Quarterly Financial Report for the quarter ended December 31, 2018

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 2018–19 Main Estimates Part II (PDF, 1.79 MB) and the 2017–18 Quarterly Financial Report for the quarter ended December 31, 2017.

A summary description of Immigration, Refugees and Citizenship Canada (IRCC) programs may be found in Part II of the Main Estimates and the 2018-19 Departmental Plan (PDF, 1.32 MB).

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 for the 2018–19 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 June 2017, the House of Commons approved a change allowing the Main Estimates to be tabled in Parliament by April 16^th instead of March 1^st, which allowed the 2018 Federal Budget priorities to be included in the 2018-19 Main Estimates. These changes address the government’s commitment to provide more coherent information to Parliament and to align the Federal Budget and the Estimates.

The Main Estimates present financial requirements for the full 2018-19 fiscal year as announced in the 2018 Federal Budget. Items funded through Budget 2018 are held in a centrally managed Budget Implementation Vote (BIV). Through this vote, the Main Estimates will include 100% of Budget 2018 incremental spending measures, improving Budget-Estimates alignment and eliminating some of the time lag between announcement and implementation of programs. The funds will be held centrally until supporting policy and program approvals are in place. After approvals, funds will be transferred to responsible departments.

In 2018-19, IRCC’s total authorities include the Main Estimates, incremental funding from Budget 2018, items sought through the Supplementary Estimates (A), the funding from the 2017-18 carry forward and other salary adjustments as well as other minor adjustments related to statutory items.

The introduction of the 10 year passport in July 2013 is now starting to have an impact on the Passport program as applicants who opted to apply for the 10 year Passport are no longer required to re-apply at the 5 year expiration mark. This has resulted in a reduction of Passport applications, hence a decrease in overall volume.

For this quarterly report, no authorities from Supplementary Estimates (B) are included as these were tabled to Parliament in January 2019. Note that for 2017-18, authorities through Supplementary Estimates (B) were requested during the third quarter.

Significant changes to authorities

As reflected in the Statement of Authorities, IRCC’s total budgetary authorities available for use in fiscal year 2018–19 increased by approximately $563 million (29%) when compared to the same quarter in 2017–18. This increase is comprised of:

• an increase of $141 million (19%) in Vote 1 – Operating Expenditures
• a decrease of $7 million (18%) in Vote 5 – Capital Expenditures
• an increase of $188 million (15%) in Vote 10 – Grants and Contributions
• an increase of $241 million (320%) in Statutory Authorities

The most significant changes to the authorities relate to an increase in funding to support higher admission levels for permanent residents as per the 2017 and the 2018 Immigration Levels Plan, the grant related to the Canada-Quebec Accord on immigration, additional funding to support increased volumes of asylum seekers, and an increase due to statutory adjustments related to the Passport Canada revolving fund to offset the impact of the anticipated decrease in revenues starting in 2018-19 and for the remainder of the second half of its business cycle, subsequent to the introduction of the 10-year passport in 2013.

These were partly offset by the reduction of funding levels received for the Government’s response to the Syrian Refugee crisis. As processing and resettlement activities are completed, the Department will continue efforts on the provision of settlement services to the Syrian cohort.

Vote 1 – Operating Expenditures

The Department’s Vote 1 – Operating Expenditures Authorities increase of $141 million (19%) is explained as follows:

• Increase of $176 million attributable to:

  Additional Funding for ($175 million):

  • Higher admission levels for permanent residents as per the 2018 Annual Immigration Levels Plan ($50 million);
  • The continuation of Biometric Expansion screening in Canada’s immigration system ($43 million);
  • The Interim Federal Health program increase in overall demand due to restoration to pre-2012 parameters and higher volumes ($37 million);
  • Higher admission levels for permanent residents as per the 2017 Annual Immigration Levels Plan ($16 million);
  • The Irregular Migration initiative as set out in the Budget 2018 priorities - Budget Implementation Vote (BIV) ($14 million);
  • The Citizenship Revocation Process under the Citizenship Act ($6 million);
  • The Temporary Foreign Workers’ protection and the enhancement of the Temporary Foreign Worker program and International Mobility program ($6 million);
  • Other adjustments ($3 million).

