Financial Statement Discussion and Analysis
2017-18

INTRODUCTION

This Financial Statement Discussion and Analysis (FSD&A) should be read in conjunction with the Financial Statements of the Courts Administration Service (CAS) for the fiscal year ended March 31, 2018. These Financial Statements have been prepared using the Government's accounting policies, which are based on Canadian public sector accounting standards. The FSD&A has been prepared following the Public Sector Statement of Recommended Practice (SORP-1).

Responsibility for the preparation of the FSD&A rests with the management of CAS. The purpose of the FSD&A is to enhance the user’s understanding of the organization’s financial position and results of operations while demonstrating its accountability for its resources. Additional information on the organization’s performance is available in the Departmental Results Report.

Following this introduction, the FSD&A consists of three sections:

Please note that all financial information presented herein is denominated in Canadian dollars, unless otherwise indicated.

Special note regarding forward-looking statements

The words “estimate”, “will”, “intend”, “should”, “anticipate”, and similar expressions are intended to identify forward-looking statements that reflect assumptions and expectations of the organization, based on its experience and perceptions of trends and current conditions. Although CAS believes the expectations reflected in such forward-looking statements are reasonable, they may prove to be inaccurate; consequently actual results could differ materially from expectations set out in this FSD&A. In particular, the risk factors described in this report could cause actual results or events to differ materially from those contemplated in forward-looking statements.

OVERVIEW

 

CAS was established in 2003 by the Courts Administration Service Act, S.C. 2002, c. 8 . CAS’ role is to provide effective and efficient judicial, registry and internal services to the Federal Court of Appeal, the Federal Court, the Court Martial Appeal Court of Canada and the Tax Court of Canada (“the Courts”). The Chief Administrator of CAS serves as Deputy Head.

CAS was created to ensure the effective and efficient provision of administrative support to the four superior courts of record; to enhance judicial independence by placing administrative services at arm’s length from the Government of Canada and affirming the roles of the chief justices and judges in the management of the Courts; and to enhance accountability for the use of public money in support of court administration while safeguarding the independence of the judiciary. This in turn ensures timely and fair access to the judicial system, which is essential to constitutional governance.

CAS’ budget is allocated through authorities approved by Parliament. CAS has one voted authority for program expenditures and statutory authorities for contributions to employee benefit plans, spending of proceeds from the disposal of surplus Crown assets, and refunds of amounts credited to revenues in previous years.

Authorities provided to CAS do not parallel financial reporting according to generally accepted accounting principles since since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Financial Position and in the Statement of Operations and Departmental Net Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 of the Financial Statements provides a reconciliation between the bases of reporting.

The Financial Statements of CAS are not audited.

HIGHLIGHTS

Parliamentary Authorities

The parliamentary authorities available for use by CAS include funding received through the Main Estimates, Supplementary Estimates, Transfers, Adjustments and Warrants. These authorities increased by $10,021 thousand, from $75,655 thousand in 2016-17 to $85,676 thousand in 2017-18. This variance is the result of several factors, as outlined below.

Parliamentary Authorities

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Parliamentary authorities

In 2017-18, salaries and employee benefit plan authorities were $53,514 thousand. Operating authorities were $32,162 thousand. Total authorities were $85,676 thousand.

In 2016-17, salaries and employee benefit plan authorities were $48,507 thousand. Operating authorities were $27,148 thousand. Total authorities were $75,655 thousand.

In 2015-16, salaries and employee benefit plan authorities were $49,172 thousand. Operating authorities were $26,295 thousand. Total authorities were $75,467 thousand.

This increase in authorities is partly due to $3,475 thousand in one-time funding received for program integrity to ensure the continued integrity of Canada’s federal Courts and of $1,000 thousand in funding received in Budget 2017 to support the translation of decisions of the federal Courts. Furthermore, there were increases compared to prior year for compensation for collective bargaining of $1,847 thousand, for operating budget carry-forward of $1,602 thousand, for the relocation of the Québec City federal Courts facility of $731 thousand and for the information technology (IT) infrastructure upgrades to safeguard the efficiency of the federal court system of $195 thousand.

In addition, there was $811 thousand transferred from Treasury Board for paylist requirements.  This transfer includes severance pay and termination benefits, vacation credits payable upon termination of employment and parental benefits. There was also an increase of $204 thousand in contributions to the employee benefit plans.

