Canada Border Services Agency: Quarterly Financial Report: For the quarter ended December 31, 2024

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 2023 to 2024 and 2024 to 2025 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 Government departments. 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.

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.

2.1 Significant changes to authorities

For the period ending December 31, 2024, the authorities provided to the CBSA comprise the Main Estimates, Supplementary Estimates B, Treasury Board (TB) central votes and any unused spending authorities carried forward from the previous fiscal year.

The statement of authorities (Table 1) presents a net increase of $175.7 million or 6.0% of the Agency's total authorities of $3,125.0 million on December 31, 2024, compared to $2,949.3 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 $188.5 million, an increase in Vote 5: Capital Expenditures of $1.9 million and a decrease in budgetary statutory authorities of $14.7 million, as detailed below.

2.2 Explanations of significant variances in expenditures from previous year

As indicated in the statement of authorities (Table 1), the Agency's year-to-date expenditures, at quarter end December 31, 2024, were $2,104.6 million, compared to $1,841.8 million for year-to-date, quarter ending December 31, 2023. The net increase of $262.8 million or 14.3% in expenditures is mainly due to the following items:

• $261.3 million or 16.1% increase in Vote 1 Operating Expenditures attributed to an increase of $297.8 million in salaries mainly for retroactive payments for newly negotiated agreements, offset by a small decrease in other spending area.
• $11.8 million or 23.6% increase in Vote 5 Capital Expenditures, mainly attributed to expenses for advancing work on facilities projects, such as the Land border crossing project.
• $10.3 million decrease in statutory expenditures.

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

• $297.8 million increase for Personnel due to salaries. Of this increase, $215.7 million is due to the newly negotiated collective agreements mainly for the Border Services Group (FB).
• $26.2 million decrease for Professional and special services, which can be mainly attributed to reductions in Information Technology (IT) and IT consultants.
• $8.8 million decrease for Acquisition of machinery and equipment, which is related to computer software and equipment, trucks and other vehicles for transportation of goods, and image/video equipment expenses.

The planned revenue from the sales of services reflects the Agency's revenue respending authority. The year-to-date revenue from services has increased by $4.3 million or 20.1%. The increased travel has resulted in higher regular revenues collected in programs such as Nexus.

3.1 Delivery of major projects

The Agency is pursuing several large information technology (IT) and physical infrastructure projects; most are multi-year in nature and represent substantial investments. Since the CBSA depends on other government departments and/or external stakeholders for the development and implementation of many of these projects, any delays due to limited labour availability and affordability within and outside the Agency can have an impact on these major projects. Even short delays may lead to additional costs for materials, commodities and other market rate priced services.

Despite these conditions, the Agency has met key deadlines and deliverables on many of the major projects currently underway and is on track for the next set of deliverables. 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 the Agency's quarterly integrated project reporting processes.

3.2 Current fiscal context

Following a significant peak in 2022, the consumer price index has decreased since then and stabilized within the Bank of Canada's target range of 1 to 3 per cent; the annual average Consumer Price Index for 2024 was 2.4%. Despite this, there has been upward pressure on certain costs which include commodity price increases, foreign exchange, personnel costs, amongst others which could lead to fluctuations in anticipated spending. To minimize these impacts, the Agency limits exposure to this risk by maintaining a robust quarterly financial forecasting process and 3-year financial plan.

3.3 Reliance on time-limited funding

The Agency has a mix of permanent and project funding and is increasingly relying on time-limited funding for on-going operations. To deliver on core commitments, attract the best resources and ensure a stable workforce, most of the CBSA's employees are indeterminate. To mitigate the gap between the funding horizon and the permanent obligations related to salaries, the Agency develops flexible plans through its annual Integrated Business Planning process and three-year financial plan. This increased oversight is critical to ensure the multi-year affordability of the organization.

4.1 Key senior personnel

On December 19, 2024, the Agency announced the appointment of Dominic Mallette as Regional Director General for the Atlantic Region. Dominic has been acting in this position since March 2023.

On December 20, 2024, the Prime Minister appointed the Honourable David McGuinty as Minister of Public Safety, and the Honourable Rachel Bendayan as Minister of Official Languages and Associate Minister of Public Safety.

4.2 Operations

On October 4, 2024, Canada and the European Union (EU) signed the Agreement on the Transfer and Processing of Passenger Name Record (PNR) data, and represents a significant milestone for the CBSA in finalizing the PNR data sharing negotiations that have spanned over a decade. The agreement forms a new legal basis that strengthens the EU-Canada relationship and advances Canada's national security and public safety.

On October 21, 2024, the CBSA Assessment and Revenue Management (CARM) system became the Agency's system of record for assessing and collecting duties and taxes on imported commercial goods when it was successfully released to external clients. Replacing an aged system and introducing new digitized tools, the Agency spearheaded the introduction of regulatory changes to fully implement CARM to better control revenue and payments, make voluntary compliance easier while also improving targeted compliance verification activities, and allow it to clear most goods prior to payment to keep up with the speed of commerce.

On October 31, 2024, Bill C-20, An Act establishing the Public Complaints and Review Commission (PCRC), was granted Royal Assent. The PCRC will replace the existing Civilian Review and Complaints Commission to become the independent review body for both the Royal Canadian Mounted Police (RCMP) and the CBSA. The Public Complaints and External Reviews Division, within the new Recourse, Standards and Program Integrity Branch, will lead the Agency's relationship with the PCRC.

On December 17, 2024, the Honourable Dominic LeBlanc, Minister of Finance and Intergovernmental Affairs, along with the Honourable Marc Miller, Minister of Immigration, Refugees and Citizenship and the Honourable Ya'ara Saks, Minister of Mental Health and Addictions and Associate Minister of Health, released Canada's Border Plan. Backed by an investment of $1.3 billion and built around five pillars, this plan will bolster border security, strengthen our immigration system and contribute to ensuring Canada's future prosperity.

Effective at 11:59 pm ET on December 23, 2024, work and study permits were no longer provided to flagpolers at a port of entry. Flagpoling occurred when foreign nationals who held temporary resident status in Canada, left Canada and, after a visit to the United States or St. Pierre and Miquelon, re-entered to access immigration services at a port of entry. This practice took up significant resources on both sides of the border and contributed to wait times for cross-border travellers. Part of Canada's Border Plan, this change freed up border services officers time to apply their expertise to enforcement activities, identifying dangerous people and goods, and facilitating travel.

The CBSA invests in a number of information technology (IT) projects as part of its transformation agenda towards creating a more modernized organization. A list of key IT projects with a budget over $1 million can be consulted.