Quarterly Financial Report - For the quarter ended September 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 at September 30, 2023 increased by $928 thousand (1%) compared to the same quarter in 2022 23, from $103,310 thousand to $104,238 thousand.

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

The above increases are partly offset by the decrease of $1,981 thousand resulting from the sunsetting funding related to the Asylum System, $3,436 thousand in funding to support the delivery of justice for facilities related projects, $1,142 decrease in operating budget carry-forward, and $152 thousand decrease for other various smaller initiatives.

Significant Changes to Expenditures

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

Second-quarter Expenditures

As illustrated in Figure 1, second-quarter expenditures increased by $3,512 thousand (15%) compared to the same period of the previous fiscal year, from $23,762 thousand to $27,274 thousand. As a result, 26% of the yearly authorities available for use were expended during the second quarter of 2023 24, which represent an increase of 3% compared to the same quarter of 2022-23.

Significant variances¹ in expenditures are explained as follows:

Personnel

The year-to-date expenditures related to personnel increased by $2,905 thousand (8 %) compared to the same period of the previous fiscal year, from $34,769 thousand to $37,674 thousand. This increase is considered as important when compared to the same period last year, and was largely driven by increases in personnel. This is mainly due to new funding received to build capacity within the Digital Service Branch and the staff hired to support the additional judges appointed in newly created positions.

Professional and special services

The year-to-date expenditures related to professional and special services increased by $1,121 thousand (27%) compared to the same period of the previous fiscal year, from $4,199 thousand to $5,320 thousand. This increase was mainly due to timing variations related to the processing of invoices for translation and protection services between quarters.

Rentals

The year-to-date expenditures related to rentals increased by $610 thousand (25%) compared to the same period of the previous fiscal year, from $2,450 thousand to $3,060 thousand. This increase was mainly due to an increase in IT licences.

Acquisition of machinery and equipment

The year-to-date expenditures related to acquisition of machinery and equipment decreased by $379 thousand (-64%) compared to the same period of the previous fiscal year, from $596 thousand to $217 thousand. This decrease is due to less acquisition in IT equipment for the setting of e-courts.

Acquisition of land, building & works

The year-to-date expenditures related to acquisition of land building and works decreased by $77 thousand (-100%) compared to the same period of the previous fiscal year, from $77 thousand to $0. This decrease, considered immaterial in value, is due to the timing of leasehold improvements for which costs can vary from year to year depending on the stage of each project.

Remaining expenditures compared to the same period of the previous fiscal year are considered as immaterial variations (information, transportation and telecommunication, repair and maintenance, utilities, materials and supplies and other subsidies and payments).

¹ Significant variances are defined as variances by standard object that are greater than $250 thousand or 25%.

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’ operations will be very significant and resource intensive. A risk exists that CAS does not have the appropriate level of resources to meet this new legislative requirements. 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.

Significant changes in relation to operations, personnel and programs

There has been a significant change to the executive management team since July 1, 2023:

• David Boudreau was appointed to the position of Director General, Judicial and Registry services, effective September, 2023.

Approval by Senior Officials

Approved by:

(Ottawa, Canada)
(November 27, 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..