Quarterly Financial Report for the quarter ended June 30, 2020

1. Introduction

This quarterly financial report should be read in conjunction with the Main Estimates for fiscal year 2020-21. 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 2020-21 fiscal.

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 Canada 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 2020-21 fiscal year and new spending announced in Budget 2020. 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:

As of the first quarter the Department has total budgetary authorities of $11.3 billion for 2020-21. 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.

Highlights of the fiscal quarter and the year-to-date results (Unaudited)
(in thousands of dollars)
  2020-21 Budgetary Authorities to March 31, 2021 2019-20 Budgetary Authorities to March 31, 2020 Variance in Budgetary Authorities Year-to-date expenditures as at Q1 2020-21 (June 30, 2020) Year-to-date expenditures as at Q1 2019-20 (June 30, 2019) Variance between 2020-21year-to-date and 2019-20 year-to-date expenditures 2020-21 Q1 expenditures 2019-20 Q1 expenditures Variance between 2020-21 Q1 expenditures and 2019-20 Q1 expenditures
Vote 1: Operating expenditures 1,484,835 1,999,048 (514,213) 334,499 380,615 -46,116 334,499 380,615 -46,116
Vote 5: Capital expenditures 5,124 5,618 (494) 408 0 408 408 0 408
Vote 10: Grants and Contributions 8,786,647 10,093,954 (1,307,307) 3,291,036 2,612,846 678,190 3,291,036 2,612,846 678,190
Statutory Authorities 1,065,155 126,294 938,861 422,814 15,430 407,384 422,814 15,430 407,384
Total Authorities 11,341,761 12,224,914 (883,153) 4,048,757 3,008,891 1,039,866 4,048,757 3,008,891 1,039,866

2.1 Statement of voted and statutory authorities

The COVID-19 pandemic has significantly affected the department’s supply in the current fiscal year given that Main Estimates have not yet been approved by Parliament.

As at June 30, 2020, the total budgetary authorities available for use decreased by $883 million (8%) from the previous fiscal year:

  • Vote 1 authorities decreased by $514 million
  • Vote 5 authorities decreased by $0.5 million
  • Vote 10 authorities decreased by $1.3 billion
  • Statutory authorities increased by $939 million

The net decrease of $1.3 billion in the Grants and Contributions authority (Vote 10) is mainly due to the following:

  • $2 billion decrease resulting from the impact of the pandemic as the Department has not received the full supply for the 2020-21 Main Estimates;
  • $730 million increase funding as part of the 2020-21 Supplementary Estimates (A):
    • $468 million for Child and Family Services;
    • $209 million for Health, Social, Educations Services and Support for First Nations Children under Jordan’s Principle;
    • $24 million for the Band Support Program;
    • $20 million for the Métis Capital Corporations;
    • $5 million to continue implementation of the National Suicide Prevention Strategy; and
    • $4 million for the National Inquiry into Missing and Murdered Indigenous Women and Girls final report.

The net decrease of $514 million in Operating authority and Capital (Operating Vote 1 and Capital Vote 5) is mainly due to the following:

  • $537 million decrease resulting from the impact of the pandemic as the Department has not received the full supply for the 2020-21 Main Estimates;
  • $23 million increase funding as part of the 2020-21 Supplementary Estimates (A) for Health Social and Education Services and Support for First Nations Children under Jordan’s Principle.

The net increase of $939 million in statutory authority (Operating and Grants & Contributions) includes:

  • $950 million funding pursuant to the Public Health Events of National Concern Payments Act (Indigenous Communities, Income Assistance, Urban and Indigenous Organizations, Family Violence Prevention, Canada’s Initial Response to COVID–19);
  • $19 million funding for Employee Benefits Plan (EBP);
  • $2 million funding for Indian Annuities Treaty Payments.

2.2 Expenditures analysis by Standard Object

Departmental Budgetary Expenditures were $4 billion for the quarter ended June 30, 2020.

