Quarterly Financial Report - For the quarter ended September 30, 2018
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 administrative services for the federal Courts 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. Further details on CAS’ programs can be found in the 2018-19 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 2018-19 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 results 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 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 September 30, 2018, authorities available for use for the year increased by $2,337 thousand (3%) compared to the same quarter in 2017-18, from $78,312 thousand to $80,649 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 mainly due to $4,599 thousand in funding received in Budget 2018 to ensure that Canada's federal Courts, including the Tax Court of Canada, receive adequate support to address a growing and increasingly complex caseload. The increase is also due to $1,000 thousand received in Budget 2017 to support the translation of decisions of the federal Courts and due to the compensation for collective bargaining of $1,390 thousand which had not been received at the end of the second quarter of the previous year. The authorities also include $780 thousand in funding to enhance procedural fairness in the citizenship revocation process under the Citizenship Act which remains frozen and inaccessible until a judicial appointment is made.
In addition, there was an increase of $334 thousand in contributions to employee benefit plans compared to 2017-18 and increases in funding of $27 thousand for enhancements to physical and information technology (IT) security for the federal Courts, of $25 thousand in funding to invest in information technology (IT) infrastructure upgrades to safeguard the efficiency of the federal court system and finally, of $19 thousand in funding for the Mexico visa lift initiative.
The above increases were partly offset by a decrease of $3,957 thousand pending renewal of Division 9 proceedings under the Immigration and Refugee Protection Act (Balanced Refugee Reform Act), a decrease of $1,642 thousand due to the completion of the relocation of the Québec City Office, as well as a decrease of $238 thousand between 2017-18 and 2018-19 due to the operating budget carry-forward.
Significant Changes to Expenditures
Figure 1 presents current and prior fiscal year expenditures compared to annual authorities, as of the end of the second quarter. These results are discussed in the section below.
Description of the image
At the end of the second quarter of 2018-19, authorities totaled $80,649 thousand compared to $78,312 thousand at the end of the same quarter of 2017-18.
During the first quarter of 2018-19, expenditures totaled $18,445 thousand compared to $15,770 thousand during the same quarter of 2017-18.
During of the second quarter of 2018-19, expenditures totaled $15,555 thousand compared to $19,254 thousand during the second quarter of 2017-18.
As illustrated in Figure 1, second-quarter expenditures decreased by $3,699 thousand (-19%) compared to the same quarter in 2017-18, from $19,254 thousand to $15,555 thousand. As a result, 18% of the authorities available for use for the fiscal year were expended during the second quarter of 2018‑19, which reflects a decrease of 7% compared to the same quarter of 2017-18.
Also, year-to-date expenditures decreased by $1,024 thousand (-3%) compared to the same period of the previous fiscal year, from $35,024 thousand to $34,000 thousand. As a result, 39% of the authorities available for use for the fiscal year were expended as of the end of the second quarter of fiscal 2018-19, which reflects a minor decrease of 6% compared to the same period of fiscal year 2017-18.
Significant variances1 are explained as follows:
Year-to-date personnel expenditures decreased by $2,423 thousand (-9%) compared to same period of the previous fiscal year, from $28,257 thousand to $25,834 thousand. This included a $4,320 thousand (-28%) decrease in second quarter expenditures compared to the same quarter in 2017-18, from $15,585 thousand to $11,265 thousand. The decreases in year-to-date and second quarter personnel expenditures were principally driven by the retroactive pay as a result of the new collective agreements paid out in the second quarter of 2017-18, and by a turnover of personnel in 2018-19.
Professional and special services
Year-to-date expenditures related to professional and special services increased by $480 thousand (19%) compared to the same period of the previous fiscal year, from $2,538 thousand to $3,018 thousand. This included a $505 thousand (35%) increase in second quarter expenditures compared to the same quarter in 2017-18, from $1,429 thousand to $1,934 thousand. This increase was mainly driven by timing variations relating to the processing of expenditures of translation and commissionaire services during this quarter.
Acquisition of machinery and equipment
Year-to-date expenditures related to acquisition of machinery and equipment increased by $358 thousand (90%) compared to the same period of the previous fiscal year, from $399 thousand to $757 thousand. This included a $273 thousand (103%) increase in the second quarter expenditures compared to the same quarter in 2017-18, from $266 thousand to $539 thousand. This increase was mainly driven by the purchase of office equipment and furniture, including parts, and informatics equipment.
