Quarterly Financial Report for the quarter ended September 30, 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 September 30, 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 16th instead of March 1st, 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 related to Irregular Migration and Managing the Canada-US Border, the funding from the 2017-18 carry forward and 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 through Supplementary Estimates (A) are included as these were tabled on October 24th, 2018 following the change outlined above. Note that for 2017-18, authorities through Supplementary Estimates (A) were requested during the first 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 $574 million (31%) when compared to the same quarter in 2017–18. This increase is comprised of:

  • an increase of $215 million (33%) in Vote 1 – Operating Expenditures
  • a decrease of $6 million (22%) in Vote 5 – Capital Expenditures
  • an increase of $125 million (10%) in Vote 10 – Grants and Contributions
  • an increase of $240 million (304%) in Statutory Authorities

The most significant changes to the authorities above relate to the increase in funding to support higher admission levels for permanent residents as per the 2017 Immigration Levels Plan and the 2018 Immigration Levels Plan, an increase in Interim Federal Health funding, an increase in Canada-Quebec Accord funding 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, which explains the year-over-year reduction in funding related to the Syrian Refugees crisis, the Department will now focus efforts on Settlement Services to Syrian Refugees;

Vote 1 – Operating Expenditures

The Department’s Vote 1 – Operating Expenditures Authorities increase of $215 million (33%) is explained as follows:

  • Increase of $242 million attributable to:

    Additional Funding for ($242 million):

    • The Interim Federal Health program increase in overall demand due to restoration to pre-2012 parameters and higher volumes ($90 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 ($40 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);
    • Compensation Adjustments related to the settlement of collective agreements ($13 million);
    • The Citizenship Revocation Process under the Citizenship Act ($6 million);
    • The strengthening of the process for claiming asylum in Canada in order to deter potential abuse by claimants ($5 million);
    • The removal of visa requirements for citizens of Mexico ($2 million);
    • The enhancement of the Temporary Foreign Worker program and International Mobility program ($2 million); and
    • Other Adjustments ($4 million).
  • Decrease of $27 million attributable to:

    Decrease in Funding for ($12 million):

    • The reduction of funding for the Government’s response to the Syrian Refugee crisis ($4 million);
    • The processing of Temporary Resident applications due to planned efficiencies ($3 million);
    • The management and protection of classified information in assessing applications under the Immigration and Refugee Protection Act (IRPA) ($2 million);
    • The operating budget Carry Forward ($2 million); and
    • The Electronic Travel Authorization Program as the initiative was completed in 2016-17 and has entered its operating phase ($1 million).

    Transfers decreasing IRCC’s Vote 1 – Operating Expenditures ($15 million):

    • Transfer to Global Affairs Canada and Shared Services Canada to support staff across the overseas network ($10 million); and
    • Internal Vote Transfer - Vote 1 to Vote 5 for Capital Projects ($5 million).

Vote 5 – Capital Expenditures

The Department’s Vote 5 – Capital Expenditures Authorities net decrease of $6 million (22%) is explained as follows:

  • Increase of $11 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

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

    • Internal Vote Transfer - Vote 1 to Vote 5 for Capital Projects ($5 million).
  • Decrease of $17 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 ($13 million);
    • The Entry-Exit initiative ($3 million); and
    • The admission levels for permanent residents as per the 2017 Annual Immigration Levels Plan ($1 million).

Vote 10 – Grants and Contributions (G&C)

The Department’s Vote 10 – Grants and Contributions Authorities net increase of $125 million (10%) is explained as follows:

  • Increase of $181 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);
    • Higher admission levels for permanent residents as per the 2018 Annual Immigration Levels Plan ($9 million); and
    • The Survivors of Daesh, including Yazidi women and girls ($5 million).
  • Decrease of $56 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 will now focus efforts on Settlement Services to Syrian Refugees;
    • The Global Assistance for Irregular Migrants (GAIM) program ($3 million).

Budgetary Statutory Authorities

The 2018–19 statutory authority level in the first quarter is higher than 2017–18 by $240 million (304%) and is primarily explained as follows:

  • Increase of $240 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 ($3 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 September 30th have increased by $67 million (12%) from $562 million in 2017-18 to $629 million in 2018-19. This increase mainly stems from changes related to Transportation and Communications, Utilities, Materials and Supplies, Acquisition of Machinery and Equipment, Transfer payments and Other Subsidies and Payments expenditures.

Through the Passport Program and International Experience Canada, IRCC generated $86.8 million and $1.3 million respectively in re-spendable revenues in the second quarter of 2018-19. This represents a net budgetary expenditure of $541.5 million as of September 30, 2018 compared to $400.8 million as of September 30, 2017. The reduction in revenue for Passport confirms lower Passport demand in the second half of its business cycle.

Transportation and Communications expenditures have decreased by $2.9 million (22%) and is mainly due to a decrease in Passport shipping 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.

Utilities, Materials and Supplies expenditures have decreased by $4.2 million (44%) and is mainly due to a decrease in Passport 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.

Acquisition of Machinery and Equipment expenditures have increased by $2.7 million (461%) and is mainly due to purchasing of electronic equipment as part of the Biometric Expansion deployment activities undertaken in 2018.

