Quarterly Financial Report - For the quarter ended December 31, 2015
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 and the previous quarterly report for the current fiscal year. 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 effective and efficient registry, judicial and corporate services to 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 2015-16 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 2015-16 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.
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.
The authority of Parliament is required before moneys 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.
CAS uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental performance 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 year
As at December 31, 2015, authorities available for use for the year increased by $3,997 thousand (6%) compared to the same quarter in 2014-15, from $70,766 thousand to $74,763 thousand.
This increase in authorities is mainly due to $4,461 thousand in funding received for enhancements to physical and IT security for the Federal Courts. Also, renewed funding related to the Division 9 proceedings under the Immigration and Refugee Protection Act (Balanced Refugee Reform Act) increased by $562 thousand compared to 2014-15.
The above increases were partly offset by a $593 thousand decrease in funding for the implementation of Bill C-11, An Act to amend the Immigration and Refugee Protection Act and the Federal Courts Act. Related funding is included within the Main Estimates; however, its release is contingent upon the appointment of judges. There have been four judicial appointments to date, including two appointments made in May 2015.
Also, the 2015-16 operating budget carry-forward funding was $199 thousand less than in 2014-15. Furthermore, a $152 thousand decrease in authorities is attributable to adjustments to CAS’ contributions to employee benefit plans as per central agency direction.
Other minor changes resulted in an $82 thousand net decrease in authorities.
Significant Changes to Expenditures
Figure 1 presents current and prior fiscal year expenditures compared to annual authorities, as of the end of the third quarter. These results are discussed in the following sections.
Figure 1 – Third-quarter Expenditures Compared to Annual Authorities
Description of the image
At the end of the third quarter of 2015-16, authorities totalled $74,763 thousand compared to $70,766 thousand at the end of the same quarter of 2014-15.
During the first quarter of 2015-16, expenditures totalled $14,839 thousand compared to $16,608 thousand during the first quarter of 2014-15.
During of the second quarter of 2015-16, expenditures totalled $17,162 thousand compared to $16,014 thousand during the second quarter of 2014-15.
During the third quarter of 2015-16, expenditures totalled $18,014 thousand compared to $16,227 thousand during the third quarter of 2014-15.
Note: The sum of quarterly expenditures does not reconcile with the 2015-16 year to date expenditures amount of $50,014 thousand due to rounding.
Third-quarter Expenditures
As illustrated in Figure 1, third-quarter expenditures increased by $1,787 thousand (11%) compared to the same quarter in 2014-15, from $16,227 thousand to $18,014 thousand. As a result, 24% of the authorities available for use for the year were expended during the third quarter of 2015-16, compared to 23% in the same quarter of 2014-15.
The increase in third-quarter expenditures is largely due to a $929 thousand (929%) increase in the acquisition of machinery and equipment compared to the same quarter in 2014-15, from $100 thousand to $1,029 thousand. This is mainly attributable to an increase in the purchase of informatics equipment and parts, specifically video communications equipment and, computer equipment.
Also, there was a $456 thousand (23%) increase in professional and special services expenditures compared to the same quarter in 2014-15, from $2,017 thousand to $2,473 thousand. This variance is mainly attributable to an increase in translation services.
Additionally, there was a $321 thousand (3%) increase in personnel expenditures, from $12,272 thousand to $12,593 thousand. This variance is largely driven by increases in salaries and wages for personnel employed part-time and those employed on a full-time seasonal, term, casual or student basis.
Furthermore, there was a $130 thousand (47%) increase in rental expenditures, from $274 thousand to $404 thousand. The increase is attributable to timing variations related to the processing of expenditures between quarters for the renewal of software licenses.
The above increases were partly offset by a $168 thousand (-23%) decrease in transportation and communications, from $730 thousand to $562 thousand. This variance is mainly attributable to timing variations related to the processing of expenditures between quarters for postage and courier expenditures.
Minor variations in the timing of the delivery of goods and services account for the remaining
$119 thousand increase in third-quarter expenditures in the current year compared to the same quarter in the previous fiscal year.
Year to date Expenditures
As illustrated in Figure 1, year to date expenditures increased by $1,165 thousand (2%) compared to the same period of the previous fiscal year, from $48,849 thousand to $50,014 thousand. As a result, 67% of the authorities available for use for the fiscal year were expended as of the end of the third quarter of fiscal 2015-16, compared to 69% during the same period of 2014-15.
The increase in year to date expenditures is largely driven by a $997 thousand (18%) increase in professional and special services, from $5,466 thousand to $6,463 thousand. As explained above, this variance is mainly due to an increase in translation services.
Also, there was a $784 thousand (135%) increase in the acquisition of machinery and equipment, from $582 thousand to $1,366 thousand. As described above, this variance is mainly due to an increase in the purchase of informatics equipment and parts, specifically video communications equipment and, computer equipment.
Moreover, rental expenditures increased by $355 thousand (40%), from $896 thousand to $1,251 thousand. This is mainly due to an increase in expenditures related to the rental of office buildings and renewal of software licenses, attributable to timing variations related to the processing of expenditures between quarters.
Additionally, there was a $230 thousand (1%) increase in personnel expenditures, from $36,507 thousand to $36,737 thousand. This variance is due to an increase in salaries and wages for part-time, seasonal, term, casual or student personnel, partly offset by timing variations related to the processing of other personnel expenditures between quarters.
