Quarterly Financial Report - For the quarter ended June 30, 2017 - Revised
Statement outlining results, risks and significant changes in operations, personnel and programs
Date: September 13, 2017
Location: Acquisition of land, building and works
Revision: “$3.5 thousands” replaces “$3 thousands”.
Rationale for the revision: Original amount reported was not correct.
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 2017-18 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 2017-18 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 illustrated in the Statement of Authorities and the Departmental Budgetary Expenditures by Standard Object tables at the end of this report, as at June 30, 2017, authorities available for use for the year increased by $2,896 thousand (4%) compared to the same quarter in 2016-17, from $72,353 thousand to $75,249 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.
The increase in authorities is partly due to $1,490 thousand in funding received in Budget 2016 to invest in information technology (IT) infrastructure upgrades to safeguard the efficiency of the federal court system. Also, $1,642 thousand was received in Budget 2016 to relocate the Québec City Office, thereby ensuring continued Federal Courts presence in that city.
In addition, $740 thousand in funding for the Mexico visa lift initiative is now included in the 2017-18 authorities. The final repayment related to the one-time funding received in fiscal year 2011-12 to replace the aging data centre was made in 2016-17, resulting in an increase of $551 thousand in 2017-18 reference level. Finally, compensation for collective bargaining increases of $113 thousand had not been received at the end of the first quarter of the previous fiscal year.
The above increases were partly offset by a $1,040 thousand decrease in funding received in Budget 2015 for enhancements to physical and information technology (IT) security for the Federal Courts, and a $495 thousand decrease in contributions to employee benefit plans. Additionally, there was a decrease of $104 thousand related to a government-wide reduction in professional services and travel.
Other minor changes resulted in a net decrease of $1 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 2017-18, authorities totalled $75,249 thousand compared to $72,353 thousand at the end of the same quarter of 2016-17.
At the end of the first quarter of 2017-18, expenditures totalled $15,770 thousand compared to $16,510 thousand at the end of the same quarter of 2016-17.
As illustrated in Figure 1, first-quarter expenditures decreased by $740 thousand (-4%) compared to the same quarter in 2016-17, from $16,510 thousand to $15,770 thousand. As a result, 21% of the authorities available for use for the fiscal year were expended during the first quarter of 2017-18, which reflects a minor decrease of 2% compared to the same quarter of 2016-17.
Significant variances1 are explained as follows:
Acquisition of machinery and equipment:
Year-to-date expenditures related to acquisition of machinery and equipment decreased by $498 thousand (-79%) compared to same period of the previous fiscal year, from $631 thousand to $133 thousand. This decrease was mainly driven by timing variations related to the processing of expenditures between quarters for the purchase of informatics equipment and parts for IT-related projects and initiatives.
Professional and special services
Year-to-date expenditures related to professional and special services decreased by $313 thousand (-22 %) compared to same period of the previous fiscal year, from $1,422 thousand to $1,109 thousand. This decrease was mainly driven by a lower volume of translation services during this quarter and a decrease in the IT and telecommunications consulting expenditures.
Year-to-date expenditures related to rentals increased by $199 thousand (47%) compared to same period of the previous fiscal year, from $423 thousand to $622 thousand. This increase was due to rental of additional office space in relation to the physical security enhancements initiative.
Repair and maintenance
Year-to-date expenditures related to repair and maintenance decreased by $60 thousand (-71%) compared to same period of the previous fiscal year, from $84 thousand to $24 thousand. The decrease is explained by timing differences in both repairs of building and purchases of informatics equipment and parts for IT related projects and initiatives.
Other subsidies and payments
Year-to-date expenditures related to other subsidies and payments decreased by $20 thousand (-100 %) compared to same period of the previous fiscal year, from $20 thousand to zero. This decrease is mainly due to timing variances.
Acquisition of land, building and works
Year-to-date expenditures related to acquisition of land, building and works decreased by $3.5 thousand (-86%) compared to same period of the previous fiscal year, from $4 thousand to $0.5 thousand. This decrease was due to completion of a leasehold improvement project to accommodate additional requirements of the Federal Court.
Immaterial variances, including minor variations in the timing of the delivery of goods and services accounts for the remaining variances compared to same period of the previous fiscal year.
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 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 resources required to support the judicial process and translation costs, which result from increases in the quantity and complexity of court cases, as well as increases in the number of self-representing litigants who require more assistance. 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 is trying to secure additional funding. CAS received some program integrity funding in Budget 2015 specifically for physical and IT security.
Budget 2016 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 also provided up to $2.6 million over two years on a cash basis to relocate the Québec City Office.
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 29, 2017)
|Fiscal year 2017-18||Fiscal year 2016-17|
|Total available for use for the year ending March 31, 20181||Used during the quarter ended June 30, 2017||Year-to-date used at quarter-end||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|
|Vote 1 – Operating expenditures||68,590||14,104||14,104||65,200||14,721||14,721|
|Contributions to employee benefit plans||6,657||1,664||1,664||7,152||1,788||1,788|
|Spending of proceeds from the disposal of surplus Crown assets||-||-||-||-||-||-|
|Refunds of amounts credited to revenues in previous years||2||2||2||1||1||1|
|Total budgetary authorities||75,249||15,770||15,770||72,353||16,510||16,510|
1- Includes only Authorities available for use and granted by Parliament at quarter-end.
|Expenditures:||Fiscal year 2017-18||Fiscal year 2016-17|
|Planned expenditures for the year ending March 31, 2018||Expended during the quarter ended June 30, 2017||Year-to-date used at quarter-end||Planned expenditures for the year ending March 31, 2017||Expended during the quarter ended June 30, 2016||Year-to-date used at quarter-end|
|Transportation and communications||2,989||462||462||2,677||510||510|
|Professional and special services||10,671||1,109||1,109||11,204||1,422||1,422|
|Repair and maintenance||1,112||24||24||1,267||84||84|
|Utilities, materials and supplies||2,569||556||556||2,189||515||515|
|Acquisition of land, building and works||2,265||0||0||256||4||4|
|Acquisition of machinery and equipment||4,358||133||133||3,150||631||631|
|Other subsidies and payments||11||0||0||1||20||20|
|Total budgetary expenditures||75,249||15,770||15,770||72,353||16,510||16,510|
- Date modified: