Quarterly Financial Report for the quarter ended December 31, 2017

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 2017–2018 Main Estimates Part II (PDF, 1.42 MB), the 2017-2018 Supplementary Estimates (A) (PDF, 734 KB), the 2017-2018 Supplementary Estimates (B) (PDF, 630 KB) and the 2016–2017 Quarterly Financial Report for the quarter ended December 31, 2016.

A summary description of Immigration, Refugees and Citizenship Canada (IRCC) programs may be found in Part II of the Main Estimates and the 2017-2018 Departmental Plan.

2. 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, the Supplementary Estimates (A) and the Supplementary Estimates (B) for the 2017–18 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 money 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.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

The Department 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 an expenditure basis.

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

In 2017-18, IRCC’s total authorities include the Main Estimates, items sought through the Supplementary Estimates (A), the Supplementary Estimates (B), the approved Operating Budget Carry Forward from 2016-17, amounts received from Treasury Board to fund the signed Collective Agreements and other minor adjustments related to statutory items.

Significant Changes to Authorities

As reflected in the Statement of Authorities, IRCC’s total budgetary authorities available for use in fiscal year 2017–18 increased by approximately $152 million (8%) when compared to the same quarter in 2016–17. This increase is comprised of:

• an increase of $76 million (11%) in Vote 1 – Operating Expenditures
• an increase of $24 million (183%) in Vote 5 – Capital Expenditures
• an increase of $21 million (2%) in Vote 10 – Grants and Contributions
• an increase of $30 million (29%) in Statutory Authorities

The most significant changes to the authorities above relate to the increase in funding sought through 2017-18 Supplementary Estimates (A) in order to support higher admission levels for permanent residents as per the 2017 Annual Immigration Levels Plan, an increase in Interim Federal Health funding received through 2017-18 Supplementary Estimates (B), and an increase in funding received from Treasury Board in order to fulfill the terms of the signed Collective Agreements.

These were partly offset by the reduction of funding levels received for the Government of Canada’s response to the Syrian refugee crisis. The vast majority of this work was completed last year.

Vote 1 – Operating Expenditures

The Department’s Vote 1 – Operating Expenditures Authorities increase of $76 million (11%) is explained as follows:

• Increase of $191 million attributable to:

  Additional Funding for ($185 million):

  • Higher admission levels for permanent residents as per the 2017 Annual Immigration Levels Plan via the 2017-18 Supplementary Estimates (A) ($75 million);
  • The Interim Federal Health program via the 2017-18 Supplementary Estimates (B) ($53 million);
  • Impacts of signed collective agreements ($44 million);
  • The removal of visa requirements for citizens of Mexico ($4 million);
  • The continuation of Biometric Expansion screening in Canada’s immigration system ($3 million);
  • The continuation of the Entry Exit initiative ($1 million);
  • The Advertising initiative related to the Settlement Program Via the 2017-18 Supplementary Estimates (B) ($1 million);
  • The Operating Budget Carry Forward ($1 million); and
  • Other minor adjustments ($3 million).

  Transfer increasing IRCC`s Vote 1 – Operating Expenditures ($6 million) as the following transfers did not occur in 2017-18:

  • Impact of the one-time transfer made via the 2016-17 Supplementary Estimates (A) from Vote 1 to Vote 5 to fund the Syria Grants and Contributions System ($4 million);
  • Impact of the one-time transfer made in 2016-17 to Innovation, Science and Economic Development Canada (ISEDC) – Computers for Schools ($1 million) for the Syria initiative which is not recurring; and
  • Other miscellaneous transfers in 2016-17 ($1 million).

• Decrease of $115 million attributable to:

  Decrease in Funding for ($110 million):

  • The reduction of funding received for the Processing and Settlement of an additional 10,000 Government Assisted Syrian Refugees (GAR) ($42 million);
  • The reduction of funding for the Government’s response to the Syrian Refugee crisis. Funding has decreased as the target of 25,000 refugees was achieved in February 2016 ($31 million);
  • Higher admission levels for permanent residents as per the 2016 Annual Immigration Levels Plan via the 2016-17 Supplementary Estimates (A) ($21 million);
  • The Electronic Travel Authorization Program as the development and implementation of the initiative reached completion in 2016-17 ($9 million);
  • The Budget reduction for professional services, travel and advertising as announced in Budget 2016 ($4 million);
  • The completion of the Information-Sharing initiative ($1 million); and
  • Other minor adjustments ($2 million).

  Transfers decreasing IRCC`s Vote 1 – Operating Expenditures ($5 million):

  • Transfer to Global Affairs Canada and Shared Services Canada for workload distribution across the overseas network ($3 million); and
  • Internal transfer for Employee Benefit Plans ($2 million).

Vote 5 – Capital Expenditures

The Department’s Vote 5 – Capital Expenditures Authorities net increase of $24 million (183%) is explained as follows:

• Increase of $27 million attributable to additional funding for:
  • The continuation of Biometric Expansion screening in Canada’s immigration system ($14 million);
  • The Temporary Foreign Workers’ Program (TFWP)/International Mobility Program (IMP) via the 2017-18 Supplementary Estimates (B) ($5 million);
  • Higher admission levels for permanent residents as per the 2017 Annual Immigration Levels Plan via the 2017-18 Supplementary Estimates (A) ($4 million); and
  • The continuation of the Entry Exit initiative ($ 4 million).
• Decrease of $3 million attributable to decrease in funding for:
  • The Electronic Travel Authorization Program as the development and implementation of the initiative reached completion in 2016-17 ($2 million); and
  • Other miscellaneous adjustments ($1 million)

