ARCHIVED – Quarterly Financial Report for the quarter ended December 31, 2012

1. 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 Treasury Board. This quarterly report should be read in conjunction with the Main Estimates, the Supplementary Estimates (A) and (B), the Quarterly Financial Reports (QFR) for the quarter ended June 30, 2012 and September 30, 2012 as well as Canada’s Economic Action Plan 2012 (Budget 2012).

A summary description of the Citizenship and Immigration Canada (CIC) program activities may be found in Part II of the Main Estimates (2.79Mb).

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Department’s spending authorities granted by Parliament and those used by the Department consistent with the Main Estimates and Supplementary Estimates (A) and (B) for the 2012–13 fiscal year. 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 moneys 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.

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year. Budget 2012 was tabled in Parliament on March 29, after the tabling of the Main Estimates on February 28, 2012. As a result, the measures announced in Budget 2012 could not be reflected in the 2012–13 Main Estimates.

In fiscal year 2012–13, frozen allotments were established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012. In future years, the changes to departmental authorities will be implemented through the Annual Reference Level Update, as approved by Treasury Board, and reflected in the subsequent Main Estimates tabled in Parliament.

Citizenship and Immigration Canada prepares its annual departmental financial statements that are part of the departmental performance reporting process, on a full accrual basis in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector. However, the spending authorities voted by Parliament remain on an expenditure basis.

This quarterly report has not been subject to an external audit or review.

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

CIC’s 2011–12 authorities represent the total Main Estimates, the Supplementary Estimates (B) and the Operating Budget Carry Forward, whereas 2012–13 includes the amounts in the Main Estimates, the Operating Budget Carry Forward and the Supplementary Estimates (A) and (B). CIC did not request authorities through Supplementary Estimates (A) in 2011–12.

CIC’s net budgetary expenditures for the quarter ending December 31, 2012 were $351 million compared to $344 million as of December 31, 2011, representing 22% of the total budgetary authorities available for use for the year ending on March 31, 2013; approximately the same percentage (21%) used at quarter-end last year.  The Department has therefore been consistent in its spending this quarter versus its authorities provided, compared to the third quarter of the previous fiscal year.

Statement of Authorities: Significant Changes

As reflected in the Statement of Authorities, Citizenship and Immigration Canada’s total budgetary authorities available for use in fiscal year 2012–13 at December 31, 2012 are $1,603 million, compared to $1,605 million at December 31, 2011. CIC’s budgetary authorities available for use decreased by approximately $2 million (0.1%), when compared to the same quarter in 2011–12.    

Vote 1 – Operating Expenditures

The Department’s Vote 1 net decrease of $25 million or 4% is explained as follows:

• Increases of $55 million to reflect funding approvals:
  • Investment in the Biometrics project ($25 million)
  • Funding to Modernize the Immigration System and Manage Backlogs ($13 million)
  • Funding to support the sharing of immigration information with the United States ($7 million)
  • Temporary Resident Visa for Mexico ($5 million)
  • Operating Budget Carry Forward ($2 million)
  • Funding to eliminate the backlog of certain Federal Skilled Worker applications ($1 million)
  • Funding to support the amendment to the Immigration and Refugee Protection Regulations that removes visa exemptions for citizens of five countries ($1 million)
  • Funding to provide essential federal services for the 2015 Pan Am and Parapan Am Games ($1 million)
• Decreases of $80 million associated with the following:
  • Funding received in 2011–12 for the cash out of severance entitlements ($24 million)
  • Reform of Interim Federal Health Program ($28 million)
    • Savings as established in Budget 2012 ($24 million)
    • Reduced request in funding through Supplementary Estimates B ($4 million)
  • Funding transferred to Shared Services Canada for the consolidation of information technology services ($15 million)
  • Net reduction of funding for the backlog reduction strategy associated with the reform of Canada’s refugee system ($5 million)
  • Internal transfer from non-salary to salary ($4 million)
  • Additional savings identified as part of the government’s Strategic Review of departmental spending ($2 million)
  • Funding to manage immigration cases involving classified information (Security Certificate) ($1 million)
  • Transfer to Canada Border Services Agency ($1 million)

Vote 5 – Grants and Contributions (G&C)

The Department’s Vote 5 net increase of $17 million or 2% is explained as follows:

• Increases of $27 million to reflect new funding approvals:
  • Funding to the Grant for the Canada-Quebec Accord on immigration ($25 million)
  • Enhancement of the Resettlement Assistance Program relating to the reform of Canada’s refugee system ($2 million)
• Decreases of $10 million to reflect a reduction of funding:
  • Additional savings identified as part of the government’s Strategic Review of departmental spending ($6 million)
  • Sunsetting of the Community Historical Recognition Program and other ($2 million)
  • Savings in Inter-Action Multiculturalism Projects as established in Budget 2012 ($2 million)

Budgetary Statutory Authorities

The 2012–13 statutory authorities level in the third quarter is approximately 13% higher than 2011–12.  The increase of $7 million is mainly related to the Employee Benefits Plan costs ($3 million), as well as the Refund of previous years’ Revenues ($4 million).

Departmental Budgetary Expenditures by Standard Object: Significant Changes

Compared to the previous year, the total of planned expenditures in the third quarter, ending December 31, 2012, have decreased by $2 million (0.1%), from $1,605 million to $1,603 million as per the Table of Departmental Budgetary Expenditures by Standard Object. 

A realignment of planned expenditures between the standard object Rentals and the standard object Acquisition of Machinery and Equipment was completed in 2012–13, to reflect a more up-to-date spending trend in the Department.

Compared to the previous year, the total of budgetary expenditures in the third quarter, ending December 31, 2012, have increased by $7 million or 2%, from $344 million to $351 million as per the Table of Departmental Budgetary Expenditures by Standard Object.  This difference is for the most part explained by an increase of $15 million under Transfer Payments, a decrease of $5 million in Professional Special Services and a decrease of $3 million in salary.

The increase of $15 million or 8%, in expenditures for Transfer Payments (Vote 5) is mainly attributable to a timing variance in the payment schedule for the Contribution to provinces ($9 million), compared to the same quarter of 2011–12. An increase in grant payments to Quebec under the Canada-Quebec Accord ($6 million) can also be observed. Transfer payments expended during the quarter represent 22% of planned transfer payments expenditures at the end of Q3 as opposed to 21% last year at this time. 

With respect to the decrease of $5 million in Professional and Special Services expenditures, this is mainly explained by a reformed program that came into effect on June 30, 2012 under the Interim Federal Health Program resulting in lower expenditures in 2012–13.

The decrease of $3 million in Personnel expenditures is mainly attributable to the decrease in cash out of severance entitlements in the third quarter of 2012–13, compared to 2011–12.

3. Risks and Uncertainties

CIC is funded through annual appropriations. As a result, its operations can be impacted by any changes approved by Parliament. This departmental Quarterly Financial Report reflects the results of the current fiscal period in relation to the Main Estimates for which full supply was released on June 29, 2012.

Before intake controls were in place, CIC consistently received more immigration and citizenship applications than could be processed in a year. Over the past few years, CIC has taken concrete measures to tackle this problem, including: limiting Federal Skilled Workers (FSW) application intake to priority occupations; adding caps to the number of new applications; eliminating through process of law most of the remaining FSW applications received before February 27, 2008; and issuing in July 2012 a temporary pause on new FSW applications, excluding candidates with a qualifying job offer or those applying under the PhD stream.

As previously mentioned in the section “Statement of Authorities: Significant Changes”, the Department received funding to embark on an ambitious modernization agenda that aims to provide simpler and more accessible services; continuous, innovative and adaptable operational improvements, as well as robust program integrity and the delivery of quality service at lower costs.  Despite all efficiency measures, the increases in demand continue to hinder our ability to effectively keep pace with increased volumes.

Budget 2010 announced that the operating budgets for departments would be frozen at their 2010–11 levels for fiscal years 2011–12 and 2012–13. The area most impacted by this freeze has been personnel costs as they amount to 62% of planned expenditures, excluding transfer payments. The wage increases as a result of collective bargaining, must be absorbed within existing budgets. CIC has estimated the impact of this government- initiative to be approximately $5 million in 2012–13. CIC has taken steps to closely manage costs in this area by establishing staffing controls (full-time equivalents) and salary budgets in addition to implementing rigorous monthly monitoring to ensure that annual budgets are respected.

4. Significant changes in relation to operations, personnel and programs

Strategic Review

CIC is in the final year of implementing the Strategic Review reduction of $67.6M, of which $59 million came from the national settlement funding.  Settlement allocations have more than tripled since 2005–06, and more services are being provided.  Realigning settlement funding based mainly on immigrant intake will allow us to advance fairness across the country.

Other savings were found through operating efficiencies including the use of a global technology network to process medical records, web-based applications forms, other services that reduce the use of expensive paper and mail, and that better track applicants as they move through the immigration system.

Shared Services Canada

Effective August 4, 2011, Shared Services Canada (SSC) was created by an Order-in-Council (OIC) under the Financial Administration Act, to standardize and consolidate information technology services in the federal government in order to reduce costs, improve services, and leverage capacity in the public and private sector through pooled resources and greater buying power.

On November 15, 2011, a second set of Orders-in-Council were signed. The Department was required to identify the amounts, by vote, of authorities related to functions transferred to Shared Services Canada.  Amounts for future years are addressed in the 2012–13 Annual Reference Level Updates.

A total of $8.3 million was transferred from CIC to SSC in 2011–12 and $23.8 million in 2012–13, including amounts in connection with corporate, administrative and other support for e-mail, networks and data centre services. 

5. Budget 2012 Implementation

This section provides an overview of savings measures announced in Budget 2012 that will be implemented in order to refocus government and programs; make it easier for Canadians and business to deal with their government; and, modernize and reduce the back office.

