Quarterly Financial Report for the quarter ended September 30, 2015

1. Introduction

This quarterly report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by Treasury Board. This quarterly report should be read in conjunction with the 2015–16 Main Estimates and the 2014–15 Quarterly Financial Report for the quarter ended September 30, 2014.

A summary description of the Citizenship and Immigration Canada (CIC) programs may be found in Part II of the Main Estimates (PDF, 1.2 MB).

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Department’s spending authorities granted by Parliament and those used by the Department consistent with the Main Estimates for the 2015–16 fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before moneys can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year.

Citizenship and Immigration Canada prepares its annual departmental financial statements that are part of the departmental performance reporting process, on a full accrual basis in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector. However, the spending authorities voted by Parliament remain on an expenditure basis.

This quarterly report has not been subject to an external audit or review.

2. Highlights of fiscal quarter and fiscal year-to-date (YTD) results

CIC’s 2015–16 authorities represent the total of Main Estimates, the approved Operating Budget Carry Forward from 2014-15 and minor adjustments related to statutory items. CIC did not request authorities through Supplementary Estimates (A) in 2015–16 or in 2014–15.

Significant Changes to Authorities

As reflected in the Statement of Authorities, CIC’s total budgetary authorities available for use in fiscal year 2015–16 increased by approximately $75 million (5%) when compared to the same quarter in 2014–15. This is comprised of an increase of $8 million (1%) in Vote 1 – Operating Expenditures, an increase of $17 million (2%) in Vote 5 – Grants and Contributions, and an increase of $50 million in Statutory Authorities mostly related to the Passport Canada Program and its revolving fund.

Vote 1 – Operating Expenditures

The Department’s Vote 1 – Operating Expenditures net increase of $8 million or 1% is explained as follows:

• Increases of $28 million associated with the following:
  • Additional Funding for:
    • The Electronic Travel Authorization initiative ($14 million);
    • The Express Entry initiative announced in Budget 2014 ($5 million);
    • Collective bargaining agreements signed prior to the operating budget freeze ($3 million);
    • The Entry Exit initiative ($1 million); and
    • The 2015 Pan American and Parapan American games ($1 million).
  • Transfers from:
    • The Department of Foreign Affairs, Trade and Development (DFATD):
      • International Experience Canada ($2 million); and
      • Locally Engaged Staff for missions abroad ($1 million).
    • The Immigration and Refugee Board of Canada:
      • Pre-Removal Risk Assessments ($1 million).
• Decreases of $20 million associated with the following:
  • Sunsetting of time-limited funding to support processing of Citizenship and Temporary Resident applications ($5 million);
  • The completion of Refugee Reform implementation ($5 million);
  • Operating Budget Carry Forward reduction from previous year ($2 million);
  • Managing and protecting classified information in assessing applications under the Immigration and Refugee Protection Act (IRPA) ($2 million);
  • Reduced Federal Skilled Workers backlog operational costs ($2 million);
  • The completion of the Biometrics project ($1 million); and,
  • Other transfers and minor adjustments ($3 million).

Vote 5 – Grants and Contributions (G&C)

The Department’s Vote 5 – Grants and Contributions net increase of $17 million or 2% is explained as follows:

• Increase of $21 million associated with additional funding for the Grant for the Canada-Quebec Accord on immigration.
• Decreases of $4 million associated with the following:
  • Sunsetting of funding for the Global Assistance for Irregular Migrants ($3 million); and,
  • Transfer to the National Capital Commission for the Victims of Communism Memorial ($1 million).

Budgetary Statutory Authorities

The 2015–16 statutory authority level in the first quarter is higher than 2014–15 by $50 million and is primarily explained as follows:

• Increases of $70 million associated with the following:
  • Passport program: the increased draw on the fiscal framework is mainly related to revised year-over-year estimates of surplus revenues over expenditures due to changes in client demand (lower than expected volumes) for Passport program services ($52 million);
  • Forecasted costs related to the return of fees for the termination of Immigrant Investor program and Entrepreneur program applications ($17 million); and,
  • Adjustments to the employee benefit plans ($1 million).
• Decreases of $20 million associated with the following:
  • Forecasted costs related to the return of fees for certain terminated Federal Skilled Workers applications ($18 million); and,
  • Other minor adjustments ($2 million).

