Quarterly Financial Report - For the quarter ended December 31, 2020
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 2020-21 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 2020-21 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, 2020, authorities available for use for the year increased by $4,816 thousand (5%) compared to the same quarter in 2019-20, from $95,748 thousand to $100,564 thousand.
The increase in authorities is mainly due to funding received in the amount of $2,701 thousands as part of the funding announced in Budget 2019 to support the delivery of justice. In addition, funding of $2,384 thousands was received to support the continuation of the Definition Phase for the Courts and Registry Management System (CRMS) project, which will enable the electronic management of court business and transition towards a paperless and digital environment. Funding will also be used to initiate digitization of court records.
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 2020-21, authorities totalled $100,564 thousand compared to $95,748 thousand at the end of the same quarter of 2019-20.
At the end of the third quarter of 2020-21, expenditures totalled $68,780 thousand compared to $64,544 thousand at the end of the same quarter of 2019-20.
As illustrated in Figure 1, third-quarter expenditures increased by $2,779 thousand (12%) compared to the same quarter in 2019-20, from $23,319 thousand to $26,098 thousand. As a result, 26% of the authorities available for use for the fiscal year were expended during the third quarter of 2020 21, which reflects an increase of 2% compared to the same quarter of 2019-20.
Also, year-to-date expenditures increased by $4,270 thousand (7%) compared to the same period of the previous fiscal year, from $64,544 thousand to $68,814 thousand. As a result, 68% of the authorities available for use for the fiscal year were expended as of the end of the third quarter of fiscal 2020-21, which reflects an increase of 1% compared to the same period of fiscal year 2019-20.
Changes in expenditures in 2020-21 were in part due to COVID-19 measures that needed to be put in place to support in-person critical operations of the Courts, as well as to enable virtual hearings and remote work. CAS received off-cycle funding to cover these costs. Since these funds were received in January 2021, they are not reflected in the funding in the third-quarter financial report, creating timing variances in reporting.
Significant variances1 are explained as follows:
The year-to-date expenditures related to personnel have increased by $2,403 thousand (5%) compared to the same period of the previous fiscal year, from $46,648 thousand to $49,051 thousand. This includes a $1,737 thousand (10%) increase in third quarter expenditures compared to the same quarter in 2019-20, from $16,650 thousand to $18,387 thousand. This net increase is explained by additional salary funding obtained in Budget 2019, as explained above, additional salary expenditures related to the COVID-19 pandemic and measures put in place, as well as timing variances related to issues with the Phoenix pay system.
Transportation and telecommunications
The year-to-date expenditures related to transportation and telecommunications decreased by $754 thousand (-39%) compared to the same period of the previous fiscal year, from $1,932 thousand to $1,178 thousand. This includes a $456 thousand (-51%) decrease in third quarter expenditures compared to the same quarter in 2019-20, from $900 thousand to $444 thousand. The decrease was mainly due to travel restrictions related to the COVID-19 pandemic and timing variances in the processing of expenditures related to postage and freight.
Professional and special services
The year-to-date expenditures related to professional and special services decreased by $2,182 thousand (-25%) compared to the same period of the previous fiscal year, from $8,681 thousand to $6,499 thousand. This includes a $41 thousand (1%) increase in third quarter expenditures compared to the same quarter in 2019-20 from $2,922 thousand to $2,963 thousand. The COVID 19 pandemic and measures to combat the spread of the virus also resulted in some reductions in expenditures. Impacts were mainly on protection services, business services, informatics services, translation services, engineering and architectural services and management consulting, due to increased remote work and the reduction of operations to focus on critical services.
The year-to-date expenditures related to rentals increased by $387 thousand (18%) compared to the same period of the previous fiscal year, from $2,198 thousand to $2,585 thousand. This includes a $170 thousand (31%) increase in the third quarter compared to the same quarter of the previous fiscal year, from $554 thousand to $724 thousand. This increase was mainly due to significant increases in software license and maintenance fees for applications and networking software, to enable virtual court hearings and remote operations due to the COVID-19 pandemic.
Utilities, materials and supplies
The year-to-date expenditures related to utilities, materials and supplies increased by $1,391 thousand (77%) compared to the same period of the previous fiscal year, from $1,805 thousand to $3,196 thousand. This includes a $719 thousand (158%) increase in third quarter expenditures compared to the same quarter in 2019-20, from $455 thousand to $1,174 thousand. The increase was mainly due to requirements for miscellaneous manufactured articles such as personal protective equipment, masks, safety glasses and acrylic shields to prevent the spread of COVID 19.