Various other minor changes resulted in a $156 thousand net increase in authorities.

Financial Highlights

Statement of Financial Position

The Departmental Net Financial Position is the amount remaining when total liabilities are deducted from total assets. CAS’ Departmental Net Financial Position was $13,519 thousand as at March 31, 2018 ($7,650 thousand as at March 31, 2017).

Liabilities: CAS’ total liabilities were $27,287 thousand as at March 31, 2018 ($17,655 thousand as at March 31, 2017). The $9,632 thousand variance is due to an increase in the accounts payable and accrued liabilities, an increase in deposit accounts and a slight increase in vacation pay and compensatory leave and employee future benefits.

Assets: CAS’ assets are presented as financial assets (amount due from the Consolidated Revenue Fund (CRF) account, and accounts receivable and advances) and non-financial assets (prepaid expenses and tangible capital assets).

Financial assets: The total net financial assets amounted to $21,933 thousand ($12,457 thousand as at March 31, 2017). The increase of $9,476 thousand is explained as follows:

  • The year-end balance of the gross financial assets was $22,984 thousand ($13,597 thousand as at March 31, 2017). The variance of $9,387 thousand is due to an increase in the amount due from the CRF and in accounts receivable and advances.
  • Accounts receivable from non-respendable revenues are not available to discharge liabilities. The corresponding amount of $1,051 thousand is therefore presented under financial assets held on behalf of Government as a reduction to the gross financial assets.

Non-financial assets: The year-end balance was $18,873 thousand ($12,848 thousand as at March 31, 2017). The increase of $6,025 thousand is due to an increase of $5,643 thousand in tangible capital assets and a $382 thousand increase in prepaid expenses. Tangible capital asset acquisitions of $7,810 thousand were made that were offset by amortization of $2,106 thousand and net write-offs of $61 thousand. Leasehold improvements account for 48%, computer hardware and software account for 26%, machinery and equipment account for 18%, and furniture and fixtures account for 7% of CAS’ tangible capital assets, respectively.Together, these categories account for 99% of CAS’ tangible capital assets. The asset under construction – computer software of $268 thousand and asset under construction – other of $983 thousand were reallocated to the corresponding asset category in the calculation of the above percentages.

Statement of Operations and Departmental Net Financial Position

CAS’ net cost of operations before government funding and transfers was $108,723 thousand in 2017-18, an increase of $7,630 thousand (7.5%) compared to $101,093 thousand in 2016-17. These figures in total expenses incurred and revenues earned on behalf of government. The increase in total expenses is mainly due to increases in salaries and employee benefits, as well as professional and special services and machinery and equipment, which are explained further in the next section.

Expenses: CAS’ total expenses were $108,737 thousand in 2017-18 ($101,101 thousand in 2016-17).

Salary and employee benefits: Salary and employee benefit expenses amounted to $59,338 thousand ($54,401 thousand in 2016-17). The $4,937 thousand (9.1%) variance is principally driven by the signature of the new collective agreements which resulted in retroactive pay as well as increases in salaries, partly offset by a decrease of 24 full-time equivalents, resulting in increases of $3,707 thousand in Salaries and Wages, $619 thousand in the provision for severance benefits, $406 thousand in employer contribution to the health and dental insurance plans (related party transaction) and $205 thousand in employer contributions to employee benefit plans. More than half of CAS’ total expenses consist of salaries and employee benefits.

Operating: Operating expenses totalled $49,399 thousand ($46,700 thousand in 2016-17). The $2,699 thousand (5.8%) variance is mainly attributable to increases of $1,424 thousand in machinery and equipment, $1,188 thousand in professional and special services, $358 thousand in rentals, $273 thousand in the amortization of tangible capital assets, $148 thousand in information, $77 thousand in transportation and telecommunications, $26 thousand in materials and supplies and $99 thousand in other miscellaneous operating expenses. These increases were partly offset by a decrease of $476 in accommodation, and $418 thousand in repairs and maintenance. The above variances are explained in the Financial Analysis section.

Expenses 

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Expenses

In 2017-18, salaries and employee benefit plan expenses were $59,338 thousand. Operating expenses were $49,399 thousand. Total expenses were $108,737 thousand.

In 2016-17, salaries and employee benefit plan expenses were $54,401 thousand. Operating expenses were $46,700 thousand. Total expenses were $101,101 thousand.