  Transfer increasing IRCC’s Vote 1 – Operating Expenditures ($1 million):

  • Internal Vote Transfer – Vote 1 to Vote 5 for Capital Projects ($1 million)
• Decrease of $35 million attributable to:

  Decrease in Funding for ($25 million):

  • Compensation Adjustments related to the settlement of collective agreements and other salary adjustments ($21 million);
  • The reduction of funding for the Government’s response to the Syrian Refugee crisis ($4 million);

  Transfers decreasing IRCC’s Vote 1 – Operating Expenditures ($10 million):

  • Transfer to Global Affairs Canada and Shared Services Canada to support staff across the overseas network ($10 million).

Vote 5 – Capital Expenditures

The Department’s Vote 5 – Capital Expenditures Authorities net decrease of $7 million (18%) is explained as follows:

• Increase of $6 million attributable to additional funding for:

  Increase in Funding for ($6 million):

  • Higher admission levels for permanent residents as per the 2018 Annual Immigration Levels Plan ($6 million); and
• Decrease of $13 million attributable to:

  Decrease of $12 million attributable to lower IT system investment requirements for:

  • The Biometric Expansion project to verify the identity of all visa required travelers seeking entry to Canada ($10 million);
  • The Temporary Foreign Worker program and International Mobility program ($1 million);
  • The admission levels for permanent residents as per the 2017 Annual Immigration Levels Plan ($1 million).

  Transfers decreasing IRCC`s Vote 5 - Capital Expenditures ($1 million):

  • Internal Vote Transfer - Vote 1 to Vote 5 for Capital Projects ($1 million).

Vote 10 – Grants and Contributions (G&C)

The Department’s Vote 10 – Grants and Contributions Authorities net increase of $188 million (15%) is explained as follows:

• Increase of $241 million attributable to additional funding for:
  • The grant related to the Canada-Quebec Accord on immigration ($112 million);
  • Higher admission levels for permanent residents as per the 2017 Annual Immigration Levels Plan ($55 million);
  • Increased volume of asylum seekers ($50 million);
  • Higher admission levels for permanent residents as per the 2018 Annual Immigration Levels Plan ($9 million);
  • The Survivors of Daesh, including Yazidi women and girls ($5 million);
  • Protecting vulnerable women and girls ($5 million);
  • Supporting Canada’s Official Languages ($3 million); and
  • Workforce and Career Pathways for Visible Minority Newcomer Women ($2 million).
• Decrease of $53 million attributable to decrease in funding for:
  • The Government’s response to the Syrian Refugee crisis. As processing and resettlement activities are completed, which explains the year-over-year reduction in funding related to the Syrian Refugees crisis ($53 million), the Department continues to focus efforts on Settlement Services to Syrian Refugees;

Budgetary Statutory Authorities

The 2018–19 statutory authority level in the third quarter is higher than 2017–18 by $241 million (320%) and is primarily explained as follows:

• Increase of $241 million mainly attributable to:
  • Increase due to statutory adjustments for the Passport Program revolving fund to offset anticipated revenue shortfalls where in-year expenses are projected to be higher than in-year revenues as the Program enters the second half of its business cycle. This shortfall is funded from accumulated surpluses since the introduction of the 10-year passport in 2013 ($237 million); and
  • Adjustments to Employee Benefit Plans and other statutory authorities ($4 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 31^st have increased by $46 million (8%) from $567 million in 2017-18 to $613 million in 2018-19. This variance stems from changes related to Personnel, Transportation and Communications, Professional and Special Services, Utilities, Materials and Supplies, Transfer payments and Other Subsidies and Payments expenditures.

Through the Passport Program and International Experience Canada, IRCC generated $75.4 million in re-spendable revenues in the third quarter of 2018-19. This represents half of the revenues for the same quarter in comparison with last fiscal year. This contributes to a net budgetary expenditure of $537.5 million as of December 31, 2018 compared to $414.9 million as of December 31, 2017.

Personnel expenditures have increased by $10.4 million (7%) and is mainly due to increase in salary funding received for the following initiatives: 2017 and 2018 Immigration Levels Plans, Biometric Expansion screening in Canada’s immigration system, Asylum seekers and Temporary Foreign Workers.

Transportation and Communications expenditures have decreased by $3.4 million (23%) as well as Utilities, Materials and Supplies expenditures have decreased by $6.2 million (64%). In both cases, this is mainly due to a decrease in Passport shipping and material costs which aligns with a volume decrease following the introduction of the 10 year passport in July 2013 allowing applicants to opt for a 10 year expiration instead of 5, which will gradually result in an overall decrease in the volume of passport applications.

Professional and Special Services expenditures have increased by $16.8 million (15%) and is mainly explained by an increase of $16.9 million in the Interim Federal Health (IFH) program spending due primarily to the increase of asylum seekers.

