Quarterly Financial Report - For the quarter ended December 31, 2019
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 2019-20 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 2019-20 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 December 31, 2019, authorities available for use for the year increased by $9,659 thousand (11%) compared to the same quarter in 2018-19, from $86,089 thousand to $95,748 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 related to 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. Funding totaling $9,299 thousand in 2019-20 represents an increase in CAS’s authorities of $4,700 thousand compared to $4,599 thousand in 2018-19.
Through Budget 2019, CAS was granted funding to enhance the integrity of Canada’s Borders and Asylum System. This funding amounts to $4,804 thousand over two years and includes support staff for judges, as well as construction of offices and chambers. $2,635 thousand was allocated in 2019-20 for this initiative.
Budget 2019 included $8,500 thousand over five years for the translation of Courts decisions to Support the Delivery of Justice. CAS has a constitutional and quasi-constitutional obligation to translate decisions rendered by the Courts. This represents funding of $1,700 thousand annually, offset by a decrease of $1,000 thousand related to sun-setting funding, for a net increase of $700 thousand.
Funding was provided in Budget 2018 to implement a new comprehensive Intellectual Property (IP) Strategy to update and modernize Canada’s IP regime. Funding allocated to CAS to improve the efficiency of IP dispute resolution represents an increase of $1,184 thousand for 2019-20.
Other increases include $489 thousand in contributions to employee benefit plans, $366 thousand due to the operating budget carry-forward being higher than previous year, $359 thousand for compensation, $104 thousand for temporary funding for the implementation of the Program and Administrative Services modernization initiative and $66 thousand related to previous Budget initiatives.
The above increases were partly offset by $258 thousand reduction in our Mexico Visa Lift infrastructure funding, $244 thousand for retroactive collective bargaining obligations, $200 thousand in a re-profile of operating sub-allotment to personnel sub-allotment, $197 thousand reduction in our Citizenship revocation funding, as well as a $45 thousand contribution to the implementation of CAS’s departmental financial system.
Note: Budget 2019 funding for the Federal Courthouse in Montreal and a portion of the funding for Canada’s Borders and Asylum System were removed from this publication since CAS hasn’t received approval from the Treasury Board at this time.
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 section below.
Description of the image
At the end of the third quarter of 2019-20, authorities totaled $95,748 thousand compared to $86,089 thousand at the end of the same quarter of 2018-19.
During the first quarter of 2019-20, expenditures totaled $18,182 thousand compared to $18,445 thousand during the same quarter of 2018-19.
During the second quarter of 2019-20, expenditures totaled $23,043 thousand compared to $15,555 thousand during the second quarter of 2018-19.
During the third quarter of 2019-20, expenditures totaled $23,319 thousand compared to $21,319 thousand during the third quarter of 2018-19.
As illustrated in Figure 1, third-quarter expenditures increased by $2,000 thousand (9%) compared to the same quarter in 2018-19, from $21,319 thousand to $23,319 thousand. As a result, 24% of the authorities available for use for the fiscal year were expended during the third quarter of 2019-20, which reflects a decrease of 1% compared to the same quarter of 2018-19.
Also, year-to-date expenditures increased by $9,225 thousand (17%) compared to the same period of the previous fiscal year, from $55,319 thousand to $64,544 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 2019-20, which reflects an increase of 3% compared to the same period of fiscal year 2018-19.
Significant variances1 are explained as follows:
The year-to-date expenditures related to personnel has increased by $5,140 thousand (12%) compared to same period of the previous fiscal year, from $41,508 thousand to $46,648 thousand. This included a $976 thousand (6%) increase in third quarter expenditures compared to the same quarter in 2018-19, from $15,674 thousand to $16,650 thousand. The increase is explained by additional salary and employee benefit plans funding obtained in Budget 2018 and Budget 2019 through the specific initiatives detailed in the “Significant Changes to Authorities” section.
Transportation and telecommunications
Year-to-date expenditures related to transportation and telecommunications increased by $119 thousand (7%) compared to same period of the previous fiscal year, from $1,813 thousand to $1,932 thousand. This included a $425 thousand (90%) increase in third quarter expenditures compared to the same quarter in 2018-19, from $475 thousand to $900 thousand. The increase was mainly driven by reallocation of expenses related to courier services as well as timing variations in the processing of expenditures related to data and telecommunication services.
Year-to-date information expenditures decreased by $116 thousand (-28%) compared to same period of the previous fiscal year, from $411 thousand to $295 thousand. The decrease was mainly due to decrease of expenditures related to printing services. This included a $77 thousand (220%) increase in the third quarter compared to the same quarter of the previous fiscal year, from $35 thousand to $112 thousand. This increase was due to timing variations in the processing of expenditures related to subscriptions.
Professional and special services
Year-to-date expenditures related to professional and special services increased by $3,296 thousand (61%) compared to the same period of the previous fiscal year, from $5,385 thousand to $8,681 thousand. This included a $555 thousand (23%) increase in third quarter expenditures compared to the same quarter in 2018-19, from $2,367 thousand to $2,922 thousand. The increase was mainly due to volume increase in translation of Courts decisions to Support the Delivery of Justice as well as information technology and telecommunications consulting expenditures for projects. This increase was also driven by timing variations related to the processing of commissionaires invoices in 2018-19 between quarters.
Year-to-date expenditures related to rentals increased by $359 thousand (20%) compared to same period of the previous fiscal year, from $1,839 thousand to $2,198 thousand. This year-to-date increase was mainly due to timing variations related to the processing of the expenditures between quarters for license and maintenance fees for application software. This included a $240 thousand (-30%) decrease in the third quarter compared to the same quarter of the previous fiscal year, from $794 thousand to $554 thousand. The decrease in expenditures in the third quarter was mainly attributable to timing variations related to the processing of the expenditures between quarters for rental of office buildings.
