Canada Border Services Agency
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Canada Border Services Agency Quarterly Financial Report
For the quarter ended September 30, 2013

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Table of Contents

1. Introduction

This quarterly report 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, the Supplementary Estimates, previous Canada Border Services Agency (CBSA) Quarterly Financial Reports, as well as Canada’s Economic Action Plan 2012 (Budget 2012) and Canada’s Economic Action Plan 2013 (Budget 2013).

A summary description of the Canada Border Services Agency program activities can be found in Part II of the Main Estimates.

1.1 Basis of presentation

This quarterly report has been prepared using an expenditure basis of accounting. The accompanying Statement of Authorities (Table 1) includes the CBSA’s spending authorities granted by Parliament and those used by the Agency, consistent with the 2012-2013 and 2013-2014 Main Estimates and Supplementary Estimates.

Parliamentary spending authority is required before monies can be spent by the Government. Approvals are given in the form of approved limits through appropriation acts or through other legislation providing statutory spending authority for specific purposes.

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year.  Budget 2012 was tabled in Parliament on March 29, after the tabling of the Main Estimates on February 28, 2012.  As a result, the savings measures announced in the Budget 2012 could not be reflected in the 2012-2013 Main Estimates.

In fiscal year 2012-2013, funding was set aside to prohibit the spending of the funds already identified as savings measures in Budget 2012.  The resulting 2013-2014 reductions to the Agency’s authorities were reflected in the 2013-2014 Main Estimates tabled in Parliament.

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

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

1.2 CBSA Financial Structure

The CBSA has a financial structure composed of voted budgetary authorities that include Vote 10 – Operating Expenditures and Vote 15 – Capital Expenditures, while the statutory authorities consist mainly of contributions to the employee benefit plans.

In addition, the Agency has an authority to respend certain revenues. Only the revenues associated with costs incurred within the respending authority activities are applied towards these costs. The revenues which are not associated with costs incurred are recorded as non-tax revenue. Revenue respending authority is appropriate as some of the CBSA programs are partially funded through User Fees (e.g. Nexus).

The CBSA also operates on the basis of a two-year appropriation, whereby any unused spending authority at the end of a fiscal year is available to be used the following year.  However, any portion of the spending authority not used at the end of the second year is lapsed. 

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 Sept 30, 2013.

Graphic 1:

Title: Comparison of Net Budgetary Authorities and Expenditures as of Sept 30, 2012 and Sept 30, 2013)

2.1 Significant Changes to Authorities

For the period ending Sept 30, 2013, the authorities provided to the CBSA are comprised of the Main Estimates, Supplementary Estimates (A) and the 2012-2013 unused spending authority, while authorities at the same time last year consisted of the Main Estimates, Supplementary Estimates (A), the 2011-2012 unused spending authority and Treasury Board Vote 30-Paylist Expenditures.  

As at Sept 30, 2013, the Statement of Authorities (Table 1) reflects total authorities available of $2,059.3 million, compared to $2,047.9 million at the same quarter last year.  The result is a net increase of $11.4 million or 0.6% in authorities. 

The Agency’s Vote 10 and contributions to employee benefit plans decreased by $7.5 million (0.4%), which is mainly attributed to the net effect of the following significant items:

  • An increase of $104.9 million from the unused 2012-13 spending authority
  • A decrease of $11.5 million due to a timing difference in receipt of a transfer from TB Vote 30 for the reimbursement of Paylist expenditures
  • A net decrease of $100.9 million as described in the CBSA Quarterly Financial Report for the quarter ended June 30, 2013

The Agency’s Vote 15 increased by $18.9 million or (9.3%), which is mainly attributed to the net effect of the following significant items:

2.2 Explanations of Significant Variances in Expenditures from Previous Year

The Statement of Authorities (Table 1) indicates a decrease of $3.8 million or 1% in Vote 10 Net Operating Expenditures used during the quarter ended Sept 30, 2013 –$343.7 million as compared to $347.5 million last year. The Vote 15 Capital Expenditures increased by $19.5 million or 122% - $35.5 million this quarter as compared to $16.0 million in the 2nd quarter  last year. The increase is mainly due to the CBSA’s early adoption of the new Treasury Board of Canada Secretariat’s common definition of a capital expenditures vote. As per this new definition, any expenditure related to the creation of or purchase of capital assets must be charged to a capital vote. In the past, capital assets could be created using Vote 10 – Operating expenditures, as long as the Treasury Board Accounting Standard 3.1 and CBSA’s Accounting Policy for Capital Assets were applied.