Vote 10 – Grants and Contributions (G&C)

The Department’s Vote 10 – Grants and Contributions Authorities net increase of $21 million (2%) is explained as follows:

• Increase of $95 million attributable to additional funding for:
  • Higher admission levels for permanent residents as per the 2017 Annual Immigration Levels Plan via the 2017-18 Supplementary Estimates (A) ($61 million);
  • The grant related to the Canada-Quebec Accord on immigration ($33 million); and
  • Other minor adjustments ($1 million).
• Decrease of $74 million attributable to decrease in funding for:
  • The reduction of funding received for the settlement of an additional 10,000 Government Assisted Syrian Refugees (GAR) ($39 million); and
  • The reduction of funding for the Government’s response to the Syrian Refugee crisis. Funding has decreased as the target of 25,000 refugees was achieved in February 2016 ($35 million).

As processing and resettlement activities are completed, the Department will now focus on Settlement Services to Syrian Refugees which explains the year-over-year reduction in funding related to the Syrian Refugees Crisis.

Budgetary Statutory Authorities

The 2017–18 statutory authority level in the third quarter is higher than 2016–17 by $30 million (29%) and is primarily explained as follows:

• Increase of $33 million attributable to:
  • Passport program: Increase largely related to an anticipated net decrease in its in-year surplus as a result of volume reductions in 17-18 ($33 million).
• Decrease of $3 million attributable to:
  • Adjustments to Employee Benefit Plans and other statutory authorities ($3 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 during the quarter ending December 31st have increased by $17.6 million (3%) from $549.3 million in 2016-17 to $566.9 million in 2017-18. This increase mainly stems from changes related to Personnel, Professional and Special Services, Transfer payments and Other Subsidies expenditures.

Personnel expenditures increased by $17.1 million (13%) as a result of collective agreements having been finalized in this fiscal year. This in turn resulted in an overall increase in employee salaries.

Professional and Special Services increased by $14.5 million (15%) and is mainly explained by an increase of $8.0 million in the Interim Federal Health (IFH) program spending, an increase in Passport delivery costs incurred by Employment and Social Development Canada (ESDC) of $10.7 million and a minor decrease of $3.9 million related to payments made to the Internal Organization for Migration (IOM) Geneva for costs related to the Syrian Refugee crisis.

Transfer Payments decreased by $11.8 million (4%). The reduction of Transfer Payments during this quarter is explained by a decrease of $13.2 million due to lower income support payments mainly toward the Syrian Refugee initiative and a decrease of $6.9 million due to the timing in recipient claims and processing of reimbursement of eligible expenditures. These decreases were partly offset by an increase of $8.3 million in spending for the Canada-Quebec Accord grant program. However the Department is expecting that most of its Authorities will be spent.

Cumulative analysis

As reflected in the Table of Departmental Budgetary Expenditures by Standard Object, IRCC’s year-to-date gross operating expenditures were $1,588.8 million in 2016-2017 compared to $1,729.3 million in 2017-2018 representing an increase of $140.5 million (9%).

Total cumulative increases of $53.6 million (14%) in Personnel expenditures are mainly a result of collective agreements having been finalized in the second quarter, which resulted in processing of a significant number of retroactive payments and an overall increase in employee salaries. This increase is also attributable to this year higher admission levels from 2017 Levels Plan for permanent residents as additional resources are required to support IRCC commitments.

The cumulative variance in Professional and Specials Services results in an increase of $36.8 million (15%) compared to the same period in the previous year and is mainly explained by an increase of $21.0 million in Interim Federal Health (IFH) program spending, an increase of $23.0 million in passport delivery costs incurred by Employment and Social Development Canada (ESDC) and an increase of $3.2 million in miscellaneous IT related services. This was partly offset by a decrease of $11.0 million in Legal Services resulting from timing differences in invoices from the Department of Justice.

The $43.3 million (5%) cumulative increase in Transfer Payments compared to the same year-to-date usage at quarter end in 2016-17 is mostly attributable to an increase of $33.2 million in spending for the Canada-Quebec Accord grant, an increase of $47.3 million in contribution payments largely due to the Syrian Refugee initiative under the Settlement Program, an increase in spending in the amount of $13.4 million upon approvals of the 2017 Levels and Victims of Daesh funding. These increases were partly offset by a decrease of $50.8 million in Resettlement Assistance Program contribution payments for the Syrian Refugee initiative.

4. 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 and experimentation agenda to improve client service.

Unforeseen Events and Natural Disasters

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

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.

This summer, IRCC and partner departments responded to a significant influx of irregular migrants from the United States. To date, IRCC has managed this response with existing resource levels. The Department continues to monitor the situation to determine its overall impact on its financial situation.

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

Over the last several years, there has been a significant increase in the volume 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.

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

Mike MacDonald was appointed Associate Assistant Deputy Minister of Strategic and Program Policy Sector in November 2017.

Zaina Sovani was appointed Assistant Deputy Minister of Corporate Services Sector with Immigration, Refugees and Citizenship Canada in December 2017.

There have been no other significant changes in relation to operations, personnel and programs during the quarter ended December 31, 2017.

Under the Policy on Results, the IRCC Departmental Results Framework was approved by Treasury Board on June 5, 2017. This framework replaces the Program Activity Architecture and will be in effect as of April 1, 2018.

Approval by Senior Officials

Approved by:

Ottawa, Canada
February 23, 2018

Statement of Authorities (in thousands of dollars)

Departmental Budgetary Expenditures by Standard Object (in thousands of dollars)