Transfer payments increased by $78.6 million (30%). The increase is mainly explained by an increase of $44.9 million in spending attributable to the higher admission levels from the 2017 and 2018 Levels Plan for permanent residents, an increase of $28 million in spending for the Canada-Quebec Accord grant program and an increase of $14 million in transfer payments to provinces and municipalities to address irregular migrations at the Canada-US border. This was partly offset by a decrease of $8.3 million in spending related to the Syria initiative as the vast majority of this work was completed in previous years.

Other Subsidies and Payments decreased by $9 million (98%) and is mainly due to the recognition of $2 million in salary overpayments and a decrease of $6.7 million in outstanding Interdepartmental Settlement amounts.

Passport re-spendable revenues have decreased by $73 million (46%) compared to the same quarter in the previous year due largely to volume reduction from the introduction of the 10 year passport as explained above.

Cumulative analysis

As reflected in the Table of Departmental Budgetary Expenditures by Standard Object, IRCC’s year-to-date gross operating expenditures were $1,162 million in 2017-2018 compared to $1,333 million in 2018-2019 for an increase of $171 million (15%).

Transportation and Communications expenditures have decreased by $4.3 million (17%) and is mainly due to a decrease in Passport shipping 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.

Utilities, Materials and Supplies expenditures have decreased by $6.5 million (35%) and is mainly due to a decrease in Passport 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.

Acquisition of Machinery and Equipment expenditures have increased by $3.4 million (421%) and is mainly due to an increase of $2.2 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 $143.7 million (23%) and is mainly explained by an increase of $84 million in spending for the Canada-Quebec Accord grant program, an increase of $63.7 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 irregular migrations at the Canada-US border. 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.

Other Subsidies and Payments increased by $7.2 million (50%) and is mainly due to a recognition of $2.2 million in salary overpayments and an increase of $10.3 million in outstanding Interdepartmental Settlement amounts, which had not been cleared at the end of the quarter.

Passport re-spendable revenues have decreased by $114 million (35%) compared to the same quarter in the previous year and it is 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 increase in Temporary Resident applications and the management of the influx of the irregular migrants at the Canada-US border 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 experimentation 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 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

Lori MacDonald was appointed to the position of Associate Deputy Minister of Immigration, Refugees and Citizenship effective August 29, 2018

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

Marta Morgan
Deputy Minister

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

Ottawa, Canada
November 19, 2018

Statement of Authorities (in thousands of dollars)

  Fiscal Year 2018-19 Fiscal Year 2017-18
Total available for use for the year ending Footnote 1 Used during the quarter ended Year-to-date used at quarter-end Total available for use for the year ending Footnote 1 Used during the quarter ended Year-to-date used at quarter-end
Vote 1 - Operating Expenditures 861,711 196,126 366,555 647,112 182,873 311,378
Vote 5 - Capital Expenditures 21,816 5,339 8,889 27,876 2,716 4,452
Vote 10 - Grants and Contributions 1,356,436 338,285 760,409 1,231,051 259,733 616,757
Budgetary Statutory Authorities
Contributions to Employee Benefit Plans 70,647 17,214 34,428 65,780 14,673 29,345
Minister's Salary and Motor Car Allowance 86 21 43 84 21 21
FSW Fees Returned (Terminated Applications) 364 150 364 452 265 452
IIP and EN Fees Returned (Terminated Applications) 151 73 151 269 119 268
Spending of Amounts Equivalent to Proceeds from Disposal of Surplus Moveable Crown Assets 25 1 2 19 1 1
Court Awards 5 5 5 62 62 62
Refunds of Previous Years Revenue 4,090 1,228 4,090 5,332 1,625 5,332
Passport Program Revolving Fund 85,607 (16,979) (54,358) (151,038) (61,279) (131,976)
Total Budgetary Authorities 2,400,938 541,463 1,120,578 1,826,999 400,809 836,092
Non-Budgetary AuthoritiesFootnote 2 68,017 5,132Footnote 3 2,089 63,816 280 (2,265)
Total Authorities 2,468,955 546,595 1,122,667 1,890,815 401,089 833,827

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

  Fiscal Year 2018-19 Fiscal Year 2017-18
Planned expenditures for the year ending Expended during the quarter ended Year-to-date used at quarter-end Planned expenditures for the year ending Expended during the quarter ended Year-to-date used at quarter-end
Expenditures
Personnel 633,280 167,029 317,970 593,576 163,879 297,491
Transportation and Communications 52,613 10,096 20,911 58,601 12,960 25,217
Information 11,659 1,104 1,610 4,783 1,137 1,937
Professional and Special Services 602,467 99,136 179,422 450,160 101,404 173,672
Rentals 31,781 3,513 12,876 13,337 3,512 13,294
Repair and Maintenance 10,491 1,483 2,158 7,093 366 491
Utilities, Materials and Supplies 32,126 5,457 11,854 52,136 9,684 18,354
Acquisition of Machinery and Equipment 37,665 3,274 4,202 29,025 584 806
Transfer Payments 1,356,436 338,285 760,409 1,231,051 259,733 616,757
Other Subsidies and Payments 27,217 222 21,645 6,502 9,175 14,415
Total Gross Budgetary Expenditures 2,795,735 629,599 1,333,057 2,446,264 562,434 1,162,434
Less Revenues Netted against Expenditures
Passport Program 384,859 86,833 208,198 609,327 159,823 322,283
International Experience Canada 9,938 1,303 4,281 9,938 1,802 4,059
Total Net Budgetary Expenditures 2,400,938 541,463 1,120,578 1,826,999 400,809 836,092
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