Quarterly financial report, for the quarter ended December 31, 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, Supplementary Estimates and the Quarterly Financial Reports for the quarters ended June 30, 2021 and September 30, 2021. 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, 2021Footnote 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 December 31, 2021 and December 31, 2020 for CSC’s combined operating, capital and budgetary statutory authorities.

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

This graph depicts the budgetary authorities as $3,228,855 thousand and the year to date net budgetary expenditures as $1,966,371 thousand for the third quarter ending December 31, 2021. In 2020-2021, the budgetary authorities were $2,795,126 thousand for the third quarter ending December 31, 2020 and the year to date net budgetary expenditures were $1,842,102 thousand.

Significant Changes to Authorities

As reflected in the Statement of Authorities for the period ending December 31, 2021, CSC has seen an increase in total authorities of $433.7 million or 15.5% for the current fiscal year compared to the previous fiscal year.

Operating Vote

CSC’s Operating Vote increased by $400.4 millionFootnote 4 or 17.1% compared to the authorities at the end of December 2020, which is attributed to the net effect of the following items:

Capital Vote

CSC’s Capital Vote increased by $18.0 million or 8.6% compared to the authorities at the end of December 2020, which is related to an increase in the Capital Budget Carry Forward.

Budgetary Statutory Authorities

CSC’s budgetary statutory authorities increased by $15.3 million or 6.3% compared to December 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 $124.3 million or 6.7% mainly due to the following factors:



(in millions of dollars)
Organizational Budgetary Expenditures Year Over Year Quarter Over Quarter
Total Net Budgetary Expenditures 2020-2021 1,842.1 635.6
Total Net Budgetary Expenditures 2021-2022 1,966.4 673.3
Variance 124.3 37.7
Explanation of Variances by Standard Object
Personnel 118.9 21.0
Transportation and communications 3.6 2.0
Professional and special services 42.5 8.0
Rentals 5.7 0.8
Repair and maintenance (3.4) (1.6)
Utilities, materials and supplies (37.5) (1.2)
Acquisition of land, buildings and works 14.7 3.9
Acquisition of machinery and equipment (4.0) (1.8)
Other subsidies and payments (12.4) 3.6
Vote Netted Revenue (2.0) 0.3
CORCAN revenues (2.3) 2.2
Other standard objects 0.5 0.5
Total 124.3 37.7

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 COVID-19 pandemic, Correctional Service Canada (CSC) has implemented rigorous infection prevention and control measures at its sites. Over 86% of the inmate population has had at least one dose of the vaccine, more than 82% are fully vaccinated and over 34% are fully vaccinated with an additional dose. Since the situation has stabilized, CSC is gradually resuming inmate visits with appropriate public health measures in place.

With the emergence of the new COVID-19 Omicron variant, CSC continues to focus on vaccinations, both COVID-19 and influenza, in combination with other infection prevention and control measures, to help reduce the spread of illness in our facilities. However, evidence is emerging that the effectiveness of the COVID-19 vaccine may decrease over time. Therefore, in mid-November, we began offering booster vaccines for inmates across the country to further protect everyone in our congregate living settings. We began by prioritizing individuals aged 65 and over, and those who had their second dose of the COVID-19 vaccine more than six months ago.

COVID-19 is still quite active in our communities and it is important not to let our guard down, even with higher rates of vaccination. In late November, the Atlantic region experienced its first COVID-19 outbreak at Dorchester Penitentiary, in the medium security unit. Everyone worked hard to contain and prevent the spread of the virus and, thankfully, the vaccination rates are high. While there have been 58 total positive inmate cases to date, 49 have recovered and, as of December 5, 2021, there remains nine active cases at Dorchester. Across the country, the reported cases remain lower but, consistent with the community, we are seeing a surge in cases after several months of not seeing any outbreaks.

While certain pandemic-related expenditures had begun to stabilize in the previous quarter, the emergence of the Omicron variant has already led to increased costs for the department. CSC is continuing to closely monitor the pandemic situation as we head into the final quarter of the fiscal year, with continued importance placed on preventing the spread of COVID-19 in institutions.

