Audited Financial Statements – Agency Activities

Management Discussion and Analysis
Agency Activities

Analysis of Net Cost of Operations (Based on Financial Statements)

The Agency 2005-2006 Net cost of Operations increased by $268 million over 2004-2005. Agency expenses totalled $3,861 million in 2005-2006 and $3,545 million in 2004-2005 (see Note 9of the Financial Statements –- Agency Activities for the breakdown of Personnel and Other Expenses). When adjusting for the receipt of Non-Tax Revenue of $319 million (2004-2005 – $270 million), the Net Cost of Operations becomes:

The Agency's expenses, as detailed in the Statement of Operations, are made up of approximately 75% in personnel expenses (salaries, other allowances and benefits) and 25% in other expenses, as illustrated in the exhibit below. Personnel expenses are the primary drivers for the Agency. A number of factors had a significant impact on the increase of $230 million in personnel expenses in 2005-2006 over 2004-2005. These include increased staff to address initiatives from recent Federal Budgets and other initiatives such as interdepartmental services provision, as well as collective agreement increases. Other expenses increased by $86 million. Much of the other expenses are linked to personnel expenses (e.g., travel for auditors, computers, accommodation, furniture replacement, etc.). Non-tax revenue increased by some $48 million in 2005-2006 over 2004-2005. The increase is attributable to additional services being provided to our clients, including provinces and other federal government departments.

Figure 45 Total Expenses

Unaudited

Date modified:

2006-11-23