Quarterly financial report, for the quarter ended June 30, 2018

Table of Contents


This quarterly report has been prepared by management of Correctional Service of Canada (CSC) as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. This quarterly report should be read in conjunction with the Main Estimates. This report has not been subject to an external audit or review.

The purpose of the federal correctional system, as defined by law, is to contribute to the maintenance of a just, peaceful and safe society by carrying out sentences imposed by courts through the safe and humane custody and supervision of offenders; and by assisting the rehabilitation of offenders and their safe reintegration into the community as law-abiding citizens through the provision of programs in penitentiaries and in the community (Corrections and Conditional Release Act, s.3). A summary description of CSC’s program activities can be found in Part II of the Main Estimates.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes CSC’s spending authorities granted by Parliament and those used by the organization, consistent with the Main Estimates for which full supply was released on June 21, 2018 Footnote 1. 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 money 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.

CSC uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

CSC has an active Revolving Fund (CORCAN) which is included in the statutory authorities of the enclosed Statement of Authorities. CORCAN's purpose is to aid in the safe reintegration of offenders into Canadian society by providing employment and training opportunities to offenders incarcerated in federal penitentiaries and, for brief periods of time, after they are released into the community. CORCAN has a continuing non-lapsing authority from Parliament to make payments out of the Consolidated Revenue Fund (CRF) for working capital, capital acquisitions and temporary financing of accumulated operating deficits, the total of which is not to exceed $5.0 million at any time.

Highlights of Fiscal Quarter and Fiscal Year to Date (YTD) Results

The following graph provides a comparison of the total budgetary authorities and net budgetary expenditures as of June 30, 2018 and June 30, 2017 for CSC’s combined operating, capital and budgetary statutory authorities.

Budgetary Authorities and Net Budgetary Expenditures
(in thousands of dollars)

This graph depicts the net budgetary authorities in thousands of dollars

This graph depicts the net budgetary authorities as $2,444,874 thousand and the year to date net expenditures as $548,663 thousand for the first quarter ending June 30, 2018. In 2017-2018, the net budgetary authorities were $2,401,367 thousand for the first quarter ending June 30, 2017 and the year to date net expenditures were $471,222 thousand.

Significant Changes to Authorities

As reflected in the Statement of Authorities for the period ending June 30, 2018, CSC has seen an increase in total authorities of $43.5 million or 1.8 % for the current fiscal year compared to the previous fiscal year.

Operating Vote

CSC’s Operating Vote increased by $64.3 million or 3.3 % compared to the authorities at the end of June 2017, which is attributed to the net effect of the following items:

Capital Vote

CSC’s Capital Vote decreased by $19.8 million or 9.5% compared to the authorities at the end of June 2017 which is attributed to the net effect of the following items:

Budgetary Statutory Authorities

CSC’s budgetary statutory authorities decreased by $1.0 million or 0.4% mainly due to a decrease in the rate of the employer’s contribution to the Employee Benefit Plan from 15.7% in the previous year to 15.2% in the current year, as directed by the Treasury Board Secretariat, as well as a decrease in the proceeds from the disposal of surplus of Crown assets.

Explanation of Significant Variances from Previous Year Expenditures

Compared with the first quarter of the previous fiscal year, total net budgetary expenditures increased by $77.5 million or 16.4% due to the following factors:

(in millions of dollars)
Organizational Budgetary Expenditures Quarter Over Quarter
Total Net Budgetary Expenditures 2017-2018 471,2
Total Net Budgetary Expenditures 2018-2019 Dépenses budgétaires nettes totales pour 2018-2019 548,7
Variance 77,5
Explanation of Variances by Standard Object
  • Personnel
  • Professional and special services
  • Utilities, materials and supplies
  • Acquisition of land, buildings and works
  • Acquisition of machinery and equipment
  • CORCAN Revenues
  • Other
Total 77,5

Risks and Uncertainties

CSC’s Departmental Plan 2018-2019 identifies the current risk environment and CSC’s key risk areas to the achievement of its strategic outcomes.

In the 2013 Speech from the Throne, the Government of Canada announced it would freeze the overall federal operating budget. Consequently, CSC would have to fund the increases in salary resulting from collective agreements that took effect during the freeze period (2014-2015 and 2015-2016), and for the ongoing impact of those adjustments. Given that salaries represent a significant portion of CSC’s expenditures, this freeze and other government-wide spending reduction exercises have resulted in significant financial pressures.