Transfer payments increased by $32.7 million (12%). The increase is mainly explained by an increase of $28.0 million for the Canada-Quebec Accord grant program and an increase of $4.0 million in spending under the Settlement program attributable to the higher admission levels from the 2017 and 2018 Levels Plan for permanent residents.

Other Subsidies and Payments decreased by $6.4 million (1,739%) and is mainly due to a decrease of $7.7 million in outstanding Interdepartmental Settlement amounts combined with an increase of $1.1 million in salary overpayments.

Passport re-spendable revenues have decreased by $75.6 million (50%) compared to the same quarter in the previous year due largely to expected and planned volume reductions due to the introduction of the 10 year passport.

Cumulative analysis

As reflected in the Table of Departmental Budgetary Expenditures by Standard Object, IRCC’s year-to-date gross operating expenditures were $1,729 million in 2017-2018 compared to $1,946 million in 2018-2019 for an increase of $217 million (13%).

Personnel expenditures have increased by $30.8 million (7%) and is mainly due to the increase in salary funding received for the following initiative: 2017 and 2018 Immigration Levels Plans, Biometric Expansion screening in Canada’s immigration system, Asylum Seekers and Temporary Foreign Workers.

Transportation and Communications expenditures have decreased by $7.7 million (19%) as well as Utilities, Materials and Supplies expenditures have decreased by $12.7 million (45%). In both cases, this is mainly due to a decrease in Passport shipping and material costs which aligns with a volume decrease following the introduction of the 10 year passport in July 2013 allowing applicants to opt for a 10 year expiration instead of 5, which will gradually result in an overall decrease in the volume of passport applications.

Professional and Special Services expenditures have increased by $22.5 million (8%) and is mainly explained by an increase of $25.1 million in the Interim Federal Health (IFH) program spending, an increase of $9.6 million in Legal Services resulting from timing differences in invoices from the Department of Justice, an increase of $4.9 million for the Biometrics transactions costs, an increase of $3.8 million related to the temporary housing for asylum seekers and an increase of $3.2 million related to the Memorandum of Understanding for passport services abroad provided by Global Affairs Canada. This was partly offset by a decrease of $34.2 million in passport delivery costs incurred by Employment and Social Development Canada (ESDC).

Acquisition of Machinery and Equipment expenditures have increased by $3.9 million (164%) and is mainly due to an increase of $2.4 million related to the purchase of electronic equipment as part of the Biometric Expansion deployment activities undertaken in 2018 and an increase in $1 million in the purchase of miscellaneous computer equipment.

Transfer payments have increased by $176.4 million (20%) and is mainly explained by an increase of $112.0 million in spending for the Canada-Quebec Accord grant program, an increase of $59.7 million in spending attributable to the higher admission levels from the 2017 and 2018 Levels Plan for permanent residents, and an increase of $14 million in transfer payments to provinces and municipalities as a result of increased volume for asylum seekers. This was partly offset by a decrease of $18 million in spending related to the Syria initiative as the vast majority of this work was completed in previous years.

Passport re-spendable revenues have decreased by $190 million (40%) compared to the same quarter in the previous year due to the introduction of the 10 year passport as explained above.

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. For IRCC, continued increases in Temporary Resident applications and the management of the influx of asylum seekers are priorities that are closely monitored.

As part of its risk mitigation strategy, IRCC is continuously working towards improving its own internal processes and systems through change initiatives such as the modernization and transformation agenda with the objective 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.

IRCC and partner departments will continue to respond to the influx of asylum seekers crossing between ports of entry. This situation involves multiple departments along with impacts to provinces and municipalities. IRCC and partner departments received funding in Budget 2018 and 2018-19 Supplementary Estimates to help respond to this issue. 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

IRCC operates in a high volume litigation environment which includes complex, high profile and high impact litigation files. 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 to the position of Associate Assistant Deputy Minister of the Operations Sector effective August 29, 2018.

Corporate Management Sector was created in January 2019. Daniel Mills was appointed to the position of Assistant Deputy Minister of this new Sector effective January 21, 2019. Mr Mills continues his responsibilities as Chief Financial Officer (CFO).

Zaina Sovani assumed the role of Assistant Deputy Minister of Transformation and Chief Information Officer (CIO) effective January 21, 2019.

There have been no other significant changes in relation to operations, personnel and programs during the quarter ended December 31, 2018.

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 has been in effect as of April 1, 2018.

Approval by Senior Officials

Approved by:

Ottawa, Canada
February 27, 2019

Statement of Authorities (in thousands of dollars)

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