Quarterly Financial Report for the quarter ended December 31, 2015

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 2015–16 Main Estimates, the 2015-16 Supplementary Estimates (B) and the 2014–15 Quarterly Financial Report for the quarter ended December 31, 2014.

A summary description of the Immigration, Refugees and Citizenship Canada (IRCC) programs may be found in Part II of the Main Estimates (PDF, 1.2 MB).

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 (B) for the 2015–16 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.

Immigration, Refugees and Citizenship 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

IRCC’s 2015–16 authorities represent the total of Main Estimates, Supplementary Estimates (B), the approved Operating Budget Carry Forward from 2014–15, and minor adjustments related to statutory items. IRCC requested authorities through Supplementary Estimates (B) in 2015–16 as well as in 2014–15.

Significant Changes to Authorities

As reflected in the Statement of Authorities, IRCC’s total budgetary authorities available for use in fiscal year 2015–16 increased by approximately $338 million (24%) when compared to the same quarter in 2014–15. This is comprised of an increase of $170 million (29%) in Vote 1 - Operating Expenditures, an increase of $117 million (12%) in Vote 5 - Grants and Contributions, and an increase of $52 million in Statutory Authorities mostly related to the Passport Canada Program and its revolving fund. The most significant change to the authorities above is the funding of $280 million received through Supplementary Estimates (B) to implement the Government’s response to the Syrian refugee crisis.

Vote 1 – Operating Expenditures

The Department’s Vote 1 – Operating Expenditures net increase of $170 million or 29% is explained as follows:

• Increases of $205 million associated with the following:
  • Additional Funding for:
    • The implementation of the Government’s response to the Syrian refugee crisis ($178 million);
    • The Electronic Travel Authorization initiative ($14 million);
    • The Express Entry initiative announced in Budget 2014 ($5 million);
    • The Entry Exit initiative ($1 million); and
    • The 2015 Pan American and Parapan American games ($1 million).
  • Transfers from:
    • The Department of Global Affairs Canada:
      • Locally Engaged Staff for missions abroad ($3 million); and
      • International Experience Canada ($2 million).
    • The Immigration and Refugee Board of Canada:
      • Pre-Removal Risk Assessments ($1 million).
• Decreases of $35 million associated with the following:
  • Work that was completed for the Express Entry initiative in previous fiscal year ($7 million);
  • The reduction in funding to support processing of Citizenship and Temporary Resident applications ($5 million);
  • The completion of Refugee Reform implementation ($5 million);
  • The transfer of funding in the previous fiscal year  from Canada Border Services Agency for increased functionality in the Global Case Management System ($5 million);
  • The Government of Canada Centralization Initiatives ($4 million);
  • The Operating Budget Carry Forward reduction from previous fiscal year ($2 million);
  • The management and protection of classified information in assessing applications under the Immigration and Refugee Protection Act (IRPA) ($2 million);
  • The reduction of Federal Skilled Workers backlog operational costs ($2 million);
  • The completion of the Information Sharing initiative ($1 million);
  • The completion of the Biometrics project ($1 million); and
  • Foregone revenues (lifting of Temporary Resident Visas) ($1 million).

Vote 5 – Grants and Contributions (G&C)

The Department’s Vote 5 – Grants and Contributions net increase of $117 million or 12% is explained as follows:

• Increases of $121 million associated with the following:
  • Additional Funding for:
    • The implementation of the Government’s response to the Syrian refugee crisis ($100 million); and
    • The Grant for the Canada-Quebec Accord on immigration ($21 million).
• Decreases of $4 million associated with the following:
  • The sunsetting of funding for the Global Assistance for Irregular Migrants Program ($3 million); and
  • The transfer to the National Capital Commission for the Victims of Communism Memorial ($1 million).

Budgetary Statutory Authorities

The 2015–16 statutory authority level in the third quarter is higher than 2014–15 by $52 million and is primarily explained as follows:

• Increases of $72 million associated with the following:
  • Passport program: the increased draw on the fiscal framework is mainly related to revised year-over-year estimates of surplus revenues over expenditures due to changes in client demand (lower than projected volumes) for Passport program services ($52 million);
  • The forecasted costs related to the return of fees for the termination of Immigrant Investor Program and Entrepreneur Program applications ($17 million); and
  • Adjustments to the employee benefit plans ($3 million).
• Decreases of $20 million associated with the following:
  • The forecasted costs related to the return of fees for certain terminated Federal Skilled Workers applications ($18 million); and
  • Other minor adjustments ($2 million).

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, the total gross budgetary expenditures have increased by $15 million (3%) from $480 million to $495 million. IRCC, through the addition of the Passport Program and International Experience Canada, also added respectively $134 million and $0.5 million in re-spendable revenues, thereby resulting in a net budgetary expenditure of $360 million in 2015–16 as compared to $321 million as of December 31, 2014.

With the exception of the Professional and Special Services, Transfer Payments and Other Subsidies and Payments, the remaining operating expenditures have not encountered significant quarter over quarter variances.

