Quarterly Financial Report for the quarter ended June 30, 2019

1. Introduction

This quarterly financial report should be read in conjunction with the Main Estimates for fiscal year 2019-20. It has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. For the purposes of both the Main and Supplementary Estimates, the Department is referred to as the Department of Indigenous Services Canada.

The quarterly financial report has not been subject to an external audit or review.

1.1 Authority, Mandate and Departmental Results

Indigenous Services Canada (ISC) works collaboratively with partners to improve quality of life and access to high quality services for Indigenous Peoples. Our vision is to support First Nations, Inuit and Métis to design, manage and deliver services to their communities.

The Minister of Indigenous Services is responsible for this organization.

Further details on ISC's authority, mandate and department results can be found in Part II of the Main Estimates and the Departmental Plan.

1.2 Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Department's spending authorities granted by Parliament, and those used by the Department consistent with the Main Estimates for the 2019-20 fiscal year and new spending announced in Budget 2019. 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.

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 represent the authorities by votes given for the year and actual expenditures by Standard Object as of the first quarter ended June 30, 2019.

As of the first quarter, the Department has total budgetary authorities of $12,225 million for 2019-20. Indigenous Services Canada is composed of three sectors: Regional Operations (RO), the Education and Social Development Program and Partnerships (ESDPP), and the First Nations and Inuit Health Branch (FNIHB).

In the first quarter, budgetary authorities were $2,653 million higher than last fiscal year. As per the Statement of Authorities tables (1a and 1b), the increase in total authorities is attributed to the increase of $2,186  illion in Grants and Contributions, the increase of $422.7 million in Operating and Capital, and the increase of $43.8 million for Statutory Operating and Transfer Payments.

The year over year increase of $2,186 million in the Grants and Contributions authority is primarily due to the following changes:

The year over year increase of $422.7 million in Operating authority (Operating Vote 1 and Capital Vote 5) is primarily due to the following changes:

The year over year increase of $43.8 million in statutory authority (Operating and Grants & Contributions) is primarily due to the following changes:

Departmental Budgetary Expenditures were $3,009 million for the quarter ended June 30, 2019. The majority of expenditures occurred in the Standard Object Transfer Payments for $2,613 million, Utilities, Materials and Supplies for $111 million, Professional and Special Services for $108 million, Personnel for $91 million, and Transportation and Communications for $58 million.

Departmental Budgetary Expenditures were $479 million higher than the same quarter in 2018-19. As per the Departmental Budgetary Expenditures by Standard Object tables (2a and 2b), the increase for the quarter is mainly due to the changes listed in Figure 1.

Figure 1: Departmental Budgetary Expenditures Changes

from Q1 2018-2019 to Q1 2019-2020 (in thousands of dollars)
Standard Object Expended during the quarter ended June 30, 2019 Expended during the quarter ended June 30, 2018 Total ISC Change in Expenditures
1 Personnel 91,156 92,092 (937)
2 Transportation and communications 58,098 55,630 2,468
3 Information 46 111 (65)
4 Professional and special services 108,882 83,433 25,449
5 Rentals 325 313 11
6 Purchased repair and maintenance 209 297 (88)
7 Utilities, materials and supplies 110,696 120,467 (9,770)
8 Acquisition of land, buildings and works 0 0 0
9 Acquisition of machinery and equipment 11,996 8,287 3,709
10 Transfer payments 2,612,896 2,163,708 449,188
11 Public debt charges 0 0 0
12 Other subsidies and payments 14,588 19,430 (4,842)
Total gross budgetary expenditures 3,008,891 2,543,767 465,123
Less Revenues netted against expenditures:
Internal Services 0 (14,350) 14,350
Total net budgetary expenditures 3,008,891 2,529,417 479,473

The change in the Internal Services is due to actual expenditures being incurred in CIRNAC (Crown-Indigenous Relations and Northern Affairs Canada) that will be transferred to Indigenous Services Canada (ISC) as a result of the split of the two Departments.

3. Risks and Uncertainties

As a federal department delivering a complex mandate in a geographical area that truly encompasses the whole of Canada, Indigenous Services Canada is influenced by many factors. These include political situations, societal and historical contexts, as well as broader economic and environmental conditions and internal departmental factors. These factors expose the Department to a variety of risks.

The ISC Corporate Risk Profile identifies nine Key Risks:

  • Alignment: the risk that the priorities and directions of ISC and those of its partners will not be aligned.
  • Demonstrating Results: the risk that ISC will be unable to demonstrate progress needed to secure support of Indigenous partners, central agencies, Provincials/Territorials and the general public.
  • Legal: the risk that the Department will be unable to effectively anticipate, prevent, plan for and respond to legal challenges and decisions that may impact the activities and directions of the department.
  • Human & Financial Resource Management: the risk that the Department will not be able to effectively acquire and appropriately allocate scarce human and financial resources in a way that ensures sustainable service delivery.
  • Internal Services Capacity: the risk that there will be insufficient capacity on the part of internal services to enable transformation while supporting core service delivery.
  • Adaptation: the risk that the processes, services and behaviors of ISC will not adapt in a way that is supportive of partnerships and nation-to-nation relationships.
  • Information for Decision-making & Accountability: the risk that information and analysis needed to support reforms and demonstrate value and accountability will not be sufficient or reliable.
  • Conduct & Quality: the risk that activities, decisions and behaviors will be off-side of standards and expectations for quality and control.
  • Service Delivery: the risk that communities and individuals will not receive quality and timely services from the Department.

The Department continues to monitor its risk exposure and take action as needed to mitigate the risk of not achieving anticipated results or to deal with emerging pressures. Achievement of ISC’s core responsibilities and delivery of programs is dependent on timely access to appropriate authorities and funding levels.

Mitigation strategies for each risk category are highlighted by the following:

  • Alignment: Governance structures have been developed integrating the regions, Head Quarters (HQ), and the Chief Finance, Results, and Delivery Officer (CFRDO) Sector to support effective communications and common understanding of the approach to Indigenous partner working relationships and impacts on operations in order to align with the needs and perspectives of Indigenous peoples.
  • Demonstrating Results: usage of Departmental Communications Strategy including early and ongoing communication with Indigenous groups and Provincial/Territorial around expectations and bilateral consultations between federal government representatives and Cabinet members with their provincial and territorial counterparts.
  • Legal: early flagging of potential issues and collaborative litigation prevention processes between ISC and the Department of Justice to respond effectively and in a timely fashion to legal challenges.
  • Human & Financial Resource Management: usage of effective planning and resource allocation mechanisms and controls to ensure sustainable service delivery.
  • Internal Services Capacity: the Department is working to put preventative measures in place.
  • Adaptation: usage of ongoing departmental engagement activities, championed by senior management and change management and project management mechanisms.
  • Information for Decision-making & Accountability: work with partners to identify interim measures for success to achieve better results.
  • Conduct & Quality: Program management control frameworks are in place and in some cases are being revised to adjust to changing environments.
  • Service Delivery: the Department is working to put preventative and detective measures in place.

The Department is managing its budget by aligning resources to needs and through rigorous monitoring against both financial and human resource targets. Management proactively and systematically manages and responds to risks to minimize adverse impacts and capitalize on opportunities. Budget and expenditure trends are monitored regularly, including a review and challenge function, through the Financial Status Report.

For Grants and Contribution risk, the Department transfers funds to recipients each year. The Department undertakes risk assessments on new, existing and reformed programs as well as an annual general assessment of each recipient to identify areas of risk. Multiple regional approaches are used to confirm that recipients have met planned program results and that the funds were used for the intended purposes. The conduct of recipient and project audits, under the terms of their funding agreements, provides a further opportunity to ensure that First Nations have appropriate management, financial and administrative controls in place.

The Internal Services expenditures are currently accounted under CIRNAC (Crown-Indigenous Relations and Northern Affairs Canada) at the First Quarter. There is a risk that Internal Services expenditures will not be properly allocated to ISC. The Department will work closely with CIRNAC through monthly reviews to ensure that Internal Services expenditures are accurately tracked and transferred.

ISC has integrated the First Nations Inuit Health Branch (FNIHB) from Health Canada (HC) into Indigenous Services Canada’s financial system. The Chief Financial, Results and Delivery Officers (CFRDO) is continuously monitoring the financial situation to ensure that controls are in place and authorities are being respected.

Significant changes in relation to Operations, Personnel and Programs

Significant changes in relation to Operations, Personnel and Programs during the first quarter of fiscal year 2019-20 include:

  • Effective April 8, 2019, Robin Buckland assumed the position of Chief Nursing Officer.
  • Effective July 2, 2019, Philippe Thompson assumed the position of Chief Finances, Results and Delivery Officer.

5. Approval by Senior Officials

Approved, as required by the Treasury Board Policy on Financial Management:

Original signed by

_________________________
Jean-François Tremblay
Deputy Minister, ISC

Date:
City: Gatineau (Canada)


Original signed by

_________________________
Philippe Thompson
Chief Finances, Results and Delivery Officer

Date:
City: Gatineau (Canada)

Table 1a: Statement of Authorities (unaudited)

Fiscal year 2019-20 (in thousands of dollars)
  Total available for use for the year ending March 31, 2020 Used during the quarter ended June 30, 2019 Year to date used at quarter-end
Vote 1 - Operating expenditures 1,999,048 380,615 380,615
Vote 5 - Capital expenditures 5,618 0 0
Vote 10 - Grants and contributions 10,093,954 2,612,846 2,612,846
S - Budgetary statutory authorities - Operating Expenditures:
Contributions to employee benefit plans (EBP) 65,116 15,380 15,380
Minister of Indigenous Services Canada – Salary and motor car allowance 88 0 0
Liabilities in respect of loan guarantees made to Indians for Housing and Economic Development 2,000 0 0
Other 0 0 0
S - Budgetary statutory authorities - Transfer Payments:
Gas Tax Fund - Financing municipal infrastructure 0 50 50
Contributions in connection with First Nations infrastructure 59,088 0 0
Total Budgetary Authorities 12,224,912 3,008,891 3,008,891
Total Authorities 12,224,912 3,008,891 3,008,891

Table 1b: Statement of Authorities (unaudited)

Fiscal year 2018-19 (in thousands of dollars)
  Total available for use for the year ending March 31, 2019 Used during the quarter ended June 30, 2018 Year to date used at quarter-end
Vote 1 - Operating expenditures 1,576,524 343,383 343,383
Vote 5 - Capital expenditures 5,412 32 32
Vote 10 - Grants and contributions 7,907,466 2,173,494 2,173,494
S - Budgetary statutory authorities - Operating Expenditures:
Contributions to employee benefit plans (EBP) 50,956 11,974 11,974
Minister of Indigenous Services Canada – Salary and motor car allowance 86 22 22
Liabilities in respect of loan guarantees made to Indians for Housing and Economic Development 2,000 75 75
Other 0 1 1
S - Budgetary statutory authorities - Transfer Payments:
Contributions in connection with First Nations infrastructure 29,404 436 436
Total Budgetary Authorities 9,571,848 2,529,417 2,529,417
Total Authorities 9,571,848 2,529,417 2,529,417

Table 2a: Departmental budgetary expenditures by Standard Object (unaudited)

Fiscal year 2019-20 (in thousands of dollars)
Expenditures: Planned expenditures for the year ending March 31, 2020 Expended during the quarter ended June 30, 2019 Year to date used at quarter-end
1 Personnel 480,610 91,156 91,156
2 Transportation and communications 422,581 58,098 58,098
3 Information 2,986 46 46
4 Professional and special services 640,712 108,882 108,882
5 Rentals 5,736 325 325
6 Purchased repair and maintenance 6,849 209 209
7 Utilities, materials and supplies 693,900 110,696 110,696
8 Acquisition of land, buildings and works 0 0 0
9 Acquisition of machinery and equipment 5,618 11,996 11,996
10 Transfer payments 10,153,041 2,612,896 2,612,896
11 Public debt charges 0 0 0
12 Other subsidies and payments 2,058 14,588 14,588
Total gross budgetary expenditures 12,414,091 3,008,891 3,008,891
Less Revenues netted against expenditures:
Internal Services (189,179) 0 0
Total Revenues netted against expenditures (189,179) 0 0
Total net budgetary expenditures 12,224,912 3,008,891 3,008,891

Table 2b: Departmental budgetary expenditures by Standard Object (unaudited)

Fiscal year 2018-19 (in thousands of dollars)
Dépenses Planned expenditures for the year ending March 31, 2019 Expended during the quarter ended June 30, 2018 Year to date used at quarter-end
1 Personnel 379,882 92,092 92,092
2 Transportation and communications 325,260 55,630 55,630
3 Information 1,967 111 111
4 Professional and special services 484,209 83,433 83,433
5 Rentals 4,722 313 313
6 Purchased repair and maintenance 6,316 297 297
7 Utilities, materials and supplies 585,381 120,467 120,467
8 Acquisition of land, buildings and works 0 0 0
9 Acquisition of machinery and equipment 5,415 8,287 8,287
10 Transfer payments 7,936,278 2,163,708 2,163,708
11 Public debt charges 0 0 0
12 Other subsidies and payments 2,121 19,430 19,430
Total gross budgetary expenditures 9,731,551 2,543,767 2,543,767
Less Revenues netted against expenditures:
Internal Services (159,703) (14,350) (14,350)
Total Revenues netted against expenditures (159,703) (14,350) (14,350)
Total net budgetary expenditures 9,571,848 2,529,417 2,529,417

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