Quarterly Financial Report for the quarter ended December 31, 2019

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 2019-20 Main Estimates Part II (PDF, 1.3 MB) and the 2018-19 Quarterly Financial Report for the quarter ended December 31, 2018.

A summary description of Immigration, Refugees and Citizenship Canada (IRCC) programs may be found in the 2019-20 Departmental Plan (PDF, 1.11 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 2019–20 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 2019 Federal Budget priorities to be included in the 2019-20 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 2019-20 fiscal year as announced in the 2019 Federal Budget. Items funded through Budget 2019 are held in a separately managed Budget Implementation Vote (BIV). Through this vote, the Main Estimates included Budget 2019 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 separately until supporting policy and program approvals are in place. After approvals, funds will be transferred to the Department’s regular votes.

In 2019-20, IRCC’s total authorities include the Main Estimates, incremental funding from Budget 2019 related to Interim Federal Health Program, Enhancing the Integrity of Canada’s Borders and Asylum System, Improving Immigration Client Service, and Helping Travellers Visit Canada. They also include funding accessed through the Supplementary Estimates A where the most significant items are for the temporary housing for asylum seekers and the adjustment on the Canada-Quebec Accord on Immigration. Funding from the 2018-19 Operating and Capital Budget carry forward, compensation allocation for collective agreements and other minor adjustments related to statutory items are also part of the IRCC’s total authorities.

The introduction of the 10 year passport in July 2013 has 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 revenue for this program.

Significant changes to authorities

As reflected in the Statement of Authorities, IRCC’s Total Budgetary Authorities available for use in fiscal year 2019–20 increased by approximately $860.8 million (34%) compared to the same quarter in 2018–19. This increase is comprised of:

• $221.3 million (25%) in Vote 1 – Operating Expenditures
• $5.3 million (17%) in Vote 5 – Capital Expenditures
• $521.9 million (37%) in Vote 10 – Grants and Contributions
• $112.3 million (68%) in Statutory Authorities

The most significant changes to authorities available for use are related to increases in funding received to support provinces and municipalities for temporary housing with respect to increased volume of asylum claimants, for Enhancing the Integrity of Canada’s Borders and Asylum System, for the Canada-Quebec Accord and to support higher admission levels for permanent residents as per the Immigration Levels Plans. There is also an increase due to statutory adjustments related to Passport Program Revolving Fund to offset the impact of the anticipated decrease in revenues that started in 2018-19 and for the remainder of its 10 year business cycle, subsequent to the introduction of the 10-year passport in 2013.

These increases were partly offset by the reduction in the funding profile for the Government’s response to the Syrian Refugee crisis. While processing and resettlement activities have been completed, Syrian refugees continue to have access to settlement services provided by the Department.

Vote 1 – Operating Expenditures

The Department’s Vote 1 – Operating Expenditures Authorities net increase of $221.3 million (25%) is explained as follows:

• Increases of $229.6 million are mainly comprised of:
  • Enhance the Integrity of Canada’s Borders and Asylum System ($97.2 million);
  • Improving Immigration Client Service, and Helping Travellers Visit Canada ($35.8 million);
  • The Interim Federal Health program to cover incremental program costs related to the provision of health-care services to eligible beneficiaries ($35.3 million);
  • The continuation of Biometric Expansion screening in Canada’s immigration system ($27.9 million);
  • Higher admission levels for permanent residents as per the Immigration Levels Plans ($13.2 million);
  • The Operating Budget Carry Forward ($7.7 million);
  • The Canada’s New International Education Strategy ($6.9 million);
  • Transfer to Global Affairs Canada and Shared Services Canada to support staff across the overseas network ($3.2 millions); and
  • The protection of Vulnerable Women and Girls ($2.4 million).
• Decreases of $8.3 million are mainly comprised of:
  • Transfer to Shared Services Canada to enhance the Government’s digital services as announced in Budget 2018 ($3.6 million); and
  • Other adjustments ($4.7 million).

Vote 5 – Capital Expenditures

The Department’s Vote 5 – Capital Expenditures Authorities net increase of $5.3 million (17%) is explained as follows:

• Increases of $11.2 million are mainly comprised of:
  • The 2018-19 Capital Budget Carry Forward ($6.2 million);
  • The Biometric Expansion project to verify the identity of all visa required travelers seeking entry to Canada ($2.0 million);
  • The Start-Up Visa Program ($1.9 million); and
  • Canada’s New International Education Strategy ($1.1 million).
• Decreases of $5.9 million are mainly comprised of:
  • $3.3 million attributable to lower IT system investment requirements, compared to previous years, for:
    • The Entry-Exit initiative ($2.4 million);
    • The admission levels for permanent residents as per the Immigration Levels Plans ($0.8 million); and
    • Other adjustments ($0.1 million).
  • A one-time internal vote transfer - Vote 1 Operating Expenditures to Vote 5 Capital performed in 2018-19 to support various IT builds/projects ($2.6 million).

