Quarterly Financial Report for the quarter ended September 30, 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 2017–18 Main Estimates Part II, the 2017-18 Supplementary Estimates (A) and the 2016–17 Quarterly Financial Report for the quarter ended September 30, 2016.

A summary description of Immigration, Refugees and Citizenship Canada (IRCC) programs may be found in Part II of the Main Estimates and the 2017-18 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 and Supplementary Estimates (A) 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 includes the Main Estimates, items sought through the Supplementary Estimates (A), the approved Operating Budget Carry Forward from 2016-17 and 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 decreased by approximately $44 million (2%) when compared to the same quarter in 2016–17. This decrease is comprised of:

  • a decrease of $43 million (6%) in Vote 1 – Operating Expenditures
  • an increase of $10 million (53%) in Vote 5 – Capital Expenditures
  • a decrease of $40 million (3%) in Vote 10 – Grants and Contributions
  • an increase of $29 million (27%) in Statutory Authorities

The most significant changes to the authorities above relate to 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. The sunset of funding for the Labour Market Impact and the International Mobility Initiative under the Temporary Foreign Workers’ Program also contributed to the decrease in authorities.

These reductions were partly offset by 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.

Vote 1 – Operating Expenditures

The Department’s Vote 1 – Operating Expenditures decrease of $43 million (6%) is explained as follows:

  • Increase of $96 million attributable to:

    Additional Funding for ($88 million):

    • Higher admission levels for permanent residents as per the 2017 Annual Immigration Levels Plan ($75 million);
    • The continuation of Biometric Expansion screening in Canada’s immigration system ($5 million);
    • The removal of visa requirements for citizens of Mexico ($4 million);
    • The Electronic Travel Authorization expansion to lift visa requirements for certain low-risk travelers from key visa-required markets ($1 million);
    • Operating Budget Carry Forward ($1 million); and
    • Other minor adjustments ($2 million).

    Transfer increasing IRCC`s Vote 1 – Operating Expenditures ($8 million):

    • Impact of the one-time internal fund transfer in 2016-17 from Operating Expenditures to Capital Expenditures is not recurring ($6 million);
    • Transfer from the Canada Border Services Agency (CBSA) to realign roles and responsibilities between IRCC and CBSA in missions abroad ($1 million); and
    • 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.
  • Decrease of $139 million attributable to:

    Decrease in Funding for ($130 million):

    • The reduction of funding received for the Processing and Settlement of an additional 10,000 Government Assisted Syrian Refugees (GAR) ($38 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 ($23 million);
    • The sun-setting of funding for the Labour Market Impact Assessment (LMIA) and the International Mobility Program (IMP) under the Temporary Foreign Workers’ Program ($28 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 Ministerial Reviews and Intervention Pilot Program (IIP) received through the 2016-17 Supplementary Estimates (A) ($5 million) which was temporary in nature;
    • The budget reduction for professional services, travel and advertising ($4 million) as announced in Budget 2016;
    • The reduction of funding for Entry-Exit initiative ($1 million) and
    • The completion of Info-Sharing initiative ($1 million).

    Transfers decreasing IRCC`s Vote 1 – Operating Expenditures ($9 million):

    • Transferred to Canadian Heritage to reflect the transfer of the Multiculturalism Program ($5 million);
    • Internal transfer for Employee Benefit Plans ($2 million);
    • Transfer to Global Affairs Canada and Shared Services Canada for workload distribution across the overseas network ($2 million).

Vote 5 – Capital Expenditures

The Department’s Vote 5 – Capital Expenditures net increase of $10 million (53%) is explained as follows:

  • Increase of $16 million attributable to:

    Additional Funding ($16 million) for:

    • The continuation of Biometric Expansion screening in Canada’s immigration system ($10 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
    • Impact resulting from reprofiling of funds to 2017-18 for the Entry Exit Project ($2 million).
  • Decrease of $6 million attributable to:

    Transfer decreasing IRCC`s Vote 5 – Capital ($6 million):

    • Impact of amounts transferred internally in 2016-17 from Operating Expenditures to Capital Expenditures that was not required in 2017-18 ($6 million).

Vote 10 – Grants and Contributions (G&C)

The Department’s Vote 10 – Grants and Contributions net decrease of $40 million (3%) is explained as follows:

  • Increase of $94 million attributable to:

    Additional Funding ($94 million) for:

    • Higher admission levels for permanent residents as per the 2017 Annual Immigration Levels Plan via the 2017-18 Supplementary Estimates (A) ($61 million); and
    • The grant related to the Canada-Quebec Accord on immigration ($33 million).
  • Decrease of $134 million attributable to:

    Decreased Funding ($134 million) for:

    • The reduction of funding received for the settlement of an additional 10,000 Government Assisted Syrian Refugees (GAR) ($68 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 ($66 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.

Budgetary Statutory Authorities

The 2017–18 tatutory authority level in the second quarter is higher than 2016–17 by $29 million (27%) 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 ($33 million).
  • Decrease of $4 million attributable to:
    • 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 have increased by $61 million (12%) from $501 million in 2016-17 to $562 million in 2017-18. This increase is mainly related to two elements.

First, increases can be attributed to Personnel expenditures ($32 million or 24%) as a result of collective agreements having been finalized in the quarter. These resulted in the processing of a significant number of retroactive payments.