Revenues: The majority of CAS’ revenues are earned on behalf of Government. Such revenues are non-respendable, meaning that they cannot be used by CAS, and are deposited directly into the CRF. CAS earns a small amount of respendable revenue from the sale of Crown assets. CAS’ gross revenues were $2,560 thousand ($3,071 thousand in 2016-17) and net revenues were $14 thousand ($8 thousand in 2016-17).

Gross Revenues

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Gross Revenues

In 2017-18, recovery of administration costs – Employment Insurance was $1,017 thousand. Filing fees revenues were $1,440 thousand. Fines revenues were $2 thousand. Other revenues were $101 thousand. Total gross revenues were $2,560 thousand.

In 2016-17, recovery of administration costs – Employment Insurance was $1,098 thousand. Filing fees revenues were $1,604 thousand. Fines revenues were $265 thousand. Other revenues were $104 thousand. Total gross revenues were $3,071 thousand.

In 2015-16, recovery of administration costs – Employment Insurance was $1,097 thousand. Filing fees revenues were $1,722 thousand. Fines revenues were $51 thousand. Other revenues were $109 thousand. Total gross revenues were $2,979 thousand.

DISCUSSION AND ANALYSIS

Risks and Uncertainties

Funding

The majority of non-personnel expenses incurred by CAS are contracted costs for services supporting the judicial process and court hearings. They include translation, court reporters, transcripts, and security services, and they are mostly driven by the number, type and duration of hearings conducted in any given year. These are non-discretionary and limit the organization's financial flexibility.

CAS has been facing a program integrity situation for many years, which has resulted from various ongoing pressures and has impacted CAS’ ability to deliver its core mandate while meeting legislative and policy requirements. Furthermore, external drivers that influence costs, such as inflation and government cost-saving measures, have represented additional challenges. Although it is an important priority for the courts and their users, CAS has been unable to procure and implement a modern court and registry management system to replace unreliable legacy systems and support the transition to fully electronic services. CAS also has a limited budget to respond to translation requirements of the courts. As explained in the Risk Management mitigation strategies, CAS has received funding to address many of the areas of concerns; securing additional funding for future years is still a priority.

Risk Management

To address the risks arising from its program integrity issues, CAS has implemented various strategies, including reorganizing and realigning services, reallocating resources, establishing priorities and regularly reassessing them, as well as seeking efficiencies wherever possible. Having assessed a number of different financial models, CAS has been able to secure additional funding through the budgetary process to address many of the pressures.

As a result of these efforts, Budget 2015 provided funding of $19 million over five years, as well as ongoing funding, specifically to enhance CAS’ physical and IT security. Budget 2016 then provided $7.9 million over five years, as well as ongoing funding, to invest in IT infrastructure upgrades to safeguard the efficiency of the federal court system.  Budget 2016 provided up to $2.6 million over two years to relocate the Québec City Office, thereby ensuring a continued federal Courts presence in that location.

Budget 2017 provided $2 million over two years to enhance the federal Courts’ ability to make decisions available in both English and French. CAS also received one-time off-cycle funding of $4 million in 2017-18 to address urgent program integrity issues to help ensure the continued integrity of Canada’s federal Courts.

Budget 2018 provided funding of $41.9 million over 5 years, starting 2018-19, as well as ongoing funding, to ensure that Canada’s federal Courts, including the Tax Court of Canada, receive adequate support to address a growing and increasingly complex caseload. This investment includes support for new front-line registry and judicial staff.

Outstanding pressures to address include the courts and registry management system and translation of court decisions.

Financial Analysis

The following analysis explains the main items appearing on the financial statements, as well as significant variances and financial trends.

Liabilities

Accounts payable and accrued liabilities: CAS’ accounts payable and accrued liabilities totalled totalled $14,083 thousand as at March 31, 2018 ($7,672 thousand as at March 31, 2017). The variance of $6,411 thousand is due to increases of $4,329 thousand in accounts payable to external parties and $1,953 thousand in accounts payable to other government departments and agencies, primarily due to timing of equipment and service delivery, as well as $129 thousand in accrued liabilities related to salaries and wages, due to timing of the last pay period of the year.

Accounts payable and accrued liabilities 

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Accounts payable and accrued liabilities

In 2017-18, accounts payable to external parties were $7,213 thousand. Accrued liabilities were $3,667 thousand. Accounts payable to other government departments and agencies were $3,203 thousand.

