Quarterly financial report, for the quarter ended June 30, 2021

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 2021-2022.

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 2021-2022 fiscal year for which the interim supply was released on March 31, 2021 Footnote 1 and the full supply was released June 24, 2021Footnote 2. 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 Department. 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 a cash 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, 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 $20.0 million at any time. Through Supplementary Estimates (A), 2020–2021Footnote 3, this limit was increased from a previous amount of $5.0 million. This increase was requested as a consequence of reduced sales and operations resulting from the COVID-19 pandemic. The limit will gradually decrease until fiscal year 2025-26, at which point it will return to the original $5.0 million threshold.

CSC also has a Vote Netted Revenue (VNR) authority in place, currently only being utilised for transactions with the Parole Board of Canada (PBC). The total VNR authority for 2021-22 is $3.9 million, which allows CSC to bill PBC for information management and information technology services on a full incremental cost recovery basis. Throughout this report, the VNR authorities are netted with CSC’s vote 1 operating authorities.

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, 2021 and June 30, 2020 for CSC’s combined operating, capital and budgetary statutory authorities.

Budgetary Authorities and Net Budgetary Expenditures

This graph depicts the budgetary authorities as $2,794,041 thousand and the year to date net budgetary expenditures as $582,453 thousand for the first quarter ending June 30, 2021. In 2020-21, the budgetary authorities were $2,554,845 thousand for the first quarter ending June 30, 2020 and the year to date net budgetary expenditures were $553,237 thousand.

Significant Changes to Authorities

As reflected in the Statement of Authorities for the period ending June 30, 2021, CSC has seen an increase in total authorities of $239.2 million or 9.4% for the current fiscal year compared to the previous fiscal year.

Operating Vote

CSC’s Operating Vote increased by $213.6 million or 10.0% compared to the authorities at the end of June 2020, which is attributed to the net effect of the following items:

Capital Vote

CSC’s Capital Vote was unchanged from the authorities at the end of June 2020.

Budgetary Statutory Authorities

CSC’s budgetary statutory authorities increased by $25.6 million or 11.5% compared to June 2020, which is related to:

Explanation of Significant Variances from Previous Year Expenditures

Compared with the previous fiscal year, the total year to date net budgetary expenditures increased by $29.3 million or 5.3% mainly due to the following factors:

(in millions of dollars)
Organizational Budgetary Expenditures Year-to-Date Over Prior
Total Net Budgetary Expenditures 2020-2021 553.2
Total Net Budgetary Expenditures 2021-2022 582.5
Variance 29.3
Explanation of Variances by Standard Object
Personnel 35.0
Transportation and communications 0.6
Professional and special services 13.4
Rentals 4.6
Utilities, materials and supplies (14.7)
Acquisition of land, buildings and works 3.0
Acquisition of machinery and equipment 1.4
Other subsidies and payments (10.1)
CORCAN revenues (4.4)
Other standard objects 0.5
Total 29.3

Risks and Uncertainties

CSC’s Departmental Plan 2021-2022 identifies the current risk environment and CSC’s key risk areas to the achievement of its strategic outcomes.

CSC secured permanent integrity funding in 2019-20 to maintain operations after completing its Comprehensive Review. In the short term, CSC is focused on maintaining operations during and in the aftermath of the COVID-19 pandemic. CSC will address existing financial challenges, and will continue working on a modernization plan over the three-year planning period. During 2020-21, CSC stabilized its existing Departmental Financial Management System (DFMS) using an Oracle technical upgrade, and in 2021-22 will continue to advance plans for the future modernization of the DFMS through a SAP hosting solution.

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 Departmental Plan 2021-2022, are the increasingly complex and diverse 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 and modernization of the organization, the potential loss of support of partners delivering critical services and providing resources for offenders, the maintenance of public confidence in the federal correctional system, and the maintenance of a safe, secure, healthy, respectful, and collaborative working environment as established by its legal and policy obligations, mission, and values statement.

CSC has put in place risk mitigation strategies to address the stated risks. The integrated approach allows CSC to handle risk-related challenges, ensure operational sustainability to fulfill its mandate.

Significant Changes in Relation to Operations, Personnel and Programs

Since the beginning of the pandemic, Correctional Service Canada (CSC) has implemented rigorous infection prevention and control measures at its sites. By the end of the first quarter of 2021-2022, there were no new cases of COVID-19 among the inmate population in any of CSC’s institutions. Over 76% of the inmate population has had at least one dose of the vaccine and more than 68% are fully vaccinated. Since the situation has stabilized, CSC is gradually resuming inmate visits with appropriate public health measures in place.

