Quarterly Financial Report for the quarter ended June 30, 2023

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

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1. Introduction

This quarterly financial report should be read in conjunction with the Main Estimates for fiscal year 2023-24. 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 2023-24 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 $44.5 billion for 2023-24. 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, 2024 March 31, 2023 Variance 2023-24
(June 30, 2023)		 2022-23
(June 30, 2022)		 Variance Q1 2023-24
(April 1 to June 30, 2023)		 Q1 2022-23
(April 1 to June 30, 2022)		 Variance
Vote 1: Operating Expenditures 26,985,452 25,719,205 1,266,247 570,623 2,478,287 (1,907,664) 570,623 2,478,287 (1,907,664)
Vote 5: Capital Expenditures 6,263 5,984 279 602 498 104 602 498 104
Vote 10: Grants and Contributions 17,339,700 15,941,618 1,398,082 4,683,338 4,046,833 636,505 4,683,338 4,046,833 636,505
Statutory Authorities 151,852 141,702 10,151 32,965 29,418 3,547 32,965 29,418 3,547
Total 44,483,268 41,808,509 2,674,760 5,287,528 6,555,036 (1,267,507) 5,287,528 6,555,036 (1,267,507)

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 $2.7 billion from the previous year:

  • Vote 1 authorities increased by $1.3 billion
  • Vote 5 authorities decreased by $0.3 million
  • Vote 10 authorities increased by $1.4 billion
  • Statutory authorities decreased by $10 million

Vote 1 Operating expenditures

Operating authority has increased by $1.3 billion in the first quarter of 2023-24 compared to the same period of the previous year, mainly due to the following:

  • $1.5 billion for Out-of-Court Settlements;
  • $28 million for Health Human Resources;
  • $18 million for First Nations Child and Family Services;
  • $13 million for Emergency Management;
  • $12 million for Community Infrastructure;
  • $10 million for Health Facilities;
  • $9 million for Jordan’s Principle & Inuit Child First Initiative.

Offset by a funding decrease for the following programs:

  • $310 million for Non-Insured Health Benefits.

Vote 10 Grants and Contributions

Grants and Contributions authority has increased by $1.4 billion in the first quarter of 2023-24 compared to the same period of the previous year, mainly due to the following:

  • $443 million for the implementation of the Act respecting First Nations, Inuit and Métis children, youth and families;
  • $268 million for First Nations Health Authority;
  • $212 million for Community Infrastructure;
  • $111 million for Emergency Management;
  • $108 million for Residential schools;
  • $82 million for Education;
  • $71 million for New Fiscal Relationship and Governance Capacity;
  • $68 million for Income Assistance;
  • $62 million for Assisted Living;
  • $56 million for Family Violence Prevention Program;
  • $54 million for Mercury Care Home and Water Treatment Facility;
  • $49 million for Jordan’s Principle and the Inuit Child Initiative.

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

  • $241 million for British Columbia Tripartite Agreement.

2.2 Expenditures analysis by standard object

Departmental Budgetary Expenditures were $5.3 billion for the quarter ended June 30, 2023.

Departmental Budgetary Expenditures were $1.3 billion lower than the same quarter in 2022-23. 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 2023-24 Q1 and 2022-23 Q1 expenditures Variance between 2023-24 year-to-date and 2022-23 year-to-date expenditures
Expenditures:
1-Personnel There are increases in Primary Health, Jordan's Principle, Indigenous Governance and Capacity Child, and Family Services and Community Economic Development expenditures due to increase in personnel in order to deliver department programs. 16,434 16,434
2-Transportation and communications The increase is mainly related to Supplementary Health Benefits experiencing significant inflationary pressures now that all activities are back to pre-pandemic levels. 23,360 23,360
3-Information 461 461
4-Professional and special services The decrease is mainly due to Water & Wastewater legal settlement regarding safe drinking water. (12,660) (12,660)
5-Rentals 648 648
6-Purchased repair and maintenance (79) (79)
7-Utilities, materials and supplies The increase for Supplementary Health Benefits expenditures is due to an extension in drugs and medical supplies as part of product listing agreements. 17,672 17,672
8-Acquisition of land, buildings and works (4) (4)
9-Acquisition of machinery and equipment 1,479 1,479
10-Transfer payments Transfer payment expenditures* 637,584 637,584
11-Public debt charges 0 0
12-Other subsidies and payments The decrease is related to Water & Wastewater program for a legal settlement regarding safe drinking water paid in 2022-23. (1,952,308) (1,952,308)
Total gross budgetary expenditures (1,267,412) (1,267,412)
Less Revenues netted against expenditures
Services and Benefits to Individuals (95) (95)
Total Revenues netted against expenditures (95) (95)
Total net budgetary expenditures (1,267,507) (1,267,507)

*The net increase of $637 million in transfer payment expenditures is mainly due to the following:

