Canada Border Services Agency Quarterly Financial Report
For the quarter ended June 30, 2018

1. Introduction

This Quarterly Financial Report (QFR) has been prepared 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, Supplementary Estimates A, Canada’s Economic Action Plan 2017 (Budget 2017) and Canada’s Economic Action Plan 2018 (Budget 2018).

A summary description of the Canada Border Services Agency (CBSA) program activities can be found in Part II of the Main Estimates, and a detailed description in Part III Departmental Plan.

The QFR has not been subjected to an external audit or review.

1.1 Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting.  The accompanying Statement of Authorities (Table 1) includes the Department's spending authorities granted by Parliament, and those used by the Department consistent with the Main Estimates and Supplementary Estimates (as applicable) for the 2017-2018 and 2018-2019 fiscal years.  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 money 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. 

The Department 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.

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

This section highlights the significant items that contributed to the net increase or decrease in resources available for the year and actual expenditures as of the quarter ended June 30, 2018.

2.1 Significant Changes to Authorities

For the period ending June 30, 2018, the authorities provided to the CBSA comprise of the Main Estimates and Treasury Board (TB) approved Budget 2018 measures.  For the period ending June 30, 2017, the authorities provided to the CBSA comprise of the Main Estimates and Supplementary Estimates A. 

The Statement of Authorities (Table 1) presents a net decrease of $26.8 million or 1.4% in the Agency’s total authorities of $1,952.5 million at June 30, 2018 compared to $1,979.3 million total authorities at the same quarter last year.

This net decrease in the authorities available for use is the result of a decrease in Vote 1 – Operating Expenditures of $19.8 million, a decrease in Vote 5 – Capital of $9.1 million and an increase in Budgetary Statutory Authorities of $2.1 million, as detailed below:

Vote 1 – Operating

The Agency’s Vote 1 Operating decreased by $19.8 million or 1.2%, which is attributed to the net effect of the following significant items (excluding the statutory authorities):

Increases are mainly attributed to:

• $73.7 million in funding for Strengthening the CBSA (Integrity);
• $46.1 million in funding for Irregular Migration;
• $6.5 million in funding to Implement and administer a Federal framework to legalize and regulate cannabis;
• $6.4 million in funding for the Temporary Foreign Worker program;
• $5.9 million in funding related to safeguarding of Canadians with an enhanced Passenger Protect program;
• $5.8 million in funding for the CBSA Assessment and Revenue Management (CARM) project;
• $4.7 million in funding for Biometrics expansion; and
• $10.0 million due to a net increase of funding for various projects.

Decreases are mainly attributed to:

• $162.8 million for funding to maintain the integrity of Canada’s border operations;
• $8.6 million to remove the visa requirement for citizens of Mexico;
• $5.3 million for the Entry-Exit program; and
• $4.7 million for the Integrated Cargo Security initiative.

Vote 5 - Capital

The Agency’s Vote 5 Capital decreased by $9.1 million or 4.4%, which is attributed to the net effect of the following significant items:

Increases are mainly attributed to:

• $36.8 million in funding related to the CBSA Assessment and Revenue Management (CARM) project;
• $10.6 million in funding related to Biometrics expansion;
• $3.9 million in funding related the 2017 Immigration Plan;
• $0.9 million in funding related to the safeguarding of Canadians with and enhanced Passenger Protect program; and
• $0.1 million in funding related to the Temporary Foreign Worker program.

Decreases are mainly attributed to:

• $16.2 million related to the Accelerated Infrastructure program;
• $11.5 million related to the Postal Modernization initiative;
• $11.0 million related to the Entry-Exit program;
• $5.9 million related to Border Infrastructure;
• $5.4 million received in 2017-2018 through the Supplementary Estimates A for the 2017 Immigration Levels plan;
• $4.8 million related to the Integrated Cargo initiative; and
• $6.6 million net decrease of funding for various projects.

Budgetary Statutory Authorities

The Agency’s Statutory Authority related to the employee benefit plan increased by $2.1 million, or 1.1% from the previous year.

2.2 Explanations of Significant Variances in Expenditures from Previous Year

As indicated in the Statement of Authorities (Table 1), the Agency’s expenditures for the quarter ending June 30, 2018 were $376.3 million, as compared to $357.6 million for the quarter ending June 30, 2017.  The net increase of $18.7 million or 5.2% in expenditures is mainly due to the following items:

• Increase of $18.0 million or 5.9% in Vote 1 Operating Expenditures year-to-date used at quarter end ($326.1 million versus $308.1 million same time last year).  The bulk of the difference in spending is attributed to an increase in professional and personnel expenditures for the fiscal year 2018-2019.
• Increase of $0.8 million or 11.3% in Vote 5 Capital Expenditures year-to-date used at quarter end ($7.6 million versus $6.8 million same time last year).  The increase in expenditures is mainly related to the CBSA Assessment and Revenue Management (CARM) project. 
• Decrease of $0.1 million in statutory and other spending.   