Departmental Budgetary Expenditures were $1 billion higher than the same quarter in 2019-20. As per the Departmental Budgetary Expenditures by Standard Object tables, the increase for the quarter is mainly due to the changes listed below:

The following table provides a detailed explanation of these changes by standard object (Unaudited)
(in thousands of dollars)
Standard object Changes to standard object expenditures Variance between 2020-21 year-to-date and 2019-20 year-to-date expenditures (April 1 to June 30, 2020) Variance between 2020-21 Q1 and 2019-20 Q1 expenditures (April 1 to June 30,2020)
Expenditures:
1 Personnel
 The variance is mainly due to the increase of permanent salaries based on collective agreements and full-time equivalent employees 33,882 33,882
2 Transportation and communications
 The variance is mainly due to a decrease in travel expenditures due to the COVID-19 Pandemic (18,103) (18,103)
3 Information
   70 70
4 Professional and special services
 The variance is mainly due to delays in contracts due to the COVID-19 Pandemic (59,786) (59,786)
5 Rentals
   1,673 1,673
6 Purchased repair and maintenance
   409 409
7 Utilities, materials and supplies
 The variance is mainly due to the COVID-19 Pandemic 19,454 19,454
8 Acquisition of land, buildings and works
   0 0
9 Acquisition of machinery and equipment
   (804) (804)
10 Transfer payments
 Transfer payments expenditures* 1,070,009 1,070,009
11 Public debt charges
   0 0
12 Other subsidies and payments
   (6,067) (6,067)
Total gross budgetary expenditures
   1,040,737 1,040,737
Less Revenues netted against expenditures   (872) (872)
Services and Benefits to Individuals
   0 0
Total Revenues netted against expenditures
   (872) (872)
Total net budgetary expenditures   1,039,865 1,039,865

*The net increase of $1 billion in transfer payment expenditures is mainly due to the following:

  • $211 million increase for Emergency Management Assistance primarily due to the unpredictable nature of emergencies, and the need to have cash on hand to support active evacuations and other urgent events;
  • $199 million increase resulting from the transfer of Land and Economic Development Programs from Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC) in July 2019: Indigenous Entrepreneurship and Business Development $130 million, Land Natural Reserve and Environment Management $42 million and Economic Development Capacity and Readiness $27 million;
  • $184 million increase for New Fiscal Relationship due to the increase in the number of grant agreements (26) in 2020-21;
  • $103 million increase for Urban Aboriginal Peoples for infrastructure projects to improve the physical capacity, safety, security and accessibility of facilities that offer Urban Programming for Indigenous Peoples and response measures to COVID-19 pandemic;
  • $79 million increase for First Nations and Inuit Health response measures to the COVID-19 pandemic (Communicable Disease Control and Management $29 million, Clinical and Client Care $25 million, Health Facilities $25 million);
  • $54 million increase for Jordan’s Principle due a significant increase in the number of Jordan's Principle recipients and volume of requests in Q1 for FY 2020-21 compared to 2019-20;
  • $50 million increase to support First Nations, Inuit, Métis Post-Secondary students and response measures to COVID-19 pandemic;
  • $27 million increase for Income Assistance Case Management and Pre-employment Support and response measures to COVID-19 pandemic;
  • $52 million decrease for Education Facilities Schools budgets for 2020-21 due to the realignment strategy whereby the other asset classes (Water, Other Community Infrastructure, Housing) had loans to repay to schools in 2019-20 and 2020-21.

3. Risks and Uncertainties

While the Department continues to proactively and systematically manage and respond to risk through rigorous monitoring, review and challenge functions, the COVID-19 pandemic and a rapidly evolving environment have furthered highlighted uncertainties where the Department requires additional focus and agility. Most notably, the pandemic has emphasized the need for financial flexibility within the Department to ensure the ability to allocate funds to the most pressing issues, as well as the need to ensure that the systems used for financial management are robust enough to maintain pace with the continuously changing environment and organizational changes that come as a result.

