Quarterly Financial Report for the quarter ended June 30, 2022

Statement outlining results, risks and significant changes in operations, personnel and programs

Table of contents

  1. Introduction
  2. Highlights of fiscal quarter and fiscal year-to-date results
  3. Risks and uncertainties
  4. Significant changes in relation to operations, personnel and programs
  5. Approval by senior officials
  6. Appendix A

1. Introduction

This quarterly financial report should be read in conjunction with the Main Estimates for fiscal year 2022-23. 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 Canada (ISC) with the enactment of the Department of Indigenous Services Act (DISA).

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. Its 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 2022-23 fiscal year. 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 the fiscal quarter and the fiscal year-to-date (YTD) results

This section:

As of the first quarter, the Department has total budgetary authorities of $41.8 billion for 2022-23. 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 dollars)
Budgetary authority Authorities available for the year ending Expenditures as at Q1 Year-to-date expenditures
March 31, 2023 March 31, 2022 Variance 2022-23 (June 30, 2022) 2021-22 (June 30, 2021) Variance Q1 2022-23 (April 1 to June 30, 2022) Q1 2021-22 (April 1 to June 30, 2021) Variance
Vote 1: Operating Expenditures 25,719,205 3,466,584 22,252,621 2,478,287 459,178 2,019,109 2,478,287 459,178 2,019,109
Vote 5: Capital Expenditures 5,984 37,227 (31,243) 498 82 416 498 82 416
Vote 10: Grants and Contributions 15,941,618 15,276,153 665,465 4,046,833 3,631,846 414,987 4,046,833 3,631,846 414,987
Statutory Authorities 141,702 158,962 (17,260) 29,418 23,157 6,261 29,418 23,157 6,261
Total 41,808,509 18,938,926 22,869,583 6,555,036 4,114,263 2,440,773 6,555,036 4,114,263 2,440,773

2.1 Statement of voted and statutory authorities

As per the highlights of the fiscal quarter and the year-to-date results table, total budgetary authorities available for use increased by $22.9 billion from the previous year:

  • Vote 1 authorities increased by $22 billion
  • Vote 5 authorities decreased by $31 million
  • Vote 10 authorities increased by $665 million
  • Statutory authorities decreased by $17 million

Vote 1 Operating expenditures

Operating authority has increased by $22 billion in the first quarter of 2022-23 compared to the same period of the previous year, mainly due to the following:

  • $22 billion for Out-of-court settlements;
  • $413 million for Non-Insured Health Benefits;
  • $63 million for Health Outcomes (Budget 2021);
  • $57 million for Jordan's Principle & Inuit Child First Initiative;
  • $49 million for Mental Health and Wellness;
  • $10 million for First Nations Child and Family Services;
  • $7 million for Jordan's Principle & Inuit Child First Initiative (Supplementary Estimates (A)).

Offset by a funding decrease for the following programs as part of the Supplementary Estimates (A):

  • $275 million for First Nations Child and Family Services;
  • $36 million for Communicable Disease Control and Management;
  • $28 million for Mental Wellness;
  • $14 million for Clinical and Client Care.

Vote 5 Capital expenditures

Capital authority has decreased by $31 million in the first quarter of 2022-23 compared to the same period of the previous year, mainly due to the continuation of public health responses in Indigenous communities.

Vote 10 Grants and Contributions

Grants and Contributions authority has increased by $665 million in the first quarter of 2022-23 compared to the same period of the previous year, mainly due to the following:

  • $1 billion for Indigenous Infrastructure and Safe, clean drinking water;
  • $635 million for Child and Family Services, including annual growth;
  • $348 million for Elementary and Secondary Education as well as Post-Secondary Education Programs, including COVID-19 and annual growth;
  • $341 million for Income Assistance, including annual growth;
  • $317 million for Jordan's Principle & Inuit Child First Initiative;
  • $256 million for Indigenous early learning;
  • $162 million for Mental Health and Wellness;
  • $122 million for Non-Insured Health Benefits;
  • $66 million for Medical Air Travel in Nunavut;
  • $63 million for Health Outcomes (Budget 2021);
  • $56 million for Indigenous Governance and Capacity, including annual growth;
  • $46 million for Anti-Indigenous Racism (Budget 2021).

Offset by a funding decrease for the following programs as part of the Supplementary Estimates (A):

  • $2 billion for COVID-19 measures;
  • $120 million for Supportive care in Indigenous communities (COVID-19).

Statutory Authorities

Statutory Authority (Operating and Grants & Contributions) has decreased by $17 million in the first quarter of 2022-23 compared to the same period of the previous year, mainly due to the following:

  • $21 million for Employee Benefits Plan from most above listed items in Vote 1 Operating;

Offset by a funding decrease for the following programs

  • $30 million for Contributions related to the Canada Community-Building Fund;
  • $6 million for Employee Benefits Plan from most above listed items in Vote 1 Operating.

2.2 Expenditures analysis by standard object

Departmental Budgetary Expenditures were $6.5 billion for the quarter ended June 30, 2022.