Repair and maintenance
Year-to-date expenditures related to repair and maintenance increased by $124 thousand (141%) compared to same period of the previous fiscal year, from $88 thousand to $212 thousand. This included a $109 thousand (170%) increase in second quarter expenditures compared to the same quarter in 2017-18, from $64 thousand to $173 thousand. The increase is mainly attributable to increases in repairs of office buildings and repair of communications and networking equipment.
Year-to-date expenditures related to rentals decreased by $96 thousand (-8%) compared to same period of the previous fiscal year, from $1,141 thousand to $1,045 thousand. This included a $305 thousand (-59%) decrease in the second quarter compared to the same quarter of the previous fiscal year, from $519 thousand to $214 thousand. This decrease was due timing variations related to the processing of the expenditures between quarters.
Other subsidies and payments
Year-to-date expenditures related to other subsidies and payments increased by $88 thousand (251%) compared to same period of the previous fiscal year, from $35 thousand to $123 thousand. This included a $60 thousand (171%) increase in the second quarter compared to the same quarter of the previous fiscal year, from $35 thousand to $95 thousand. This increase is mainly due to timing variances.
Year-to-date information expenditures increased by $64 thousand (21%) compared to same period of the previous fiscal year, from $312 thousand to $376 thousand. This included a $58 thousand (-48%) decrease in the second quarter compared to the same quarter of the previous fiscal year, from $120 thousand to $62 thousand. This decrease in the second quarter was mainly due to timing of printing services.
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.
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. 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.
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 $2.6 million over two years to relocate the Québec City Office, thereby ensuring 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 court and registry management system and translation of court decisions.
Significant changes in relation to operations, personnel and programs
Since its establishment in 2003, CAS has strived to provide timely and efficient service in support of the four Courts while safeguarding judicial independence- a cornerstone of the Canadian judicial system and our democracy. However, the distinct requirements of each Court and the evolving and ongoing demands by Canadians and the legal community for increased availability of e-services continue to pose considerable challenges for CAS in meeting its core responsibilities with the limited available resources.
The priority placed on technology-enabled courts, as well as the continued security of the Courts and their members warrant that they be recognized as programs in themselves. As such in 2018-19, CAS’s Departmental Results Framework brings significant changes in relation to its programs and will now include e-courts and security, in addition to the judicial and registry programs. This will effectively respond to the current, unique needs of the Courts and allow CAS to better measure and report on results in these areas. This change will represent a reduction in internal services and a corresponding increase in administration services for the federal courts, due to realignment of security and e-courts resources.
In 2018-19 particular focus will be placed on enhancing court and registry technologies to allow access to court services electronically, continuing to enhance physical and information technology security, ensuring the space requirements of the Courts are met, and facilitating the timely translation and posting of court decisions on websites of the Courts.
There have been no significant changes in CAS operations and personnel.
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
(November 29, 2018)
|Fiscal year 2018-19||Fiscal year 2017-18|
|Total available for use for the year ending March 31, 20191||Used during the quarter ended September 30, 2018||Year-to-date used at quarter-end||Total available for use for the year ending March 31, 20181||Used during the quarter ended September 30, 2017||Year-to-date used at quarter-end|
|Vote 1 – Operating expenditures||73,658||13,943||30,776||71,653||17,589||31,694|
|Contributions to employee benefit plans||6,991||1,612||3,224||6,657||1,664||3,328|
|Spending of proceeds from the disposal of surplus Crown assets||-||-||-||-||-||-|
|Refunds of amounts credited to revenues in previous years||-||-||-||2||1||2|
|Total budgetary authorities||80,649||15,555||34,000||78,312||19,254||35,024|
1- Includes only Authorities available for use and granted by Parliament at quarter-end.
|Expenditures:||Fiscal year 2018-19||Fiscal year 2017-18|
|Planned expenditures for the year ending March 31, 2019||Expended during the quarter ended September 30, 2018||Year-to-date used at quarter-end||Planned expenditures for the year ending March 31, 2018||Expended during the quarter ended September 30, 2017||Year-to-date used at quarter-end|
|Transportation and communications||2,634||765||1,338||2,989||683||1,145|
|Professional and special services||11,839||1,934||3,018||10,821||1,429||2,538|
|Repair and maintenance||1,003||173||212||1,112||64||88|
|Utilities, materials and supplies||2,191||341||1,130||2,569||413||969|
|Acquisition of land, building and works||3,570||167||167||3,777||140||140|
|Acquisition of machinery and equipment||4,611||539||757||4,858||266||399|
|Other subsidies and payments||8||95||123||12||35||35|
|Total budgetary expenditures||80,649||15,555||34,000||78,312||19,254||35,024|
1 Significant variances are defined as variances by standard object that are greater than $250 thousand or 25%.
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