  • $228 million increase for First Nation Child and Family Services (FNCFS) mainly due to the continued 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), as well as the coming into force of seven coordination agreements for First Nations exercising jurisdiction under an Act respecting First Nations, Inuit and Métis children, youth and families;
  • $176 million increase for First Nations Health Assistance (FNHA) due to the timing of the quarterly payments;
  • $124 million increase for Jordan’s Principle due to the high number of requests for Jordan's Principle First Nation and Inuit Child First Initiative this fiscal year over last fiscal year. Jordan's Principle is a demand-driven legal obligation, and expenditures have been steadily increasing year over year;
  • $65 million increase for Elementary & Secondary Education in order to expand access to adult education by supporting First Nations people on reserve and to support better student outcomes through a Regional Education Agreement with the First Nations Education Council;
  • $45 million increase for Emergency Management Assistance and Indigenous Governance & Capacity is due to the magnitude of this year’s wildland fire season across Canada. It is also due to the timing difference of payments;
  • $35 million increase for Public Health and Promotion Disease due to the timing difference of the payments.

Offset by a decrease for:

  • $49 million for Post-Secondary Education due to additional funding received in 2022-23 to support students and youth during the pandemic COVID-19.

3. Risks and uncertainties

For 2023-24, ISC is addressing key priorities in service areas 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 2023-24 Corporate Risk Profile and the 2023-24 Departmental Plan, and highlight that a rapidly increasing and evolving Indigenous population, as well as the rising cost of living, building supplies and equipment, educational materials, and more, are all having a significant impact on our risk environment.

The current risk environment is unpredictable and has created the need for additional financial flexibility to allocate funds to the most pressing issues, such as wildfires and emergency health care, 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 continue to 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.

ISC is committed to sound stewardship of public funds. Examples include the development of ISC's Integrated Risk Management Framework, the creation of a yearly Corporate Risk Profile and Risk Inventory/Register, increased risk analysis and monitoring, frequent risk discussions at governance committees, the review of ISC's Budget Management Framework, strengthened planning and cash management activities, and increased fraud prevention and detection activities. Risk data is continuously and systematically 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.

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 2023-24 Fiscal Year 2022-23
Total available for use for the year ending March 31, 2024 Used during the quarter ended June 30, 2023 Year to date used at quarter ended June 30, 2023 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
Vote 1: Operating Expenditures 26,985,452 570,623 570,623 25,719,205 2,478,287 2,478,287
Vote 5: Capital expenditures 6,263 602 602 5,984 498 498
Vote 10: Grants and Contributions 17,339,700 4,683,338 4,683,338 15,941,618 4,046,833 4,046,833
S- Statutory Authorities: Operating expenditures
Contributions to employee benefit plan 115,275 27,921 27,921 106,477 25,144 25,144
Court awards–Crown Liability and Proceedings Act 0 240 240 0 50 50
Minister of Indigenous Services Canada – Salary and motor car allowance 95 24 24 93 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 29 29 0 530 530
S- Statutory Authorities: Transfer Payments
Canada Community – Building Fund – Financial municipal infrastructure 32,383 12 12 31,033 111 111
Contributions in connection with First Nations Infrastructure 0 0 0 0 0 0
Indian Annuities Treaty payments 2,100 4,739 4,739 2,100 3,560 3,560
Payments related to Public Health Events of National Concern and income support 0 0 0 0 0 0
Subtotal Statutory Authorities 151,852 32,965 32,965 141,702 29,418 29,418
Total Authorities 44,483,268 5,287,528 5,287,528 41,808,509 6,555,036 6,555,036

Departmental budgetary expenditures by standard object (Unaudited)

(In thousands dollars)
Expenditures Fiscal Year 2023-24 Fiscal Year 2022-23
Planned expenditures for the year ending March 31, 2024 Expended during the quarter ending June 30, 2023 Year to date used at quarter ended June 30, 2023 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
1-Personnel 863,437 162,808 162,808 798,935 146,374 146,374
2-Transportation and communications 392,308 93,828 93,828 415,524 70,468 70,468
3-Information 10,620 1,226 1,226 6,143 765 765
4-Professional and special services 1,903,755 149,892 149,892 1,804,811 162,552 162,552
5-Rentals 18,917 3,228 3,228 17,120 2,580 2,580
6-Purchased repair and maintenance 5,930 343 343 5,591 422 422
7-Utilities, materials and supplies 608,564 173,054 173,054 822,702 155,382 155,382
8-Acquisition of land, buildings and works 0 0 0 0 4 4
9-Acquisition of machinery and equipment 6,263 11,459 11,459 5,984 9,980 9,980
10-Transfer payments 17,374,183 4,688,089 4,688,089 15,974,751 4,050,505 4,050,505
11-Public debt charges 0 0 0 0 0 0
12-Other subsidies and payments 2,100 4,739 4,739 2,100 3,560 3,560
Total gross budgetary expenditures 44,531,621 5,288,643 5,288,643 41,857,101 6,556,056 6,556,056
Less Revenues netted against expenditures
Services and Benefits to Individuals (48,353) (1,115) (1,115) (48,592) (1,020) (1,020)
Total Revenues netted against expenditures (48,353) (1,115) (1,115) (48,592) (1,020) (1,020)
Total net budgetary Expenditures 44,483,268 5,287,528 5,287,528 41,808,509 6,555,036 6,555,036

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