Quarterly Financial Report for the quarter ended December 31, 2014

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 2014-15 Main Estimates, the 2013-14 Quarterly Financial Report for the quarter ended December 31, 2013 and Canada's Economic Action Plan 2012 (Budget 2012).

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

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 for the 2014–15 fiscal year and the Supplementary Estimates (B) for fiscal year 2014-2015. 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.

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

This quarterly financial report reflects the results of the current fiscal period in comparison to the authorities provided in the combination of the Main Estimates and Supplementary Estimates (B) for fiscal year 2014–2015, as well as budget adjustments approved by Treasury Board up to December 31, 2014.

Significant Changes to Authorities

As reflected in the Statement of Authorities, CIC’s total budgetary authorities available for use in fiscal year 2014–15 decreased by approximately $333 million (19%) when compared to the same quarter in 2013–14. This is comprised of a decrease of $18 million (3%) in Vote 1 – Operating Expenditures, an increase of $23 million (2%) in Vote 5 – Grants and Contributions, an increase of $1 million in Vote 7 – Write-off outstanding immigration loans, and a decrease of $339 million in Statutory Authorities mostly related to the integration of the Passport Canada Program and its revolving fund into CIC operations.

Vote 1 – Operating Expenditures

The Department’s Vote 1 – Operating Expenditures net decrease of $18 million or 3% is explained as follows:

  • Increases of $69 million related to:
    • Funding to modernize the processing of Citizenship grants and proofs ($25 million);
    • Funding to modernize the immigration system and manage backlogs for temporary residents ($15 million);
    • Funding for the Express Entry initiative ($7 million);
    • Transfer from Vote 5 – Grants and Contributions to support the delivery of settlement program in BC and Manitoba ($6 million) as a result of the repatriation of service delivery to the federal government;
    • Funding related to collective agreements ($4 million);
    • Funding to support Official Languages Action Plan ($4 million);
    • Funding to support the electronic Travel Authorization initiative ($3 million);
    • Transfer from Canada Border Services Agency for increased functionality in the Global Case Management System ($3 million);
    • Funding to support the 2015 Pan American games ($1 million); and,
    • Operating Budget Carry Forward ($1 million).
  • Decreases of $87 million associated with the following:
    • Sunsetting of one-time funds for the Temporary Biometrics Resident Project ($29 million);
    • Paylist Expenditures ($13 million);
    • Savings identified as part of Budget 2012 ($8 million);
    • Canada-US immigration information sharing ($7 million);
    • Transfer to Department of Foreign Affairs, Trade and Development (DFATD) to provide support to departmental staff located at missions abroad ($7 million);
    • Sunsetting of one-time funds for backlog processing and IT investment previously approved under the Action Plan for Faster Immigration from Budget 2008 (Bill C-50) ($6 million);
    • Reduced costs for delivery of Temporary Resident Visa for Mexico ($6 million);
    • Transfer to DFATD to reverse previous International Experience Canada (IEC) funding ($4 million);
    • Transfer to Shared Services Canada for workplace technology device software ($3 million);
    • Transfer to DFATD for the costs of locally engaged staff delivering the IEC program ($2 million);
    • Funding for the reform of Canada’s refugee determination system ($1 million); and,
    • Other transfers and minor adjustments ($1 million).

Vote 5 – Grants and Contributions (G&C)

The Department’s Vote 5 – Grants and Contributions net increase of $23 million or 2% is explained as follows:

  • Increase of $35 million associated with the following:
    • To reflect the additional funding for the Grant for the Canada-Quebec Accord on immigration ($35 million).
  • Decreases of $12 million associated with the following:
    • Transfer to Vote 1 – Operating Expenditures to fund the repatriation of the settlement program in BC ($7 million); and,
    • Savings identified as part of the Budget 2012 ($5 million).

Vote 7 – Write-off Outstanding Immigration Loans

The Department’s Vote 7 – Write-off of Outstanding Immigration Loans increase by $1 million which represents the amount requested in Supplementary Estimates (B).

Budgetary Statutory Authorities

The 2014–15 statutory authorities level in the third quarter is significantly lower than 2013–14 by $339 million and is primarily explained as follows:

  • Passport Canada Program variance ($324 million) between an anticipated deficit ($70 million) for 2013-14 and an anticipated surplus ($254 million) for 2014-15.
    • Passport Canada Program was integrated into CIC effective July 2, 2013. However due to the timing of the integration, Passport financial components were only included in CIC statements beginning in the third quarter of 2013-14.
    • The deficit of $70 million anticipated in 2013-14 was established based on revenues with the fee structure in effect before July 1, 2013.The anticipated surplus of $254 million for 2014-15 factors in the introduction of the new fee structure in effect July 1, 2013.
    • The anticipated $254 million surplus in 2014-15 is the positive balance of revenues over expenses. The Passport Canada Program operates on a cost-recovery basis and finances its activities through the fees charged for its services. Program funds are placed in a revolving fund which has a continuing non-lapsing authority from Parliament under Statutory Authorities.
    • This surplus will help to fund the program's deficits during years when revenues do not cover expenditures.
  • Decrease of $17 million related to the return of fees for certain terminated Federal Skilled Worker applications. Funds were re-allocated from 2013-14 to 2014-15 to align with the demand for the return of fees.
  • Increase of $2 million related to employee benefit plan.

Significant Changes to Departmental Budgetary Expenditures by Standard Object

Quarter over quarter analysis

As reflected in the Table of Departmental Budgetary Expenditures by Standard Object, CIC’s net budgetary expenditures for the quarter ending December 31, 2014 were $321 million compared to $300 million as of December 31, 2013, representing an increase of $21 million or 7%.

Total gross budgetary expenditures have increased by $43 million or 10% from $438 million to $481 million. CIC, through the addition of the Passport Program and International Experience Canada (IEC), also added respectively $158 million and $1 million in re-spendable revenues, thereby resulting in a net budgetary expenditure of $321 million. 

The integration of Passport Canada into CIC led to the changes in the expenditure structure. With ESDC providing passport service delivery on behalf of CIC, salary for staff transferred to ESDC previously recorded under Personnel are now reported under Professional Services invoiced by ESDC. This mostly explains the shift for the third quarter between the decrease in salary and the increase in expenditures for Professional and Special Services. For this 2014–15 quarter, Passport integration had an impact of $7 million of the $43 million gross expenditure increase.

The other significant change for this quarter relates to the increase in Transfer payments mostly related to the Settlement Program, the Canada-Quebec Accord on Immigration and the Resettlement Assistance Program which accounts for an overall increase of $25 million compared to previous year.

Cumulative analysis

As reflected in the Table of Departmental Budgetary Expenditures by Standard Object, CIC’s year-to-date expenditures as of December 31, 2014 were $1,452 million compared to $1,278 million as of December 31, 2013, representing 69% of the total budgetary authorities available for use for the year ending on March 31, 2015.

Total respendable revenues for the same period increased from $285 million to $475 million and are mostly from the integration of Passport Canada Program. This increase in revenue of $190 million applied against the $174 million increase of expenditures explains the reduction of the net budgetary expenditures from $993 million to $977 million.

This increase of $174 million in year to date expenditures is mostly explained by:

  • Integration of Passport Canada Program: ($100 million). Since July 2, 2013 Passport Canada has been a part of CIC. As a result, cumulative data for 2013-14 represents the period from July 2013 to December 2013 (6 months) while 2014-15 data represents the period from April 2014 to December 2014 (9 months). The first three months of 2013-14 is included in DFATD’s statements. This integration has brought significant fluctuations between salary and professional services since salaries for staff transferred to ESDC were recorded last year under salary while in 2014-15 they are reflected under professional services since ESDC invoices CIC for passport delivery services. 
  • Transfer payments: ($42 million). This is explained by an increase of $35 million for the grant related to the Canada-Quebec Accord on Immigration, an increase of $10 million in the Resettlement Assistance Program offset by a decrease of $3 million in the Settlement Program.
  • Other subsidies and payments (excluding Passport Program): ($17 million). This is mostly explained by a reduction in fee refunds for terminated applications with respect to Federal Skilled Workers ($4 million), an increase for CIC’s portion of pay in arrears charges ($12 million) and an increase of the fee returns for terminated applications for the Immigrant Investor Program ($6 million).

3. Risks and Uncertainties

CIC operates in a constantly changing environment. Its strategic directions as well as its policies and operations are influenced by external factors such as emerging events, the Canadian and global economic, social or political contexts and shifting migration trends. CIC’s evolving mandate and integration of new programs and staff inherently contains a level of risk as CIC continuously advances its own internal systems through change initiatives such as the Modernization agenda.

Unforeseen Events and Natural Disasters

Unforeseen events and natural disasters may have significant effects on CIC’s operations and reputation. They can affect CIC directly when they occur in places where our offices and employees are located.

Additionally, CIC can also be indirectly affected when the Department is required, for humanitarian or legal reasons, to facilitate travel of foreign nationals or Canadian citizens by processing applications for visas or other necessary documents. 

In conjunction with its national and international partners, CIC continues to identify, assess, monitor, and proactively implement measures to mitigate risks and minimize the impact they may have on our operations, commitments, service standards and processing targets.

Litigation and Legal

There is a risk that the pace and scope of change in CIC’s policies (including legislative and regulatory changes) and programs could lead to additional pressure with respect to litigation, which may impact our resources. Over the last few years, there has been a significant increase in the number of complex and high-profile litigation.

Sound project management practices are in place to manage all of these changes and ensure timely delivery of CIC’s programs and client services.

4. Significant Changes in Relation to Operations, Personnel and Programs

Ms. Catrina Tapley was appointed Assistant Deputy Minister for Strategic and Program Policy at CIC on November 17, 2014.

There have been no other significant changes in relation to operations, personnel and programs during the quarter ended December 31, 2014.

5. Budget 2012 Implementation

This section provides an overview of savings measures announced in Budget 2012 that are being 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.

CIC will achieve Budget 2012 savings of $71.2 million by 2014–15 through modernization and efficiency measures, by transforming how it works internally, and by consolidating and streamlining its operations. 

In the first year of implementation in 2012–13, CIC achieved savings of $26.5 million. Savings have increased to $59 million for 2013–14. 

The incremental ongoing savings from 2013–14 to 2014–15 is $12.2 million. This is a result of increased savings of $13.9 million offset by a decrease in savings of $1.7 million and is explained by the following:

Increase in savings of $13.9 million

CIC's authorities in the Main Estimates for 2014–15 have been reduced by the following:

Vote 1 – Operating Expenditures ($8.4 million) and Statutory Employee Benefit Plan Costs ($0.7 million), for a total of $9.1 million

  • $4.5 million – Reducing the number of CIC offices overseas by implementing a more integrated, modernized and centralized working environment;
  • $4.5 million – Reductions in back office costs; and
  • $0.1 million – Reducing the number of regional headquarters.

Vote 5 – Grants and Contributions $4.8 million

  • $3.3 million – Changing the ratio of government-assisted refugees (GAR) to privately sponsored refugees; and
  • $1.5 million – Elimination of federal contributions to Provinces and Territories relating to maintenance of Immigration Portals.

Decrease in savings of $1.6 million

The savings related to the reform of the Interim Federal Health Program (IFHP) have been adjusted from $24.5 million in 2013–14 to $22.9 million in 2014–15 based on actual up-take.

The impact of Budget 2012 has been mitigated through the ongoing modernization of CIC’s processing network. This modernization is being achieved through various measures including the deployment of the Global Case Management System to all overseas and in-Canada offices, the ongoing implementation of e-applications, a growing visa application centre network, the centralization of some overseas processing in Canada and improved online information and tools.

