Quarterly Financial Report - For the quarter ended December 31, 2021
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 administrative services to four superior courts of law: 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 2021-22 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 2021-22 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 monies can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or 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, yearly authorities available for use as at December 31, 2021 decreased by $2,720 thousand (-3%) compared to the same quarter in 2020-21, from $100,564 thousand to $97,844 thousand.
The decrease in authorities is mainly due to reductions in funding received for leasehold improvement projects and CAS Program Integrity. These reductions were partially offset by an increase in authorities received from Treasury Board central votes related to the ratified collective bargaining agreements.
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.
Significant Changes to Expenditures
Figure 1 presents current and prior fiscal year expenditures compared to annual authorities at 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 2021-22, authorities totalled $97,844 thousand compared to $100,564 thousand at the end of the same quarter of 2020-21.
At the end of the third quarter of 2021-22, expenditures totalled $65,351 thousand compared to $68,814 thousand at the end of the same quarter of 2020-21.
As illustrated in Figure 1, third-quarter expenditures decreased by $3,673 thousand (-14%) compared to the same period of the previous fiscal year, from $26,098 thousand to $22,425 thousand. As a result, 23% of the yearly authorities available for use were expended during the third quarter of 2021-22, which reflects a decrease of 3% compared to the same quarter of 2020-21.
Also, year-to-date expenditures decreased by $3,463 thousand (-5%) compared to the same period of the previous fiscal year, from $68,814 thousand to $65,351 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 2021-22, which reflects a decrease of 1% compared to the same period of fiscal year 2020-21.
Changes in year-over-year expenditures were in part due to COVID-19 measures that needed to be put in place in 2020-21 in order 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 in the fourth quarter of 2020-21.
Significant variances1 in expenditures are explained as follows:
The year-to-date expenditures related to personnel have increased by $2,449 thousand (5%) compared to the same period of the previous fiscal year, from $49,051 thousand to $51,500 thousand. The increases in personnel expenditures were principally driven by the signature of the new collective agreements, which resulted in increases in salaries.
The year-to-date expenditures related to information increased by $109 thousand (34%) compared to the same period of the previous fiscal year, from $320 thousand to $429 thousand. This increase was mainly driven by an increase in electronic subscriptions and yearly cost increase of publications for the judicial library.
Professional and special services
The year-to-date expenditures related to professional and special services decreased by $301 thousand (-5%) compared to the same period of the previous fiscal year, from $6,499 thousand to $6,198 thousand. This decrease was mainly due to a decrease in IT consultant expenses and translation services, partially offset by an increase in protection services.
The year-to-date expenditures related to rentals decreased by $757 thousand (-29%) compared to the same period of the previous fiscal year, from $2,585 thousand to $1,828 thousand. This decrease was mainly due to the timing of office buildings rental invoices between quarters.
Repair and maintenance
The year-to-date expenditures related to repair and maintenance increased by $178 thousand (78%) compared to the same period of the previous fiscal year, from $229 thousand to $407 thousand. The increase in expenditures was mainly attributable to an increase in repairs of office buildings.
Utilities, materials and supplies
The year-to-date expenditures related to utilities, materials and supplies decreased by $740 thousand (-23%) compared to the same period of the previous fiscal year, from $3,196 thousand to $2,456 thousand. The COVID-19 pandemic required the implementation of measures for the safe return to in-person court operations, such as personal protection equipment and acrylic shields. The amounts spent on these measures in 2021-22 decreased compared to 2020-21.
Acquisition of land, building and works
The year-to-date expenditures related to acquisition of land building and works decreased by $3,791 thousand (-88%) compared to the same period of the previous fiscal year, from $4,330 thousand to $539 thousand. This decrease was mainly driven by the timing of leasehold improvements for reconfiguration of office buildings, including the completion of projects related to courtrooms and judicial spaces early in 2020-21.
Acquisition of machinery and equipment
The year-to-date expenditures related to acquisition of machinery and equipment decreased by $841 thousand (-59%) compared to the same period of the previous fiscal year, from $1,418 thousand to $577 thousand. In the previous fiscal year, due to the COVID-19 pandemic, there were significant acquisitions of informatics equipment, office equipment and furniture, resulting in a comparative decrease in these expenditures in 2021-22.
Remaining expenditures (transportation and communications, and other subsidies and payments)
Immaterial variances compared to the same period of the previous fiscal year are the results of the COVID-19 pandemic and the 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 (CRMS) Project, for the delivery of justice, and for the expenditures incurred due to the COVID-19 pandemic. Following consultations with the industry and refinement of the project scope and approach, new risks were identified regarding the feasibility to continue as planned with the initial scope and approach of the CRMS project.
