Canada Border Services Agency: Quarterly Financial Report: For the quarter ended September 30, 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 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 September 30, 2024, 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 decrease of $56.8 million or 2.0% of the agency's total authorities of $2,808.2 million on September 30, 2024, compared to $2,865.0 million total authorities at the same quarter last year.

This net decrease in the authorities available for use is the result of a decrease in Vote 1: Operating Expenditures of $54.1 million, an increase in Vote 5: Capital Expenditures of $10.0 million and a decrease in budgetary statutory authorities of $12.7 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 September 30, 2024, were $1,389.6 million, compared to $1,187.4 million for year-to-date, quarter ending September 30, 2023. The net increase of $202.3 million or 17.0% in expenditures is mainly due to the following items:

• Increase of $202.0 million or 19.3% in Vote 1: Operating expenditures. The increase in expenditures is attributed to increase in salaries mainly for retroactive payments for newly negotiated agreement.
• Increase of $7.1 million or 28.2% in Vote 5: Capital expenditures, mainly attributed to expenses for advancing work on facilities projects, such as the Land border crossing project.
• Decrease of $6.9 million 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:

• Increase of $238.8 million for personnel due to salaries. Of this increase, $188.7 million is due to the newly negotiated collective agreements, mainly for the Border Services Group (FB).
• Increase of $4.9 million in acquisition of land, buildings and works related to the advancement of facilities projects, such as the Land Border Crossing Project.
• Decrease of $29.1 million for professional and special services, which can be mainly attributed to reductions in IT consultants and property management fees.
• Decrease of $5.8 million 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 $1.5 million or 11.0%. 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 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 been decreasing since then to near pre-pandemic levels, reaching 1.6% in September 2024. 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 September 25, 2024, the agency announced the following incoming changes to key senior personnel following the creation of two new Branches (refer to the Operations section below for details):

• On October 7, 2024, Caroline Marchildon, currently Director General of Communications, will assume the new role of Vice-President for the Communications, Parliamentary and Public Affairs Branch
• On October 23, 2024, Christine Durocher, currently the Regional Director General of the Southern Ontario Region, will assume the new role of Vice-President, Recourse, Standards and Program Integrity Branch

4.2 Operations

The Government of Canada announced on July 24, 2024 that the tentative agreement reached with the Public Service Alliance of Canada for the FB Group has been approved. The collective agreement was later signed on August 8, 2024. The agreement applies to approximately 11,000 employees at the CBSA.

The work in preparation for the launch of CBSA Assessment and Revenue Management (CARM) for external clients continued in the second quarter to ensure the agency will be well positioned for a successful deployment on October 21, 2024.

• Broad consultation with stakeholders continued to ensure a smooth transition from outdated to modern systems. As of September 1, 2024, over 90,000 importers representing approximately 95% of the volume of all commercial goods imported into Canada had already registered to use CARM.
• Thorough and rigorous testing was finalized, using over 4,200 test cases over multiple testing cycles.
• Legislative and regulatory amendments necessary to support the October 2024 CARM release have already been published.

On September 25, 2024, the President and Executive Vice-President announced some changes to the structure of the agency through the creation of two new branches: the Communications, Parliamentary and Public Affairs Branch and the Recourse, Standards and Program Integrity Branch. The first will regroup the Parliamentary Affairs, Communications, and the Information Sharing, Access to Information and Privacy directorates, previously under the Strategic Policy Branch, and add the Corporate Secretary role. The second will regroup the Recourse Directorate with the Professional Standards and Integrity Directorate, which were part of the Finance and Corporate Management Branch, and will establish a new directorate: Quality Assurance and Support, which will include the External Review Division from the Strategic Policy Branch.

The CBSA invests in a number of 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.