Service levels at CIC are primarily measured through service standards and processing times, which CIC posts and regularly updates on its Web site.

Original signed by Anita Biguzs

Anita Biguzs
Deputy Minister
Ottawa, Canada

Original signed by Tony Matson

Tony Matson, CPA, CMA
Assistant Deputy Minister / CFO
Ottawa, Canada

February 13, 2015

Date

Statement of Authorities

Authorities
(in thousands of dollars)
Fiscal Year 2014-2015 Fiscal Year 2013-2014
Total available for use for the year ending March 31, 2015Footnote 1 Used during the quarter ended December 31, 2014 Year-to-date used at quarter-end Total available for use for the year ending March 31, 2014Footnote 1 Used during the quarter ended December 31, 2013 Year-to-date used at quarter-end
Vote 1 - Operating Expenditures 587,387 131,201 383,598Footnote 2 605,640 123,077 355,056
Vote 5 - Grants and Contributions 976,185 233,710 728,464 952,946 208,048 686,353
Vote 7 - Debt Write-off 1,145
Budgetary Statutory Authorities
Contributions to Employee Benefit Plans 60,009 14,863 44,591 58,210 14,340 43,020
Minister's Salary and Motor Car Allowance 82 21 62 79 11 60
FSW Fees Returned (Terminated Applications) 47,250 2,832 17,155 63,800 9,521 21,070
IIP Fees Returned (Terminated Applications) 5,007 5,905
Spending of Amounts Equivalent to Proceeds from Disposal of Surplus Moveable Crown Assets 33 14 14 36 4 5
Court Awards 31 3 31 18 2 19
Refunds of Previous Years Revenue 6,093 1,579 6,093 5,701 (531) 5,701
Passport Program Revolving Fund (254,192) (68,089) (208,540)Footnote 3 70,373 (54,764) (118,579)
Total Budgetary Authorities 1,424,023 321,141 977,373 1,756,803 299,708 992,705
Non-Budgetary Authorities Footnote 4 69,800 (43)Footnote 5 (1,432) 70,528 (264) (1,357)
TOTAL AUTHORITIES 1,493,823 321,098 975,941 1,827,331 299,444 991,348

Departmental Budgetary Expenditures by Standard Object

  Fiscal Year 2014-2015 Fiscal Year 2013-2014
Planned expenditures for the year ending March 31, 2015 Expended during the quarter ended December 31, 2014 Year-to-date used at quarter-end Planned expenditures for the year ending March 31, 2014 Expended during the quarter ended December 31, 2013 Year-to-date used at quarter-end
Expenditures (in thousands of dollars)
Personnel 635,864 124,909 368,344 592,430 152,521 403,409
Transportation and Communications 62,289 12,396 37,384 70,962 (618) 28,264
Information 21,596 891 4,171 15,330 2,048 3,013
Professional and Special Services 265,994 79,269 212,610 209,752 29,935 78,635
Rentals 32,337 4,683 16,343 35,968 6,851 20,170
Repair and Maintenance 9,309 598 1,248 23,427 411 858
Utilities, Materials and Supplies 20,452 11,325 31,835 59,788 23,374 18,774
Acquisition of Machinery and Equipment 28,898 1,587 5,469 17,133 5,431 10,426
Transfer Payments 976,185 233,710 728,464 952,946 208,048 686,353
Other Subsidies and PaymentsFootnote 6 54,778 11,134 45,761 72,467 9,499 27,618
TOTAL GROSS BUDGETARY EXPENDITURES 2,107,702 480,502 1,451,629 2,050,203 437,500 1,277,520
Less Revenues Netted against Expenditures (in thousands of dollars)
Passport Program Respendable Revenue 673,741 158,108 469,875 285,359 137,792 284,815
Revenue Credited to the Vote 9,938 1,253 4,381 8,041 0 0
TOTAL NET BUDGETARY EXPENDITURES 1,424,023 321,141 977,373 1,756,803 299,708 992,705
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