Canada Border Services Agency Quarterly Financial Report:
June 30, 2020

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, Canada's Economic Action Plan 2019 (Budget 2019) and Canada's COVID-19 Economic Response Plan.

Information on the "raison d’être", mandate, role and core responsibilities of the Canada Border Services Agency (CBSA) can be found in Part III Departmental Plan and Part II of the Main Estimates.

The QFR has not been subjected to an external audit or review. To date, CBSA has received 9/12th of its total funding due to delays caused by the COVID-19 pandemic. This reduced level of funding will be presented throughout this report along with the CBSA's full annual funding levels when possible. Please refer to following two Appropriation Acts: Bill C-18 and Bill C-11 for more details.

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 2019 to 2020 and 2020 to 2021 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, 2020.

2.1 Significant changes to authorities

For the period ending June 30, 2020, the authorities provided to the CBSA comprise of 9/12th of the 2020 to 2021 Main Estimates, due to changes in the operations of Parliament caused by the COVID-19 pandemic. For the period ending June 30, 2019, the authorities provided to the CBSA comprise of the Main Estimates and Treasury Board (TB) approved Budget 2019 measures.

The statement of authorities (Table 1) presents a net decrease of $394.0 million or 18.7% of the agency's total authorities of $1,707.4 million at June 30, 2020 compared to $2,101.4 million total authorities at the same quarter last year due to the supply of 9/12th of Main Estimates.

This net decrease in the authorities available for use is the result of a decrease in Vote 1 – Operating Expenditures of $386.4 million, an increase in Vote 5 – Capital of $6.8 million and a decrease in budgetary statutory authorities of $14.3 million, as detailed below.

Vote 1: Operating

As a result of the Agency receiving 9/12th of Main Estimates, the Agency's Vote 1 decreased by $386.4 million or 22.0% (excluding the statutory authorities), compared to the same period last fiscal year.

Once the Agency, receives 12/12th of Main Estimates, the Agency's expected 2020 to 2021 Vote 1 increase will be $10.9 million or 0.6% ($1,822.9 million) compared to the 2019 to 2020 Main Estimates last fiscal year ($1,812.0 million, which includes CBSA's total 2019 Budget Implementation Vote). The increase is attributed to the net effect of the following significant items:

The main increases contributing to the changes in operating funding include:

• $34.5 million to implement and maintain CBSA's Assessment and Revenue Management (CARM) project
• $8.1 million for the Integrated Cargo Security Initiative
• $4.2 million for collective bargaining
• $3.3 million to enhance the operational response related to Gun and Gang Violence
• $3.0 million to implement and administer an amendment to the federal framework to strengthen the Duty Relief Program (DRP) and Duty Drawback Program (DDP)
• $2.9 million to implement amendments to the Secure Air Travel Act (SATA) and introduce a framework for the Passenger Protect Program (PPP)
• $2.7 million for the Entry/Exit initiative
• $1.6 million to strengthen Canada's Anti-Money Laundering and Anti-Terrorist Financing Regime
• $1.6 million to improve immigration client service, and help travellers visit Canada through the Temporary Resident Program
• $1.3 million to address the global threat of African Swine Fever
• $1.2 million to prevent human trafficking, support victims and ensure the prosecution of perpetrators

The main decreases contributing to the changes in operating funding include:

• $21.0 million for Modernizing Canada's Border Operations to support effective border management, enforcement and to modernize border operations
• $15.5 million to support Canada's Immigration Levels Plan
• $7.9 million to protect the Integrity of Canada's Border and Asylum System
• $3.4 million transfer to Shared Services Canada to improve the management of information technology and support cyber security
• $2.7 million to expand biometrics screening in Canada's Immigration proceedings
• $2.4 million transfer to Global Affairs Canada for staff abroad

Vote 5: Capital

As a result of the Agency receiving 9/12th of Main Estimates, the Agency's Vote 5 capital increased by $6.8 million or 5.4% (excluding the statutory authorities), compared to the same period last fiscal year.

