Quarterly Financial Report - For the quarter ended December 31, 2017
Statement outlining results, risks and significant changes in operations, personnel and programs
This quarterly report should be read in conjunction with the Main Estimates, Supplementary Estimates and previous quarterly reports 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 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 Main Estimates and Supplementary Estimates for the 2017-18 fiscal year. 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 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, as at December 31, 2017, authorities available for use for the year increased by $4,992 thousand (7%) compared to the same period in 2016-17, from $76,168 thousand to $81,160 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 an increase in funding received in Budget 2017 of $1,000 thousand to support the translation of decisions of the Federal Courts. Furthermore, there was an increase in funding between 2016-17 and 2017-18 of $195 thousand to invest in information technology (IT) infrastructure upgrades to safeguard the efficiency of the federal court system, as well as an increase in funding of $731 thousand to relocate the Québec City Office.
Although $740 thousand in funding for the Mexico visa lift initiative is included in the 2017-18 authorities, it will remain frozen and inaccessible until a judicial appointment is made. The final repayment of a five-year loan 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 the 2017-18 reference level. Also, the operating budget carry-forward increased by $1,602 thousand and compensation for collective bargaining increased by $1,847 thousand between 2016-17 and 2017-18.
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 $526 thousand decrease in contributions to employee benefit plans. Additionally, there was a decrease of $104 thousand related to a government-wide reduction in marketing, professional services, and travel.
Other minor changes resulted in a net decrease of $4 thousand in authorities.
Significant Changes to Expenditures
The table of Departmental Budgetary Expenditures by Standard Object at the end of this report provides a comparison by standard object between the current and previous fiscal year for third quarter expenditures and year-to-date expenditures.
Figure 1 presents current and prior fiscal year expenditures compared to annual authorities, as of the end of the third quarter.
Figure 1 - Expenditures Compared to Annual Authorities
Description of the image
At the end of the third quarter of 2017-18, authorities totalled $81,160 thousand compared to $76,168 thousand at the end of the same quarter of 2016-17.
During the first quarter of 2017-18, expenditures totalled $15,770 thousand compared to $16,510 thousand during the first quarter of 2016-17.
During of the second quarter of 2017-18, expenditures totalled $19,254 thousand compared to $16,532 thousand during the second quarter of 2016-17.
During the third quarter of 2017-18, expenditures totalled $18,617 thousand compared to $18,038 thousand during the third quarter of 2016-17.
As illustrated in Figure 1, third quarter expenditures increased by $579 thousand (3%) compared to the same quarter in 2016-17, from $18,038 thousand to $18,617 thousand. Of CAS’ total annual authorities, 23% were expended during the third quarter of 2017-18, which reflects a minor decrease of 1% compared to the same quarter in 2016-17.
Year-to-date expenditures increased by $2,561 thousand (5%) compared to the same period of the previous fiscal year, from $51,080 thousand to $53,641 thousand. Of the authorities available for use for the fiscal year, 66% were expended as of the end of the third quarter of fiscal 2017-18, which reflects a minor decrease of 1% compared to the same quarter in 2016-17.
Significant variances1 are explained as follows:
Year-to-date personnel expenditures increased by $4,019 thousand (10%) compared to the same period of the previous fiscal year, from $38,353 thousand to $42,372 thousand. This included a $1,110 thousand (9%) increase in third quarter expenditures compared to the same quarter in 2016-17, from $12,984 thousand to $14,094 thousand. The increases in year-to-date and third quarter personnel expenditures were principally driven by the signature of the new collective agreements which resulted in retroactive pay as well as increases in salaries.
Professional and special services:
Year-to-date professional and special services decreased by $1,084 thousand (-20%) compared to the same period of the previous fiscal year, from $5,322 thousand to $4,238 thousand. This included a $224 thousand (-11%) decrease in third quarter expenditures compared to the same quarter in 2016-17, from $2,006 thousand to $1,782 thousand. The decreases in year-to-date and third quarter professional and special services expenditures were mainly attributable to timing variations related to the processing of expenditures between quarters for protection services and to a decrease in expenditures for business services related to hearings.
Year-to-date expenditures related to information increased by $44 thousand (14%) compared to the same period of the previous fiscal year, from $318 thousand to $362 thousand. This included a $25 thousand (-33%) decrease in third quarter expenditures compared to the same quarter in 2016-17, from $75 thousand to $50 thousand. The decrease in expenditures for information in the third quarter is mainly related to timing variations in the processing of expenditures between quarters for printing services.
