Quarterly Financial Report - For the quarter ended June 30, 2023

Statement outlining results, risks and significant changes in operations, personnel and programs

Introduction

This quarterly report should be read in conjunction with the Main Estimates. It 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 has not been subject to an external audit or review.

The role of the Courts Administration Service (CAS) is to provide administrative services to four superior courts of law: the Federal Court of Appeal, the Federal Court, the Court Martial Appeal Court of Canada and the Tax Court of Canada. Further details on CAS’ programs can be found in the 2023-24 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 CAS’ spending authorities granted by Parliament and those used by the organization consistent with the 2023-24 Main Estimates. This quarterly report has been prepared using a prescribed financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before monies can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or legislation in the form of statutory spending authority for specific purposes.

CAS 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.

Highlights of fiscal quarter and fiscal year to date (YTD) results

Significant Changes to Authorities available for use for the fiscal year

As illustrated in the Statement of Authorities and the Departmental Budgetary Expenditures by Standard Object tables at the end of this report, yearly authorities available for use as of June 30, 2023 increased by $2,070 thousand (2%) compared to the same quarter in 2022‑23, from $99,307 thousand to $101,377 thousand.

The increase in authorities is mainly due to Budget 2022 funding announcement for the creation of new judicial positions $4,208 thousand. It also includes a reprofile of funds related to these positions from 2022-23 to 2023-24 of $3,196 thousand and a $235 thousand increase in funding for executive salary agreements.

The above increases are partly offset by the decrease of $1,981 thousand sunsetting funding for Asylum System, $1,800 thousand in funding on Toronto courtroom expansion projects, $1,636 thousand in funding to support the delivery of justice for facilities related projects, and $152 thousand decrease for other various smaller initiatives.

As a result of the Government expenditure management cycle and certain conditions imposed by Central Agencies, there are often significant fluctuations by quarter between authorities received and the timing of expenditures realized.

Significant Changes to Expenditures

Figure 1 presents current and prior fiscal year expenditures compared to annual authorities at the end of the first quarter. These results are discussed in the section below.

First-quarter Expenditures

As illustrated in Figure 1, first-quarter expenditures increased by $771 thousand (4%) compared to the same period of the previous fiscal year, from $21,384 thousand to $22,155 thousand. As a result, 22% of the yearly authorities available for use were expended during the first quarter of 2023‑24, which is consistent to the same quarter of 2022-23.

Significant variances ^{Footnote i} in expenditures are explained as follows:

Personnel

The year-to-date expenditures related to salaries increased by $894 thousand (5%) compared to the same period of the previous fiscal year, from $16,727 thousand to $17,621 thousand. This increase is mainly related to the increase in full time equivalents to support the new judicial positions.

Rentals

The year-to-date expenditures related to rentals decreased by $433 thousand (-25 %) compared to the same period of the previous fiscal year, from $1,701 thousand to $1,268 thousand. This decrease was mainly due to the timing of office buildings rental invoices between quarters in the current year.

Acquisition of machinery & equipment

The year-to-date expenditures related to acquisition of machinery & equipment decreased by $38 thousand (-55 %) compared to the same period of the previous fiscal year, from $69 thousand to $31 thousand. The decrease if mainly due to buying less application software.

Acquisition of land, building and works

The year-to-date expenditures related to acquisition of land building and works decreased by $19 thousand (-100%) compared to the same period of the previous fiscal year, from $19 thousand to $0. This decrease considered immaterial in value, was mainly driven by the timing of leasehold improvements projects.

Information

The year-to-date expenditures related to information increased by $57 thousand (29 %) compared to the same period of the previous fiscal year, from $197 thousand to $254 thousand. This is mainly due to an increase in printing services and electronic subscriptions and electronic publications.

Remaining expenditures by standard object with insignificant variances (transportation and communication, professional and special services, repair and maintenance, utilities, materials and supplies, and other subsidies and payments).

Immaterial variances compared to the same period of the previous fiscal year are the results of the timing of the delivery of goods and services.

Risks and Uncertainties

The majority of non-personnel expenses incurred by CAS are contracted costs for services supporting the judicial process, court hearings, court security and e-courts. They include translation services, protection services, informatics services, court reporters, transcripts, deputy judges, court ushers and court facility rentals. These costs are mostly driven by the volume, type and duration of hearings conducted in any given year, which are non-discretionary and can limit the organization's financial flexibility.

Amendments to the Official Languages Act will come into force in June 2024, requiring CAS to release in both official languages simultaneously decisions of precedential value and questions of law of general public interest or national importance. The impact on CAS’s operations will be very significant and resource intensive. A risk exists that CAS does not have the appropriate level of resources to meet the requirements of the new legislation. If not properly funded, it is anticipated there will be impacts on access to justice. Recognizing the importance of our official language obligations, CAS has prioritized securing appropriate funding to ensure Canadians are able to access court decisions in the official language of their choice, as part of our commitment to access to justice.

CAS continues to address the risks associated with the lack of financial flexibility by implementing internal mitigation strategies such as baselining budgets, establishment of multi-year budgets, reorganizing and realigning services, reallocating resources, and regular reassessment of priorities, exploring alternate funding models while seeking efficiencies wherever possible.

Through different reviews and consultations, a lack of digital maturity within the organization has been identified. The potential risk with that low level of maturity will be addressed by investing in CAS digital foundations. CAS has started by increasing internal capacity within the digital transformation team. Network infrastructure enhancements were also undertaken to both modernize digital services and prepare for the delivery of more modern digital solutions.

Significant changes in relation to operations, personnel and programs

There hasn’t been any significant change since April 1, 2023.

Approval by Senior Officials

Approved by:

(Ottawa, Canada)
(August 26, 2023)

¹ - Includes only Authorities available for use and granted by Parliament at quarter-end.

Groupings can change between quarters due to materiality of initiatives.

Amounts may not balance with other public documents due to rounding.