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

Table of Contents


Date: 2020-01-31
Location: Organizational Budgetary Expenditures by Standard Object (unaudited), Planned expenditures for the year ending March 31, 2020
Revision: "Acquisition of machinery and equipment planned expenditures $61,484 thousands" replaces "Acquisition of machinery and equipment planned expenditures $61,528 thousands".
Rationale for the revision: Original amount reported was not correct.


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, Supplementary Estimates and the Quarterly Financial Report for the quarter ended June 30, 2019.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 2018-2019.

Basis of Presentation

Management using an expenditure basis of accounting has prepared this quarterly report. 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, 2019Endnote 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 September 30, 2019 and September 30, 2018 for CSC’s combined operating, capital and budgetary statutory authorities.

Budgetary Authorities and Net Budgetary Expenditures

This graph depicts the net budgetary authorities as $2,550,537 thousand and the year to date net expenditures as $1,169,470 thousand for the second quarter ending September 30, 2019. In 2018-2019, the net budgetary authorities were $2,494,706 thousand for the second quarter ending September 30, 2018 and the year to date net expenditures were $1,151,575 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 September 30, 2019, CSC has seen a increase in total authorities of $55.8 million or 2.2% for the current fiscal year compared to the previous fiscal year.

Operating Vote

CSC’s Operating Vote increased by $93.3 million or 4.6% compared to the authorities at the end of September 2018, which is attributed to the net effect of the following items:

Capital Vote

CSC’s Capital Vote decreased by $43.7 million or -18.3% compared to the authorities at the end of September 2018, which is attributed to the following items:

Budgetary Statutory Authorities

CSC’s budgetary statutory authorities increased by $6.2 million or 2.7% compared to September 2018, which is related to increased employer contributions to the Employee Benefit Plan as a result of increases in personnel expenses associated with the items described above, as well as proceeds from the disposal of surplus Crown assets.

Explanation of Significant Variances from Previous Year Expenditures

Compared with the previous fiscal year, the total year to date net budgetary expenditures increased by $17.9 million or 1.55 % mainly due to the following factors:

(in millions of dollars)
Organizational Budgetary Expenditures Year Over Year Quarter Over Quarter
Total Net Budgetary Expenditures 2018-2019 1,151.6 602.9
Total Net Budgetary Expenditures 2019-2020 1,169.5 629.7
Variance 17.9 26.8
Explanation of Variances by Standard Object
Personnel 10.3 23.1
Professional and special services 5.5 (7.1)
Utilities, materials and supplies 7.8 0.5
Acquisition of land, buildings and works 2.1 1.5
Acquisition of machinery and equipment (10.5) (5.5)
CORCAN Revenues (1.7) 7.8
Other Standard Objects 4.4 6.5
Total 17.9 26.8

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.

In the 2013 Speech from the Throne, the Government of Canada announced it would freeze the overall federal operating budget. Consequently, CSC was required 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. The department has undertaken a comprehensive two-year review to:

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 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 includes receiving program integrity funding in the last quarter of 2017-2018, the third quarter of 2018-2019, and through Budget 2019, 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

CSC sought incremental funding to implement Transforming Federal Corrections (TFC), a strategy to eliminate the practice of segregation and to transform federal corrections through investments in proactive diagnosis, targeted intervention and treatment of inmates needs.

The TFC Memorandum to Cabinet was approved in September 2018 and funding was approved by Treasury Board Minister in May 2019. Funding approved through the Treasury Board Submission began in the 2019-20 fiscal year, and will gradually increase over the following five years until it finally stabilizes in fiscal year 2024-25 going forward.

Approvals by Senior Officials

Approved by:

Original Signed By

Tony Matson,
Chief Financial Officer

Original Signed By

Anne Kelly,

Ottawa, Canada
November 22 2019

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 September 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 September 30, 2018 Year to date used at quarter-end
Vote 1 - Operating Expenditures 2,119,891 528,362 996,510 2,026,626 506,702 973,040
Vote 5 - Capital Expenditures 194,811 45,756 61,596 238,494 52,286 73,779
CORCAN Gross Expenditures 124,339 29,020 54,697 108,355 26,510 49,329
CORCAN Gross Revenues (124,339) (32,007) (60,508) (108,355) (39,775) (58,832)
CORCAN Net Expenditures (Revenues) - (2,987) (5,811) - (13,265) (9,503)
Contributions to employee benefit plans 234,335 58,583 117,167 228,278 57,069 114,139
Refunds of previous years revenue - - 109 109
Spending of proceeds from the disposal of surplus Crown assets 1,500 7 8 1,308 11 11
Total Budgetary Authorities 2,550,537 629,721 1,169,470 2,494,706 602,912 1,151,575
Non-Budgetary Authorities 44 (0) (0) 44 (0) (0)
Total Authorities 2,550,581 629,721 1,169,470 2,494,750 602,912 1,151,575
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 September 30, 2019 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2019 Expended during the quarter ended September 30, 2018 Year to date used at quarter-end
Personnel 1,880,991 429,508 864,898 1,779,904 406,388 854,604
Transportation and communications 24,632 7,108 11,810 24,502 5,918 10,676
Information 621 195 334 538 143 304
Professional and special services 326,782 101,390 158,016 293,299 108,492 152,549
Rentals 18,093 7,366 10,860 22,629 4,939 8,968
Repair and maintenance 23,873 9,908 13,220 23,035 8,211 12,154
Utilities, materials and supplies 120,982 30,930 62,430 130,516 30,467 54,615
Acquisition of land, buildings and works* 130,127 36,654 48,342 149,941 35,136 46,220
Acquisition of machinery and equipment* 61,484 6,059 8,207 85,198 11,602 18,700
Transfer payments 120 539 539 120 438 438
Other subsidies and payments 87,171 32,071 51,322 93,379 30,953 51,179
Total Gross Budgetary Expenditures 2,674,876 661,728 1,229,978 2,603,061 642,687 1,210,407
CORCAN (124,339) (32,007) (60,508) (108,355) (39,775) (58,832)
Total Net Budgetary Expenditures 2,550,537 629,721 1,169,470 2,494,706 602,912 1,151,575
* These are mainly Vote 5 (Capital) expenditures
**Amounts re-classified to conform to current quarter presentation.

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