Significant Changes to Departmental Budgetary Expenditures by Standard Object

Quarter over quarter analysis

As reflected in the Table of Departmental Budgetary Expenditures by Standard Object, the total gross budgetary expenditures have increased by $18 million (4%) from $460 million to $478 million. CIC, through the addition of the Passport Program and International Experience Canada, also added respectively $150 million and $2 million in re-spendable revenues, thereby resulting in a net budgetary expenditure of $325 million in 2015–16 as compared to $303 million as of September 30, 2014.

The integration of Passport Canada into CIC led to changes in the expenditure structure. With Employment and Social Development Canada (ESDC) providing passport service delivery on behalf of CIC, salaries for staff transferred to ESDC previously recorded under Personnel are now reported under Professional Services and invoiced by ESDC. This mostly explains the shift for the planned budgetary expenditures in Professional Services and Personnel.

With the exception of the Professional and Special Services and Transfer Payments, the remaining operating expenditures have not encountered significant quarter over quarter variances.

Professional and Special Services increased by $14 million compared to the same quarter in the previous year. It is mainly explained by an increase of $13 million in Passport Program business services expenditures with ESDC due to timing difference in recording ESDC expenditures. In 2014–15, the expenditures were recorded starting in the third quarter, whereas for fiscal year 2015–16, the ESDC expenditures started in the second quarter resulting in higher expenditures.

For this quarter, Transfer Payments increased by $8.3 million compared to the previous year and is mostly due to an increase of $5.1 million for the Grant for the Canada-Quebec Accord Program combined with other small increases in CIC transfer payments programs.

Cumulative analysis

As reflected in the Table of Departmental Budgetary Expenditures by Standard Object, CIC’s year-to-date gross operating expenditures as of the second quarter were $983 million compared to $971 million as of September 30, 2014, representing an increase of 1% from previous year and 46% of the total budgetary authorities available for use for the year ending March 31, 2016. This is in line with the percentage (46%) used at quarter-end last year.  The Department has therefore been consistent in its spending.

With the exception of the Other Subsidies and Payments and the Transfer Payments, the remaining operating expenditures have not encountered significant year-to-date variances.

Significant change occurred in Other Subsidies and Payments as year-to-date expenditures have decreased by $25.6 million when compared to last fiscal year. This amount includes a decrease of $14.7 million in Federal Skilled Workers return of fees related to terminated applications, resulting from a decrease in the volume of returns received. Another significant contributor to the decrease relates to the one-time transition payment of $13.5 million for the implementation of the pay in arrears initiative in 2014–15. These decreases were partly offset by an increase of $4.7 million in the Immigrant Investor Program (IIP) and Entrepreneur (EN) Program return of fees related to terminated applications as the volume for the return of fees increased in comparison with last fiscal year.

Transfer Payments increased by $19.9 million compared to the previous year-to-date used at quarter-end and is due to an increase of $15.5 million for the Grant for the Canada-Quebec Accord Program combined with other small increases in CIC transfer payments programs.

3. Risks and Uncertainties

CIC operates in a constantly changing environment. Its strategic directions as well as its policies and operations are influenced by external factors such as emerging events, the Canadian and global economic, social or political contexts and shifting migration trends. CIC’s evolving mandate and integration of new programs and staff inherently contains a level of risk and uncertainty as CIC continuously advances its own internal processes and systems through change initiatives such as the Modernization agenda.

Unforeseen Events and Natural Disasters

Unforeseen events and natural disasters may have significant effects on CIC’s operations and reputation. They can affect CIC directly when they occur in places where our offices and employees are located.

Additionally, CIC can also be indirectly affected when the Department is required, for humanitarian or legal reasons, to facilitate travel of foreign nationals or Canadian citizens by processing applications for visas or other necessary documents on an urgent basis.

In conjunction with its national and international partners, CIC continues to identify, assess, monitor, and proactively implement measures to mitigate risks and minimize the impact they may have on our operations, commitments, service standards and processing targets.

Litigation and Legal

There is a risk that the pace and scope of change in CIC’s policies (including legislative and regulatory changes) and programs could lead to additional pressure with respect to litigation, which may impact our resources. Over the last few years, there has been a significant increase in the numbers of complex and high-profile litigation.

Sound project management practices are in place to manage all of these changes and ensure timely delivery of CIC’s programs and client services.

4. Significant Changes in Relation to Operations, Personnel and Programs

Richard Wex was appointed to the position of Associate Deputy Minister of CIC effective September 8, 2015.

Approval by Senior Officials

Approved by:

Statement of Authorities

Departmental Budgetary Expenditures by Standard Object