The Departmental Budgetary Expenditures by Standard Object (Table 2) indicates an increase in expenses incurred during the 2nd quarter of $15.0 million or 3.7%, $409.1 million in 2012-2013 compared to $424.1 million in 2013-2014.  Expenses during the quarter represent 20.6% of planned expenditures as compared to 20.0% in 2012-2013.

The most notable variance by standard object from the 2nd quarter last year to this year are as follows:

  • Increase of $16.41 million in professional and special services due to an increase in informatics services ($12.8 million); and in other services ($2.8 million) related to the spending on the Federal Bridge at the port of entry in Cornwall.
  • Decrease of $2.42 million in repair and maintenance mainly due to lower costs to maintain the Laval and Rigaud complexes than in the prior year.
  • Decrease of $4.41 million in the acquisition of land, building and works due to fewer infrastructure projects this year as compared to the prior year.
  • Increase of $4.29 million in other subsidies and payments due to payment to the International Organization for Migration as part of the Assisted Voluntary Return Reintegration Pilot 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 the global economy cascade down into Canada’s trade, immigration, tourism and refugee patterns, affecting volumes and introducing security and facilitation challenges. The shift to corporate globalization and a growing virtual economy has benefitted legitimate business and criminal enterprises alike, and presents more complexity in managing Canada’s supply chain and physical borders. Similarly, the rapid evolution of technology can advance the fortification of border controls and identity verification or can be used to circumvent border controls, if in the wrong hands.

In considering these factors, the CBSA has embarked on various initiatives, including those identified in the Beyond the Border Action Plan, 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.

To improve its ability to successfully deliver on its initiatives, the Agency regularly examines its enterprise risk landscape, the results of which are published in the CBSA Enterprise Risk Profile (ERP). The ERP identifies and ranks the top risks to the Agency’s strategic outcome and underwent a full revision in spring 2013, with risk response strategies developed over the summer of 2013 for the risks deemed unacceptable. The top two risks (Information Technology (IT) Systems and Information Security), as evaluated by senior management, are IT related which illustrates the high level of dependency the Agency has on technology. The two risks that have decreased most significantly are Immigration Enforcement and Irregular Migration, due to considerable progress in mitigation activities and in strengthening controls.

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

4.1 Key Senior Personnel

There have been changes in senior level personnel, most notably the appointment of new Vice Presidents for Operations and Programs Branches. 

4.2 New Programs

Prime Minister Stephen Harper and President Barack Obama announced the Beyond the Border Action Plan (Action Plan) in December 2011. The Action Plan provides a practical road map for speeding up legitimate trade and travel. At the same time, the Prime Minister and the President also announced the Joint Action Plan for the Canada- United States Regulatory Cooperation Council to increase regulatory transparency and co-ordination between our two countries.

The CBSA will play an instrumental role in implementing the Beyond the Border Action Plan. The Agency will lead ten initiatives, play a key supporting role in nine initiatives, and has an interest in another nine initiatives. 

4.3 Budget 2012 Implementation

This section provides an overview of the savings measures announced in Budget 2012 that are being implemented in order to refocus government and programs: make it easier for Canadians and business to deal with their government and to modernize and reduce the back office operations.

The CBSA will achieve Budget 2012 savings of $143.4 million by fiscal year 2014-2015 through efficiency measures by restructuring, modernizing programs and transforming business practices in select areas.  With these changes the CBSA will focus on supporting management excellence and accountability across government.  In the first year of implementation, the CBSA generated $31.3 million in savings.  Those savings increase to $72.8 million in 2013-2014 and will result in ongoing saving of $143.4 million by 2014-2015.

As a result of Budget 2012, the CBSA is implementing its plan to:

  • streamline and simplify its approach to internal services through the use of more technology and less cumbersome processes;
  • optimize programs to get better results at reduced costs;
  • transform programs in order to eliminate red tape, provide better services to Canadians; and reduce costs; and
  • adjust front-line service delivery where adjustments can be made without impacting service levels.

The CBSA achieved its target for 2012-2013 and is on track to fully achieve its savings for 2013‑2014, 2014-2015 and ongoing.  The CBSA is actively managing the implementation of all initiatives through regular and sustained monitoring, ensuring that the delivery is proceeding on time.

The initiatives under Budget 2012 will further enable the CBSA to focus and align resources to its key priorities and core mandate; meeting current and future security and service requirements to serve Canadians and provide them with a modern, dynamic border.

The impacts of Budget 2012 have been reflected in the financial information for the year to date and for the 2nd quarter in that the budgets and expenditures have been reduced accordingly.

Supplementary data on Budget 2012 savings by program activity is included in Table 3


5. Approval by Senior Officials

Approved by:

Luc Portelance
Claude Rochette
Chief Financial Officer

Ottawa, Canada
Date: September 29, 2013

6. Table 1: Statement of Authorities (Unaudited)

  Fiscal Year 2013–2014   Fiscal Year 2012–2013
(in thousands of dollars) Total available for use for the year ending March 31, 2014* Used during the quarter ended Sept 30, 2013 Year-to-date used at quarter end   Total available for use for the year ending March 31, 2013*,** Used during the quarter ended Sept 30, 2012 Year-to-date used at quarter end
Vote 10 – Net Operating Expenditures** 1,657,843 343,666 652,027   1,663,019 347,477 656,488
Vote 15 – Capital Expenditures 222,331 35,520 39,866   203,386 16,044 23,850
Statutory Authority - Contributions to employee benefit plans 179,164 44,791 89,582   181,491 45,373 90,745
Statutory Authority - Court Awards - Crown Liability Act 0 14 14   0 15 65
Statutory Authority - Refunds of amounts credited to revenues in previous years 0 9 24   0 33 60
Statutory Authority - Spending of proceeds from the disposal of surplus Crown assets 0 118 263   0 135 220
Total budgetary authorities 2,059,338 424,118 781,776   2,047,896 409,077 771,428
Non-budgetary authorities 0 0 0   0 0 0
Total authorities 2,059,338 424,118 781,776   2,047,896 409,077 771,428

Note: Numbers may not add and may not agree with details provided elsewhere due to rounding.
* Includes only Authorities available for use and granted by Parliament at quarter end.
** Total available for use does not reflect measures announced in Budget 2012.

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

  Fiscal Year 2013–2014   Fiscal Year 2012–2013
(in thousands of dollars) Planned expenditures for the year ending March 31, 2014 * Expended during the quarter ended Sept 30, 2013 Year-to-date used at quarter end   Planned expenditures for the year ending March 31, 2013*,** Expended during the quarter ended Sept 30, 2012 Year-to-date used at quarter end
Personnel 1,219,391 335,995 637,005   1,242,085 332,951 634,126
Transportation and communications 107,370 10,764 18,534   98,613 13,587 23,167
Information 2,406 219 695   2,415 398 602
Professional and special services 474,340 54,514 93,970   484,501 38,104 74,004
Rentals 15,926 2,047 3,775   13,476 2,371 4,695
Repair and maintenance 42,794 2,561 7,010   36,668 4,983 8,785
Utilities, materials and supplies 35,635 4,088 6,299   30,151 3,826 7,471
Acquisition of land, buildings and works 73,735 5,238 5,575   62,413 9,647 15,574
Acquisition of machinery and equipment 82,898 4,630 7,104   46,215 3,484 4,906
Transfer payments 0 0 0   0 0 0
Other subsidies and payments 16,973 7,409 6,867   41,068 3,121 3,547
Total gross budgetary expenditures 2,071,468 427,465 786,834   2,057,605 412,472 776,877
Less revenues netted against expenditures              
Sales of Services 12,130 3,356 5,082   9,710 3,428 5,509
Other Revenue 0 -9 -24   0 -33 -60
Total revenues netted against expenditures 12,130 3,347 5,058   9,710 3,395 5,449
Total net budgetary expenditures 2,059,338 424,118 781,776   2,047,895 409,077 771,428

Note: Numbers may not add and may not agree with details provided elsewhere due to rounding.
* Includes only planned expenditures against authorities available for use and granted by parliament at quarter-end.
** Planned expenditures do not reflect measures announced in Budget 2012.

8. Table 3: Departmental Budget 2012 Planned Savings by Program (Unaudited)

Table 3: Departmental Budget 2012 Planned Savings by Program (Unaudited)

  Planned Savings
Program 2012-13 2013-14 2014-15
& ongoing
  (in thousands of dollars) 
Risk Assessment 5,452 10,168 11,209
Admissibility Determination 7,254 20,469 30,494
Criminal Investigations 15 73 118
Immigration Enforcement 103 1,152 3,432
Secure and Trusted Partnerships 158 327 7,706
Revenue and Trade Management 1,753 3,994 9,816
Recourse 129 302 609
Internal Services 16,415 36,295 80,024
Total for CBSA 31,279 72,780 143,408

Note: Numbers may not add and may not agree with details provided elsewhere due to rounding.