Quarterly Financial Report for the quarter ended September 30, 2020
Statement outlining results, risks and significant changes in operations, personnel and programs
Table of contents
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 Canada (ISC) 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 year.
The quarterly financial report has not been subject to an external audit or review.
1.1 Authority, mandate and departmental results
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 2020 to 2021 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 results
This section:
- Highlights the financial results for the quarter and fiscal year-to date ended September 30, 2020.
- Provides explanations of variances compared with the same period of the previous year that exceed materiality tresholds of:
- $1 million Vote 1, program expenditures and statutory votes
- $25 million Vote 10, grants and contributions
As of the second quarter, the department has total budgetary authorities of $12.1 billion for 2020 to 2021. 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.
| 2020 to 2021 Budgetary authorities to March 31,2021 | 2019 to 2020 Budgetary authorities to March 31, 2020 |
Variance in budgetary authorities | 2020 to 2021 Q2 expenditures |
2019 to 2020 Q2 expenditures |
Variance between 2020 to 2021 Q2 and 2019-2020 Q2 expenditures | Year-to-date expenditures as at Q2 2020 to 2021 (September 30, 2020) | Year-to-date expenditures as at Q2 2019 to 2020 (September 30, 2019) | Variance between 2020 to 2021 year-to-date and 2019 to 2020 year-to-date expenditures | |
|---|---|---|---|---|---|---|---|---|---|
| Vote 1: operating expenditures | 1,524,580 | 2,154,834 | (630,254) | 468,459 | 431,133 | 37,326 | 803,830 | 811,748 | (7,918) |
| Vote 5: capital expenditures | 6,758 | 11,755 | (4,997) | 362 | 171 | 191 | 770 | 171 | 599 |
| Vote 10: grants and contributions | 8,786,647 | 10,386,751 | (1,600,104) | 2,524,641 | 2,301,831 | 222,810 | 5,815,677 | 4,914,677 | 901,000 |
| Statutory authorities | 1,866,955 | 126,292 | 1,740,663 | 846,973 | 21,439 | 825,534 | 1,269,787 | 36,869 | 1,232,918 |
| Total | 12,184,940 | 12,679,632 | (494,692) | 3,840,435 | 2,754,574 | 1,085,861 | 7,890,064 | 5,763,465 | 2,126,599 |
2.1 Statement of voted and statutory authorities
The COVID-19 pandemic delayed the final approval by Parliament of the Main Estimates which significantly affected the timing of funding availability for all departments. For ISC, this results in a decrease of $2.0 billion compared to usual funding level. Final approval is expected by the end of Q3.
As a result of the delay in the approval of the Main Estimates, the budgetary authorities available for use for the department in the grants and contributions (Vote 10) for 2020 to 2021 totals $8.8 billion which is a net decrease of $1.6 billion over 2019 to 2020. Assuming approval of the Main Estimates, the department's total funding amounts to $12.2 billion, which is a net increase of $1.8 billion over 2019 to 2020.
The net increase of $1.8 billion in the Grants and Contributions authority (Vote 10) is mainly due to the following:
- $481 million Education and Social Development Program and Partnerships (ESDPP)
- $400 million First Nations and Inuit Health Branch (FNIHB)
- $355 million Regional Operations (RO)
- $256 million New Fiscal Relationship (NFR)
- $192 million First Nations Child and Family Services (FNCFS)
- $58 million Lands and Economic Development (LED)
As a result of the delay in the approval of the Main Estimates, the budgetary authorities available for use for the department in the operating authority (Vote 1) for 2020-21 totals $1.5 billion which is a net decrease of $630 million over 2019-20. Assuming approval of the Main Estimates, the department's total funding totals $2.1 billion, which is a net decrease of $64 million over 2019 to 2020.
The net decrease of $64 million in operating authority Vote 1 is mainly due to the following:
- Decrease of $176 million in Non-Insured Health Benefits
- Decrease of $8.1 million in Internal Services
- Offset by an increase of $108 million in Mental Wellness
- An increase of $5.6 million in Land, Natural Resources and Environmental Management
- An increase of $4.8 million in Individual Affairs
The net increase of $1.7 billion in statutory authority (operating and grants & contributions) includes :
- $1.7 billion funding pursuant to the Public Health Events of National Concern Payments Act (Indigenous Communities $610 million; Enhance COVID-19 measures in First Nations and Inuit Communities $281 million; Income Assistance $270 million; Safe Restart $233 million; Mental Wellness $83 million; Students and Youths $106 million; Indigenous Businesses $75 million; Urban and Indigenous Organizations $75 million; Family Violence Prevention and Response to COVID –19 $20 million)
2.2 Expenditures analysis by standard object
Departmental budgetary expenditures were $3.8 billion for the quarter ended September 30, 2020.