In 2016-17, accounts payable to external parties were $2,884 thousand. Accrued liabilities were $3,538 thousand. Accounts payable to other government departments and agencies were $1,250 thousand.

Vacation pay and compensatory leave: CAS’ vacation pay and compensatory leave year-end balance was $2,694 thousand as at March 31, 2018 ($2,241 thousand as at March 31, 2017). The increase of $453 thousand is mainly due to an increase in vacation pay.

Employee future benefits: CAS’ employee future benefits balance was $2,164 thousand as at March 31, 2018 ($2,129 thousand as at March 31, 2017). This allowance for severance benefits is payable to employees. Beginning in 2011-12, significant changes were made to the severance pay program, whereby benefits for voluntary departures ceased for employee groups. Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service. The severance percentage factor used in calculating the liability is provided by the Treasury Board Secretariat, which is derived from the actuarially determined liability for severance benefits for the Government as a whole that takes into account this curtailment and plan settlements to date. The rate decreased in 2017-18 by 0.2%. The $35 thousand increase in the employee future benefits liability is the net result of the increase in salaries following the signature of the new collective agreements, partly offset by a decrease of the rate and of the number of employees included in the severance pay calculation.

Deposit accounts: CAS’ deposit accounts amounted to $8,346 thousand as at March 31, 2018 ($5,613 thousand as at March 31, 2017). CAS maintains two Specified Purpose Accounts (SPAs), one for deposits by litigants appearing before the Federal Court of Appeal or the Federal Court, and the other for those appearing before the Tax Court of Canada. These two accounts were established pursuant to Section 21.1 of the Financial Administration Act under Order in Council P.C. 1970 4/2 and Order in Council P.C. 1970-300, respectively. Pursuant to an order of the Court, amounts are held in trust and eventually released with accrued interest. Because payments into or out of the accounts are determined by the Courts, depending on the particular case, the balance is unpredictable and may vary significantly from year to year.

Deposit accounts

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Vacation pay and compensatory leave, Employee future benefits, and Deposit accounts

In 2017-18, vacation pay and compensatory leave was $2,694 thousand. Employee future benefits were $2,164 thousand. Deposit accounts were $8,346 thousand.

In 2016-17, vacation pay and compensatory leave was $2,241 thousand. Employee future benefits were $2,129 thousand. Deposit accounts were $5,613 thousand.

Assets

Financial Assets

Due from the Consolidated Revenue Fund: CAS’ due from the CRF year-end balance was $19,157 thousand as at March 31, 2018 ($11,123 thousand as at March 31, 2017). The increase of $8,034 thousand is mainly due to a $2,733 thousand increase in the deposit accounts, a $2,135 thousand increase in accounts payable, a $2,029 thousand increase in accrued liabilities, a $1,953 thousand increase in accounts payable to other government departments and a $6 thousand increase in advances, offset by a $822 thousand decrease in accounts receivable from other government departments. Variances are primarily due to the timing of funding received and goods delivered, as well as issues with the Phoenix pay system. This account represents the net amount of cash that CAS is entitled to withdraw from the CRF in order to discharge its liabilities without generating any additional charges against its authorities in the year of the withdrawal. This includes expenses incurred but not yet paid and amounts received by CAS that can be paid out in future years, offset by accounts receivable from other government departments and agencies.

Accounts receivable and advances: CAS’accounts receivable and advances balance was
$3,827 thousand as at March 31, 2018 ($2,474 thousand as at March 31, 2017). The key components of this balance are accounts receivable from other government departments and agencies, and accounts receivable from external parties, offset by the allowance for doubtful accounts.

  • Accounts receivable from other government departments and agencies: The year-end balance was $3,501 thousand ($2,174 thousand as at March 31, 2017). The increase of $1,327 thousand is largely due to a $1,319 thousand increase in receivables related to salaries and a $506 thousand increase in recoverable amounts related to taxes (GST/HST/QST), partly offset by a $492 thousand decrease in the amount allocated to Employee Benefit Plan and other minor variances resulted in a net decrease of $6 thousand.
  • Accounts receivable from external parties: The year-end balance was $317 thousand ($287 thousand as at March 31, 2017). It includes photocopy fees charged to litigants and members of the general public, as well as employees’ salaries overpayments and other adjustments. The increase of $30 thousand is due to an increase of $43 thousand in accounts receivable for refunds of program expenses, offset by a decrease of $13 thousand in accounts receivable related to other revenue.
  • Employee Advances: The year-end balance was $15 thousand ($22 thousand as at March 31, 2017), and is mostly attributable to the situation with the Phoenix pay system.
  • Allowance for doubtful accounts: The year-end balance was $6 thousand ($9 thousand as at March 31, 2017). Over the past several years, CAS has been diligently reviewing and pursing outstanding accounts receivable.