Acquisition of land building and works
The year-to-date expenditures related to acquisition of land building and works increased by $3,107 thousand (254%) compared to the same period of the previous fiscal year, from $1,223 thousand to $4,330 thousand. This includes a $521 thousand (57%) increase in third quarter expenditures compared to the same quarter in 2019-20, from $920 thousand to $1,441 thousand. This increase was mainly driven by the leasehold improvements of CAS offices, especially in Ottawa and Calgary.
Remaining expenditures (information, repair and maintenance, acquisition of machinery and equipment, and other subsidies and payments)
For the remaining expenditures, the variances are immaterial and relate mainly to timing of the delivery of goods and services.
1 Significant variances are defined as variances by standard object that are greater than $250 thousand or 25%.
Risks and Uncertainties
CAS received funding in 2020-21 to continue the Definition Phase of the Courts and Registry Management System Project, for the delivery of justice, and for expenditures incurred due to the COVID-19 pandemic.
The impacts of COVID-19 and related measures to prevent the spread are expected to continue for the foreseeable future, requiring continued expenditures, such as for personal protective equipment, increased cleaning and specialized sanitization. In addition, CAS’s significant distribution of informatics equipment and software applications in 2020-21 will result in ongoing costs for licenses and maintenance. As such, CAS will require ongoing funding beginning in 2021-22 to offset these costs and prevent impacts on its program integrity.
As explained in the Risk Management Mitigation Strategies, CAS has received on-going funding to address many other areas of concerns.
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 facility rental. These costs are mostly driven by the number, type and duration of hearings conducted in any given year, which are non-discretionary and limit the organization's financial flexibility.
The outbreak of the Coronavirus disease “COVID-19” pandemic has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures include the implementation of travel bans, quarantine periods and social distancing. The duration and global impact of the COVID-19 outbreak are unknown at this time. During the quarter, CAS supported the courts in providing critical services. Given that measures to combat the spread of the virus are expected to continue for the foreseeable future, CAS has identified its funding requirements for 2021-22 and beyond.
CAS continues to address the risks to its program integrity, including reorganizing and realigning services, reallocating resources, and regular reassessment of priorities, while seeking efficiencies wherever possible. CAS has developed an efficient Enterprise Risk Management (ERM) process, which includes management participation at the organization’s highest levels. 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 have initiated discussions 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.
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.
In 2018–19, CAS’s Departmental Results Framework was revised, identifying e-courts and court security as separate programs, in addition to the judicial and registry programs. This change reflects the current, unique needs of the Courts and will allow CAS to better measure and report on results in these areas.
Approval by Senior Officials
Original signed by
Darlene H. Carreau, LLB
Deputy Head Chief Administrator
Original signed by
Francine Côté, CPA, CA, CISA
Chief Financial Officer Deputy Chief Administrator, Corporate Services
(March 1, 2021)
|Fiscal year 2020-21||Fiscal year 2019-20|
|Total available for use for the year ending March 31, 20211||Used during the quarter ended December 31, 2020||Year-to-date used at quarter-end||Total available for use for the year ending March 31, 20201||Used during the quarter ended December 31, 2019||Year-to-date used at quarter-end|
|Vote 1 – Operating expenditures||92,287||24,792||63,588||87,778||21,356||58,654|
|Contributions to employee benefit plans||8,277||1,306||5,226||7,970||1,963||5,889|
|Spending of proceeds from the disposal of surplus Crown assets||-||-||-||-||-||-|
|Refunds of amounts credited to revenues in previous years||-||-||-||-||-||1|
|Total budgetary authorities||100,564||26,098||68,814||95,748||23,319||64,544|
1- Includes only Authorities available for use and granted by Parliament at quarter-end.
|Expenditures:||Fiscal year 2020-21||Fiscal year 2019-20|
|Planned expenditures for the year ending March 31, 2021||Expended during the quarter ended December 31, 2020||Year-to-date used at quarter-end||Planned expenditures for the year ending March 31, 2020||Expended during the quarter ended December 31, 2019||Year-to-date used at quarter-end|
|Transportation and communications||3,882||444||1,178||3,229||900||1,932|
|Professional and special services||15,511||2,963||6,499||15,183||2,922||8,681|
|Repair and maintenance||1,302||145||229||1,053||184||289|
|Utilities, materials and supplies||3,083||1,174||3,196||2,641||455||1,805|
|Acquisition of land, building and works||4,098||1,441||4,330||5,329||920||1,223|
|Acquisition of machinery and equipment||4,817||713||1,418||5,506||697||1,450|
|Other subsidies and payments||3||2||8||7||-75||23|
|Total budgetary expenditures||100,564||26,098||68,814||95,748||23,319||64,544|
Amounts may not balance with other public documents due to rounding.
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