Quarterly financial report, for the quarter ended September 30, 2022

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 Report for the quarter ended June 30, 2022. 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 2022-2023.

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 2022-2023 fiscal year for which the interim supply was released on March 31, 2022 Endnote i and the full supply was released June 24, 2022. Endnote ii 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), 2020–2021Endnote iii, 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 2022-23 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 September 30, 2022 and September 30, 2021 for CSC’s combined operating, capital and budgetary statutory authorities.

Budgetary Authorities and Net Budgetary Expenditures

Highlights of Fiscal Quarter and Fiscal Year to Date (YTD) Results This graph depicts the budgetary authorities as $3,207,325 thousand and the year to date net budgetary expenditures as $1,302,985 thousand for the second quarter ending September 30, 2022. In 2021-2022, the budgetary authorities were $2,931,068 thousand for the second quarter ending September 30, 2021 and the year to date net budgetary expenditures were $1,293,094 thousand.

Significant Changes to Authorities

As reflected in the Statement of Authorities for the period ending September 30, 2022, CSC has seen an increase in total authorities of $276.3 million or 9.4% for the current fiscal year compared to the previous fiscal year.

Operating Vote

CSC’s Operating Vote increased by $230.8 million or 9.4% compared to the authorities at the end of September 2021, which is attributed to the net effect of the following items:

Capital Vote

CSC’s Capital Vote increased by $32.7 million or 14.4% compared to the authorities at the end of September 2021, which is related to:

Budgetary Statutory Authorities

CSC’s budgetary statutory authorities increased by $12.8 million or 5.2% compared to September 2021, 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 $9.9 million or 0.8% mainly due to the following factors:

(in millions of dollars)
Organizational Budgetary Expenditures Year Over Year Quarter Over Quarter
Total Net Budgetary Expenditures 2021-2022 1,293.1 710.6
Total Net Budgetary Expenditures 2022-2023 1,303.0 730.9
Variance 9.9 20.3
Explanation of Variances by Standard Object
Personnel (10.0) 2.9
Transportation and communications 2.7 1.8
Professional and special services 12.1 8.3
Rentals (2.8) (4.3)
Purchased repair and maintenance 3.9 1.3
Utilities, materials and supplies 11.3 8.2
Acquisition of land, buildings and works 4.0 4.6
Acquisition of machinery and equipment (2.6) 0.2
Transfer payments 1.3 0.3
Other subsidies and payments (4.5) 0.0
CORCAN revenues (5.1) (2.6)
Other standard objects (0.4) (0.4)
Total 9.9 20.3

Risks and Uncertainties

CSC’s Departmental Plan 2022-2023 identifies the current risk environment and CSC’s key risk areas to the achievement of its strategic outcomes.

The Government of Canada lifted the proof of vaccination required for federal public servants and supplier personnel as of June 20, 2022. In line with the Government of Canada’s decision, effective June 27, 2022, visitors are no longer required to show a proof of vaccination to enter CSC facilities. CSC’s existing infection prevention and control efforts are ongoing and CSC will continue to follow public health guidance in adherence with national, provincial and local public health authorities. 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 2022-23 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 2022-2023, 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. Over 79% of the inmate population have completed their primary COVID-19 vaccine series and 16% have received a booster dose in the last six months. Since the situation has stabilized, CSC is gradually resuming inmate visits with appropriate public health measures in place.

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 $20.0 million 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.

The following changes were made to key senior personnel, effective September 2022:

Statement of Authorities (unaudited)
Fiscal year 2022-2023 Fiscal year 2021-2022
(in thousands of dollars) Total available for use for the year ending
March 31, 2023*
Used during the quarter ended
September 30, 2022
Year to date used at
Total available for use for the year ending
March 31, 2022*
Used during the quarter ended
September 30, 2021
Year to date used at
Vote 1 – Operating expenditures
Gross operating expenditures 2,691,022 645,177 1,151,610 2,460,213 632,115 1,145,788
Vote-netted revenues (3,943) (2,736) (2,736) (3,943) (2,348) (2,348)
Net operating expenditures 2,687,079 642,441 1,148,874 2,456,270 629,767 1,143,440
Vote 5 – Capital expenditures 260,118 28,981 39,553 227,457 26,302 37,300
Budgetary statutory authorities
CORCAN gross expenditures 109,527 23,645 43,798 108,388 22,535 43,571
CORCAN revenues (109,731) (31,719) (58,447) (106,106) (29,043) (53,359)
CORCAN net expenditures (204) (8,074) (14,649) 2,282 (6,508) (9,788)
Spending of proceeds from disposal of surplus Crown assets 2,040 60 61 813 19 19
Contributions to employee benefits plans 258,292 67,489 129,146 244,246 61,061 122,123
260,332 67,549 129,207 245,059 61,080 122,142
Total budgetary authorities 3,207,325 730,897 1,302,985 2,931,068 710,641 1,293,094
Non-budgetary authorities 45 - - 45 - -
Total authorities 3,207,370 730,897 1,302,985 2,931,113 710,641 1,293,094

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 September 2022 was $20.0M, of which none was used, leaving a residual balance available of $20.0M. In comparison, at the end of September 2021, CORCAN’s drawdown authority was $20.0M, of which none was used, and $20.0M of funding was available.

Organizational budgetary expenditures by Standard Object (unaudited)
Fiscal year 2022-2023 Fiscal year 2021-2022
(in thousands of dollars) Planned expenditures for the year ending
March 31, 2023
Expended during the quarter ended September 30, 2022 Year to date used at quarter-end Planned expenditures for the year ending
March 31, 2022
Expended during the quarter ended September 30, 2021 Year to date used at quarter-end
Personnel 2,073,677 514,737 986,353 1,972,480 511,813 996,321
Transportation and communications 25,674 6,479 9,877 13,546 4,700 7,135
Information 467 137 176 273 96 143
Professional and special services 553,615 127,598 191,016 407,467 119,270 178,898
Rentals 44,557 4,990 13,973 25,992 9,379 16,780
Purchased repair and maintenance 26,877 6,942 12,321 23,691 5,609 8,385
Utilities, materials and supplies 196,082 39,830 65,858 217,252 31,657 54,608
Acquisition of land, buildings and works* 146,090 19,092 23,354 107,265 14,464 19,377
Acquisition of machinery and equipment* 100,039 5,736 8,215 116,305 5,522 10,874
Transfer payments 720 284 1,284 120 19 19
Other subsidies and payments 153,201 39,527 51,741 156,726 39,503 56,261
Total gross budgetary expenditures 3,320,999 765,352 1,364,168 3,041,117 742,032 1,348,801
Less revenues netted against expenditures
Vote-netted revenues (3,943) (2,736) (2,736) (3,943) (2,348) (2,348)
CORCAN (109,731) (31,719) (58,447) (106,106) (29,043) (53,359)
Total revenues netted against expenditures (113,674) (34,455) (61,183) (110,049) (31,391) (55,707)
Total net budgetary expenditures 3,207,325 730,897 1,302,985 2,931,068 710,641 1,293,094
* These are mainly Vote 5 (Capital) expenditures.

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