Financial assets held on behalf of Government: Accounts receivable from non-respendable revenues are presented under financial assets held on behalf of Government in reduction of the gross financial assets. The year-end balance was $1,051 thousand ($1,140 thousand as at March 31, 2017). The $89 thousand decrease reflects a $76 thousand decrease in the accounts receivable from other government departments and other minor variances resulting in a net decrease of $13 thousand.

Departmental Net Debt

The Departmental Net Debt (total liabilities less total net financial assets) is an indicator that provides a measure of the future authorities required to pay for past transactions and events. The year-end balance was $5,354 thousand ($5,198 thousand as at March 31, 2017).

Non-financial Assets

Tangible capital assets:CAS’ net book value of tangible capital assets was $18,105 thousand ($12,462 thousand as at March 31, 2017). The variance of $5,643 thousand represents acquisitions of $7,810 thousand, offset by amortization of $2,106 thousand and a write-off of $61 thousand.

CAS’ capital asset acquisitions of $7,810 thousand ($3,956 thousand in 2016-17) were largely driven by projects related to physical and IT security as well as IT infrastructure. Tangible capital assets acquisitions were as follows:

  • Leasehold improvements ($64 thousand) and under construction ($3,066 thousand) totalled $3,130 thousand, and are mainly related to the physical security enhancement projects and the Quebec relocation;
  • IT hardware upgrades totalled $2,101 thousand, and for the most part support the implementation of video conferencing, servers and other equipment as part of funding received for IT infrastructure upgrades to safeguard the efficiency of the federal court system;
  • Machinery and equipment purchases ($308 thousand) including those under construction ($1,314 thousand) totalled $1,622 thousand, and comprise security equipment in support of the physical security enhancement projects;
  • Purchases of furniture and fixtures ($197 thousand) and those for projects under construction ($216 thousand) totalled $413 thousand, and are mostly for the Quebec relocation and for the physical security enhancement projects;
  • Software upgrades and improvements ($257 thousand) including assets under development ($137 thousand) totalled $394 thousand, and are mostly to support the implementation and configuration of purchased software; and
  • Vehicle purchases totalled $150 thousand.

Tangible capital assets

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Tangible capital asset acquisitions

In 2017-18, furniture and fixture acquisitions were $197 thousand. Vehicle acquisitions were $150 thousand. Machinery & equipment acquisitions were $308 thousand. Computer hardware acquisitions were $2,101 thousand. Computer software acquisitions were $257 thousand. Leasehold improvements acquisitions were $64 thousand. Assets under construction-computer software acquisitions were $137 thousand. Assets under construction-other acquisitions were $4,596 thousand.

In 2016-17, furniture and fixture acquisitions were $672 thousand. Vehicle acquisitions were $0 thousand. Machinery & equipment acquisitions were $474 thousand. Computer hardware acquisitions were $221 thousand. Computer software acquisitions were $97 thousand. Leasehold improvements acquisitions were $133 thousand. Assets under construction-computer software acquisitions were $765 thousand. Assets under construction-other acquisitions were $1,594 thousand.

*Note: The category “Assets under construction – Other” includes leasehold improvements, as well as security-related machinery and equipment, and furniture and fixtures that have not been put into service.

Expenses

CAS’ total expenses were $108,737 thousand in 2017-18 ($101,101 thousand in 2016-17). The increase of $7,636 thousand (7.6%) is comprised of increases of $4,937 thousand in salaries and employee benefits, $1,424 thousand in machinery and equipment, $1,188 thousand in professional and special services, $358 thousand in rentals, $273 thousand in the amortization of tangible capital assets, $148 thousand in information, $77 thousand in transportation and telecommunications, $26 thousand in materials and supplies and $99 thousand in other miscellaneous operating expenses. These increases were partly offset by a decrease of $476 in accommodation, and $418 thousand in repairs and maintenance. The variances are explained below.

