Quarterly Financial Report for the quarter ended December 31, 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 Department of Indigenous Services Canada (DISC) was first established by Order–in-Council (P.C. 2017-79) on November 30, 2017.  The Budget Implementation Act (BIA) of 2019 established Indigenous Services (IS) with the enactment of the Department of Indigenous Services Act (DISA) and removed DISC from Schedule I.1. For financial reporting purposes this is viewed as a continuation of the work initiated in 2017 and as such, DISC and ISC are considered a continuous entity for the 2019-20 fiscal year.  

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

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 third quarter ended December 31, 2019.

As of the third quarter, the Department has total budgetary authorities of $12,776 million for 2019-20. Indigenous Services Canada (ISC) is composed of the following sectors: Regional Operations (RO), the Education and Social Development Program and Partnerships (ESDPP), Lands and Economic Development (LED), First Nations Child and Family Services (FNCFS), First Nations and Inuit Health Branch (FNIHB) and Internal Services.

As at December 31, 2019, budgetary authorities were $1,386 million higher for the year 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 $980 million in Grants and Contributions, the increase of $370 million in Operating and Capital, and the increase of $36 million for Statutory Operating and Transfer Payments.

The year increase of $980 million in the Grants and Contributions authority is primarily due to the following increases:

• $234M Deemed Appropriation funding from CIRNAC resulting from the transfer of Lands and Economic Development Sector and the Individual Affairs Branch;
• $120M for the continued implementation of Jordan's Principle and supporting Inuit Children;
• $100M to support Healthier First Nations and Inuit communities;
• $96M to support the New Fiscal Relationship program from Budget 2018 and reallocation to new grant mechanism;
• $83M for Income Assistance on Reserve from Budget 2018 and annual growth;
• $74M to support First Nations, Inuit and Métis Nation post-secondary students and to develop regional post-secondary strategies for First Nations;
• $67M to support ongoing efforts to eliminate and prevent long-term drinking water advisories;
• $59M funding for supporting Indigenous Early Learning and Child Care;
• $35M for Assisted Living on Reserve from Budget 2019 approved initiatives;
• $28M for Supporting Resiliency Emergency Management On-Reserve;
• $14M for Non-Insured Health Benefits for First Nations and Inuit.

The increase of $370 million in Operating authority (Operating Vote 1 and Capital Vote 5) is primarily due to the following increases:

• $138M for Non-Insured Health Benefits for First Nations and Inuit;
• $132M Deemed Appropriation funding from CIRNAC resulting from the transfer of Lands and Economic Development Sector and the Individual Affairs Branch;
• $42M for the continued implementation of Jordan's Principle and supporting Inuit Children;
• $28M Operating Budget Carry Forward funding allowable from the previous fiscal year;
• $11M to support Internal Services;
• $10M Compensation allocation for Collective Agreements.

The increase of $36 million in statutory authority (Operating and Grants & Contributions) is primarily due to the following increases:

• $30M to support the contributions in connection with First Nations infrastructure;
• $6M for Employee Benefit Plan.

Departmental Budgetary Expenditures were $3,204 million for the quarter ended December 31, 2019.

Details by Standard Object are shown below in Figure 1.

Departmental Budgetary Expenditures were $516 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.

3. Risks and Uncertainties

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 monthly Financial Status reporting.

The Department transfers funds to recipients through Grants and Contributions. 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, Metis and Inuits have appropriate management, financial and administrative controls in place.

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.

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

There have been no significant changes in relation to Operations, Personnel and Programs during the third quarter of fiscal year 2019-20.

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).