Canada Border Services Agency Quarterly Financial Report
For the quarter ended December 31, 2018

Table of contents

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 .

Graph 1: Comparison of Net Budgetary Authorities and Expenditures as of and (in thousands $)

2.1 Significant Changes to Authorities

For the period ending , the authorities provided to the CBSA comprise of the Main Estimates, Treasury Board (TB) approved Budget 2018 measures, Supplementary Estimates A and any unused spending authorities carried forward from the previous fiscal year. For the period ending , the authorities provided to the CBSA comprise of the Main Estimates, Supplementary Estimates A & B and any unused spending authorities carried forward from the previous fiscal year.

The Statement of Authorities (Table 1) presents a net increase of $273.7 million or 12.3% of the Agency’s total authorities of $2,501.1 million at compared to $2,227.4 million total authorities at the same quarter last year.

This net increase in the authorities available for use is the result of an increase in Vote 1 – Operating Expenditures of $296.8 million, a decrease in Vote 5 – Capital of $30.5 million and an increase in Budgetary Statutory Authorities of $7.4 million, as detailed below:

Vote 1 – Operating

The Agency’s Vote 1 Operating increased by $296.8 million or 17.0%, which is attributed to the net effect of the following significant items (excluding the statutory authorities):

Increases are mainly attributed to:

Decreases totaling $181.4 million as described in the CBSA Quarterly Financial Report for the quarter ended .

Vote 5 - Capital

The Agency’s Vote 5 Capital decreased by $30.5 million or 10.3%, which is attributed to the net effect of the following significant items:

Increases are mainly attributed to:

Decreases are mainly attributed to:

Budgetary Statutory Authorities

The Agency’s Statutory Authority related to the employee benefit plan increased by $7.4 million, or 4.0% 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 used during the quarter ended were $448.9 million, as compared to $439.0 million for the same quarter last year. The Agency’s year-to-date expenditures total $1,504.8 million as compared to $1,231.5 million at the same time last year. The net increase of $273.3 million or 22.2% in expenditures is mainly due to the following item:

Increase of $296.8 million or 17.0% in Vote 1 operating expenditures year-to-date used at quarter end ($1,308.8 million versus $1,049.4 million same time last year). The vast majority of spending increase is due to economic increases including retroactive payments for the signed collective bargaining agreements of the Border Services staff (FB). These retroactive payments are also apparent in the Departmental Budgetary Expenditures by Standard Object (Table 2), large increase in personnel expenditures for 2018-19 compared against 2017-18. Vote 5 capital and statutory expenditures have remained consistent compared to the same period last year.

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 $2.2 million or 15.9% due to increases in the NEXUS program.

Graph 2: Comparison of Vote Netted Revenue and Revenue collected as of and (in thousands $)

3. Risks and Uncertainties

The CBSA’s dynamic operating environment makes the Agency particularly susceptible to external drivers that are largely beyond its control. Together, these drivers have the potential to affect the organization’s ability to adhere to its annual financial plan.

The Agency is pursuing several large information technology (IT) and physical infrastructure projects. Most are multi-year in nature and represent substantial investment costs. As such, the Agency needs to continue maturing its long-term financial planning. External stakeholders, who have their own priorities, may limit transformation opportunities, require unanticipated investments, or delay implementation of modernization initiatives. Public policy issues or the need for legislative requirements can also affect the speed with which the Agency is able to implement its major projects.

Specific to IT, the Agency continues to support services it is expecting to phase out while waiting for the delivery of government-wide corporate solutions (e.g. cloud computing, data storage).

Delays can add additional challenges as project costing does not adequately allow for fluctuating interest rates and materials costs. Inflation also drives up costs on deferred or delayed projects.

The Agency strives to mitigate financial risks by risk-rating its projects for confirmation of funding sources and human resources capacity, conducting periodic project reviews to adjust existing scopes after announcements of new funding, and by holding regular budget discussions. External stakeholder engagement is also pursued on an ongoing basis.

The Agency will continue to examine its resource base in an effort to fully align its operations to the priorities of the Government and Canadians.

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

4.1 Key Senior Personnel

There have been no changes to key senior personnel in the third quarter of 2018-2019.

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 Strategic Policy branch (SPB) was created on as part of the CBSA’s Renewal initiatives towards a more sustainable future for the CBSA. The CBSA continues with transitioning to an enhanced functional management model which involves changes to the organizational structure. CBSA has announced these changes that will occur in waves:

Wave 1 - marked the finalization of wave 1 with respect to the changes to our organizational structure.

As part of establishing a strategic policy function, functions under the former Corporate Affairs branch (CAB) have been integrated into the Strategic Policy branch and the Comptrollership branch, which has been renamed the Finance and Corporate Management branch (FCMB). This name change reflects the expansion of roles within the branch. In addition to the FCMB’s existing responsibilities, the following directorates joined the FCMB:

Also, the following functions formerly under CAB have transferred to the Strategic Policy branch:

Efforts continue at the same time to build a new Strategic Policy unit within the branch, as well as a new Chief Data Officer function.

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.

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 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, the Agency has innovated and evolved constantly, adopting new technologies and benefitting from greater international collaboration to keep Canada competitive, open to new immigrants and to keep Canadians safe.

Looking forward, our Agency is committed to the vision of CBSA Renewal, which is designed to maximize the potential of technology and further implement innovation to enable our officers to stand strong and provide effective service amidst rising volumes and ever evolving security threats.

5. Approval by Senior Officials

Approved by:

John Ossowski
President
Ottawa, Canada
Date: March XX, 2019

Jonathan Moor
Chief Financial Officer
Ottawa, Canada
Date: March XX, 2019

6. Table 1: Statement of Authorities (Unaudited)

Fiscal year 2018-2019
(in thousands of dollars)
  Total available for use for the year ending * Used during the quarter ended Year-to-date used at quarter end
Vote 1 - Operating Expenditures 2,044,266 369,134 1,308,833
Vote 5 - Capital Expenditures 264,389 37,116 68,176
Statutory Authority - Contributions to employee benefit plans 192,441 42,587 127,759
Statutory Authority - Refunds of amounts credited to revenues in previous years 0 0 5
Statutory Authority - Spending of proceeds from the disposal of surplus Crown assets 0 29 49
Total budgetary authorities 2,501,096 448,866 1,504,822
Non-budgetary authorities 0 0 0
Total authorities 2,501,096 448,866 1,504,822
Note: Numbers may not add due to rounding.
* Includes only Authorities available for use and granted by Parliament at quarter end.
Fiscal year 2017-2018
(in thousands of dollars)
  Total available for use for the year ending * Used during the quarter ended Year-to-date used at quarter end
Vote 1 - Operating Expenditures 1,747,488 373,774 1,049,425
Vote 5 - Capital Expenditures 294,862 22,561 53,960
Statutory Authority - Contributions to employee benefit plans 185,080 42,669 128,006
Statutory Authority - Refunds of amounts credited to revenues in previous years 0 0 44
Statutory Authority - Spending of proceeds from the disposal of surplus Crown assets 0 3 65
Total budgetary authorities 2,227,430 439,007 1,231,500
Non-budgetary authorities 0 0 0
Total authorities 2,227,430 439,007 1,231,500
Note: Numbers may not add due to rounding.
* Includes only Authorities available for use and granted by Parliament at quarter end.

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

Fiscal year 2018-2019
(in thousands of dollars)
  Planned expenditures for the year ending * Expended during the quarter ended Year-to-date used at quarter end
Expenditures
Personnel 1,785,250 348,083 1,245,127
Transportation and communications 55,242 11,835 32,270
Information** 9,637 887 1,170
Professional and special services** 314,839 55,373 165,827
Rentals 8,601 5,295 8,613
Repair and maintenance 36,757 5,672 13,705
Utilities, materials and supplies 25,496 2,716 7,673
Acquisition of land, buildings and works 116,057 14,722 26,504
Acquisition of machinery and equipment 143,124 8,593 14,248
Transfer payments 0 0 0
Other subsidies and payments 24,523 1,916 5,524
Total gross budgetary 2,519,526 455,092 1,520,661
Less revenues netted against expenditures
Sales of Services 18,430 6,226 15,844
Other Revenue 0 0 (5)
Total revenues netted against expenditures 18,430 6,226 15,839
Total net budgetary expenditures 2,501,096 448,866 1,504,822
Note: Numbers may not add due to rounding.
* Includes only Authorities available for use and granted by parliament at quarter-end.

** Standard Object - Professional Services decreased by $698K and Standard Object - Information Services increased by $689K due to realignment of expenditures to the appropriate Standard Object.
Fiscal year 2017-2018
(in thousands of dollars)
  Planned expenditures for the year ending * Expended during the quarter ended Year-to-date used at quarter end
Expenditures
Personnel 1,369,248 319,407 978,151
Transportation and communications 78,692 12,038 28,450
Information 5,250 112 329
Professional and special services 392,484 83,247 165,814
Rentals 12,792 2,412 4,959
Repair and maintenance 35,384 4,076 11,593
Utilities, materials and supplies 23,361 2,462 7,650
Acquisition of land, buildings and works 127,964 11,293 25,310
Acquisition of machinery and equipment 165,348 9,161 17,834
Transfer payments 0 0 0
Other subsidies and payments 35,337 267 5,031
Total gross budgetary expenditures 2,245,860 444,475 1,245,121
Less revenues netted against expenditures
Sales of Services 18,430 5,468 13,665
Other Revenue 0 0 (44)
Total revenues netted against expenditures 18,430 5,468 13,621
Total net budgetary expenditures 2,227,430 439,007 1,231,500
Note: Numbers may not add due to rounding.
* Includes only Authorities available for use and granted by Parliament at quarter-end.
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