Once the Agency, receives 12/12th of Main Estimates, the Agency's expected Vote 5 increase will be $53.1 million or 42.5% ($177.8 million) compared to the 2019 to 2020 Main Estimates last fiscal year ($124.7 million), which is attributed to the net effect of the following significant items:

The main increases contributing to the changes in capital funding include:

• $40.5 million to implement and maintain CBSA's Assessment and Revenue Management (CARM) project
• $14.2 million due to the updated timelines for the National Immigration Detention Framework
• $14.0 million to enhance the operational response related to Gun and Gang Violence
• $9.5 million to implement amendments to the Secure Air Travel Act (SATA) and introduce a framework for the Passenger Protect Program (PPP)
• $3.2 million for border infrastructure
• $2.2 million for the Entry/Exit initiative

The main decreases contributing to the changes in capital funding include:

• $10.3 million for the sunsetting of the Postal Modernization Initiative
• $10.0 million reduction of the capital base due to the acceleration of federal infrastructure projects
• $7.5 million for the Integrated Cargo Security Initiative
• $2.2 million for Opioids
• $2.0 million to support Canada's Immigration Levels Plan

Budgetary statutory authorities

The agency’s statutory authority related to the employee benefit plan (EBP) decreased by $14.3 million, or 6.5% 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 year-to-date, at quarter end June 30, 2020 were $433.1 million, as compared to $428.7 million for year-to-date, quarter ending June 30, 2019. The net increase of $4.4 million or 1.0% in expenditures is mainly due to the following items:

• Decrease of $4.2 million or 1% in Vote 1 Operating Expenditures year-to-date used at quarter end. This amount of spending is generally consistent with the previous year
• Increase of $4.6 million or 45% in Vote 5 Capital Expenditures year-to-date used at quarter end. The increase in expenditures is mainly attributed to an increase of $2.9 million for Information Technology Consultants and $0.6 million for Facilities Capital Projects
• Increase of $4.0 million in statutory expenditures

As indicated in the departmental budgetary expenditures by standard object (Table 2), the net increases by standard object are mainly attributed to:

• Increase of $6.7 million for Personnel due to staffing of regular personnel and offset by a reduction in overtime due to COVID-19
• Increase of $3.6 million in Other subsidies and payments which can be mainly attributed to Salary Overpayments
• Increase of $2.6 million for the Acquisition of machinery and equipment
• Decrease of $8.8 million in Transportation and communications which can be mainly attributed to COVID-19

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 decreased by $0.9 million or 18.3% due to the COVID-19 pandemic.

3. Risks and uncertainties

The CBSA's changing 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 investments. In Q1, the COVID-19 pandemic necessitated a re-prioritization of certain agency activities to address pressing matters, which may result in scheduling delays for some projects.

In addition, because the CBSA depends on other government departments and/or external stakeholders for the development and implementation of many of its major projects, scheduling delays are even more likely. As each organization must also manage the repercussions the COVID-19 pandemic is having on its own operations, assisting the CBSA in the advancement of its projects in a timely basis can become challenging due to conflicting priorities.

Beyond the effects of re-prioritization on the way resources are allotted, the COVID-19 pandemic will also likely prompt a need for adjustments to the design of certain projects, which could further delay the execution and delivery of said projects and result in funding lapses.

Delays can lead to other challenges as project costing does not always allow for fluctuating costs for materials commodities and other market rate price changes. Inflation also drives up costs on deferred or delayed projects.

The agency strives to mitigate financial risks by risk-rating its projects, conducting periodic project reviews, and by holding regular budget discussions. Such activities are informed and supported by agency quarterly integrated project reporting processes.

4. Significant changes in relation to operations, personnel and programs

4.1 Key senior personnel

Scott Harris joined the Agency on June 1, 2020 to become the new Vice-President of the Intelligence and Enforcement Branch.

4.2 Operations

The COVID-19 pandemic has had significant impacts on agency operations. Travel restrictions were in place for the entirety of Q1 at all Canadian international border crossings. Travel of an optional or discretionary nature, including tourism, recreation and entertainment, is covered by these measures across all ports of entry in all modes of transportation: land, marine, air and rail. This has resulted in a dramatic decrease in traveller border volumes.

New safety protocols and procedures have been, or are being, developed to handle ongoing commercial volumes, continuing non-discretionary travel and to prepare for when discretionary travel resumes.

The COVID-19 pandemic also prompted a transition to telework for thousands of non-frontline employees. This has brought about new methods for communicating and collaborating, and while some limitations exist, the IT infrastructure has largely been able to successfully support this transition.

5. Approval by senior officials

6. Table 1: Statement of authorities (unaudited)

7. Table 2: Departmental budgetary expenditures by standard object, in thousands of dollars (unaudited)

Date modified:

2020-08-28