In Budget 2021, CAS received one-time funding for COVID-19 related costs in 2021-22 and ongoing funding for judicial appointments for the Federal Court of Appeal and the Tax Court of Canada. Pending Royal Assent for Supplementary Estimates C, funding from Budget 2021 is not included in CAS authorities for the period ending December 31, 2021. The Supplementary Estimates C funding will be received prior to March 31, 2022.
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 distancing, personal protective equipment, increased cleaning and specialized sanitization. In addition, CAS’s increased resourcing costs related to supporting court operations, as well as significant IT costs, including hardware, software and bandwidth in 2020-21, will result in ongoing costs for licenses and maintenance. As such, CAS will require additional funding in the coming years to offset these costs and prevent impacts on its program integrity. As mentioned above, COVID-19 funding provided in Budget 2021 is for 2021-22 only.
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 rentals. 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.
Funding for CRMS was provided for the Definition Phase to define requirements, initiate digitization activities, and issue a request for proposals prior to advancing to the execution phase of the project. The Definition Phase has been extended to allow for further consultation with the industry and refinement of the project scope and approach. As mentioned above, based on the new risks identified, CAS is currently reviewing the scope and considering alternative approaches. The result of these reviews will allow CAS to refine the costing of the project before moving ahead with the next phases.
The outbreak of the 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 and addressing backlogs as applicable. Given that measures to combat the spread of the virus, including hybrid/virtual proceedings and other investments to better support the Courts (e-filing, digital documents, online services), are expected to continue for the foreseeable future, CAS has identified the need for additional funding beyond 2021-22.
CAS continues to address the risks to its program integrity, including baselining budgets, establishment of multi-year budgets, reorganizing and realigning services, reallocating resources, and regular reassessment of priorities, exploring alternate funding models while seeking efficiencies wherever possible. The Courts have important facilities requirements that create financial pressures, and CAS is looking at solutions. 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.
Significant changes in relation to operations, personnel and programs
The COVID-19 pandemic has created additional pressures on CAS’ capacity to ensure efficient and effective modernized and e-enabled services for the Courts, while protecting health and safety.
There have been significant changes to the executive management team since October 1, 2021:
- Wayne Lepine was appointed to the position of Deputy Chief Administrator, Judicial and Registry Services effective October 4, 2021.
- Jean-François Talbot was appointed to the position of Executive Director, Corporate Services and CFO effective November 15, 2021
Approval by Senior Officials
Original signed by
Darlene H. Carreau, LL.B
Original signed by
Executive Director, Corporate Services
Chief Financial Officer
(February 28, 2022)
|Fiscal year 2021-22||Fiscal year 2020-21|
|Total available for use for the year ending March 31, 20221||Used during the quarter ended December 31, 2021||Year-to-date used at quarter-end||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|
|Vote 1 – Operating expenditures||89,609||21,048||59,856||92,287||24,792||63,588|
|Contributions to employee benefit plans||8,235||1,372||5,490||8,277||1,306||5,226|
|Spending of proceeds from the disposal of surplus Crown assets||-||-||-||-||-||-|
|Refunds of amounts credited to revenues in previous years||-||5||5||-||-||-|
|Total budgetary authorities||97,844||22,425||65,351||100,564||26,098||68,814|
1 - Includes only Authorities available for use and granted by Parliament at quarter-end.
|Expenditures:||Fiscal year 2021-22||Fiscal year 2020-21|
|Planned expenditures for the year ending March 31, 2022||Expended during the quarter ended December 31, 2021||Year-to-date used at quarter-end||Planned expenditures for the year ending March 31, 2021||Expended during the quarter ended December 31, 2020||Year-to-date used at quarter-end|
|Transportation and communications||2,970||636||1,408||3,882||444||1,178|
|Professional and special services||14,582||2,229||6,198||15,511||2,963||6,499|
|Repair and maintenance||842||214||407||1,302||145||229|
|Utilities, materials and supplies||2,814||728||2,456||3,083||1,174||3,196|
|Acquisition of land, building and works||2,702||353||539||4,098||1,441||4,330|
|Acquisition of machinery and equipment||3,796||151||577||4,817||713||1,418|
|Other subsidies and payments||7||6||9||3||2||8|
|Total budgetary expenditures||97,844||22,425||65,351||100,564||26,098||68,814|
Groupings can change between quarters due to materiality of initiatives.
Amounts may not balance with other public documents due to rounding.
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