Quarterly Financial Report, for the quarter ended June 30, 2026

Statement outlining results, risks and significant changes in operations, personnel and programs.

Alternative format:

Introduction

This quarterly report has been prepared by management 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 reintegration into the community as law-abiding citizens through the provision of programs in penitentiaries and in the community (section 3 of the Corrections and Conditional Release Act). A summary description of the Correctional Service of Canada’s (CSC) program activities can be found in Part II of the Main Estimates and the Departmental Plan 2026 to 2027.

Basis of presentation

This quarterly report has been prepared 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 and Supplementary Estimates (as applicable). 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 for working capital, capital acquisitions and temporary financing of accumulated operating deficits, the total of which is not to exceed $5 million.

Highlights of fiscal quarter and fiscal year-to-date (YTD) results

The following graph provides a comparison of the net budgetary authorities and expenditures as of June 30, 2026, and June 30, 2025, for CSC’s combined operating, capital and budgetary statutory authorities.

Comparison of net budgetary authorities and expenditures as of June 30, 2026, and June 30, 2025

Significant changes to authorities

As reflected in the Statement of Authorities for the period ending June 30, 2026, CSC has seen an increase in total authorities of $155 million or 4% for the current fiscal year compared to the previous fiscal year.

Comparison of net budgetary authorities for the quarters ended June 30, 2026, and June 30, 2025 (in millions of dollars)

*Numbers may not add up due to rounding.

Vote 1 - Operating

CSC’s Operating Vote increased by $84 million or 3% compared to the authorities at the end of June 2025, which is attributed to the net effect of the following significant items:

• an increase of $143 million related to compensation for the funded portion of collective agreement increases
• an increase of $124 million related to funding for class action settlements
• an increase of $6 million related to the transfer to Shared Services Canada for the Microsoft 365 E5 Enterprise Standard done at the beginning of 2025 to 2026
• a decrease of $107 million in funding to stabilize operations related to workplace injuries
• a decrease of $66 million related to the Comprehensive Expenditure Review
• a decrease of $21 million related to Refocusing Government Spending

Vote 5 - Capital

CSC’s Capital Vote increased by $45 million or 13% compared to the authorities at the end of June 2025, which is related to the net effect of the following significant items:

• an increase of $30 million in funding for the rehabilitation of correctional facilities
• an increase of $12 million in funding to modernize existing security equipment infrastructure capability
• an increase of $6 million in funding to reduce suspension points in correctional facilities to increase inmate safety

Budgetary statutory authorities

CSC’s budgetary statutory authorities increased by $26 million or 9% compared to June 2025, which is mainly related to the department’s allocation of the employer’s share of the employee benefit plan.

Explanation of significant variances from previous year expenditures

As reflected in the Statement of Authorities for the period ending June 30, 2026, CSC has seen an increase in total net budgetary expenditures of $43 million or 6% for the current fiscal year compared to the previous fiscal year.

Comparison of net budgetary expenditures for the quarters ended June 30, 2026, and June 30, 2025 (in millions of dollars)

*Numbers may not add up due to rounding.

Vote 1 - Operating

CSC’s operating expenditures increased by $40 million compared to the first quarter of 2025 to 2026, mainly due to the following:

• professional and special services increased by $27 million, primarily due to delays in billing for prepaid legal fees from Justice Canada in 2025 to 2026 and to Correctional and Training fee invoices being processed earlier this year compared to last year
• personnel expenditures increased by $7 million, primarily due to the ratification of the Correctional Officer collective agreement in February 2025
• vote-netted revenues (VNR) decreased by $2 million, primarily due to a delay in recording the VNR entry in the first quarter of 2026 to 2027

Vote 5 – Capital

CSC’s capital expenditures increased by $2 million compared to the first quarter of 2025 to 2026, primarily due to increased spending on construction projects.

Budgetary statutory expenditures

CSC’s statutory expenditures increased by $2 million compared to the first quarter of 2025 to 2026, primarily due to a $6 million increase in expenditures related to the employer’s contributions to the Employee Benefit Plan (EBP), partially offset by a $4 million increase in CORCAN’s net revenues.

Risks and uncertainties

Through the Treasury Board of Canada Secretariat’s new Risk and Compliance Process, CSC updated its corporate risks. CSC’s revised corporate risks will form the basis of an updated Corporate Risk Profile which will be written and approved by senior management in 2026 to 2027, ultimately forming a key component of its strategic plan.

Significant changes in relation to operations, personnel and programs

Budget 2025 announced ongoing expenditure reductions across federal organizations, resulting in planned funding reductions for CSC of $132 million by 2028 to 2029. Approved savings are beginning to be reflected in the 2026 to 2027 Main Estimates. Planned spending reductions are:

• 2026 to 2027: $75,559,603
• 2027 to 2028: $104,900,899
• 2028 to 2029: $132,187,834

In the first quarter of 2026 to 2027, the following changes have occurred within senior leadership:

• Kathy Neil, formerly the Deputy Commissioner of Indigenous Corrections, was appointed to the role of acting Regional Deputy Commissioner for the Prairie Region
• Marty Maltby, formerly the Director General of Indigenous Initiatives Sector, was appointed to the role of acting Deputy Commissioner of Indigenous Corrections
• Isabelle Barrette has been appointed as the new Chief Audit and Evaluation Executive, Internal Audit and Evaluation Sector
• Curtis Jackson, formerly the Assistant Deputy Commissioner for Correctional Operations, was appointed to the role of acting Regional Deputy Commissioner for the Ontario and Nunavut Region

Approvals by senior officials

Approved by:

Ottawa, Canada
August 15, 2026

Statement of authorities (unaudited)

Statement of authorities (unaudited, in thousands of dollars) for the fiscal year 2026 to 2027

Note: Numbers may not add up due to rounding.
*Includes only authorities available for use and granted by Parliament at quarter-end.

Statement of authorities (unaudited, in thousands of dollars) for the fiscal year 2025 to 2026

Note: Numbers may not add up due to rounding.
*Includes only authorities available for use and granted by Parliament at quarter-end.

Departmental budgetary expenditures by standard object (unaudited)

Departmental budgetary expenditures by standard object (unaudited, in thousands of dollars) for fiscal year 2026 to 2027

Note: Numbers may not add up due to rounding.
*These are mainly Vote 5 (Capital) expenditures.

Departmental budgetary expenditures by standard object (unaudited, in thousands of dollars) for fiscal year 2025 to 2026

Note: Numbers may not add up due to rounding.
*These are mainly Vote 5 (Capital) expenditures.