Repair and maintenance:
Year-to-date expenditures related to repair and maintenance decreased by $498 thousand (-79%) compared to the same period of the previous fiscal year, from $627 thousand to $129 thousand. This included a $348 thousand (-90%) decrease in third quarter expenditures, from $388 thousand to $40 thousand compared to the same quarter in fiscal year 2016-17. The decreases in year-to-date and third quarter repair and maintenance expenditures were mainly driven by a decrease in the repair and maintenance of office equipment. They were also attributable to decreases in communications and networking equipment maintenance related to IT projects and initiatives as well as in repairs of office buildings.
Acquisition of machinery and equipment:
Year-to-date expenditures related to the acquisition of machinery and equipment decreased by $656 thousand (-43%) compared to the same period of the previous fiscal year, from $1,528 thousand to $872 thousand. The year-to-date 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 as well as by a decrease in expenditures for office equipment. The decrease in expenditures related to the acquisition of machinery and equipment was partially offset by an increase in expenditures for security screening equipment.
Acquisition of land, building and works:
Year-to-date expenditures related to the acquisition of land, building and works increased by $419 thousand (381%) compared to the same period of the previous fiscal year, from $110 thousand to $529 thousand. This included a $313 thousand (412%) increase in third quarter expenditures compared to the same quarter in the previous fiscal year, from $76 thousand to $389 thousand. These increases are mainly attributable to leasehold improvements related to security initiatives.
Year-to-date expenditures related to rentals increased by $431 thousand (35%) compared to the same period of the previous fiscal year, from $1,244 thousand to $1,675 thousand. This increase was principally driven by rental of additional office space as well an increase in expenditures to renew network software.
Other subsidies and payments:
Year-to-date expenditures related to other subsidies and payments increased by $82 thousand (304%) compared to the same period of the previous fiscal year, from $27 thousand to $109 thousand. This included a decrease of $7 thousand (-33%) in third quarter expenditures compared to the same quarter in 2016-17, from $21 thousand to $14 thousand. The increase in year-to-date and the decrease in third quarter expenditures are mainly due to timing variations related to the processing of expenditures between quarters for interdepartmental settlements.
Immaterial variances, including minor variations in the timing of the delivery of goods and services account for the remaining variances in year-to-date and third quarter expenditures compared to the previous fiscal 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, and 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 is trying to secure additional funding.
CAS received 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 received one-time funding of $4 million in 2017-18 to address urgent program integrity issues. CAS continues to work with central agencies to address program integrity on an ongoing basis.
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
(February 23, 2018)
|Fiscal year 2017-18||Fiscal year 2016-17|
|Total available for use for the year ending March 31, 2018 1||Used during the quarter ended December 31, 2017||Year-to-date used at quarter-end||Total available for use for the year ending March 31, 2017 1||Used during the quarter ended December 31, 2016||Year-to-date used at quarter-end|
|Vote 1 – Operating expenditures||74,499||16,951||48,644||68,978||16,247||45,709|
|Contributions to employee benefit plans||6,657||1,664||4,993||7,183||1,788||5,364|
|Spending of proceeds from the disposal of surplus Crown assets||-||-||-||-||-||-|
|Refunds of amounts credited to revenues in previous years||4||2||4||7||3||7|
|Total budgetary authorities||81,160||18,617||53,641||76,168||18,038||51,080|
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 December 31, 2017||Year-to-date used at quarter-end||Planned expenditures for the year ending March 31, 2017||Expended during the quarter ended December 31, 2016||Year-to-date used at quarter-end|
|Transportation and communications||2,989||588||1,733||2,893||689||1,905|
|Professional and special services||11,821||1,782||4,238||12,060||2,006||5,322|
|Purchased repair and maintenance||1,112||40||129||1,333||388||627|
|Utilities, materials and supplies||2,569||653||1,622||2,380||636||1,646|
|Acquisition of land, building and works||3,777||389||529||1,101||76||110|
|Acquisition of machinery and equipment||4,858||473||872||4,364||624||1,528|
|Other subsidies and payments||13||14||109||7||21||27|
|Total budgetary expenditures||81,160||18,617||53,641||76,168||18,038||51,080|
1 Significant variances are defined as variances by standard object that are greater than $250 thousand or 25%.
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