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 third quarter of 2021-2022.

Statement of Authorities (unaudited)

(in thousands of dollars)
Fiscal year 2021-2022 Fiscal year 2020-2021
Total available for use for the year ending March 31, 2022* Used during the quarter ended December 31, 2021 Year to date used at quarter-end Total available for use for the year ending March 31, 2021* Used during the quarter ended December 31, 2020 Year to date used at quarter-end
Vote 1–Operating expenditures
Gross operating expenditures 2,744,826 572,026 1,717,814 2,340,532 551,934 1,633,362
Vote-netted revenues (3,943) 363 (1,985) - - -
Net operating expenditures 2,740,883 572,389 1,715,829 2,340,532 551,934 1,633,362
Vote 5 – Capital expenditures 227,457 32,224 69,524 209,428 23,987 47,422
Budgetary statutory authorities
CORCAN gross expenditures 108,388 23,316 66,887 124,334 22,461 62,766
CORCAN revenues (106,106) (15,719) (69,078) (124,334) (17,925) (66,729)
CORCAN net expenditures 2,282 7,597 (2,191) - 4,536 (3,963)
Spending of proceeds from the disposal of surplus Crown assets 1,006 5 24 1,182 15 15
Refunds from previous years - - - - 1 1
Contributions to employee benefits plans 257,227 61,062 183,185 243,984 55,088 165,265
258,233 61,067 183,209 245,166 55,104 165,281
Total budgetary authorities 3,228,855 673,277 1,966,371 2,795,126 635,561 1,842,102
Non-budgetary authorities 45 - - 45 - (1)
Total authorities 3,228,900 673,277 1,966,371 2,795,171 635,561 1,842,101

* Includes only Authorities available for use and granted by Parliament at quarter-end.
Note: CORCAN’s available drawdown authority at the end of December 2021 was $20.0M, of which $5.7M was used, leaving a residual balance available of $14.3M. In comparison, at the end of December 2020, CORCAN’s drawdown authority was $20.0M, of which $7.0M was utilized, and $13.0M of funding was available.

Organizational Budgetary Expenditures by Standard Object (unaudited)

(in thousands of dollars)
Fiscal year 2021-2022 Fiscal year 2020-2021
Planned expenditures for the year ending March 31, 2022 Expended during the quarter ended December 31, 2021 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2021 Expended during the quarter ended December 31, 2020 Year to date used at quarter-end
Personnel 2,101,152 483,520 1,479,841 1,912,986 462,488 1,360,982
Transportation and communications 13,546 5,414 12,549 29,374 3,439 8,936
Information 273 120 263 836 92 181
Professional and special services 449,907 105,380 284,278 438,901 97,430 241,822
Rentals 25,992 7,049 23,829 23,665 6,285 18,100
Purchased repair and maintenance 31,442 5,524 13,909 29,727 7,142 17,287
Utilities, materials and supplies 268,344 34,831 89,439 172,040 36,062 126,954
Acquisition of land, buildings and works* 107,265 16,273 35,650 169,428 12,335 20,966
Acquisition of machinery and equipment* 116,497 7,906 18,780 36,481 9,782 22,780
Transfer payments 120 810 829 120 267 382
Other subsidies and payments 224,366 21,806 78,067 105,902 18,164 90,441
Total gross budgetary expenditures 3,338,904 688,633 2,037,434 2,919,460 653,486 1,908,831
Less revenues netted against expenditures
Vote netted revenue (3,943) 363 (1,985) - - -
CORCAN (106,106) (15,719) (69,078) (124,334) (17,925) (66,729)
Total revenues netted against expenditures (110,049) (15,356) (71,063) (124,334) (17,925) (66,729)
Total net budgetary expenditures 3,228,855 673,277 1,966,371 2,795,126 635,561 1,842,102
* These are mainly Vote 5 (Capital) expenditures.

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