Quarterly Financial Report for the quarter ended June 30, 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 Main Estimates 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. 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

CIC’s 2014–15 authorities represent the total Main Estimates. CIC did not request authorities through Supplementary Estimates (A) in 2014–15.  This is similar to 2013–14 where CIC did not request authorities through Supplementary Estimates (A).

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 $270 million (19%), when compared to the same quarter in 2013–14. This is comprised of an increase of $3M (1%) in Vote 1 – Operating Expenditures, an increase of $27M (3%) in Vote 5 – Grants and Contributions, a decrease of $300M in Statutory Authorities mostly related to the integration of Passport Canada Program and its revolving fund to CIC operations.

Vote 1 – Operating Expenditures

The Department’s Vote 1 – Operating Expenditures net increase of $3 million or 1% 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 to support the electronic Travel Authorization initiative ($13 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 to support Official Languages Action Plan ($4 million)
    • Funding to support the Entry Exit initiative ($3 million)
    • Funding related to collective agreements signed prior to February 2014 ($2 million)
    • Funding to support the 2015 Pan American games ($1 million)
  • Decreases of $66 million associated with the following:
    • Sunsetting of one-time funds for the Temporary Biometrics Resident Project ($29 million)
    • Savings identified as part of Budget 2012 ($8 million)
    • Sunsetting of one-time funds for backlog processing and IT investment for funding previously approved under the Action Plan for Faster Immigration from Budget 2008 (C50) ($6 million)
    • Reduced costs for delivery of Temporary Resident Visa for Mexico ($6 million)
    • Canada-US immigration information sharing  ($5 million)
    • Transfer to Department of Foreign Affairs, Trade and Development to reverse previous International Experience Canada (IEC) funding ($4 million)
    • Transfer to Shared Services Canada for workplace technology device software ($3 million)
    • Transfer to Department of Foreign Affairs, Trade and Development 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)
    • Other transfers and minor adjustments ($2 million)

Vote 5 – Grants and Contributions (G&C)

The Department’s Vote 5 – Grants and Contributions net increase of $27 million or 3% is explained as follows:

  • Increases of $39 million associated with the following:
    • To reflect the additional funding to the Grant for the Canada-Quebec Accord on immigration ($36 million)
    • Funding for Global Assistance for Irregular Migrants ($3 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)
    • Savings identified as part of the Budget 2012 ($5 million)

Budgetary Statutory Authorities

The 2014–15 statutory authorities level in the first quarter is significantly lower than 2013–14 by $300 million and is primarily explained as follows:

  • Passport Canada program surplus ($254 million)
    • Passport Canada was integrated into CIC effective July 2, 2013, consequently, its component is not included in 2013-14 first quarter.
    • The anticipated $254 million surplus in 2014-15 is the positive balance between revenues and expenses.  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 $48 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 better align 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

As reflected in the Table of Departmental Budgetary Expenditures by Standard Object, CIC’s net budgetary expenditures for the quarter ending June 30, 2014 were $353 million compared to $379 million as of June 30, 2013, representing a decrease of $26 million or 7% of the total budgetary authorities available for use for the year ending on March 31, 2015.  This differs from the authorities used at quarter-end last year, and can be attributed primarily to the integration of the Passport program. 

Total gross budgetary expenditures have increased by $132 million or 35% from $379 million to $511 million.  This difference is for the most part explained by an increase of $47 million in Professional and Special Services, an increase of $24.5 million in Other Subsidies and Payments, an increase of $20 million in Personnel expenditures, and an increase of $16 million under Transfer Payments. CIC, through Passport program integration, also added $158 million in re-spendable revenues, thereby decreasing net budgetary expenditures to $353 million. 

The increase of $47 million or 397% in expenditures for Professional and Special Services is mainly due to the integration of Passport Canada Program into CIC. These expenditures are mainly related to the delivery of passport services performed by Service Canada on behalf of CIC, as well as expenditures related to Shared Services Canada.  As Passport Canada Program was integrated on July 2, 2013, CIC did not have any Passport related expenditures in the first 2013-14 quarter.  

The increase of $24.5 million or 396% in expenditures for Subsidies and Other Payments is mainly due to two items.  The first part of the increase relates to the implementation of the government- payment in arrears for 2014-15 resulting from the Passport Canada Program transition salary payments in the amounts of $12 million for CIC and $1.5 million for Passport Canada, respectively.  The balance is mainly due to the return of fees for certain terminated Federal Skilled Worker applications.

The increase of $20 million or 21% in Personnel expenditures is mainly attributable to the integration of Passport Canada Program into CIC thus resulting in higher personnel expenditures.  

The net increase of $16 million or 6%, in expenditures for Transfer Payments is mainly attributable to the increase in the Grant for the Canada-Quebec Accord.

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.

CIC is mainly funded through annual appropriations. As a result, its operations can be impacted by any changes approved by Parliament. This departmental Quarterly Financial Report reflects the results of the current fiscal period in relation to the Main Estimates for which full supply was released on June 20, 2014.

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.

Unforeseen events and natural disasters can also affect CIC indirectly when the Department is required, for humanitarian or legal reasons to facilitate travel of foreign nationals or Canadian victims by processing applications for visas or other necessary documents. 

Lack of a planned, timely and coordinated response between CIC and our national or international partners in any such event could have serious, negative impacts on our operating activities, program delivery and financial condition. In addition, implementation of response plans can take resources away from planned priorities and activities, thereby diminishing our capacity to deliver on commitments, service standards, processing targets and strategies.