In the first year of implementation, CIC will achieve Budget 2012 savings of approximately $26.5M ($2.3M Inter-Action Multiculturalism Projects and $24.2M Reform of Interim Federal Health Program).  Savings will increase to $59.0M for fiscal year 2013–14; and will result in ongoing savings of $71.2M by 2014–15.

CIC will change the way it operates in Canada and abroad by reducing overhead costs and continuing to streamline operations and program delivery to provide better value for Canadians. In this regard, it will continue to take steps to more efficiently process immigration applications by centralizing more of its visa processing, and by allowing in-Canada applicants to be processed in Canada.

CIC has been moving diligently towards an increasingly integrated, modernized, and centralized working environment. Updated technology, along with a robust program integrity strategy, allows processing to be done anywhere and in a more effective manner, therefore reducing the number of CIC offices needed in Canada and overseas. CIC can continue to do its work with fewer local offices while reducing its overhead costs.

The Department has moved from seven regions to five regions. One western region has been created, amalgamating BC, Yukon, Prairies, the Northwest Territories (NWT) and Nunavut.  The location of the regional office is Calgary, Alberta.  An eastern region amalgamates Quebec and the Atlantic provinces. Its regional headquarters is in Montreal with a senior presence in Atlantic Canada.  Ontario region, International region, and the Centralized Processing region will remain.  Functional guidance and operational performance measurement has been centralized at NHQ. Nineteen small CIC offices in Canada have been closed or consolidated into existing offices, and ten visa offices overseas have been closed (Belgrade, Berlin, Buffalo, Caracas, Detroit, Dhaka, Kuala Lumpur, Seattle, Seoul and Tokyo).  Services will be relocated to other offices or moved to on-line services.

As the Government of Canada moves to strengthen national responsibility for the delivery of settlement services across Canada, CIC is resuming management of federally funded settlement programs in BC and Manitoba, bringing these programs in line with every other province and territory outside Quebec. This will create a uniform delivery system for settlement services across Canada, eliminate the transfer for administration of the services, and allow the federal government to manage any unspent funds.  It will ensure that immigrants have access to similar levels and types of services regardless of where in Canada they choose to settle.

By reforming the Interim Federal Health Program (IFHP), CIC is ensuring that IFHP beneficiaries do not receive benefits that are more generous than what Canadians receive through taxpayer-funded benefit programs and that the benefits provided through the program continue to protect public health and safety. 

While maintaining the overall number of refugees brought to Canada annually, the government is changing the ratio of government–assisted refugees (GAR) to privately sponsored refugees (PSR). The adjustment of the GAR and PSR levels will be implemented as part of the 2013 levels plan. The change in ratio between the GAR and PSR streams will be phased in over three years.  In 2013, 300 GARs will be converted to the PSR stream, 500 will be converted in 2014 and the remaining 500 spaces will be converted in 2015. 

The Multiculturalism Program Inter-Action has had funding lapse year after year. Reducing spending in this program by 25% will allow the Department to budget more appropriately based on how much of the funding is actually being spent.  The Inter-Action Program will continue and provide funding to projects and events that promote intercultural or interfaith understanding, civic memory and pride, and respect for core democratic values.

Information on CIC’s savings included in Budget 2012 by Program Alignment Architecture is available at http://www.cic.gc.ca/english/resources/publications/qfr/2012-supp.asp.

In addition, through the Economic Action Plan 2012, CIC will:

• Realign the Temporary Foreign Worker Program to better meet labour market demands.
• Support further improvements to foreign credential recognition and identify the next set of target occupations beyond 2012.
• Move to an increasingly fast and flexible immigration system where priority focus is on meeting Canada’s labour market needs.
• Return applications and fees to certain federal skilled worker applicants who have been waiting for processing to be completed.

These actions will contribute to making the immigration system truly proactive, fast and flexible in a manner that will be responsive to labour market needs.

Approved by: 

Statement of Authorities (unaudited)

Pursuant to section 31.1 of the Financial Administration Act and Oder-in-Council P.C. 2011-1297 effective November 15, 2011, $8,293K is deemed to have been appropriated to Shared Services Canada (operating expenditures), which results in a reduction for the same amount in CIC, Vote 1, Appropriation Act No. 1, 2011-2012.  Excludes an amount of $1,034K (including EBP of $119K) incurred on behalf of Shared Services Canada from the date of the transfer of November 15 to December 31, 2011.

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

** Represents the net of loans collected and loans issued

*** Budgetary Statutory Authorities consist of $56,839K related to Employee Benefits Plan (EBP); $78K related to the Minister's Salary and Motor Car Allowance; and $7,819K related to Refund of Previous Years' Revenues and others.

Departmental Budgetary Expenditures by Standard Object (unaudited)

Pursuant to section 31.1 of the Financial Administration Act and Oder-in-Council P.C. 2011-1297 effective November 15, 2011, $8,293K is deemed to have been appropriated to Shared Services Canada (operating expenditures), which results in a reduction for the same amount in CIC, Vote 1, Appropriation Act No. 1, 2011-2012.  Excludes an amount of $1,034K (including EBP of $119K) incurred on behalf of Shared Services Canada from the date of the transfer of November 15 to December 31, 2011.