Quarterly financial report, for the quarter ended June 30, 2019

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 and the Departmental Plan 2019-2020.

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 the 2019-2020 fiscal year for which full supply was released on June 28, 2019 Endnote i. 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 results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

CSC has an active Revolving Fund (CORCAN) that 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, 2019 and June 30, 2018 for CSC’s combined operating, capital and budgetary statutory authorities.

Budgetary Authorities and Net Budgetary Expenditures

This graph depicts the budgetary authorities as $2,486,193 thousand and the year to date net budgetary expenditures as $539,749 thousand for the first quarter ending June 30, 2019. In 2018-2019, the budgetary authorities were $2,444,874 thousand for the first quarter ending June 30, 2018 and the year to date net budgetary expenditures were $548,663 thousand.

Significant Changes to Authorities

CSC’s 2019-20 Main Estimates include $95.0M under Vote 10 for funding approved through Budget 2019 for “Support for the Correctional Service of Canada”, to support CSC’s existing operations. Funding approved through Vote 10 has not yet been transferred to CSC and is not yet available for use. Therefore, Vote 10 has been excluded from the budgetary authorities presented here and in the Statement of Authorities.

As reflected in the Statement of Authorities for the period ending June 30, 2019, CSC has seen an increase in total authorities available for use of $41.3 million or 1.7 % for the current fiscal year compared to the previous fiscal year.

Operating Vote

CSC’s Operating Vote increased by $36.3 million or 1.8 % compared to the authorities at the end of June 2018, which is attributed to the net effect of the following items:

Capital Vote

CSC’s Capital Vote decreased by $1.3 million or 0.7% compared to the authorities at the end of June 2018, which is attributed to CSC’s contribution to the Financial Management Transformation Initiative of the Treasury Board of Canada Secretariat.

Budgetary Statutory Authorities

CSC’s budgetary statutory authorities increased by $6.3 million or 2.8% compared to June 2018, which is related to increases in personnel expenses associated with the items described above, as well as proceeds from the disposal of surplus of crown assets.

Explanation of Significant Variances from Previous Year Expenditures

Compared with the previous fiscal year, the total year to date net budgetary expenditures decreased by $8.9 million or 1.6% mainly due to the following factors:

(in millions of dollars)
Organizational Budgetary Expenditures Year-to-Date Over Prior Year-to-Date
Total Net Budgetary Expenditures 2018-2019 548.7
Total Net Budgetary Expenditures 2019-2020 539.7
Variance (9.0)
Explanation of Variances by Standard Object
Personnel (12.8)
Professional and special services 12.5
Utilities, materials and supplies 7.3
Acquisition of land, buildings and works 0.6
Acquisition of machinery and equipment (5.0)
CORCAN Revenues (9.4)
Other subsidies and payments/Standard Objects (2.2)
Total (9.0)

Risks and Uncertainties

CSC’s Departmental Plan 2019-20 identifies the current risk environment and CSC’s key risk areas to the achievement of its strategic outcomes.

CSC continues to manage financial pressures resulting from prior-year operating budget freezes (2014-2015 and 2015-2016), other government-wide spending reduction exercises, and increases in non-discretionary costs. CSC has undertaken 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 continues to work with internal and external stakeholders to resolve these issues.

CSC’s specific risks, as outlined in CSC’s Plans at a glance and operating context, 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 included receiving program integrity funding in the last quarter of 2017-2018 and the third quarter of 2018-2019. Additional funding to support CSC’s operations has been announced in the 2019 Budget Plan, however this funding is still pending the approval of the Treasury Board, before being transferred to CSC, and is not included in the Statement of Authorities available to CSC. Additional funding is anticipated in the future, until the comprehensive review is completed.

Significant Changes in Relation to Operations, Personnel and Programs

CSC received significant investments via the Fall Economic Statement (2018) to enhance mental health services for offenders, and support amendments to transform federal corrections, specifically in support of Bill C-83. Bill C-83 An Act to amend the Corrections and Conditional Release Act and another Act received Royal Assent on June 21, 2019. The amendments will eliminate administrative and disciplinary segregation, and introduce a new correctional model including the use of structured intervention units (SIUs) for inmates who cannot be managed safely within a mainstream inmate population. CSC is in the process of making the necessary infrastructure changes, developing policy, and hiring and training staff to open the SIUs. Funding for these initiatives will gradually increase over the following five years and stabilize in fiscal year 2024-2025.

There have been no changes to key senior personnel in the first quarter of 2019-2020.

Statement of Authorities (unaudited)

(in thousands of dollars)
Fiscal Year 2019-2020 Fiscal Year 2018-2019
Total available for use for the year ending
March 31, 2020*
Used during the quarter ended
June 30, 2019
Year to date used at quarter-end 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
Vote 1 - Operating Expenditures 2,062,951 468,148 468,148 2,026,626 466,338 466,338
Vote 5 – Capital Expenditures 187,809 15,840 15,840 189,142 21,493 21,493
Budgetary Statutory Authorities
CORCAN Gross Expenditures 124,339 25,677 25,677 108,355 22,819 22,819
CORCAN Gross Revenues (124,339) (28,501) (28,501) (108,355) (19,057) (19,057)
CORCAN Net Expenditures (Revenues) - (2,824) (2,824) - 3,762 3,762
Contributions to employee benefit plans 234,335 58,584 58,584 228,278 57,070 57,070
Refunds of previous years revenue - - - - - -
Spending of proceeds from the disposal of surplus Crown assets 1,098 1 1 828 - -
Total Budgetary Authorities 2,486,193 539,749 539,749 2,444,874 548,663 548,663
Non-Budgetary Authorities 44 - - 45 - -
Total Authorities 2,486,237 539,749 539,749 2,444,919 548,663 548,663
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 2019-2020 Fiscal Year 2018-2019
Planned expenditures for the year ending
March 31, 2020
Expended during the quarter ended
June 30, 2019
Year to date used at quarter-end Planned expenditures for the year ending
March 31, 2019*
Expended during the quarter ended
June 30, 2018
Year to date used at quarter-end
Personnel 1,824,052 435,390 435,390 1,779,904 448,216 448,216
Transportation and communications 24,631 4,702 4,702 24,502 4,758 4,758
Information 621 139 139 538 161 161
Professional and special services 326,783 56,626 56,626 293,299 44,057 44,057
Rentals 18,093 3,494 3,494 22,629 4,029 4,029
Repair and maintenance 23,873 3,311 3,311 23,035 3,943 3,943
Utilities, materials and supplies 120,982 31,500 31,500 130,516 24,148 24,148
Acquisition of land, buildings and works* 123,125 11,688 11,688 100,588 11,084 11,084
Acquisition of machinery and equipment* 61,081 2,147 2,147 84,719 7,098 7,098
Transfer payments 120 - - 120 - -
Other subsidies and payments 87,171 19,253 19,253 93,379 20,226 20,226
Total Gross Budgetary Expenditures 2,610,532 568,250 568,250 2,553,229 567,720 567,720
Less Revenues Netted Against Expenditures
CORCAN (124,339) (28,501) (28,501) (108,355) (19,057) (19,057)
Total Net Budgetary Expenditures 2,486,193 539,749 539,749 2,444,874 548,663 548,663
* These are mainly Vote 5 (Capital) expenditures

Page details

Date modified: