Quarterly Financial Report, For the Quarter ended June 30, 2016

Introduction

This quarterly report has been prepared by management of Correctional Service of Canada (CSC) as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. This quarterly report should be read in conjunction with the Main Estimates and Supplementary Estimates. This report has not been subject to an external audit or review.

The purpose of the federal correctional system, as defined by law, is to contribute to the maintenance of a just, peaceful and safe society by carrying out sentences imposed by courts through the safe and humane custody and supervision of offenders; and by assisting the rehabilitation of offenders and their safe reintegration into the community as law-abiding citizens through the provision of programs in penitentiaries and in the community (Corrections and Conditional Release Act, s.3). A summary description of CSC's program activities can be found in Part II of the 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 the CSC's spending authorities granted by Parliament and those used by the organization, consistent with the Main Estimates and Supplementary Estimates (A) for which full supply was released on June 23, 2016Footnote 1. This quarterly report has been prepared using a special purpose 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.

CSC uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

CSC has an active Revolving Fund (CORCAN) which is included in the statutory votes of the enclosed Statement of Authorities.  CORCAN's purpose is to aid in the safe reintegration of offenders into Canadian society by providing employment and training opportunities to offenders incarcerated in federal penitentiaries and, for brief periods of time, after they are released into the community. CORCAN has a continuing non-lapsing authority from Parliament to make payments out of the Consolidated Revenue Fund (CRF) for working capital, capital acquisitions and temporary financing of accumulated operating deficits, the total of which is not to exceed $5.0 million at any time.

Highlights of Fiscal Quarter and Fiscal Year to Date (YTD) Results

The following graph provides a comparison of the net budgetary authorities and expenditures as of June 30, 2016 and June 30, 2015 for CSC's combined Operating, Capital and Budgetary Statutory Authorities.

Net Budgetary Authorities and Expenditures

graph: Net Budgetary Authorities and Expenditures

Net Budgetary Authorities and Expenditures

This graph depicts the net budgetary authorities as $2,363,444 and the year to date net expenditures as $481,441 for the first quarter ending June 30, 2016. In 2015-2016, the net budgetary authorities were $2,359,871 for the first quarter ending June 30, 2015 and the year to date net expenditures were $505,588.

Significant Changes to Authorities

As reflected in the Statement of Authorities for the period ending June 30, 2016, CSC has seen an increase in total net authorities of $3.6 million or 0.15% for the current fiscal year compared to the previous fiscal year.

Operating Vote

CSC's Operating Vote decreased by $3.2 million or 0.2% compared to the authorities at the end of June 2015, which is attributed to the net effect of the following items:

  • A decrease of $2.1 million related to an increase in CSC's contribution to the Canada School of Public Service under its new service delivery model (CSC's contribution in 2016-2017 is $4.1 million compared to $2.0 million in 2015-2016);
  • A decrease of $1.0 million related to the Federal Contaminated Sites Action Plan;
  • A decrease of $1.0 million related to the National Infrastructure Contribution Program due to adjustment to reprofiling of funds in previous year;
  • A net decrease of $0.2 million related to miscellaneous adjustments; and
  • An increase of $1.1 million related to the implementation of the Canadian Victims Bill of Rights.

Capital Vote

CSC's Capital Vote has not significantly changed compared to the authorities at the end of June 2015.  However, this minor change is a net effect of the following items:

  • A decrease of $8.9 million for Supplementary Estimates (A) received in 2015-2016 related to the 2014 Federal Infrastructure Initiative;
  • A net decrease of $0.6 million related to miscellaneous adjustments;
  • An increase of $5.1 million in capital investments mainly due to reprofiling of funds in previous years; and
  • An increase of $4.3 million from the Accelerated Infrastructure Program.

Budgetary Statutory Authorities

CSC's Budgetary Statutory Authorities increased by $6.8 million or 2.8% mainly due to the department's allocation of the employer's share of the Employee Benefit Plan and the proceeds from the disposal of surplus Crown assets.

Explanation of Significant Variances from Previous Year Expenditures

Compared with the first quarter of the previous fiscal year, total net budgetary expenditures decreased by $24.2 million or 4.8% due to multiple factors:

  • A decrease of $6.0 million in personnel expenditures as a result of the implementation of saving measures to achieve administrative efficiencies within National Headquarter and Regional Headquarters' organizational structures. Additionally, a decrease of $10.8 million as a result of a timing issue with interdepartmental invoicing for CSC's portion of the Federal Worker's Compensation expenditure; and
  • A decrease of $6.7 million in other subsidies and payments expenditures which is mainly due to the timing difference between the payment and recovery of certain program expenditures.
(in millions of dollars)
Departmental Budgetary Expenditures Quarter Over Quarter
Total Net Budgetary Expenditures 2015-2016 505.6
Total Net Budgetary Expenditures 2016-2017 481.4
Variance (24.2)
Explanation of Variances by Standard Object
(16.8)
(6.7)
  • Other
(0.7)
  • Total
(24.2)

Risks and Uncertainties

CSC's Report on Plans and Priorities (RPP) identifies the current risk environment and CSC's key risk areas to the achievement of its strategic outcomes.