With respect to Grants and Contributions, the Department continues to undertake risk assessments on new, existing, and reformed programs as well as a general assessment of each recipient to identify areas of risk. 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 mandate 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 first quarter of fiscal year 2020-21.

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)

6. Appendix

Statement of Authorities (Unaudited)
(in thousands of dollars)
  Fiscal Year 2020-21 Fiscal Year 2019-20
  Total available for use for the year ending March 31, 2021 Used during the quarter ended June 30, 2020 Year to date used at quarter ended June 30, 2020 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 ended June 30, 2019
Vote 1 - Operating expenditures 1,484,835 334,499 334,499 1,999,048 380,615 380,615
Vote 5 - Capital expenditures 5,124 408 408 5,618 0 0
Vote 10 - Grants and contributions 8,786,647 3,291,036 3,291,036 10,093,954 2,612,846 2,612,846
S - Budgetary statutory authorities - Operating Expenditures
Contributions to employee benefit plans
 80,733 20,183 20,183 65,116 15,380 15,380
Minister of Indigenous Services Canada – Salary and motor car allowance
 89 22 22 88 0 0
Liabilities in respect of loan guarantees made ot Indian for Housing and Economic Development
 2,000 0 0 2,000 0 0
Payments related to Public Health Events of National Concern and income support
 2,100 9,089 9,089 0 0 0
Other
 0 1,651 1,651 0 0 0
Transfer Payments
Gas Tax Fund - Financing municipal infrastructure
 0 500 500 59,088 50 50
Contributions in connection with First Nations Infrastructure
 29,684 0 0 0 50 50
Indian Annuities Treaty payments
 0 37 37 0 0 0
Indian Annuities Treaty payments
 950,548 391,332 391,332 0 0 0
Total Budgetary Authorities 1,065,155 422,814 422,814 126,292 15,430 15,430
Total Authorities 11,341,761 4,048,757 4,048,757 12,224,912 3,008,891 3,008,891
 
Departmental budgetary expenditures by standard object (Unaudited)
(in thousands of dollars)
  Fiscal Year 2020-21 Fiscal Year 2019-20
  Planned expenditures for the year ending March 31, 2021 Expended during the quarter ending June 30, 2020 Year to date used at quarter ended June 30, 2020 Planned expenditures for the year ending March 31, 2020 Expended during the quarter ending June 30, 2019 Year to date used at quarter ended June 30, 2019
Expenditures
1 Personnel
 524,097 125,038 125,038 480,610 91,156 91,156
2 Transportation and communications
 314,564 39,995 39,995 422,581 58,098 58,098
3 Information
 2,360 116 116 2,986 46 46
4 Professional and special services
 542,971 49,096 49,096 640,712 108,882 108,882
5 Rentals
 12,995 1,998 1,998 5,736 325 325
6 Purchased repair and maintenance
 9,781 618 618 6,849 209 209
7 Utilities, materials and supplies
 469,669 130,150 130,150 693,900 110,696 110,696
8 Acquisition of land, buildings and works
 2,000 0 0 0 0 0
9 Acquisition of machinery and equipment
 9,424 11,192 11,192 5,618 11,996 11,996
10 Transfer payments
 9,620,918 3,682,905 3,682,905 10,153,041 2,612,896 2,612,896
11 Public debt charges
 0 0 0 0 0 0
12 Other subsidies and payments
 2,000 8,521 8,521 2,058 14,588 14,588
Total gross budgeary expenditures
 11,510,780 4,049,629 4,049,629 12,414,091 3,008,891 3,008,891
Less Revenues netted against expenditures
Services and Benefits to Indivuduals
 (169,019) (872) (872) (189,179) 0 0
Total Revenues netted against expenditures
 (169,019) (872) (872) (189,179) 0 0
Total net budgetary expenditures 11,341,761 4,048,757 4,048,757 12,224,912 3,008,891 3,008,891

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