The largest categories of expense are: salaries and employee benefits (55% of total expenses in 2017-18, 54% in 2016-17); and accommodations (25% of total expenses in 2017-18, 27% in 2016-17). These two categories make up 80% of total expenses in fiscal year 2017-18 and 81% in 2016-17.

Expenses

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Expenses

In 2017-18, salaries and employee benefits expenses were $59,338 thousand. Accommodation expenses were $27,295 thousand. Professional and special services expenses were $9,361 thousand. Transportation and telecommunications expenses were $2,796 thousand. Materials and supplies expenses were $2,282 thousand. Rentals expenses were $2,348 thousand. Amortization of tangible capital assets was $2,106 thousand. Machinery and equipment expenses were $1,989 thousand. Repair and maintenance expenses were $407 thousand. Information expenses were $561 thousand. Miscellaneous expenses were $254 thousand.

In 2016-17, salaries and employee benefits expenses were $54,401 thousand. Accommodation expenses were $27,771 thousand. Professional and special services expenses were $8,173 thousand. Transportation and telecommunications expenses were $2,719 thousand. Materials and supplies expenses were $2,256 thousand. Rentals expenses were $1,990 thousand. Amortization of tangible capital assets was $1,833 thousand. Machinery and equipment expenses were $565 thousand. Repair and maintenance expenses were $825 thousand. Information expenses were $413 thousand. Miscellaneous expenses were $155 thousand.

Salaries and employee benefits: Salaries and employee benefits expense was $59,338 thousand in 2017-18 ($54,401 thousand in 2016-17). Salaries and employee benefits expense includes such costs as gross salaries and wages, overtime pay, retroactive salary adjustments, employee entitlements and allowances, severance pay, and pension and medical benefits. The $4,937 thousand (9.1%) variance is due to an increase of $3,707 thousand in salaries and wages principally driven by the signature of the new collective agreements which resulted in retroactive pay as well as increases in salaries, $619 thousand in the provision for severance benefits, $406 thousand in employer contribution to the health and dental insurance plans (related party transaction) and $205 thousand in employer contributions to employee benefit plans.

Accommodations: Accommodations expense was $27,295 thousand in 2017-18 ($27,771 thousand in 2016-17). This amount represents the value of accommodation services, including rent, provided without charge by Public Services and Procurement Canada, a common service organization providing accommodation services to the government.

Professional and special services: Professional and special services expense $9,361 thousand in 2017-18 ($8,173 thousand in 2016-17). Professional and special services include translation services, protection services, court reporter and transcription services, and IT services. The increase of $1,188 thousand (14.5%) is largely driven by an increase of $796 thousand in protection services, $695 in translation and interpretation services, $251 thousand in informatics services, and $43 thousand in temporary help services. These increases were partly offset by decreases of $521 thousand in court reporters and transcription services and $67 thousand in various services such as management consulting, legal services, audit services and other services. Other smaller variances resulted in a net decrease of $9 thousand.

Transportation and telecommunications: Transportation and telecommunications expense was $2,796 thousand in 2017-18 ($2,719 thousand in 2016-17). The increase of $77 thousand (2.8 %) is mainly driven by a $170 thousand increase in postage and courier for court documents and $10 thousand in relocation and travel. These increases were partially offset by a $103 thousand decrease in telecommunications services.

Materials and supplies: Materials and supplies expense was $2,282 thousand in 2017-18 ($2,256 thousand in 2016-17). Materials and supplies expense includes legal books, publications and subscriptions (except electronic subscriptions), as well as stationery and supplies. The increase of $26 thousand (1.2 %) is mainly due to an increase of $35 thousand in books, publications and subscriptions for the judicial library, and $17 thousand in miscellaneous goods and products. These increases were partly offset by a decrease of $31 thousand in chemical products, mostly toner for the multi-function photocopiers. Other smaller variances resulted in a net increase of $5 thousand.

Rentals: Rentals expense was $2,348 thousand in 2017-18 ($1,990 thousand in 2016-17). The increase of $358 thousand (18.0%) is primarily due to a $289 thousand increase in IT licenses and maintenance, and $81 thousand in additional office space required for the Federal Court and for the physical security enhancement initiative, partly offset by other minor variances resulting in a net decrease of $12 thousand.

