Quarterly Financial Report for the quarter ended September 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 2014-15 Main Estimates, the 2013-14 Quarterly Financial Report for the quarter ended September 30, 2013 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 2014-15 Main Estimates, the approved Operating Budget Carry Forward and minor adjustments related to statutory items. Similar to 2013-14, 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 $247 million (14%), when compared to the same quarter in 2013–14. This is comprised of an increase of $28 million (5%) in Vote 1 – Operating Expenditures, an increase of $27 million (3%) in Vote 5 – Grants and Contributions, a decrease of $302 million in Statutory Authorities mostly related to the integration of the Passport Canada Program and its revolving fund into CIC operations.

Vote 1 – Operating Expenditures

The Department's Vote 1 – Operating Expenditures net increase of $28 million or 5% is explained as follows:

• Increases of $94 million related to:
  • Operating budget Carry Forward ($25million)
  • 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 second quarter is significantly lower than 2013–14 by $302 million and is primarily explained as follows:

• Passport Canada program surplus ($254 million)
  • Passport Canada was integrated into CIC effective July 2, 2013. However, due to the timing of the integration, the passport financial component was not included in the 2013-14 second quarter.
  • The anticipated $254 million surplus in 2014-15 is the positive balance between revenues and expenses.  The 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 align with the demand for the return of fees.
• Decrease of $2 million in refunds of previous year revenues.
• Increase of $2 million related to employee benefit plan

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, CIC's net budgetary expenditures for the quarter ending September 30, 2014 were $303 million compared to $378 million as of September 30, 2013, representing a decrease of $75 million or 20% 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 which is now reflected in CIC authorities. 

Total gross budgetary expenditures have increased by $82 million or 22% from $378 million to $460 million. CIC, through the addition of Passport program and International Experience Canada (IEC), also added respectively $154 million and $3 million in re-spendable revenues, thereby decreasing net budgetary expenditures to $303 million. 

The integration of Passport Canada into CIC led to the changes in the expenditure pattern. The increase of $50 million or 208% in expenditures for Professional and Special Services is mainly due to payments related to the delivery of passport services performed by Service Canada on behalf of CIC, as well as expenditures related to Shared Services Canada. Integration of former passport staff accounts for approximately 75% of the increase in salary while the remaining amount is due to new CIC programs and the impact of collective agreements. Operating expenditures increased by $19 million due to Passport requirements such as freight and passport material. The decrease in Other Subsidies and Payments for this quarter is mostly due to reduced payments for  Fees Returned in Connection with Terminated application.

Cumulative analysis

As reflected in the Table of Departmental Budgetary Expenditures by Standard Object, CIC's year-to-date expenditures as of the second quarter were $971 million compared to $757 million as of September 30, 2013, representing 46% of the total budgetary authorities available for use for the year ending on March 31, 2015; a similar percentage (46%) was used at quarter-end last year.  The Department has therefore been consistent in its spending.

The majority of this increase is accounted for by the addition of passport program expenditures of $169 million to CIC and $2 million from IEC. Other significant changes include an increase of $16 million in grants and contributions (Vote 5) funding for the Quebec Accord grant and the increase for overall Pay in arrears of $13 million.

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.

With the exception of the passport program which operates on a cost recovery basis, 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. Over the last few years, there has been a significant increase in the number of complex and high-profile litigation.

Sound project management practices are in place to manage all of these changes and ensure timely delivery of CIC's programs and client services.

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 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 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. 

Date: November 14, 2014

Statement of Authorities

Departmental Budgetary Expenditures by Standard Object