Quarterly Financial Report for the quarter ended September 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 second quarter, the Department has total budgetary authorities of $41.9 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 Q2 Year-to-date expenditures
March 31, 2023 March 31, 2022 Variance 2022-23 (July 1 to September 30, 2022) 2021-22 (July 1 to September 30, 2021) Variance Q2 2022-23 (April 1 to September 30, 2022) Q2 2021-22 (April 1 to September 30, 2022) Variance
Vote 1: Operating Expenditures  25,759,838  3,500,842  22,258,996  705,626  573,897 131,729  3,183,913 1,033,075 2,150,838
Vote 5: Capital Expenditures  7,215  38,694  (31,479)  317  1,518 (1,201)  815 1,600 (785)
Vote 10: Grants and Contributions  15,941,618  15,276,153  665,465  3,844,136  2,833,386 1,010,750  7,890,969 6,465,232 1,425,737
Statutory Authorities  141,702  158,962  (17,260)  28,993  29,578 (585)  58,411 52,735 5,676
Total  41,850,373  18,974,651  22,875,722  4,579,072 3,438,379 1,140,693  11,134,108 7,552,642 3,581,466

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 $22.3 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 $22.3 billion in the second 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;
  • $64 million for Jordan's Principle & Inuit Child First Initiative;
  • $21 million for Mental Health and Wellness;

Offset by a funding decrease for the following programs:

  • $265 million for First Nations Child and Family Services;
  • $36 million for Communicable Disease Control and Management;
  • $14 million for Clinical and Client Care.

Vote 5 Capital expenditures

Capital authority has decreased by $31 million in the second quarter of 2022-23 compared to the same period of the previous year, mainly due to a decrease in COVID expenses related to public health responses in Indigenous communities.

Vote 10 Grants and Contributions

Grants and Contributions authority has increased by $665 million in the second 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;
  • $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;
  • $56 million for Indigenous Governance and Capacity, including annual growth;
  • $46 million for Anti-Indigenous Racism.

Offset by a funding decrease for the following programs:

  • $760 million for Urban programming and emergency management assistance for activities on reserves;
  • $673 million for First Nations and Inuit Primary Health Care;
  • $443 million for First Nations and Inuit Health Infrastructure Support;
  • $341 million for the Aboriginal Economic Development Strategic Partnerships Initiative;
  • $172 million for Management of contaminated sites of First Nation;
  • $47 million for Supply to public services in Indian Government Support;

Statutory Authorities

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

  • $15 million for Employee Benefits Plan;

Offset by a funding decrease for the following:

  • $30 million for Contributions related to the Canada Community-Building Fund.

2.2 Expenditures analysis by standard object

Departmental Budgetary Expenditures were $4.6 billion for the quarter ended September 30, 2022.

Departmental Budgetary Expenditures were $1.1 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 Q2 and 2021-22 Q2 expenditures Variance between 2022-23 year-to-date and 2021-22 year-to-date expenditures
Expenditures:
1-Personnel There are increases in Indigenous Governance and Capacity and First Nations Child and Family Services expenditures due to increase in personnel in order to deliver department programs.  7,480  6,775
2-Transportation and communications There is an increase in Supplementary Health Benefits due to 2021-22 expenditures for medical travel that were suppressed because of the COVID-19 pandemic and a decrease in Clinical and Client Care due to the reduction in nationally managed charter flights with the return of commercial air travel in most regions.  17,804  36,585
3-Information    3,025  2,493
4-Professional and special services There are increases in Jordan's Principle expenditures due to restrictions being lifted, especially for in-person and medical travel related costs and in Supplementary Health Benefits due to 2021-2022 professional services expenditures that were suppressed because of COVID-19.  8,114  67,527
5-Rentals    714  (83)
6-Purchased repair and maintenance    324  476
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.  19,676  28,598
8-Acquisition of land, buildings and works    (10)  (78)
9-Acquisition of machinery and equipment    2,259  3,071
10-Transfer payments Transfer payment expenditures*  1,006,475  1,424,197
11-Public debt charges   - -
12-Other subsidies and payments The increase is due to a one-time payment related to Water Out-of-court settlement.  75,458  2,012,690
Total gross budgetary expenditures    1,141,319  3,582,251
Less Revenues netted against expenditures      
Services and Benefits to Individuals    (626)  (785)
Total Revenues netted against expenditures    (626)  (785)
Total net budgetary expenditures    1,140,693  3,581,466

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

  • $422 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);
  • $158 million increase for BC Tripartite Health Governance due to the First Nations Health Authorities escalator;
  • $83 million increase for New Fiscal Relationship due to the new recipients First Nations that qualified to receive the 10-Year Grant and to the growth funding for Health Block recipients;
  • $65 million increase for Other Community Infrastructure and Activities due to the increase in funding to invest and support infrastructure in First Nations Communities;
  • $58 million increase for Water and Wastewater due to the increase in funding to invest and support infrastructure in First Nations Communities;
  • $53 million increase for Mental Wellness due to the timing of receipt of funding earlier in 2022-23 than in 2021-22;
  • $45 million increase for Education Facilities due to the increase in funding to invest and support infrastructure in First Nations Communities;
  • $44 million increase for Income Assistance is due to the additional top up funding provided to recipients in First Nation communities to help cope with the effects of inflation;
  • $38 million increase for Emergency Management Assistance due to the Response and Recovery expenditures and to the Indigenous Community Support Funding in response to the COVID-19 pandemic;
  • $35 million increase for Jordan's Principle due to the fact that in-person and medical travel have resumed following pandemic restrictions. Jordan's Principle is a demand-driven legal obligation, and expenditures have steadily increase year over year;
  • $34 million from increased investment from the government to address housing shortages;
  • $26 million increase for Education due to additional funding received in 2022-23.

Offset by decreases for:

  • $71 million decrease for Economic Development Capacity and Readiness due to the winding down of funding to support First Nations, Inuit and Métis community or collectively owned business whose revenues have been affected by the COVID-19 pandemic and to the Artic Gateway Initiative expenditures that occurred earlier in 2022-2023 compare to 2021-2022.

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

Effective July 18 to December 4, 2022, Michelle Gagnon was appointed Acting Assistant Deputy Minister, Communications and Public Affairs.

Effective December 5th, 2022, Dr. Lisa Smylie is appointed Assistant Deputy Minister, Communications and Public Affairs.

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
September 30, 2022		 Year to date used at quarter ended September 30, 2022 Total available for use for the year ending
March 31, 2022		 Used during the quarter ended
September 30, 2021		 Year to date used at quarter ended September 30, 2021
Vote 1: Operating expenditures 25,759,838 705,626 3,183,913 3,500,842 573,897 1,033,075
Vote 5: Capital expenditures 7,215 317 815 38,694 1,518 1,600
Vote 10: Grants and Contributions 15,941,618 3,844,136 7,890,969 15,276,153 2,833,386 6,465,232
S- Statutory Authorities: Operating expenditures
Contributions to employee benefit plan 106,477 25,145 50,289 94,054 21,369 42,737
Court awards–Crown Liability and Proceedings Act 0 0 50   130 341
Minister of Indigenous Services Canada – Salary and motor car allowance 93 23 46 90 22 45
Liabilities in respect of loan guarantees made of Indian for Housing and Economic Development 2,000 0 0 2,000 0 0
Other 0 54 584 0 13 631
S- Statutory Authorities: Transfer Payments
Canada Community – Building Fund – Financial municipal infrastructure 31,033 3,230 3,341 60,718 7,825 8,623
Indian Annuities Treaty payments 2,100 541 4,101 2,100 219 358
Subtotal Statutory Authorities 141,702 28,993 58,411 158,962 29,578 52,735
Total Authorities 41,850,373 4,579,072 11,134,108 18,974,651 3,438,379 7,552,642
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 September 30, 2022 Year to date used at quarter ended September 30, 2022 Planned expenditures for the year ending March 31, 2022 Expended during the quarter ending September 30, 2021 Year to date used at quarter ended September 30,2021
1-Personnel  813,524  198,483  344,857  718,508  191,003  338,082
2-Transportation and communications  415,794  103,096  173,564  410,234  85,292  136,979
3-Information  6,611  2,559  3,324  3,930  (466)  831
4-Professional and special services  1,826,250  163,533  326,085  740,073  155,419  258,558
5-Rentals  20,525  5,490  8,070  21,100  4,776  8,153
6-Purchased repair and maintenance  5,819  900  1,322  7,238  576  846
7-Utilities, materials and supplies  822,936  177,243  332,625  588,219  157,567  304,027
8-Acquisition of land, buildings and works  -    (4)  -    477  6  78
9-Acquisition of machinery and equipment  7,215  12,293  22,273  38,217  10,034  19,202
10-Transfer payments  15,974,751  3,847,905  7,898,410  15,338,971  2,841,430  6,474,213
11-Other subsidies and payments  22,005,540  69,822  2,026,846  1,202,000  (5,636)  14,156
Total gross budgetary expenditures  41,898,965  4,581,320  11,137,376  19,068,967  3,440,001  7,555,125
Less Revenues netted against expenditures
Services and Benefits to Individuals  (48,592)  (2,248)  (3,268)  (94,316)  (1,622)  (2,483)
Total Revenues netted against expenditures  (48,592)  (2,248)  (3,268)  (94,316)  (1,622)  (2,483)
Total net budgetary Expenditures  41,850,373  4,579,072  11,134,108  18,974,651  3,438,379  7,552,642

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