes to the design process of the key business processes.

Entity Level Controls

The triennial evaluation of entity level controls (ELCs) was completed in 2024-2025 and the controls operated as intended with some remediation actions recommended. Remediation centered around the development of internal controls documentation on financial management and fraud risk, as well as review of key job descriptions.

IT General Controls

ITGCs over the SAP financial system are shared between OSFI and the SAP cluster host, TBS. OSFI completed the operating effectiveness assessment of controls under its responsibility while TBS completed a Reporting on Controls at a Service Organization commonly called the Canadian Standard on Assurance Engagements (CSAE 3416) audit over the design and operating effectiveness of the SAP system, which benefits all members of the cluster. As the service provider of the SAP financial system, TBS is responsible for completing any remedial actions identified as a result of the CSAE 3416 audit.

For fiscal year 2024-2025, the CSAE 3416 report is unqualified. TBS reports on the findings of this audit in its Annex to the Statement of Management Responsibility including Internal Control over Financial Reporting.

As a complimentary control, OSFI performed a semi-annual review of SAP user access with no issues noted.

Financial fraud risk monitoring activities

With the objective to enhance the detection and reporting of fraudulent activity, OSFI utilizes data analysis techniques (using a data analytics software) to identify anomalies, trends, and risk indicators within a large population of transactions with the objective to identify financial fraud and irregular transactions.

Scope of Testing

Business processes in scope include Accounts Payable, Travel, Acquisition Cards, and Contracting.

Summary of Results: No potential fraud was identified.

4. OSFI’s action plan for the next fiscal year and subsequent fiscal years

OSFI’s monitoring plan over the next three fiscal years in accordance with the Five-Year Risk Based Plan for the Assessment, Remediation and Ongoing Monitoring of Internal Controls over Financial Reporting is shown in the table below.

The ongoing monitoring plan is based on the following:

• Control tests are performed on a rotational basis. High-risk processes are validated annually, medium risk processes every two years, and low risk processes every three years.
• Adjustments to the ongoing monitoring plan are made in accordance with the risk assessment against the inherent risk criteria.