Canada Border Services Agency Quarterly Financial Report
For the quarter ended September 30, 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 September 30, 2018.

Graph 1: Comparison of Net Budgetary Authorities and Expenditures as of September 30, 2017 and September 30, 2018 (in thousands $)

2.1 Significant Changes to Authorities

For the period ending September 30, 2018, the authorities provided to the CBSA comprise of the Main Estimates, Treasury Board (TB) approved Budget 2018 measures and any unused spending authorities carried forward from the previous fiscal year. For the period ending September 30, 2017, the authorities provided to the CBSA comprise of the Main Estimates, Supplementary Estimates A and any unused spending authorities carried forward from the previous fiscal year.

The Statement of Authorities (Table 1) presents a net decrease of $16.7 million or 0.8% of the Agency’s total authorities of $2,172.0 million at September 30, 2018 compared to $2,188.7 million total authorities at the same quarter last year.

This net decrease in the authorities available for use is the result of an increase in Vote 1 – Operating Expenditures of $17.3 million, a decrease in Vote 5 – Capital of $36.1 million and an increase in Budgetary Statutory Authorities of $2.1 million, as detailed below:

Vote 1 – Operating

The Agency’s Vote 1 Operating increased by $17.3 million or 1.0%, 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 $36.1 million or 12.2%, which is attributed to the net effect of the following significant items:

Increases totaling $52.3 million as described in the CBSA Quarterly Financial Report for the quarter ended .

Decreases are mainly attributed to:

Budgetary Statutory Authorities

The Agency’s Statutory Authority related to the employee benefit plan increased by $2.1 million, or 1.1% 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 September 30, 2018 were $679.7 million, as compared to $434.9 million for the same quarter last year. The Agency’s year-to-date expenditures total $1,056.0 million as compared to $792.5 million at the same time last year. The net increase of $263.5 million or 33.2% in expenditures is mainly due to the following item:

Increase of $264.0 million or 39.1% in Vote 1 operating expenditures year-to-date used at quarter end ($939.7 million versus $675.7 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 $1.4 million or 17.3% due to increases in the NEXUS 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 geopolitical relations, in the global economy, in environmental matters, and in human and animal health impact Canada’s trade, immigration, tourism and refugee patterns, affecting volumes and introducing security and facilitation challenges. Continued growth in both global trade and the virtual economy has benefitted legitimate business and criminal enterprises alike, and presents more complexity in managing Canada’s supply chain and physical borders.

CBSA continues to manage an increasing number of asylum seekers crossing Canada’s borders. Budget 2018 provided additional funding to address associated pressures.

Lastly, the CBSA operates in a rapidly changing border environment with increasingly complex security and immigration demands, changing traveller volumes, higher infrastructure costs and rising trade volumes, all of which contributed to a strain on the Agency’s finances. To ensure it can continue to deliver in this context in a sustainable manner, the CBSA continues to examine its current resource base in an effort to fully align its operations to the priorities of the Government and Canadians; and to ensure the sustainability of those operations for years to come.

In considering these factors, the CBSA has embarked on various initiatives 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 and travel. To improve its ability to successfully deliver on its initiatives, the Agency regularly examines its enterprise risk landscape, updates its Enterprise Risk Profile and takes appropriate action to mitigate its top risks and the associated financial impacts. The Agency’s top risks and associated responses are communicated in its Departmental Plan.

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 second 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 July 3, 2018 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 - September 4, 2018 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: November 29, 2018

Jonathan Moor
Chief Financial Officer
Ottawa, Canada
Date: November 29, 2018

6. Table 1: Statement of Authorities (Unaudited)

Fiscal year 2018-2019
(in thousands of dollars)
  Total available for use for the year ending March 31, 2019* Used during the quarter ended Year-to-date used at quarter end
Vote 1 - Operating Expenditures 1,727,323 613,553 939,699
Vote 5 - Capital Expenditures 258,723 23,514 31,060
Statutory Authority - Contributions to employee benefit plans 185,936 42,586 85,172
Statutory Authority - Refunds of amounts credited to revenues in previous years 0 5 5
Statutory Authority - Spending of proceeds from the disposal of surplus Crown assets 0 11 20
Total budgetary authorities 2,171,982 679,669 1,055,956
Non-budgetary authorities 0 0 0
Total authorities 2,171,982 679,669 1,055,956
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 1,710,022 367,532 675,651
Vote 5 - Capital Expenditures 294,792 24,622 31,399
Statutory Authority - Contributions to employee benefit plans 183,875 42,668 85,337
Statutory Authority - Refunds of amounts credited to revenues in previous years 0 28 44
Statutory Authority - Spending of proceeds from the disposal of surplus Crown assets 0 9 62
Total budgetary authorities 2,188,689 434,859 792,493
Non-budgetary authorities 0 0 0
Total authorities 2,188,689 434,859 792,493
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 1,472,106 576,828 897,044
Transportation and communications 52,447 11,545 20,435
Information 8,677 102 283
Professional and special services 310,146 73,063 110,454
Rentals 7,965 2,176 3,318
Repair and maintenance 36,572 4,196 8,033
Utilities, materials and supplies 23,972 3,087 4,957
Acquisition of land, buildings and works 115,990 10,475 11,782
Acquisition of machinery and equipment 139,544 3,154 5,655
Transfer payments 0 0 0
Other subsidies and payments 22,993 1,145 3,608
Total gross budgetary 2,190,412 685,771 1,065,569
Less revenues netted against expenditures
Sales of Services 18,430 6,107 9,618
Other Revenue 0 (5) (5)
Total revenues netted against expenditures 18,430 6,102 9,613
Total net budgetary expenditures 2,171,982 679,669 1,055,956
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)
  Planned expenditures for the year ending * Expended during the quarter ended Year-to-date used at quarter end
Expenditures
Personnel 1,336,979 344,627 658,744
Transportation and communications 77,117 9,479 16,412
Information 4,281 80 217
Professional and special services 390,255 52,630 82,567
Rentals 12,290 1,924 2,547
Repair and maintenance 35,268 5,174 7,517
Utilities, materials and supplies 22,662 3,285 5,188
Acquisition of land, buildings and works 127,956 12,789 14,017
Acquisition of machinery and equipment 165,031 6,457 8,673
Transfer payments 0 0 0
Other subsidies and payments 35,280 3,317 4,764
Total gross budgetary expenditures 2,207,119 439,762 800,646
Less revenues netted against expenditures
Sales of Services 18,430 4,931 8,197
Other Revenue 0 (28) (44)
Total revenues netted against expenditures 18,430 4,903 8,153
Total net budgetary expenditures 2,188,689 434,859 792,493
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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