Departmental Budgetary Expenditures were $2.4 billion higher than the same quarter in 2021-22. 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 dollars)
Standard Object Changes to Standard Object expenditures Variance between 2022-23 Q1 and 2021-22 Q1 expenditures Variance between 2022-23 year-to-date and 2021-22 year-to-date expenditures
Expenditures:
1-Personnel   (705) (705)
2-Transportation and communications The increase is mainly related to Supplementary Health Benefits 2021-22 expenditures for medical travel that were suppressed due to the COVID-19 pandemic. 18,781 18,781
3-Information   (532) (532)
4-Professional and special services The increase is due to a Water & Wastewater legal settlement regarding safe drinking water and an increase in Jordan's Principle expenditures due to restrictions being lifted, especially for in-person and medical travel related costs. Jordan's Principle is a demand-driven legal obligation, and expenditures have steadily increased year over year. 59,413 59,413
5-Rentals   (797) (797)
6-Purchased repair and maintenance   152 152
7-Utilities, materials and supplies The increase is due to the Supplementary Health Benefits 2021-22 expenditures for drugs and medical supplies that were suppressed due to the COVID-19 pandemic. 8,922 8,922
8-Acquisition of land, buildings and works   (68) (68)
9-Acquisition of machinery and equipment   812 812
10-Transfer payments Transfer payment expenditures* 417,722 417,722
11-Public debt charges   0 0
12-Other subsidies and payments   1,937,232 1,937,232
Total gross budgetary expenditures   2,440,932 2,440,932
Less Revenues netted against expenditures
Services and Benefits to Individuals   (159) (159)
Total Revenues netted against expenditures   (159) (159)
Total net budgetary expenditures   2,440,932 2,440,932

*The net increase of $418 million in transfer payment expenditures is mainly due to the following:

  • $329 million increase for First Nation Child and Family Services (FNCFS) due to the implementation of the Agreement in Principle (AIP) Immediate Measures on April 1, 2022 for reforming the FNCFS Program including Prevention, First Nations Representative Services, actual costs of post-majority care and National Assembly of Remote Communities (NARC);
  • $62 million increase for New Fiscal Relationship due to the new recipients First Nations that qualified to receive the 10-Year Grant;
  • $54 million increase for Jordan's Principle due to the pandemic related restriction being lifted, especially for in-person and medical travel related costs. Jordan's Principle is a demand-driven legal obligation, and expenditures have steadily increased year over year;
  • $50 million increase for Education due to additional funding received;
  • $32 million increase for Mental Wellness due to the timing of receipt of funding earlier in 2022-23 than in 2021-22;
  • $32 million increase for Education Facilities due to the increase in funding to invest and support infrastructure in First Nations Communities;
  • $27 million increase for Income Assistance due to new Budget 2021 funding;
  • $27 million increase for Other Community Infrastructure and Activities due to the increase in funding to invest and support infrastructure in First Nations Communities;
  • $25 million increase for Emergency Management Assistance due to the response for the COVID-19 pandemic.

Offset by decreases for:

  • $136 million decrease for BC Tripartite Health Governance due to the timing of the quarterly payments;
  • $99 million decrease for Emergency Management Assistance primarily due to the Indigenous Community Support Funding (ICSF) measure in response to the COVID-19 pandemic and regular operations;
  • $33 million decrease for Communicable Disease Control & Management due to the wind down of funding related to the pandemic.

The net increase of $2 billion in other subsidies and payments expenditures is related to Water & Wastewater program for a legal settlement regarding safe drinking water.

3. Risks and uncertainties

As the Department works with partners to improve access to high-quality services for First Nations, Inuit and Métis, support self-determination and Indigenous-led service delivery, and address the fundamental issue of closing socio-economic gaps, it must remain mindful of the changing environment in which it operates as well as the risks that may delay or prevent it from achieving its objectives.

Risk-awareness empowers the Department to improve planning, resource allocation, and investment decisions, while allowing ISC to achieve objectives with more efficiency and resilience. The Department strives to take an enterprise approach to identify risks across programs, sectors and regions which may impede the achievement of objectives and to develop coordinated response measures. Information concerning risk is continuously collected and shared widely to gain a holistic picture of challenges and opportunities and to facilitate the development of the best treatment of risk at the lowest cost.

In 2022-23, ISC will be addressing key priorities in core services linked to advancing health, supporting families, helping build sustainable communities, and supporting Indigenous communities in self-determination. The Department's key risks and the efforts being taken to mitigate them are described in the 2022-23 Departmental Plan.

The pandemic has highlighted the importance of managing risks while delivering on our Department's core mandate. The internal and external risk environment has significantly changed and created the need for additional financial flexibility to allocate funds to the most pressing issues, while continuing to deliver essential services and programs to address underlying social, economic and health issues in communities.

With respect to Grants and Contributions, the Department continues to undertake risk assessments of new, existing, and reformed programs and general assessments of each recipient to identify areas of risk. Conducting recipient and project audits ensures that recipients have appropriate management, financial and administrative controls in place.