Having seen no new COVID-19 cases during this first quarter of 2021-22 and a successful vaccination campaign within correctional facilities, working groups have been put in place and are developing plans to resume activities at CSC. These plans will ensure we make evidence-based decisions, put in place the proper safeguards, and determine exactly how any return to a new normal will roll-out.

Furthermore, CSC will adopt a phased and gradual restoration of interventions, programs and services approach, ensuring there are appropriate measures in place to limit health and safety risks, while supporting public safety efforts. CSC will adjust restrictions in adherence with national, provincial and local public health authorities.

CSC’s Special Operating Agency (SOA), CORCAN, operates a revolving fund with authority to spend its revenues. Due to the resulting measures around COVID-19, CORCAN could not operate under normal conditions. Consequently, CORCAN’s drawdown limit increased to $20.0M following Treasury Board approval. This limit will gradually decrease until fiscal year 2025-26, at which point it will return to the original $5.0 million threshold.

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 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 has started and is continuing the process of making the necessary infrastructure changes, developing policies, and hiring and training staff to operate the SIUs. Funding for these initiatives gradually increases over a period of five years and stabilizes in fiscal year 2024-2025.

There have been no changes to key senior personnel in the first quarter of 2021-2022.

Statement of Authorities (unaudited)
(in thousands of dollars) Fiscal year 2021-2022 Fiscal year 2020-2021
(in thousands of dollars) Main Estimates for the year ending
March 31, 2022*
Used during the quarter ended
June 30, 2021
Year to date used at
Total available for use for the year
ending March 31, 2021*
Used during the quarter
ended June 30, 2020
Year to date used at
Vote 1– Net operating expenditures 2,359,350 513,673 513,673 2,145,689 492,881 492,881
Vote 5 – Capital expenditures 187,797 10,998 10,998 187,797 7,185 7,185
Budgetary statutory authorities
CORCAN gross expenditures 108,388 21,036 21,036 124,334 17,953 17,953
CORCAN revenues (106,106) (24,316) (24,316) (124,334) (19,870) (19,870)
CORCAN net expenditures 2,282 (3,280) (3,280) - (1,917) (1,917)
Spending of proceeds from disposal of surplus Crown assets 366 - - 1, 006 - -
Contributions to employee benefits plans 244,246 61,062 61,062 220,353 55,088 55,088
244,612 61,062 61,062 221,359 55,088 55,088
Total budgetary authorities 2,794,041 582,453 582,453 2,554,845 553,237 553,237
Non-budgetary authorities 45 45 (1) (1)
Total authorities 2,794,086 582,453 582,453 2,554,890 553,236 553,236

More information is available on the following page.

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

Note: CORCAN’s available drawdown authority at the end of June 2021 was $20.0M, of which $4.8M was used, leaving a residual balance available of $15.2M. In comparison, at the end of June 2020, CORCAN’s drawdown authority was $20.0M, of which $9.2M was utilized, and $10.8M of funding was available.

Organizational budgetary expenditures by Standard Object (unaudited)
(in thousands of dollars) Fiscal year 2021-2022 Fiscal year 2020-2021
(in thousands of dollars) Planned expenditures for the year ending
March 31, 2022
Expended during the quarter ended June 30, 2021 Year to date used at quarter-end Planned expenditures for the year ending
March 31, 2021
Expended during the quarter ended June 30, 2020 Year to date used at quarter-end
Personnel 1,951,323 484,508 484,508 1,767,134 449,500 449,500
Transportation and communications 13,546 2,435 2,435 29,374 1,818 1,818
Information 273 47 47 835 27 27
Professional and special services 369,586 59,628 59,628 389,894 46,252 46,252
Rentals 25,992 7,401 7,401 23,665 2,796 2,796
Purchased repair and maintenance 23,691 2,776 2,776 29,727 2,284 2,284
Utilities, materials and supplies 198,312 22,951 22,951 155,823 37,614 37,614
Acquisition of land, buildings and works* 67,605 4,913 4,913 147,798 1,926 1,926
Acquisition of machinery and equipment* 115,856 5,352 5,352 36,305 3,950 3,950
Transfer payments 120 - - 120 - -
Other subsidies and payments 137,786 16,758 16,758 98,504 26,940 26,940
Total gross budgetary expenditures 2,904,090 606,769 606,769 2,679,179 573,107 573,107
Less revenues netted against expenditures
Vote Netted Revenue (3,943) - - - - -
CORCAN (106,106) (24,316) (24,316) (124,334) (19,870) (19,870)
Total revenues netted against expenditures (110,049) (24,316) (24,316) (124,334) (19,870) (19,870)
Total net budgetary expenditures 2,794,041 582,453 582,453 2,554,845 553,237 553,237
* These are mainly Vote 5 (Capital) expenditures.

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