Repair and maintenance
Year-to-date expenditures related to repair and maintenance decreased by $25 thousand (-8%) compared to same period of the previous fiscal year, from $314 thousand to $289 thousand. This included a $82 thousand (80%) increase in third quarter expenditures compared to the same quarter in 2018-19, from $102 thousand to $184 thousand. The decrease in year-to-date expenditures was mainly attributable to decreases in repairs of communications and networking equipment. The increase in third quarter expenditures were due to timing variations related to the processing of expenditures between quarters for repairs of office buildings.
Utilities, materials and supplies
Year-to-date expenditures related to utilities, materials and supplies decreased by $205 thousand (-10%) compared to same period of the previous fiscal year, from $2,010 thousand to $1,805 thousand. This included a $425 thousand (-48%) decrease in the third quarter compared to the same quarter of the previous fiscal year, from $880 thousand to $455 thousand. The decrease was mainly due to timing variations in the processing of the expenditures between quarters related to office supplies and stationaries as well as printed materials including books, newspapers, pictures, manuscripts and forms.
Acquisition of land, buildings, and works
Year-to-date expenditures related to acquisition of land, buildings, and works increased by $503 thousand (70%) compared to the same period of the previous fiscal year, from $720 thousand to $1,223 thousand. This included a $367 thousand (66%) increase in the third quarter expenditures compared to the same quarter in 2018-19, from $553 thousand to $920 thousand. This increase in the expenditures was mainly driven by the increase of leasehold improvements for reconfiguration of office buildings.
Acquisition of machinery and equipment
Year-to-date expenditures related to acquisition of machinery and equipment increased by $341 thousand (31%) compared to the same period of the previous fiscal year, from $1,109 thousand to $1,450 thousand. This included a $345 thousand (98%) increase in the third quarter expenditures compared to the same quarter in 2018-19, from $352 thousand to $697 thousand. The increase in the expenditures was mainly driven by the purchase of informatics equipment and parts.
Other subsidies and payments
Year-to-date expenditures related to other subsidies and payments decreased by $187 thousand (-89%) compared to same period of the previous fiscal year, from $210 thousand to $23 thousand. This included a $162 thousand (-186%) decrease in the third quarter compared to the same quarter of the previous fiscal year, from $87 thousand to -$75 thousand. The decrease in year-to-date and in third quarter expenditures are mainly due to timing variations related to the processing of expenditures between quarters for reallocation of expenses.
Risks and Uncertainties
The majority of non-personnel expenses incurred by CAS are contracted costs for services supporting the judicial process, court hearings, court security and e-court. They include translation services, protection services, informatics services, court reporters, transcripts, deputy judges, court ushers and court facilities rental. These costs are mostly driven by the number, type and duration of hearings conducted in any given year, are non-discretionary and limit the organization's financial flexibility.
CAS has a limited budget to respond to translation requirements of the courts despite additional funding received. In addition CAS obtained off-cycle funding to implement a modern Courts and Registry Management System. As explained in the Risk Management Mitigation Strategies, CAS has received on-going funding to address many other areas of concerns.
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. CAS has developed an efficient Enterprise Risk Management (ERM) process which includes management participation at the highest levels of the organization. The ERM process allows management to identify, evaluate and mitigate key risks to achieving its mandate and organizational priorities, and drives resource allocation accordingly.
The Chief Justices and CAS has initiated discussion with government officials regarding a potential funding model more appropriate to the context of judicial independence. In the meantime, CAS has been able to secure additional funding through the budgetary process to address a number of specific pressures, including program integrity.
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 and translation 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 court 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 2019–20, the focus will continue to 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.
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 28, 2020)
|Fiscal year 2019-20||Fiscal year 2018-19|
|Total available for use for the year ending March 31, 2020 1||Used during the quarter ended December 31, 2019||Year-to-date used at quarter-end||Total available for use for the year ending March 31, 2019 1||Used during the quarter ended December 31, 2018||Year-to-date used at quarter-end|
|Vote 1 – Operating expenditures||87,778||21,356||58,654||78,727||19,709||50,485|
|Contributions to employee benefit plans||7,970||1,963||5,889||7,362||1,610||4,834|
|Spending of proceeds from the disposal of surplus Crown assets||-||-||-||-||-||-|
|Refunds of amounts credited to revenues in previous years||-||-||1||-||-||-|
|Total budgetary authorities||95,748||23,319||64,544||86,089||21,319||55,319|
1- Includes only Authorities available for use and granted by Parliament at quarter-end.
|Expenditures:||Fiscal year 2019-20||Fiscal year 2018-19|
|Planned expenditures for the year ending March 31, 2020||Expended during the quarter ended December 31, 2019||Year-to-date used at quarter-end||Planned expenditures for the year ending March 31, 2019||Expended during the quarter ended December 31, 2018||Year-to-date used at quarter-end|
|Transportation and communications||3,229||900||1,932||2,920||475||1,813|
|Professional and special services||15,183||2,922||8,681||12,861||2,367||5,385|
|Repair and maintenance||1,053||184||289||1,044||102||314|
|Utilities, materials and supplies||2,641||455||1,805||2,437||880||2,010|
|Acquisition of land, building and works||5,329||920||1,223||4,275||553||720|
|Acquisition of machinery and equipment||5,506||697||1,450||4,796||352||1,109|
|Other subsidies and payments||7||-75||23||8||87||210|
|Total budgetary expenditures||95,748||23,319||64,544||86,089||21,319||55,319|
Groupings can change between quarters due to materiality of initiatives.
Amounts may not balance with other public documents due to rounding.
1 Significant variances are defined as variances by standard object that are greater than $250 thousand or 25%.
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