The Department's program spending is mainly comprised of contribution agreements allocated to third party recipients. There are several financial uncertainties associated with ISC's diverse contribution programs which influence spending patterns. Recipients face a range of challenges including unexpected cost increases, increased demand for health and social services, labour shortages, construction and supply delays and other external factors. These uncertainties have a direct impact on recipients' ability to deliver projects or spend as planned, resulting in risks to the Department's ability to meet objectives including closing socio-economic gaps. On ISC's sound stewardship of public funds, examples of actions and focus include increased risk analysis and monitoring, more frequent risk discussions at governance committees, the development of ISC's Integrated Risk Management Framework, the review of ISC's Budget Management Framework, strengthened planning and cash management activities, and increased fraud prevention and detection activities.

The Department will continue to monitor its risk exposure and take action as needed to mitigate the risk of not achieving objectives and to responsibly manage public resources. Achievement of ISC's mandate and delivery of programs remains reliant on timely access to required authorities and appropriate levels of funding.

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

5. Approval by senior officials

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

 

Original signed by
__________________________
Gina Wilson
Deputy Minister, ISC
City: Gatineau (Canada)

Original signed by
__________________________
Philippe Thompson
Chief Finances, Results and Delivery Officer
City: Gatineau (Canada)

6. Appendix A

Statement of Authorities (Unaudited)
(In thousands dollars)
Statement of Authorities (Unaudited) Fiscal Year 2022-23 Fiscal Year 2021-22
Total available for use for the year ending March 31, 2023 Used during the quarter ended June 30, 2022 Year to date used at quarter ended June 30, 2022 Total available for use for the year ending March 31, 2022 Used during the quarter ended June 30, 2021 Year to date used at quarter ended June 30, 2021
Vote 1: Operating expenditures 25,719,205 2,478,287 2,478,287 3,466,584 459,178 459,178
Vote 5: Capital expenditures 5,984 498 498 37,227 82 82
Vote 10: Grants and Contributions 15,941,618 4,046,833 4,046,833 15,276,153 3,631,846 3,631,846
S- Statutory Authorities: Operating expenditures
Contributions to employee benefit plan 106,477 25,144 25,144 94,054 21,368 21,368
Court awards–Crown Liability and Proceedings Act 0 50 50 0 211 211
Minister of Indigenous Services Canada – Salary and motor car allowance 92.5 23 23 91 23 23
Liabilities in respect of loan guarantees made of 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 0 0 0 0 0 0
Other 0 530 530 0 618 618
S- Statutory Authorities: Transfer Payments
Canada Community – Building Fund – Financial municipal infrastructure 31,033 111 111 0 798 798
Contributions in connection with First Nations Infrastructure 0 0 0 0 0 0
Indian Annuities Treaty payments 2,100 3,560 3,560 2,100 139 139
Payments related to Public Health Events of National Concern and income support 0 0 0 60,718 0 0
Subtotal Statutory Authorities 141,702 29,418 29,418 158,962 23,157 23,157
Total Authorities 41,808,509 6,555,036 6,555,036 18,938,926 4,114,263 4,114,263
Departmental budgetary expenditures by standard object (Unaudited)
(In thousands dollars)
Expenditures Fiscal Year 2022-23 Fiscal Year 2021-22
Planned expenditures for the year ending March 31, 2023 Expended during the quarter ending June 30, 2022 Year to date used at quarter ended June 30, 2022 Planned expenditures for the year ending March 31, 2022 Expended during the quarter ending June 30, 2021 Year to date used at quarter ended June 30, 2021
1-Personnel 798,935 146,374 146,374 707,453 147,079 147,079
2-Transportation and communications 415,524 70,468 70,468 408,838 51,687 51,687
3-Information 6,143 765 765 3,452 1297 1297
4-Professional and special services 1,804,811 162,552 162,552 723,302 103,139 103,139
5-Rentals 17,120 2,580 2,580 17,323 3,377 3,377
6-Purchased repair and maintenance 5,591 422 422 6,826 270 270
7-Utilities, materials and supplies 822,702 155,382 155,382 587,850 146,460 146,460
8-Acquisition of land, buildings and works 0 4 4 0 72 72
9-Acquisition of machinery and equipment 5,984 9,980 9,980 37,227 9,168 9,168
10-Transfer payments 15,974,751 4,050,505 4,050,505 15,338,971 3,632,783 3,632,783
11-Public debt charges 0 0 0 0 0 0
12-Other subsidies and payments 22,005,540 1,957,024 1,957,024 1,202,000 19,792 19,792
Total gross budgetary expenditures 41,857,101 6,556,056 6,556,056 19,033,242 4,115,124 4,115,124
Less Revenues netted against expenditures
Services and Benefits to Individuals (48,592) (1,020) (1,020) (94,316) (861) (861)
Total Revenues netted against expenditures (48,592) (1,020) (1,020) 0 0 0
Total net budgetary Expenditures 41,808,509 6,555,036 6,555,036 18,938,926 4,114,263 4,114,263

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