Furthermore, there was a $148 thousand (7,400%) year to date increase in the acquisition of land, building and works, from $2 thousand to $150 thousand. This variance is due to increases in leasehold improvements.
The above increases were partly offset by a $1,512 thousand decrease related to transition payments for implementing salary payment in arrears by the Government of Canada in 2014-15.
Minor variations in the timing of the delivery of goods and services resulted in a further $163 thousand increase in year to date expenditures.
Risks and Uncertainties
Funding
Judicial functions of the courts are a responsibility of the judiciary and impose requirements that are beyond CAS’ control. A majority of the 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 essentially non-discretionary and limit the organization's financial flexibility.
For some years, CAS has lacked the permanent funding necessary to enable the organization to fully meet its commitments and address major program integrity issues. Budget 2011 partially addressed this need, providing CAS with approximately $3 million per year for some program integrity measures. However, Budget 2014 announced that the operating budget of departments would be frozen at their 2013-14 level for the years 2014-15 and 2015-16 and as a result, CAS would not receive additional funding for salary increases resulting from newly signed collective bargaining agreements.
Historically, such funding restraints have severely limited the resources available for strategic initiatives needed to address critical risk areas and allow the organization to become more effective and efficient in its delivery of services to the judiciary and Canadians.
Risk Management
Budget 2015 addressed the program integrity issues related to physical and IT security through the provision of $19 million over five years, including $4.5 million in 2015-16. This additional funding is for investment in physical security enhancements such as additional cameras, security personnel and screening tools that will help ensure federal courts remain secure and function properly. In addition, it will also enable IT security enhancements to further protect judicial and CAS information.
CAS has made tangible progress in addressing IT related rust-out, risks and performance. Further work in this area remains to be completed to provide an efficient and robust infrastructure to support the growing needs of the Courts and the Registries. CAS will continue to closely manage expenditures in order to invest to the extent possible in this area.
Significant changes in relation to operations, personnel and programs
With the coming into force of Bill C-43 Economic Action Plan 2014 Act, No. 2, effective December 14, 2014, the jurisdiction for payment of prothonotaries’ salaries, pensions, benefits and other administrative arrangements has been transferred to the Office of the Commissioner for Federal Judicial Affairs (FJA). As a result of this transfer, associated funding has been frozen and expenditures have been reduced.
Approval by Senior Officials
Approved by:
Original signed by
Daniel Gosselin, FCPA, FCA
Chief Administrator
Deputy Head
Original signed by
Francine Côté, CPA, CA, CISA
Deputy Chief Administrator, Corporate Services
Chief Financial Officer
(Ottawa, Canada)
(February 25, 2016)
Fiscal year 2015-16 | Fiscal year 2014-15 | |||||
---|---|---|---|---|---|---|
Total available for use for the year ending March 31, 2016 1 |
Used during the quarter ended December 31, 2015 |
Year to date used at quarter-end | Total available for use for the year ending March 31, 2015 1 |
Used during the quarter ended December 31, 2014 |
Year to date used at quarter-end | |
Vote 1 – Operating expenditures |
68,122 | 16,355 | 45,031 | 63,912 | 14,477 | 43,703 |
Statutory authorities: | ||||||
Contributions to employee benefit plans | 6,632 | 1,658 | 4,974 | 6,784 | 1,696 | 5,088 |
Spending of proceeds from the disposal of surplus Crown assets | - | - | - | 12 | - | - |
Refunds of amounts credited to revenues in previous years | 9 | 1 | 9 | 58 | 54 | 58 |
Total budgetary authorities | 74,763 | 18,014 | 50,014 | 70,766 | 16,227 | 48,849 |
1- Includes only Authorities available for use and granted by Parliament at quarter-end.
Fiscal year 2015-16 | Fiscal year 2014-15 | |||||
---|---|---|---|---|---|---|
Planned expenditures for the year ending March 31, 2016 |
Expended during the quarter ended December 31, 2015 | Year to date used at quarter-end | Planned expenditures for the year ending March 31, 2015 |
Expended during the quarter ended December 31, 2014 | Year to date used at quarter-end | |
Expenditures: | ||||||
Personnel | 48,529 | 12,593 | 36,737 | 48,002 | 12,272 | 36,507 |
Transportation and communications | 2,775 | 562 | 1,684 | 2,906 | 730 | 1,793 |
Information | 418 | 80 | 303 | 469 | 60 | 218 |
Professional and special services | 12,444 | 2,473 | 6,463 | 11,630 | 2,017 | 5,466 |
Rentals | 2,291 | 404 | 1,251 | 1,663 | 274 | 896 |
Purchased repair and maintenance | 1,414 | 87 | 230 | 433 | 56 | 146 |
Utilities, materials and supplies | 1,979 | 672 | 1,740 | 2,237 | 632 | 1,609 |
Acquisition of land, building and works | 703 | 43 | 150 | 531 | 2 | 2 |
Acquisition of machinery and equipment | 4,196 | 1,029 | 1,366 | 2,821 | 100 | 582 |
Other subsidies and payments | 14 | 71 | 90 | 74 | 84 | 1,630 |
Total budgetary expenditures | 74,763 | 18,014 | 50,014 | 70,766 | 16,227 | 48,849 |
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