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Quarterly Financial Report
For the quarter ended June 30, 2011

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

Introduction

This quarterly report has been prepared by management 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.

A summary description of the Canada Border Services Agency (CBSA) 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 CBSA's spending authorities granted by Parliament and those used by the department, consistent with the Main Estimates and Supplementary Estimates for the 2011-2012 fiscal year. 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.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

As part of the departmental performance reporting process, the CBSA prepares its annual departmental financial statements on a full accrual basis in accordance with Treasury Board accounting policies, which are based on Canadian Generally Accepted Accounting Principles (GAAP) for the public sector. However, the spending authorities voted by Parliament remain on an expenditure basis.

The quarterly report has not been subject to an external audit or review.

Highlights of fiscal quarter and fiscal year to date (YTD) results

This section highlights the significant items that contributed to the net increase in resources available for the year and actual expenditures for the quarter ended June 30.

Graph 1:

Significant Changes to Authorities

As at June 30, 2011, total authorities available for the year have increased by $214.4 million, or 13% compared to the same quarter of the previous year, from $1,632.1 million in 2010-11 (comprised of Main Estimates and Supplementary Estimates (A)) to $1,846.5 million in 2011-12 (comprised of Main Estimates only).

Total authorities variance in Main Estimates only was an increase of $227.1 million, from $1,619.4 million to $1,846.5 million, once Supplementary Estimates (A) funding is excluded.  There was $12.7 million in Supplementary Estimates (A) funding in 2010-11 and none in 2011-12. 

The $227.1 million increase is mainly made up of the following items that have been grouped into four main categories, cash flow (redistribution of funding), growth (new funding), technical adjustments and off-sets (funding cuts):

Cash Flow

  • Re-alignment between fiscal years, consistent with the Economic and Fiscal Statement actions to improve spending projections; 
  • Arming the Canada Border Officers at the border and addressing work-alone situations;
  • E-Manifest initiative

Growth

  • Continued and secure border services;
  • Reform of Canada's refugee determination system (Balanced Refugee Reform Act);
  • Accounts Receivable Ledger project;
  • Modernization of three ports of entry in British Columbia (Kingsgate, Pacific Highway, Huntingdon) and one in Ontario (Prescott) which supports the economic recovery plan of the government

Technical Adjustment

  • Contributions to employee benefit plan due to the rate increase from 17% to 18%.

Off-sets

  • Implementation of Strategic Review reallocations
  • Implementation of Budget 2010 cost containment measures

Significant Changes to Gross Budgetary Expenditures

Compared to the previous year, total gross budgetary expenditures recorded in the first quarter, ending June 30, 2011 increased by $27.9 million, from $384.2 million to $412.1 million as per the Table 1: Departmental budgetary expenditures by Standard Object. This represents an increase of 7.26% of expenditures recorded for the same period in 2010-2011.

Personnel expenditures have increased by $18.1 million from $282 million to $300.1 million, while professional and special services have increased by $10.5 million, from $77.2 million to $ 87.7 million.
 
Total expenditure and authority increases have not increased proportionately for the first quarter from 2010-11 to 2011-12.  This is as a result of general project delays and timing of expenditures, as certain projects expenditures have not yet been incurred.

Risks and Uncertainties

To a large extent, the movement of people and goods across the border is driven by factors beyond the CBSA's control, including economic and social factors, both in Canada and globally. This makes it difficult for the Agency to predict with certainty the type and volume of its workload from year to year.

Internal risks having a potential financial impact include:

  • Human resources capacity to meet demand, and skill shortages;
  • Potential rust out of key legacy management and information technology infrastructure, resulting in lost services and efficiencies;
  • Unplanned events such as MV Sunsea;
  • Capital Infrastructure delays.

This Departmental Quarterly Financial Report (QFR) reflects the results of the current fiscal period in relation to the Main Estimates (and Supplementary Estimates (A) as applicable) for which full supply was released on June 27, 2011.