As indicated in the Departmental Budgetary Expenditures by Standard Object (Table 2), the increases by standard object are mainly attributed to:

• An increase of $7.5 million year-to-date in professional and special services for information technology expenditures to support CBSA’s mandate. 
• An increase of $6.1 million in personnel costs as a result of over-time and determinate employees’ expenditures for the first quarter of 2018-2019, compared against 2017-2018 at the same time.

The planned revenue from the sales of services reflects the Agency's revenue respending authority.  The year-to-date revenue from the charge of services has increased by $0.2 million or 7.5% due to increases in the NEXUS program.

3. Risks and Uncertainties

The complexity of the operating environment of the CBSA can be seen in the broad scope of external drivers.  Developments in geopolitical relations, in the global economy, in environmental matters, and in human and animal health impact Canada’s trade, immigration, tourism and refugee patterns, affecting volumes and introducing security and facilitation challenges.  Continued growth in both global trade and the virtual economy has benefitted legitimate business and criminal enterprises alike, and presents more complexity in managing Canada’s supply chain and physical borders. 

CBSA continues to manage an increasing number of asylum seekers crossing Canada’s borders. Budget 2018 provided additional funding to address associated pressures.

Lastly, the CBSA operates in a rapidly changing border environment with increasingly complex security and immigration demands, changing traveller volumes, higher infrastructure costs and rising trade volumes, all of which contributed to a strain on the Agency’s finances. To ensure it can continue to deliver in this context in a sustainable manner, the CBSA continues to examine its current resource base in an effort to fully align its operations to the priorities of the Government and Canadians; and to ensure the sustainability of those operations for years to come.

In considering these factors, the CBSA has embarked on various initiatives that will allow the organization to be even more efficient and effective in the way it does business through increased efforts to address threats early and facilitate trade and travel.  To improve its ability to successfully deliver on its initiatives, the Agency regularly examines its enterprise risk landscape, updates its Enterprise Risk Profile and takes appropriate action to mitigate its top risks and the associated financial impacts.  The Agency’s top risks and associated responses are communicated in its Departmental Plan.

4. Significant Changes in Relation to Operations, Personnel and Programs

4.1 Key Senior Personnel

Kathy Thompson has been appointed as the Agency’s new Vice-President, Strategic Policy effective May 7, 2018. Kathy comes to CBSA from Public Safety after five years as the Assistant Deputy Minister, Community Safety and Countering Crime.

4.2 Operations

The CBSA is in the process of updating and changing its organizational structure, including new roles and responsibilities for some of its senior executives.

The Agency, created the role of Chief Transformation Officer and established a new Strategic Policy Branch. The CBSA is transitioning to an enhanced functional management model which involves changes to the organizational structure. CBSA has announced these changes that will occur in three waves:

• Wave 1 – Integrate Corporate Affairs Branch (CAB) functions into the newly established Strategic Policy Branch and the existing Comptrollership Branch (both to be completed by the end of September 2018), and initiate the nationalization of core internal services.
• Wave 2 – Combine the functions of Programs and Operations branches by establishing three new branches: Travellers, Commercial Trade, and Intelligence and Enforcement. Each branch will be led by a Vice-President who will be accountable for program development, design and delivery with the direct support of all regions. These Vice-Presidents will establish program priorities and provide national direction to the regions on delivery. This will keep regions better connected, unify service standards nationwide and make it easier to adopt best practices and innovations for the benefit of all Canadians.
• Wave 3 – Facilitate a new regional management structure.

These organizational changes will improve the Agency’s ability to make the critical, results-based decisions that keep Canadians safe and prosperous.

The Agency continues to enhance border security and ensures the facilitation of legitimate travellers and goods with modernization of and enhancements to security screening procedures, trusted traveller initiatives, immigration detentions, and infrastructure at our Ports of Entry across the country as per the Departmental Plan for 2018-19.

4.3 New Programs

The CBSA will adapt and expand operations in order to support Canada’s commitment to process new immigrants this fiscal year in collaboration with partner organizations.

In addition, in recognition of an increasingly complex and rapidly changing border environment, a review of all areas of the Agency is underway with the aim to better position the CBSA to meet current demands and operational realities, and future expectations. To ensure it can continue to deliver in this context in a sustainable manner, the CBSA continues to examine its current resource base in an effort to fully align its operations to the priorities of the Government and Canadians; and to ensure the sustainability of those operations for years to come.

5. Approval by Senior Officials

6. Table 1: Statement of Authorities (Unaudited)

7. Table 2: Departmental Budgetary Expenditures by Standard Object (Unaudited)

Date modified:

2018-08-29