Vote 10 – Grants and Contributions (G&C)

The Department’s Vote 10 – Grants and Contributions Authorities net increase of $521.9 million (37%) is explained as follows:

• Increases of $565.9 million are mainly comprised of:
  • Support to provinces and municipalities for the temporary housing with respect to the increased volume of asylum claimants ($395.0 million);
  • The grant related to the Canada-Quebec Accord on immigration ($101.4 million);
  • Higher admission levels for permanent residents as per the Immigration Levels Plans ($42.3 million);
  • Enhancing the Integrity of Canada’s Borders and Asylum System ($12.7 million);
  • Getting into and staying in the Workforce and Career Pathways for Visible Minority Newcomer Women ($10.2 million); and
  • The Protection of Vulnerable Woman and Girls ($4.3 million);
• Decreases of $44.0 million are mainly comprised of:
  • The Government’s response to the Syrian Refugee crisis as Syrian refugees continue to integrate into Canada’s society, the required investments settlement services decreases ($40.3 million); and
  • The Survivors of Daesh, including Yazidi women and girls ($3.7 million).

Budgetary Statutory Authorities

The 2019–20 statutory authority level compared to the same quarter has increased by $112.3 million (68%) compared to 2018-19 which is primarily explained as follows:

• Increase due to statutory adjustments for the Passport Program revolving fund. The Passport Program forecasts a net decrease of $93.2 million in its in-year surplus. The increased draw on the Revolving Fund is largely a result of a forecasted decrease in revenue as a result of the introduction of the 10 year passport in 2013. ($93.2 million);
• Adjustments to Employee Benefit Plans associated with funding received through Vote 1 – Operating expenditures ($16.4 million); and
• Adjustments related to other statutory authorities ($2.7 million).

4. 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, 2019 has increased by $93.4 million (15%) compared to the same quarter in 2018-19. This variance is mainly attributable to changes related to Personnel, Professional and Special Services, Transfer payments and Other Subsidies and Payments. Through the Passport Program and International Experience Canada, IRCC generated $67.3 million in re-spendable revenues in the third quarter of 2019-20. This results in a net budgetary expenditure of $639.0 million as of December 31, 2019 compared to $537.5 million as of December 31, 2018.

Personnel expenditures have increased by $25.5 million (16%) and is mainly due to increase in salary funding received for the following initiatives: Enhance the Integrity of Canada’s Borders and Asylum System and Improving Immigration Client Service, and Helping Travellers Visit Canada.

Professional and Special Services expenditures have increased by $47.9 million (37%) which is mainly comprised of $23.6 million for the Interim Federal Health (IFH) program $6.2 million for Biometrics transaction costs, $3.6 million for the MOU with Global Affairs Canada to support delivery of passport services abroad.

Transfer payments have increased by $9.9 million (31%). The increase is mainly explained by an increase of $17.3 million in spending for the Canada-Quebec Accord, an increase in $3.8 million in payments to refugees to support the Resettlement Assistance Program and a decrease of $11.3 million in payments to local non-profit organizations to support the Settlement Program because of previous quarter advances.

Other Subsidies and Payments expenditures have increase by $7.3 million (121%) which is mainly due to changes in the outstanding Interdepartmental Settlement amounts.

Passport re-spendable revenues have decreased by $7.8 million (10%) compared to the same quarter in the previous year due largely to the expected volume reductions following the introduction of the 10 year passport in 2013.

Cumulative analysis

As reflected in the Table of Departmental Budgetary Expenditures by Standard Object, IRCC’s year-to-date gross operating expenditures were $1,946 million in 2018-19 compared to $2,555 million in 2019-20 for an increase of $609 million (31%).

Personnel expenditures have increased by $44.4 million (9%) which is mainly due to increases in salary funding received for the following initiatives: Enhance the Integrity of Canada’s Borders and Asylum System and Improving Immigration Client Service, and Helping Travellers Visit Canada. The increase is also due to additional personnel expenditures to keep pace with programs’ growth.

Professional and Special Services expenditures have increased by $97.2 million (32%) which is mainly comprised of $44.5 million for the Interim Federal Health (IFH) program, $30.4 million for Biometrics transaction costs and $6.2 million to Shared Services Canada for various IT projects.

Transfer payments have increased by $466.6 million (44%). The increase is mainly explained by an increase of $328.5 million in spending to support provinces and municipalities for the interim housing of Asylum seekers, an increase in $69.2 million in spending for the Canada-Quebec Accord, an increase of $50.0 million in payments and advances to support non-profit organizations under the settlement program and an increase of $18.6 million in payments to refugees and local non-profit organizations to support Resettlement Assistance Programs.

Passport re-spendable revenues have decreased by $65.8 million (23%) compared to the same period in the previous year due largely to the expected volume reductions following the introduction of the 10 year passport in 2013.

5. 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.

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.

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 very 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 in a consistent and coordinated fashion, including consultations with Justice and other partner departments.

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

As per the Prime Minister announcement made on January 22, 2020, Lori MacDonald, Associate Deputy Minister was appointed as Senior Associate Deputy Minister of Employment and Social Development and Chief Operating Officer for Service Canada effective January 27, 2020 and Caroline Xavier was appointed to the position of Associate Deputy Minister effective February 10, 2020.

Marian Campbell Jarvis was appointed to the position of Assistant Deputy Minister, Strategic and Program Policy effective December 16 2019.

There have been no other significant changes in relation to operations, personnel and programs during the quarter ended December 31, 2019.

Approval by Senior Officials

Approved by:

Ottawa, Canada
February 19, 2020