As mitigation strategies, CIC continues to:

  • Improve security, emergency and business continuity plans and practices as they relate to CIC offices and employees; and
  • Review and develop flexible policies and procedures to ensure a timely and coordinated emergency response for unexpected world events that could place extra burden on CIC’s program delivery.

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 and impede achievement of our strategic outcomes. Legal considerations are incorporated into policy development and drafting of legislative and/or regulatory amendments in order to ensure approrpriate consideration of legal issues and risks. 

In recent years, CIC has seen a rise in the number of policy (including legislative and regulatory amendments) and  program changes, which has led to increasing litigation pressures. In fact, the Federal Court’s caseload is mostly related to immigration, refugee and citizenship matters (approximately 70% in 2013). In 2013-2014, the Department was involved in approximately 10,000 litigation cases in all levels and jurisdictions of courts. Over the last few years, there has been a dramatic increase in the number of complex or high-profile litigation cases being actively managed by CIC (4,110 in 2013-2014, more than double the 1,561 cases CIC actively managed in 2008-2009). 

CIC will continue to experience policy and programs changes in the future that could add pressure on CIC’s service delivery system and make the Department susceptible to legal actions.  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. 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 fiscal year 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 $26.5M. Savings have increased to $59M for fiscal year 2013–14, and will result in ongoing savings of $71.2M in 2014–15. 

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

Increase in savings of $13.9M:

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 $1.6M:

The savings related to the reform of the Interim Federal Health Program (IFHP) have been adjusted from $24.5M in 2013-14 to $22.9M 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. 

Approved by: 

(Original signed by Wilma Vreeswijk on on behalf of Anita Biguzs)

___________________
Anita Biguzs,
Deputy Minister
Ottawa, Canada

(Original signed by Tony Matson)

___________________
Tony Matson, MBA, CMA
Assistant Deputy Minister
Chief Financial Officer
Ottawa, Canada

August 15, 2014

___________________
Date

Statement of Authorities

(in thousands of dollars) Fiscal Year 2014-2015 Fiscal Year 2013-2014
Total available for use for the year ending March 31, 2015 Footnote 1 Used during the quarter ended
June 30, 2014
Year-to-date used at quarter-end Total available for use for the year ending March 31, 2014 Footnote 1 Used during the quarter ended June 30, 2013 Year-to-date used at quarter-end
Vote 1 - Operating Expenditures 556,389 126,925Footnote 2 126,925 552,535 104,193 104,193
Vote 5 - Grants and Contributions 976,457 270,451 270,451 949,946 254,860 254,860
Vote 9 - Debt Write-off 0 0 0 0 0 0
Budgetary Statutory Authorities
Contributions to Employee Benefit Plans 59,455 14,864 14,864 57,360 14,340 14,340
Minister's Salary and Motor Car Allowance 82 21 21 79 20 20
Fees Returned in Connection with a Terminated Application 47,250 12,083 12,083 95,500 3,181 3,181
Spending of Amounts Equivalent to Proceeds from Disposal of Surplus Moveable Crown Assets 31 0 0 31 1 1
Court Awards 22 22 22 5 5 5
Refunds of Previous Years Revenue 2,439 2,439 2,439 2,427 2,427 2,427
Passport Office Revolving Fund (254,192) Footnote 3(73,666) (73,666) 0 0 0
Total Budgetary Authorities 1,387,933 353,139 353,139 1,657,883 379,027 379,027
Non-Budgetary Authorities Footnote 4 70,754 Footnote 5 (2,385)  (2,385) 71,214 Footnote 5 (2,043) (2,043)
TOTAL AUTHORITIES 1,458,687 350,754 350,754 1,729,097 376,984 376,984

Departmental Budgetary Expenditures by Standard Object

(in thousands of dollars) Fiscal Year 2014-2015 Fiscal Year 2013-2014
Planned expenditures for the year ending March 31, 2015 Expended during the quarter ended June 30, 2014 Year-to-date used at quarter-end Planned expenditures for the year ending March 31, 2014 Expended during the quarter ended June 30, 2013 Year-to-date used at quarter-end
Expenditures
Personnel 630,773 119,228 119,228 387,092 98,860 98,860
Transportation and Communications 58,240 11,993 11,993 29,809 2,710 2,710
Information 23,094 1,048 1,048 9,763 420 420
Professional and Special Services 246,680 59,297 59,297 143,131 11,941 11,941
Rentals 31,163 7,930 7,930 13,288 3,011 3,011
Repair and Maintenance 9,010 121 121 7,505 63 63
Utilities, Materials and Supplies 19,575 9,457 9,457 8,847 322 322
Acquisition of Machinery and Equipment 26,671 895 895 8,426 639 639
Transfer Payments 976,457 270,453 270,453 949,946 254,860 254,860
Other Subsidies and Payments 49,949 30,734Footnote 6 30,734 100,076 6,201 6,201
TOTAL GROSS BUDGETARY EXPENDITURES 2,071,611 511,156 511,156 1,657,883 379,027 379,027
Less Revenues Netted against Expenditures
PPT Respendable Revenue 683,679 158,017 158,017 0 0 0
Revenue Credited to the Vote 0 0 0 0 0 0
TOTAL NET BUDGETARY EXPENDITURES 1,387,933 353,139 353,139 1,657,883 379,027 379,027
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