Quarterly Financial Report - For the quarter ended December 31, 2023

Statement outlining results, risks and significant changes in operations, personnel and programs

Introduction

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 2023-24 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 2023-24 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, 2023 increased by $27,375 thousand (25%) compared to the same quarter in 2022-23, from $108,052 thousand to $135,427 thousand.

The increase in authorities is mainly related to $18,663 thousand of funding received for the National Courts Facilities Modernisation Program – Phase I, $5,152 thousand of funding received to Strengthen Service and Digital Capabilities to Modernize Canada’s Federal Courts, $6,846 thousand of funding related to the signature of collective agreements and executive salary agreements, $4,208 thousand Budget 2022 funding announcement to support the creation of new judicial positions. It also includes a $3,196 thousand reprofile from 2022-23 to 2023-24 related to these positions.

The above increases are offset by the decrease of $4,014 thousand from a one-time reprofile relating to COVID measures, a decrease of $3,436 thousand in funding to support the delivery of justice for facilities related projects, $1,981 thousand resulting from the sunsetting funding related to the Asylum System, $1,142 decrease in operating budget carry-forward, and $117 thousand decrease for other various smaller initiatives.

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.

Third-quarter Expenditures

As illustrated in Figure 1, third-quarter expenditures increased by $8,980 thousand (37%) compared to the same period of the previous fiscal year, from $24,312 thousand to $33,292 thousand. As a result, 25% of the yearly authorities available for use were expended during the third quarter of 2023-24, compared to 23% for the same quarter of 2022-23.

Significant variances¹ in expenditures are explained as follows:

Personnel

The year-to-date expenditures related to personnel increased by $10,740 thousand (20%) compared to the same period of the previous fiscal year, from $52,718 thousand to $63,458 thousand. This increase is considered important when compared to the same period last year, and was largely driven by the signature of the collective agreements resulting in retroactive pay and higher salaries. The remaining increase is related to the funding received for the National Courts Facilities Modernization Program – Phase I and the Capabilities to Modernize Canada’s Federal Courts to build capacity within the Digital Services Branch.

Professional and special services

The year-to-date expenditures related to professional and special services increased by $1,419 thousand (18%) compared to the same period of the previous fiscal year, from $8,019 thousand to $9,438 thousand. This increase was mainly due to an increase in engineering and architectural services to support the National Courts Facilities Modernisation Program - Phase I. As well as timing variations related to the processing of invoices for translation, and protection services between quarters in the prior year

Rentals

The year-to-date expenditures related to rentals increased by $1,129 thousand (39%) compared to the same period of the previous fiscal year, from $2,866 thousand to $3,995 thousand. This increase was partly due to an increase in renewal fees of annual software licenses and maintenance fees as well as to timing variations related to the processing of invoices for office buildings rental between quarters in the prior year.

Purchased repair and maintenance

The year-to-date expenditures related to purchased repair and maintenance decreased by $196 thousand (-45%) compared to the same period of the previous fiscal year, from $437 thousand to $241 thousand. The decrease in expenditures is mainly due to the timing and variations relating to the required work as well as the processing of invoices in Q4.

Acquisition of land, building & works

The year-to-date expenditures related to acquisition of land building and works increased by $54 thousand (68%) compared to the same period of the previous fiscal year, from $80 thousand to $134 thousand. This increase, considered immaterial in value, is due to the timing of leasehold improvements for which costs can vary from year to year depending on the stage of each project.

Other subsidies and payments

The year-to-date expenditures related to other subsidies and payments increased by $2 thousand (100%) compared to the same period of the previous fiscal year, from $2 thousand to $4 thousand. This increase, considered immaterial in value, is mainly due to various administration charges for services.

Remaining expenditures compared to the same period of the previous fiscal year are considered as immaterial variations (transportation and telecommunication, information, utilities, materials and supplies, and acquisition of machinery & equipment).

¹ Significant variances are defined as variances by standard object that are greater than $250 thousand or 25%.

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-courts. They include translation services, protection services, digital services, court reporters, transcripts, deputy judges, court ushers and court facility rentals. These costs are mostly driven by the volume, type and duration of hearings conducted in any given year, which are non-discretionary and can limit the organization's financial flexibility.

Amendments to the Official Languages Act will come into force in June 2024, requiring CAS to release in both official languages simultaneously decisions of precedential value, in addition to cases that raise questions of law of general public interest or national importance. The impact on CAS’ operations will be very significant and resource intensive. A risk exists that CAS does not have the appropriate level of resources to meet these new legislative requirements. Recognizing the importance of our official language obligations, CAS has prioritized securing appropriate funding to ensure Canadians are able to access court decisions in the official language of their choice, as part of our commitment to access to justice.

CAS continues to address the risks associated with the lack of financial flexibility by implementing internal mitigation strategies such as baselining budgets, establishment of multi-year budgets; reorganizing and realigning services, reallocating resources, performing a regular reassessment of priorities; exploring alternate funding models and seeking efficiencies wherever possible.

Through different reviews and consultations, a low level of digital maturity within the organization has been identified. The potential risk will be addressed by investing in CAS digital foundations. CAS has started by increasing internal capacity.

Significant changes in relation to operations, personnel and programs

Sébastien Delisle-Côté was appointed to the position of Deputy Chief Digital Officer, effective October 3, 2023.

Diane Sokolyk was appointed to the position of Regional Director General, Eastern Region, effective October 30, 2023.

Approval by Senior Officials

Approved by:

(Ottawa, Canada)
(February 26, 2024)

¹ - Includes only authorities available for use and granted by Parliament at quarter-end.

Groupings can change between quarters due to materiality of initiatives.

Amounts may not balance with other public documents due to rounding..

Date modified:

2024-02-28