Quarterly Financial Report - For the quarter ended June 30, 2016
Statement outlining results, risks and significant changes in operations, personnel and programs
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 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 2016-17 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 2016-17 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 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 June 30, 2016, authorities available for use for the year increased by $8,399 thousand (13%) compared to the same quarter in 2015-16, from $63,954 thousand to $72,353 thousand. 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.
This increase in authorities is partly due to $4,471 thousand in funding received in Budget 2015 for enhancements to physical and information technology (IT) security for the Federal Courts. Also, an increase of $3,957 thousand is due to renewed funding related to the Division 9 proceedings under the Immigration and Refugee Protection Act (Balanced Refugee Reform Act). The renewed funding had not yet been received as of the end of the first quarter of the previous fiscal year. These two sources of funding resulted in a further increase of $521 thousand in contributions to employee benefit plans.
The above increases were partly offset by a $532 thousand decrease related to prothonotaries. With the coming into force of Bill C-43 Economic Action Plan 2014 Act, No. 2, the jurisdiction for payment of prothonotaries’ salaries, pensions, benefits and other administrative arrangements transferred to the Office of the Commissioner for Federal Judicial Affairs Canada. In 2015-16, associated funding was frozen and this funding was removed from CAS’ 2016-17 reference levels.
Other minor changes resulted in a net decrease of $18 thousand 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 first quarter. These results are discussed in the section below.
Figure 1 – First-quarter Expenditures Compared to Annual Authorities
Description of the image
At the end of the first quarter of 2016-17, authorities totalled $72,353 thousand compared to $63,954 thousand at the end of the same quarter of 2015-16.
At the end of the first quarter of 2016-17, expenditures totalled $16,510 thousand compared to $14,839 thousand at the end of the same quarter of 2015-16.
As illustrated in Figure 1, first-quarter expenditures increased by $1,671 thousand (11%) compared to the same quarter in 2015-16, from $14,839 thousand to $16,510 thousand. As a result, 23% of the authorities available for use for the fiscal year were expended during the first quarter of 2016-17, consistent with the same quarter of 2015-16.
The increase in first-quarter expenditures was in large part due to a $968 thousand (8%) increase in personnel expenditures compared to the same quarter in 2015-16, from $11,761 thousand to $12,729 thousand. This increase was driven by an increase in salaries and employer contributions to employee benefit plans due to an increase in full time equivalents.
Also, there was a $516 thousand (449%) increase in the acquisition of machinery and equipment, from $115 thousand to $631 thousand. This increase was mainly driven by increases in the purchase of informatics equipment and parts for IT related projects and initiatives.
Furthermore, there were increases of $65 thousand in information expenditures and $62 thousand in repair and maintenance expenditures. The increase in information was due to timing variations related to the processing of expenditures between quarters for database access services, printing services, and electronic subscriptions and publications. The increase in repair and maintenance was driven by an increase in communications and networking equipment maintenance related to IT projects and initiatives.
Minor variations in the timing of the delivery of other goods and services account for the remaining $60 thousand increase in first-quarter expenditures in the current year compared to the same quarter in the prior year.
Risks and Uncertainties
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. 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 increases in the quantity and complexity of court cases, as well as increases in the number of self-representing litigants who require more assistance, which has impacted the resources required to support the judicial process as well as translation costs. Furthermore, external drivers that influence costs, such as inflation and government cost-saving measures, represent additional challenges.
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 determined that the only remaining viable solution is to secure additional funding. CAS received some program integrity funding in Budget 2015 specifically for physical and IT security. Funding was also announced in Budget 2016 for investments in the IT infrastructure that supports the courts. CAS continues to work with central agencies to identify sources of funds to address outstanding risks.
Significant changes in relation to operations, personnel and programs
There have been no significant changes in CAS operations, personnel and programs.
Approval by Senior Officials
Original signed by
Daniel Gosselin, FCPA, FCA
Original signed by
Francine Côté, CPA, CA, CISA
Deputy Chief Administrator, Corporate Services
Chief Financial Officer
(August 24, 2016)
|Fiscal year 2016-17||Fiscal year 2015-16|
|Total available for use for the year ending March 31, 20171||Used during the quarter ended June 30, 2016||Year to date used at quarter-end||Total available for use for the year ending March 31, 20161||Used during the quarter ended June 30, 2015||Year to date used at quarter-end|
|Vote 1 – Operating expenditures||65,200||14,721||14,721||57,320||13,179||13,179|
|Contributions to employee benefit plans||7,152||1,788||1,788||6,632||1,658||1,658|
|Spending of proceeds from the disposal of surplus Crown assets||-||-||-||-||-||-|
|Refunds of amounts credited to revenues in previous years||1||1||1||2||2||2|
|Total budgetary authorities||72,353||16,510||16,510||63,954||14,839||14,839|
1- Includes only Authorities available for use and granted by Parliament at quarter-end.
|Expenditures:||Fiscal year 2016-17||Fiscal year 2015-16|
|Planned expenditures for the year ending March 31, 2017||Expended during the quarter ended June 30, 2016||Year to date used at quarter-end||Planned expenditures for the year ending March 31, 2016||Expended during the quarter ended June 30, 2015||Year to date used at quarter-end|
|Transportation and communications||2,677||510||510||2,586||462||462|
|Professional and special services||11,204||1,422||1,422||9,323||1,330||1,330|
|Repair and maintenance||1,267||84||84||385||22||22|
|Utilities, materials and supplies||2,189||515||515||1,979||535||535|
|Acquisition of land, building and works||256||4||4||252||-||-|
|Acquisition of machinery and equipment||3,150||631||631||1,415||115||115|
|Other subsidies and payments||1||20||20||7||25||25|
|Total budgetary expenditures||72,353||16,150||16,150||63,954||14,839||14,839|
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