CSC continues to review its operations to address the budgetary constraints resulting from the operating budget freeze and is undertaking a comprehensive review, over a two-year period, to identify potential efficiencies and reallocation opportunities, make further investments to mitigate operational and financial risks, ensure resource levels are sufficient for CSC to meet its legislated mandate and continue to deliver results for Canadians, and subsequently stabilize its financial position into the future.

CSC continues to experience ongoing issues related to the Phoenix Pay System. Given the complexity of our workforce coupled with the operational nature of our organization, CSC has experienced a significantly high number of pay related issues. CSC is continuously working internally and with external stakeholders to resolve these issues.

CSC’s specific risks, as outlined in CSC’s Operating context and key risks, are the increasingly diverse and evolving profile of the offender population, the maintenance of required levels of operational safety and security in institutions and the community, the inability to implement its mandate and ensure the financial sustainability of the organization, the potential loss of partners delivering critical services and providing resources for offenders and the need to sustain results related to violent reoffenders.

CSC has put in place risk mitigation strategies to address the stated potential risks. The integrated approach allows CSC to handle risk-related challenges, ensure operational sustainability and fulfill its mandate. This includes receiving program integrity funding in the last quarter of 2017-2018 along with additional anticipated funding in the future until such time as the comprehensive review is completed.

Significant Changes in Relation to Operations, Personnel and Programs

There have been the following significant changes since April 1, 2018:

Statement of Authorities (unaudited)

(in thousands of dollars)
Fiscal Year 2018-2019 Fiscal Year 2017-2018
Total available for use for the year ending March 31, 2019* Used during the quarter ended June 30, 2018 Year to date used at quarter-end Total available for use for the year ending March 31, 2018* Used during the quarter ended June 30, 2017 Year to date used at quarter-end
Vote 1 - Operating Expenditures 2,026,626 466,338 466,338 1,962,343 419,021 419,021
Vote 5 - Capital Expenditures 189,142 21,493 21,493 208,942 9,888 9,888
Budgetary Statutory Authorities
CORCAN Gross Expenditures 108,355 22,819 22,819 120,292 16,261 16,261
CORCAN Gross Revenues (108,355) (19,057) (19,057) (120,292) (31,336) (31,336)
CORCAN Net Expenditures (Revenues) - 3,762 3,762 - (15,075) (15,075)
Contributions to employee benefit plans 228,278 57,070 57,070 229,424 57,388 57,388
Spending of proceeds from the disposal of surplus Crown assets 828 - - 658 - -
Total Budgetary Authorities 2,444,874 548,663 548,663 2,401,367 471,222 471,222
Non-Budgetary Authorities 45 - - 45 - -
Total Authorities 2,444,919 548,663 548,663 2,401,412 471,222 471,222

More information is available on the following page.

* Includes only Authorities available for use and granted by Parliament at quarter-end.

Organizational Budgetary Expenditures by Standard Object (unaudited)

(in thousands of dollars)
Fiscal Year 2018-2019 Fiscal Year 2017-2018
Planned expenditures for the year ending March 31, 2019 Expended during the quarter ended June 30, 2018 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2018 Expended during the quarter ended June 30, 2017 Year to date used at quarter-end
Personnel 1,779,904 448,216 448,216 1,740,183 397,053** 397,053**
Transportation and communications 24,502 4,758 4,758 25,465 4,035** 4,035**
Information 538 161 161 610 64 64
Professional and special services 293,299 44,057 44,057 298,072 40,869** 40,869**
Rentals 22,629 4,029 4,029 16,726 2,317 2,317
Repair and maintenance 23,035 3,943 3,943 23,460 2,332 2,332
Utilities, materials and supplies 130,516 24,148 24,148 129,360 29,578 29,578
Acquisition of land, buildings and works* 100,588 11,084 11,084 132,198 4,760 4,760
Acquisition of machinery and equipment* 84,719 7,098 7 ,098 72,702 3,129 3,129
Transfer payments 120 - - 120 30 30
Other subsidies and payments 93,379 20,226 20,226 82,763 18,391** 18,391**
Total Gross Budgetary Expenditures 2,553,229 567,720 567,720 2,521,659 502,558 502,558
Less Revenues Netted Against Expenditures
CORCAN (108,355) (19,057) (19,057) (120,292) (31,336) (31,336)
Total Net Budgetary Expenditures 2,444,874 548,663 548,663 20,401,367 471,222 471,222

* These are mainly Vote 5 (Capital) expenditures

**Amounts re-classified to conform to current quarter presentation.

Page details

Date modified: