Quarterly Financial Report: Quarter ended September 30, 2019

1.1 Authority, Mandate and Departmental Results

Indigenous Services (IS) 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 IS'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.  

3. Risks and Uncertainties

As a federal department delivering a complex mandate in a geographical area that truly encompasses the whole of Canada, IS 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 IS Corporate Risk Profile identifies eight Key Risks:

• Alignment: the risk that the priorities and directions of IS and those of its partners will not be aligned.
• Demonstrating Results: the risk that IS 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 IS 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.

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 IS'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 IS 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 putting various measures into place to ensure that programs are adequately supported through client-centered internal services.
• 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.

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 majority of Internal Services expenditures are currently accounted under CIRNA (Crown-Indigenous Relations and Northern Affairs). There is a risk that Internal Services expenditures will not be properly allocated to IS. The Department will work closely with CIRNA through monthly reviews to ensure that Internal Services expenditures are accurately tracked and transferred.

IS 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.

4. Significant changes in relation to Operations, Personnel and Programs

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

On July 22, 2019, the 2019 OIC was passed and included  transfers of certain programs and functions between IS and Crown-Indigenous Relations and Northern Affairs (CIRNA).

As a result, the Individual Affairs Branch reporting to the Resolution and Individual Affairs Sector in CIRNA was transferred to IS. In addition the Lands and Economic Development Sector reporting to the CIRNA department was transferred to IS.

With regards to internal services functions, IS and CIRNA have chosen to establish an internal service structure with a large number of shared services functions located in one or the other department.  This model has been chosen with the aim to provide strategic capability to each organization and to create synergies between IS and CIRNA in areas of common practice.

In addition, the following groups have been transferred from CIRNA to IS and will provide services through a service-level agreement:

• The Legislative, Parliamentary and Regulatory Affairs Directorate has been transferred under the Strategic Policy and Partnerships Sector of IS.
  
• Part of the Evaluation Performance Measurement and Review Directorate has been transferred under the Assistant Deputy Minister of the Strategic Policy and Partnerships Sector of IS.
• The CIRNA Communications Branch has moved to IS Communications.
• The Security and Accommodations Directorate has been transferred under the CFRDO of IS.
• The Chief Information Officer Branch and the Coporate Accounting and Material Management Branch has been transferred under the CFRDO of IS.

In addition, the following units have been transferred from IS to CIRNA where a service-level agreement will be established to provide services to IS:

• Human Resources Planning, Performance Measurement and Systems unit has been transferred under Human Resources and Workplace Services of CIRNA.

To strengthen the relationship between litigation, program, and policies, Litigation Management and Resolution Branch's (LMRB) litigation management function and capacity has moved to the sectors.

The Planning, Research and Statistics Branch and the Planning and Resource Management Branch have been organized in distinct organizations within both departments. 

Personnel changes :

• Effective September 2019, Kelley Blanchette assumed the position of Assistant Deputy Minister, Lands and Economic Development.

5.     Approval by Senior Officials

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

"Pursuant to Order-in-Council P.C. 2019—1109 & Section 31.1 of the FAA, effective July 22, 2019, $366M is deemed to have been appropriated to the Department of Indigenous Services from the Department of Crown-Indigenous Relations and Northern Affairs (vote 1 $128M, vote 5 $4M and vote 10 $234M).