Budget 2010 announced that the operating budgets of departments would be frozen at their 2010-11 levels for the fiscal years 2011-12 and 2012-13. Management is reviewing various options to adjust to this constraint in funding and the impacts on departmental activities have been managed through mitigation strategies.

Budget 2011 announced that departmental budgets would be examined through a Strategic and Operating Review.  Pursuant to this review, it is expected that future years' budgets will be reduced for fiscal years commencing in 2012-13.  However, at this time the nature and extent of any reductions are not known.

Significant Changes in Relation to Operations, Personnel and Programs

There have been a number of changes to senior level personnel, most notably the appointment of a new President on November, 2010 and new Executive Vice-President on January 31, 2011.

There have also been significant internal changes in relation to operations, personnel and programs over the last year, all in an effort to build a more robust and adaptive Agency that can better react to any program and/or service delivery situations.  Key examples of these changes include the Agency's Change Agenda and Strategic Review implementations.

Approval by Senior Officials

Approved by:

Luc Portelance
President
Sylvain St-Laurent
Chief Financial Office



Canada Border Services (Agency Activities)

Quarterly Financial Report

For the quarter ended June 30, 2011

Statement of Authorities (Unaudited)

  Fiscal Year 2011-2012   Fiscal Year 2010-2011
(in thousands of dollars) Total available for use for the year ending March 31, 2012* Used during the quarter ended June 30, 2011 Year-to-date used at quarter end   Total available for use for the year ending March 31, 2011* Used during the quarter ended June 30, 2010 Year-to-date used at quarter end
               
Vote 10 - Net Operating Expenditures 1,551,632 358,539 358,539   1,360,688 341,029 341,029
Vote 15 - Capital Expenditures 113,930 8,285 8,285   107,692 2,155 2,155
Budgetory statutory authorities 0 0 0   0 0 0
Employee benefit plans 180,893 45,223 45,223   163,702 40,926 40,926
Other   47 47     74 74
Total Budgetary authorities 1,846,456 412,094 412,094   1,632,082 384,184 384,184

* Includes authorities available for use and granted by Parliament at quarter-end

Canada Border Services (Agency Activities)

Quarterly Financial Report

For the quarter ended June 30, 2011

Table 1: Departmental Budgetary Expenditures by Standard Object (Unaudited)

  Fiscal Year 2011-2012   Fiscal Year 2010-2011
(in thousands of dollars) Planned expenditures for the year ending March 31, 2012* Expended during the quarter ended June 30, 2011 Year-to-date used at quarter end   Planned expenditures for the year ending March 31, 2011* Expended during the quarter ended June 30, 2010 Year-to-date used at quarter end
               
Expenditures:              
Personnel 1,185,854 300,106 300,106   1,129,642 281,993 281,993
Transportation and communications 77,090 10,166 10,166   76,794 10,121 10,121
Information 2,834 186 186   2,244 133 133
Professional and special services 389,846 87,657 87,657   283,481 77,152 77,152
Rentals 10,450 1,248 1,248   5,833 1,315 1,315
Repair and maintenance 31,583 2,437 2,437   21,254 3,318 3,318
Utilities, materials and supplies 34,281 2,285 2,285   22,591 2,152 2,152
Acquisition of land, buildings and works 25,763 6,387 6,387   86,726 3,063 3,063
Acquisition of machinery and equipment 84,083 1,141 1,141   18,517 3,392 3,392
Transfer payments 0 0 0   0 0 0
Other subsidies and payments 14,381 447 447   2,709 1,545 1,545
Total gross budgetary expenditures 1,856,166 412,060 412,060   1,649,792 384,184 384,184
               
Less Revenues netted against expenditures:              
Sales of Services (9,710) 0 0   (17,710) 0 0
Other Revenue 0 (34) (34)   0 0 0
Total Revenues netted against expenditures: (9,710) (34) (34)   (17,710) 0 0
Total net budgetary expenditures 1,846,456 412,026 412,026   1,632,082 384,184 384,184

* Includes authorities available for use and granted by Parliament at quarter-end