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Canada Border Services Agency: Q2 Quarterly Financial Report—For the quarter ended September 30, 2023

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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.

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, but has been reviewed internally by the Departmental Audit Committee.

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 to and to 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.

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 $)

graph1
Image description

Graph 1: Comparison of net budgetary authorities and expenditures as of , and (in thousands $)

  to to
Net budgetary authorities 2,523,152 2,865,025
Expenditures for the quarter ending 601,353 616,063
Expenditures for the quarter ending 524,417 571,325
Total expenditures to date 1,125,770 1,187,388

2.1 Significant changes to authorities

For the period ending , the authorities provided to the CBSA comprise the main estimates, and any unused spending authorities carried forward from the previous fiscal year.

The statement of authorities (Table 1) presents a net increase of $341.8 million or 13.5% of the Agency's total authorities of $2,865.0 million on , compared to $2,523.2 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 $309.6 million, an increase in Vote 5 – Capital Expenditures of $16.8 million, and an increase in Statutory Authority of $15.4 million.

Vote 1: Operating

The Agency's Vote 1 Operating increased by $309.6 million or 14.8%, which is attributed to the net effect of the following significant items (excluding the statutory authorities):

The net increase is mainly attributed to:

Vote 5: Capital

The Agency's Vote 5 Capital increased by $16.8 million or 7.8%, which is attributed to the net effect of the following significant items:

Increases are mainly attributed to:

Statutory authorities

The Agency's Statutory Authority related to the employee benefit plan (EBP) increased by $15.4 million, or 7.2% 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 ends , were $1,187.4 million, as compared to $1,125.8 million for year-to-date, quarter ending . The net increase of $61.6 million or 5.5% in expenditures is mainly due to the following items:

  • Increase of $64.5 million or 6.6% in Vote 1 Operating Expenditures year-to-date used at quarter end. The increase in expenditures is mainly attributed to a $65.6 million increase in salaries, meal premium and overtime pay. In addition, there is a $8.1 million increase in professional services and a $5.7 million increase in property management fees for Port of Entry infrastructure. The increase is offset by a $19.3 million decrease in salaries accruals
  • Decrease of $10.7 million or 30.0% in Vote 5 Capital Expenditures year-to-date used at quarter end. The decrease in expenditures is mainly attributed to a $6.9 million decrease in Information Technology consultants for ArriveCan and CBSA Assessment and Revenue Management (CARM). In addition, there is a decrease of $3.0 million in Facilities Capital Projects, such as Land Border Crossing Project (LBCP) and Port of Entry infrastructure
  • Increase of $7.8 million or 7.3% in statutory expenditures

As indicated in the departmental budgetary expenditures by standard objects (Table 2), the net increase of $61.6 million by standard object is mainly attributed to:

  • Increase of $57.4 million for Personnel due to salaries, meal premium and overtime pay
  • Increase of $6.1 million for Professional and special services due to professional management fees for Port of Entry infrastructure, building protection services for National Guards Contract and other consulting services expenses
  • Increase of $4.9 million for Transportation and Communications due to travel and telecommunication services of mobile radio
  • Increase of $1.6 million in Repair and Maintenance can be attributed to repair of computer equipment for Enterprise Data Analytics and facilities non-capital projects for Irregular Migration and Incremental Asylum
  • Increase of $1.2 million in Utilities, materials and supplies due to purchase of Uniforms and Equipment
  • Decrease of $3.7 million in Other Subsidies and Payments which can be mainly attributed to the settlements of damage and other claims against the Crown
  • Decrease of $3.0 million in Acquisition of Land, Buildings and Equipment related to Facilities Capital Projects for LBCP and Port of Entry infrastructure
  • Increase of $3.3 million in Vote netted revenues (See below for more details)

Graph 2: Comparison of vote netted revenue and revenue collected as of , and (in thousands $)

graph2
Image description

Graph 2: Comparison of vote netted revenue and revenue collected as of , and (in thousands $)

  to to
Vote netted revenue 24,030 24,030
Revenue collected for the quarter ending 7,181 7,908
Revenue collected for the quarter ending 3,587 6,140
Total revenue collected to date 10,768 14,048

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 $3.3 million or 30.5% compared to last year, due to the reopening of borders and increased travel after the lifting of COVID-19 restrictions. The increased travel has resulted in higher regular revenues collected in programs such as Nexus.

3. Risks and uncertainties

In , the annual inflation rate rose to levels not seen in decades. Despite showing signs of levelling off in Q2 to , there have been upward pressures on certain costs. When combined with the Government of Canada's Refocusing Spending exercise over the next few years, the Agency's exposure to risks that relate to achieving its goals in a timely fashion and within allocated budgets could increase if not properly mitigated.

For example, the Agency is pursuing several large information technology (IT) and physical infrastructure projects; most are multi-year in nature and represent substantial investments. Because 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 incur 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 both the Agency’s quarterly integrated project reporting and enterprise risk reporting processes.

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

4.1 Key senior personnel

The Honourable Dominic Leblanc was appointed the new Minister of Public Safety, Democratic Institutions and Intergovernmental Affairs on .

Fred Gaspar, Vice-President of the Commercial and Trade Branch, left the Agency on to join Transport Canada as Special Advisor to the Associate Deputy Minister. He has been replaced by Jennifer Lutafallah, who joined us on , from the Public Health Authority of Canada.

4.2 Operations

With the removal of all travel restrictions due to COVID-19 on , traveller volumes rose considerably during the summer travel season, the first one without these restrictions since , as 35 million travellers crossed the border with minimal wait times. Furthermore, preparations continued for the testing launch of the CBSA Assessment and Revenue Management (CARM) project with a limited number of industry partners who expressed interest in testing their internal processes and pursuing the certification of their software. CARM will become the system of record next year (expected in ) for the collection of duties and taxes for commercial goods imported into Canada.

The Laboratories Canada initiative, an investment of $2.8 billion by the Government, took a significant step toward building new laboratory facilities to replace the current CBSA Lab, as Public Services and Procurement Canada invited five architectural and engineering firms and five construction management firms to submit a Request for Proposal for the construction of two facilities in Ottawa, slated to begin in .

Finally, the Agency has undertaken infrastructure upgrades, as well as operational and staffing enhancements, for the short-term housing of high-risk detainees, as all provinces, have announced that they will stop housing high-risk immigrant detainees in their correctional facilities over the course of the coming months and year, with some having already stopped accepting new detainees in .

The CBSA invests in a number of information technology (IT) projects as part of the ongoing work towards creating a more modernized organization. Please find enclosed a list of key IT projects with a budget over $1 million.

5. Approval by senior officials

Approved by:

Erin O'Gorman
President
Ted Gallivan
Executive Vice-President
Ottawa, Canada
Date:

Jonathan Moor
Chief Financial Officer
Ottawa, Canada
Date:

6. Table 1: Statement of authorities (unaudited)

Fiscal year to
  Total available for use for the year ending Tablenote 1 ($ thousands) Used during the quarter ended ($ thousands) Year-to-date used at quarter end ($ thousands)
Vote 1: Operating expenditures 2,403,642 542,028 1,047,859
Vote 5: Capital expenditures 233,652 16,324 25,110
Statutory authority: Contributions to employee benefit plans 227,732 56,933 113,866
Statutory authority: Refunds of amounts credited to revenues in previous years 0 16 26
Statutory authority: Spending of proceeds from the disposal of surplus Crown assets 0 762 527
Total budgetary authorities 2,865,026 616,063 1,187,388
Non-budgetary authorities 0 0 0
Total authorities 2,865,026 616,063 1,187,388
Fiscal year to
  Total available for use for the year ending Tablenote 2 ($ thousands) Used during the quarter ended ($ thousands) Year-to-date used at quarter end ($ thousands)
Vote 1: Operating expenditures 2,094,004 522,141 983,331
Vote 5: Capital expenditures 216,772 25,802 35,853
Statutory authority: Contributions to employee benefit plans 212,376 53,094 106,188
Statutory authority: Refunds of amounts credited to revenues in previous years 0 0 3
Statutory authority: Spending of proceeds from the disposal of surplus Crown assets 0 316 395
Total budgetary authorities 2,523,152 601,353 1,125,770
Non-budgetary authorities 0 0 0
Total authorities 2,523,152 601,353 1,125,770

7. Table 2: Departmental budgetary expenditures by standard objects (unaudited)

Fiscal year to
  Amount for the year ending Tablenote 3 ($ thousands) Amount for the quarter ended ($ thousands) Year-to-date at quarter end ($ thousands)
Expenditures
Personnel 1,754,992 484,713 945,605
Transportation and communications 97,666 13,589 25,928
Information 4,118 348 1,597
Professional and special services 638,796 93,228 172,522
Rentals 19,831 2,001 3,944
Repair and maintenance 54,509 10,736 13,071
Utilities, materials and supplies 41,928 4,914 8,705
Acquisition of land, buildings and works 81,823 4,568 5,330
Acquisition of machinery and equipment 133,510 7,711 18,690
Transfer payments 0 0 0
Other subsidies and payments 61,883 2,147 6,018
Total gross budgetary expeditures 2,889,056 623,955 1,201,410
Less revenues netted against expenditures
Sales of services 24,030 7,908 14,048
Other revenue 0 -16 -26
Total revenues netted against expenditures 24,030 7,892 14,022
Total net budgetary expenditures 2,865,026 616,063 1,187,388
Fiscal year to
  Planned expenditures for the year ending Tablenote 4 ($ thousands) Expended during the quarter ended ($ thousands) Year-to-date used at quarter end ($ thousands)
Expenditures
Personnel 1,733,311 446,431 888,178
Transportation and communications 54,919 12,622 21,038
Information 2,111 539 1,294
Professional and special services 542,628 111,091 166,471
Rentals 6,586 2,784 4,306
Repair and maintenance 54,482 6,630 11,447
Utilities, materials and supplies 26,674 4,230 7,522
Acquisition of land, buildings and works 39,126 7,698 8,305
Acquisition of machinery and equipment 75,072 13,280 18,257
Transfer payments 0 0 0
Other subsidies and payments 12,273 3,229 9,717
Total gross budgetary expenditure 2,547,182 608,534 1,136,535
Less revenues netted against expenditures
Sales of services 24,030 7,181 10,768
Other revenue 0 0 -3
Total revenues netted against expenditures 24,030 7,181 10,765
Total net budgetary expenditures 2,523,152 601,353 1,125,770
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