Secondly, increases in Interim Federal Health (IFH) program spending and in passport delivery costs incurred by Employment and Social Development Canada (ESDC) can explain the variance in Professional and Special Services expenditures ($17 million or 20%).

Net budgetary expenditures were at $401 million as of September 30, 2017 compared to $350 million as of the same period last year.

Cumulative analysis

As reflected in the Table of Departmental Budgetary Expenditures by Standard Object, IRCC’s year-to-date gross operating expenditures were $1,039 million in 2016-2017 compared to $1,162 million in 2017-2018 for an increase of $123 million (12%).

Total increase of $36 million (14%) in Personnel expenditures is mainly a result of collective agreements having been finalized in the second quarter, which resulted in processing of a significant number of retroactive payments. This increase is also attributable to this year higher admission levels 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 $22 million (15%) compared to the same period in the previous year and is mainly explained by an increase in Interim Federal Health (IFH) program spending and in passport delivery costs incurred by Employment and Social Development Canada (ESDC).

The $55 million cumulative increase in Transfer Payments (10%) compared to the same year-to-date usage at quarter end in 2016-17 is mostly attributable to early payments made to service provider organizations for Refugee Programs and earlier advances for expenditures in future quarters.

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 such as the impact of the civil war in Syria and the response of the Canadian government to the crisis 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

Dr. Harpreet S. Kochhar was appointed to the position of Assistant Deputy Minister of Operations Sector effective July 10, 2017.

Daniel Mills was appointed to the position of Acting Assistant Deputy Minister of the Corporate Services as of August 22, 2017.

David Manicom was appointed to the position of Assistant Deputy Minister of the Settlement and Integration Sector as of September 11, 2017.

There have been no other significant changes in relation to operations, personnel and programs during the quarter ended September 30, 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:

Marta Morgan
Deputy Minister

Daniel Mills, CPA, CMA
Assistant Deputy Minister
Chief Financial Officer

Ottawa, Canada
November 24, 2017, 2017

Statement of Authorities (in thousands of dollars)

  Fiscal Year 2017-18 Fiscal Year 2016-17
Total available for use for the year ending March 31, 2018 Footnote 1 Used during the quarter ended September 30, 2017 Year-to-date used at quarter-end Total available for use for the year ending March 31, 2017 Footnote 1 Used during the quarter ended September 30, 2017 Year-to-date used at quarter-end
Vote 1 - Operating Expenditures 647,112 182,873 311,378 690,460 138,900 261,517
Vote 5 - Capital Expenditures 27,876 2,716 4,452 18,181 3,457 5,001
Vote 10 - Grants and Contributions 1,231,051 259,733 616,757 1,270,833 256,861 561,622
Budgetary Statutory Authorities
Contributions to Employee Benefit Plans 65,780 14,673 29,345 69,192 16,194 32,388
Minister's Salary and Motor Car Allowance 84 21 21 84 28 35
FSW Fees Returned (Terminated Applications) 452 265 452 1,109 521 1,109
IIP and EN Fees Returned (Terminated Applications) 269 119 268 496 384 496
Spending of Amounts Equivalent to Proceeds from Disposal of Surplus Moveable Crown Assets 19 1 1 32 - -
Court Awards 62 62 62 13 - 13
Refunds of Previous Years Revenue 5,332 1,625 5,332 4,714 2,048 4,714
Passport Program Revolving Fund (151,038) (61,279) (131,976) (184,208) (68,854) (146,749)
Total Budgetary Authorities 1,826,999 400,809 836,092 1,870,906 349,539 720,146
Non-Budgetary AuthoritiesFootnote 2 63,816 280Footnote 3 (2,265) 67,700 (2,725) (4,255)
Total Authorities 1,890,815 401,089 833,827 1,938,606 346,814 715,891

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

  Fiscal Year 2017-18 Fiscal Year 2016-17
Planned expenditures for the year ending March 31, 2018 Expended during the quarter ended September 30, 2017 Year-to-date used at quarter-end Planned expenditures for the year ending March 31, 2017 Expended during the quarter ended September 30, 2017 Year-to-date used at quarter-end
Expenditures
Personnel 593,576 163,879 297,491 545,127 131,713 260,938
Transportation and Communications 58,601 12,960 25,217 75,785 12,407 23,169
Information 4,783 1,137 1,937 8,313 520 1,757
Professional and Special Services 450,160 101,404 173,672 505,161 84,602 151,347
Rentals 13,337 3,512 13,294 18,514 3,896 14,159
Repair and Maintenance 7,093 366 491 6,874 1,019 1,293
Utilities, Materials and Supplies 52,136 9,684 18,354 71,256 6,139 14,706
Acquisition of Machinery and Equipment 29,025 584 806 38,864 1,613 2,228
Transfer Payments 1,231,051 259,733 616,757 1,270,833 256,861 561,622
Other Subsidies and Payments 6,502 9,175 14,415 6,335 2,712 8,296
Total Gross Budgetary Expenditures 2,446,264 562,434 1,162,434 2,547,062 501,482 1,039,515
Less Revenues Netted against Expenditures
Passport Program 609,327 159,823 322,283 666,218 149,976 313,095
International Experience Canada 9,938 1,802 4,059 9,938 1,967 6,274
Total Net Budgetary Expenditures 1,826,999 400,809 836,092 1,870,906 349,539 720,146
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