In the 2013 Speech from the Throne, the Government of Canada announced it will freeze the overall federal operating budget. Consequently, CSC will have to fund the increases in salary resulting from collective agreements that take effect during the freeze period (2014-2015 and 2015-2016), and for the ongoing impact of those adjustments.

CSC continues to review its operation to address the budgetary constraints resulting from the operating budget freeze.

CSC's specific risks, as outlined in the RPP of 2016-2017 , are the increasingly diverse and evolving profile of the offender population, the maintenance of required levels of operational safety and security in institutions and the community, the ability to manage significant change related to transformation, legislative changes and fiscal constraints, the potential loss of partners delivering critical services and providing resources for offenders and the need to sustain results related to violent reoffenders.

CSC has put in place risk mitigation strategies to address the stated potential risks. The integrated approach allows CSC to handle risk-related challenges, ensure operational sustainability and fulfill its mandate.

Significant Changes in Relation to Operations, Personnel and Programs

During the first quarter of 2016-2017, there have been no significant changes in relation to operations, personnel and programs.

Approvals by Senior Officials
Approved by:

 

Original signed by
_______________
Gregory Hall, MBA, CPA, CMA
A/Chief Financial Officer

Original signed by
_______________
Don Head, Commissioner

Ottawa, Canada
August 12, 2016

Statement of Authorities (unaudited)

(in thousands of dollars)
Expenditures Fiscal Year 2016-2017 Fiscal Year 2015-2016
Total available for use for the year ending
March 31, 2017*
Used during the quarter ended June 30, 2016 Year to date used at quarter-end Total available for use for the year ending
March 31, 2016*
Used during the quarter ended June 30, 2015 Year to date used at quarter-end
Vote 1 - Operating Expenditures 1,925,556 406,032 406,032 1,928,747 432,159 432,159
Vote 5 - Capital Expenditures 185,712 11,670 11,670 185,794 12,259 12,259
Budgetary Statutory Authorities
CORCAN Gross Expenditures 92,605 15,430 15,430 79,462 16,350 16,350
CORCAN Gross Revenues (92,605) (15,371) (15,371) (79,462) (16,379) (16,379)
CORCAN Net Expenditures (Revenues) - 59 59 - (29) (29)
Contributions to employee benefit plans 251,324 63,674 63,674 244,798 61,199 61,199
Spending of proceeds from the disposal of surplus Crown assets 852 6 6 532 - -
Total Budgetary Authorities 2,363,444 481,441 481,441 2,359,871 505,588 505,588
Non-Budgetary Authorities 45 - - 45 - -
Total Authorities 2,363,489 481,441 481,441 2,359,916 505,588 505,588

More information is available on the following page.
* Includes only Authorities available for use and granted by Parliament at quarter-end.

Departmental Budgetary Expenditures by Standard Object (unaudited)

(in thousands of dollars)
Expenditures Fiscal Year 2016-2017 Fiscal Year 2015-2016
Planned expenditures for the year ending
March 31, 2017
Expended during the quarter ended June 30, 2016 Year to date used at quarter-end Planned expenditures for the year ending
March 31, 2016
Expended during the quarter ended June 30, 2015 Year to date used at quarter-end
Personnel 1,759,208 405,032 405,032 1,740,664 421,870 421,870
Transportation and communications 18,915 3,786 3,786 25,486 2,977 2,977
Information 545 34 34 615 77 77
Professional and special services 259,200 44,126 44,126 284,716 45,408 45,408
Rentals 16,059 3,528 3,528 21,011 1,796 1,796
Repair and maintenance 20,214 2,372 2,372 17,286 1,204 1,204
Utilities, materials and supplies 123,073 20,194 20,194 117,694 23,295 23,295
Acquisition of land, buildings and works* 135,170 7,631 7,631 149,069 9,602 9,602
Acquisition of machinery and equipment* 46,694 2,483 2,483 37,258 1,950 1,950
Transfer payments 4,820 675 675 5,962 121 121
Other subsidies and payments 72,151 6,951 6,951 39,572 13,667 13,667
Total Gross Budgetary Expenditures 2,456,049 496,812 496,812 2,439,333 521,967 521,967
Less Revenues Netted Against Expenditures
CORCAN (92,605) (15,371) (15,371) (79,462) (16,379) (16,379)
Total Net Budgetary Expenditures 2,363,444 481,441 481,441 2,359,871 505,588 505,588

* These are mainly Vote 5 (Capital) expenditures

Footnotes

Footnote 1

Released through Orders in Council P.C. 2016-0652 and P.C. 2016-0653.

Return to footnote 1 referrer

Footnote 2

The variances mainly explain the decrease in Vote 1 - Operating Expenditures as presented in the Statement of Authorities.

Return to footnote 2 referrer Return to footnote 2a referrer