Amortization of tangible capital assets: Amortization expense was $2,106 thousand in 2017-18 ($1,833 thousand in 2016-17). Tangible capital assets are expected to yield benefits over several years. Consequently, their cost is amortized on a straight-line basis over the estimated useful life of each asset class. The variance of $273 thousand (14.9%) is due to an increase of $152 thousand related to leasehold improvements, $98 thousand related to machinery and equipment, $68 thousand related to IT software, $24 thousand for other equipment including furniture, partly offset by a decrease of $68 thousand related to IT hardware assets. Other minor variances resulted in a net decrease of $1 thousand. 

Machinery and equipment: Machinery and equipment expense was $1,989 thousand in 2017-18 ($565 thousand in 2016-17). This includes purchases of assets costing less than $5 thousand, such as small computer parts, office equipment, furniture, and motor vehicle parts. The increase of $1,424 thousand (252.0%) is mainly due to an increase of $1,080 thousand in the acquisition of informatics equipment, including computer, communication and network equipment as part of the IT infrastructure management plan, and $307 thousand in acquisitions of office furniture and furnishings, including parts. Other minor variances resulted in a net increase of $37 thousand.

Repairs and Maintenance: Repair and maintenance expense was $407 thousand in 2017-18 ($825 thousand in 2016-17). The decrease of $418 thousand (-50.7%) is due to a decrease of $386 thousand in repairs and maintenance to facilities, mostly at the 200 Kent Street building in Ottawa, and $32 thousand in maintenance of communication network equipment.

Information: Information expense was $561 thousand in 2017-18 ($413 thousand in 2016-17). The $148 thousand increase (35.8%) is due to increases of $131 thousand in printing services, and $13 thousand in advertising services. Other smaller variances resulted in a net increase of $4 thousand.

Miscellaneous and Expenses incurred on behalf of Government: Miscellaneous expense was $254 thousand in 2017-18 ($155 thousand in 2016-17). The $99 thousand increase is mainly due to a $61 thousand increase in write-downs of tangible assets as well as a $30 thousand increase in miscellaneous special payments. Other minor variances resulted in a net increase of $8 thousand. Expenses incurred on behalf of Government relate to bad debts on accounts receivable held on behalf of Government.

Revenues

CAS’ gross revenues were $2,560 thousand in 2017-18 ($3,071 thousand in 2016-17). CAS’ revenues may fluctuate widely from year-to-year and consist almost entirely of revenues earned on behalf of Government. Such revenues are non-respendable by CAS and are deposited directly into the CRF. In 2017-18, these non-respendable revenues totalled $2,546 thousand ($3,063 thousand in 2016-17).

CAS’ net revenues were $14 thousand in 2017-18 ($8 thousand in 2016-17). This consists of revenues from the disposal of Crown assets, which are respendable.

Filing fees: Filing fees revenue was $1,440 thousand in 2017-18 ($1,604 thousand in 2016-17).
Filing fees are charged to register court documents pursuant to the legislation and rules governing the Courts.

Recovery of administration costs – Employment Insurance: Recovery of administration costs for Employment Insurance (EI) was $1,017 thousand in 2017-18 ($1,098 thousand in 2016-17). At the end of each fiscal year, CAS determines the cost associated with the administration of EI cases for presentation by Employment and Social Development Canada (ESDC), the department responsible for the EI account. Accordingly, ESDC reports an expense in its financial statements and CAS reports an equivalent revenue item. This accounting exercise is intended to reflect the total cost of running the federal government's EI program and does not involve any transfer of authorities or funds.

Fines: Fines revenue was $2 thousand in 2017-18 ($265 thousand in 2016-17). As noted previously, these fines are imposed by the Courts. Consequently, the total amount of fines revenue may vary significantly from year to year and cannot be predicted.

Miscellaneous: Miscellaneous revenue was $101 thousand in 2017-18 ($104 thousand in 2016-17). Miscellaneous revenue is composed of photocopy revenue and other miscellaneous revenues.

Gross Revenues

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Gross Revenues

In 2017-18, filing fees revenues were $1,440 thousand. Recovery of administration costs - EI was $1,017 thousand. Fines revenues were $2 thousand. Other revenues were $101 thousand.

In 2016-17, filing fees revenues were $1,604 thousand. Recovery of administration costs - EI was $1,098 thousand. Fines revenues were $265 thousand. Other revenues were $104 thousand.

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