Professional and Special Services increased by $14 million compared to the same quarter in the previous year. It is mainly explained by the first installment payment of $15 million made to the International Organization for Migration in December 2015 for costs related to the Government’s commitment to the Syrian refugee crisis for which IRCC is the lead department.

For this quarter, Transfer Payments increased by $5.9 million compared to the previous year and is mostly due to an increase of $5.2 million for the Grant for the Canada-Quebec Accord on immigration combined with other small increases in IRCC transfer payments programs.

Other Subsidies and Payments decreased by $5.6 million compared to the same quarter in the previous year. It is mainly explained by a decrease of $3.2 million in the Federal Skilled Workers (FSW) and Immigrant Investor Program (IIP) and Entrepreneur (EN) Program return of fees related to terminated applications as the volume for the return of fees decreased in comparison with the same quarter of the last fiscal year. This combined with additional small adjustments related to other Subsidies and Payments contributed to the overall decrease.

Cumulative analysis

As reflected in the Table of Departmental Budgetary Expenditures by Standard Object, IRCC’s year-to-date gross operating expenditures as of the third quarter were $1,478 million compared to $1,452 million as of December 31, 2014, representing an increase of 2% from the previous year and 61% of the total budgetary authorities available for use for the year ending March 31, 2016. The percentage used at the end of December 31, 2014 was 69%. The reduced percentage of spending can be explained by significant additional funding received later in this third quarter (Supplementary Estimates B) for the government’s response to the Syrian refugee crisis.

With the exception of Professional and Special Services, Utilities, Materials and Supplies, Transfer Payments and Other Subsidies and Payments, the remaining operating expenditures have not encountered significant year-to-date variances.

Professional and Special Services increased by $32 million when compared to the previous fiscal year-to-date and can be explained as follows; an increase of $15 million for the first installment payment made to the International Organization for Migration for costs related to the government’s response to the Syrian refugee crisis, an increase of $12 million as a result of a timing difference in recording Employment and Social Development Canada (ESDC) expenditures for the Passport program business (in 2014–15, the expenditures were recorded later in the fiscal year, whereas for fiscal year 2015–16, the ESDC expenditures were recorded in the periods they were incurred) and lastly, an increase of $3 million in Interim Federal Health Program expenditures combined with other miscellaneous adjustments.

A decrease of $7.3 million in Utilities, Materials and Supplies is mainly driven by a reduction in Passport booklet expenditures as a result of a decrease in volume for Passport program services when compared to the previous fiscal year-to-date.

Transfer Payments increased by $25.8 million compared to the previous year-to-date and is due to an increase of $20.6 million for the grant payment for the Canada-Quebec Accord on immigration, combined with other small increases in IRCC transfer payments programs.

Significant change occurred in Other Subsidies and Payments as year-to-date expenditures decreased by $31.3 million when compared to the previous fiscal year-to-date. This is explained by a decrease of $16.8 million in Federal Skilled Workers return of fees related to terminated applications resulting from a decrease in the volume of returns as well as by a decrease related to a one-time transition payment of $13.5 million for the implementation of the pay in arrears initiative in 2014-15 combined with other miscellaneous adjustments. These decreases were partly offset by an increase of $3.6 million in the Immigrant Investor Program (IIP) and Entrepreneur (EN) Program return of fees related to terminated applications as the volume for the return of fees increased in comparison with the previous fiscal year-to-date.

3. Risks and Uncertainties

IRCC 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. At the same time, IRCC continuously works to improve its own internal processes and systems through change initiatives such as the Modernization agenda to improve client service.

Unforeseen Events and Natural Disasters

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

Additionally, IRCC 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 on an urgent basis.

In conjunction with its national and international partners, IRCC 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 IRCC’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 numbers of complex and high-profile litigation.

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

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

The Honourable John McCallum was appointed the Minister of Immigration, Refugees and Citizenship Canada on November 4, 2015.

The November 4, 2015 Order in Council has designated the Minister of Canadian Heritage as the Minister responsible for the Canadian Multiculturalism Act.

On November 5, 2015 the Privy Council Office released a statement confirming that the name (applied title) of Citizenship and Immigration Canada has been changed to Immigration, Refugees and Citizenship Canada. The legal title, “Department of Citizenship and Immigration”, will continue to be used on legal documents, such as contracts and letters of offer.

The Government of Canada has committed to resettle 25,000 Syrian refugees by February 29, 2016. The Government of Canada is working in collaboration with the United Nations High Commissioner for Refugees and with Canadians, including private sponsors, non-governmental organizations, provincial, territorial and municipal governments. As at December 31, 2015, IRCC had reached its goal of identifying 25,000 refugees, had processed 10,700 refugees through all the screening stages including medical and security, and over 6,000 of these processed refugees had landed in Canada.

Approval by Senior Officials

Approved by:

Statement of Authorities

Departmental Budgetary Expenditures by Standard Object