Departmental budgetary expenditures were $1.1 billion higher than the same quarter in 2019 to 2020. As per the departmental budgetary expenditures by standard object tables, the increase for the quarter is mainly due to the changes listed below:
| Standard objects | Changes to standard objects and statutory expendituress | Variance between 2020-21 Q2 and 2019-20 Q2 expenditures (September 30, 2020) | Variance between 2020 to 2021 year-to-date and 2019 to 2020 expenditures (April 1 to September 30, 2020) |
|---|---|---|---|
| 1 Personnel | The increase is due to additional staffing, collective agreement renewal and employees coded to CIRNAC in 2019-20. | 50,172 | 84,054 |
| 2 Transportation and communications | The decrease is mainly due to the impact of the pandemic on medical transportation. | (13,583) | (31,686) |
| 3 Information | 103 | 173 | |
| 4 Professional and special services | The decrease is due to the impact of the pandemic and is mainly attributable to dental and vision benefits, nursing education that has directly impacted the availability of training courses. | (3,566) | (63,351) |
| 5 Rentals | In 2019-20, most rental expenditures related to internal services were still charged to CIRNAC as the transition of internal services to ISC had not yet occurred. | 1,978 | 3,652 |
| 6 Purchased repair and maintance | (67) | 343 | |
7 Utilities, materials and supplies |
The increase is due to the impact of the Pandemic and is mainly attributable to prescription and over the counter drug benefits. | 19,834 | 39,287 |
8 Acquisition of land, buildings and works |
172 | 172 | |
9 Acquisition of machinery and equipment |
750 | (53) | |
10 Transfer payments |
*Transfer payments | 1,014,693 | 2,084,700 |
11 Public debt charges |
0 | 0 | |
12 Other subsidies and payments |
15,375 | 9,308 | |
Total budgetary expenditures |
1,085,861 | 2,126,599 | |
*The net increase of $1 billion in transfer payment expenditures is mainly due to the following:
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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 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 and can 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
Significant changes in relation to operations, personnel and programs during the first quarter of fiscal year 2020 to 2021 include:
Effective September 21, 2020, Christiane Fox was appointed Deputy Minister, Indigenous Services Canada.
Effective September 28, 2020, Valerie Gideon was appointed Associate Deputy Minister, Indigenous Services Canada. She was previously the Senior Assistant Deputy Minister, First Nations and Inuit Health Branch.
Effective September 28, 2020, Keith Conn was appointed Acting, Senior Assistant Deputy Minister, First Nations and Inuit Health Branch. He was previously the Acting Assistant Deputy Minister of Regional Operations, First Nations and Inuit Health Branch.
Effective September 28, 2020, Marie Doyle was appointed Acting Assistant Deputy Minister of Regional Operations, First Nations and Inuit Health Branch.
5. Approval by Senior Officials
Approved, as required by the Treasury Board Policy on Financial Management:
Original signed by
__________________________
Christiane Fox
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) | Fiscal Year 2020-21 | Fiscal Year 2019-20 | ||||
|---|---|---|---|---|---|---|
| Total available for use for the year ending March 31, 2021 | Used during the quarter ended September 30, 2020 | Year to date used at quarter ended September 30, 2020 | Total available for use for the year ending March 31, 2020 | Used during the quarter ended September 30, 2019 | Year to date used at quarter ended September 30, 2019 | |
| Vote 1: Operating expenditures | 1,524,580 | 468,459 | 801,830 | 2,154,834 | 405,397 | 786,012 |
| Vote 5: Capital expenditures | 6,758 | 362 | 770 | 11,755 | 171 | 171 |
| Vote 10: Grants and contributions | 8,786,647 | 2,524,641 | 5,815,677 | 10,386,750 | 2,301,831 | 4,914,677 |
| S - Statutory Authorities: Operating expenditures | ||||||
| Contributions to employee benefit plan | 80,733 | 20,183 | 40,366 | 65,116 | 15,380 | 30,760 |
| Minister of Indigenous Services Canada – Salary and motor car allowance | 89 | 23 | 45 | 88 | 44 | 44 |
| 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 | 28,904 | 37,993 | 0 | 0 | 0 |
| Other | 0 | 112 | 1,763 | 0 | 0 | 0 |
| S - Statutory Authorities: Transfer Payments | ||||||
| Gas Tax Fund - Financing municipal infrastructure | 0 | 3,350 | 4,030 | 59,088 | 5,868 | 5,918 |
| Contributions in connection with First Nations Infrastructure | 29,684 | 0 | 0 | 0 | 0 | 0 |
| Indian Annuities Treaty payments | 0 | 30 | 67 | 0 | 0 | 0 |
| Payments related to Public Health Events of National Concern and income support | 1,752,349 | 794,161 | 1,185,523 | 0 | 0 | 0 |
| Subtotal Statutory Authorities | 1,866,955 | 846,973 | 1,269,787 | 126,292 | 21,439 | 36,869 |
| Total Authorities | 12,184,940 | 3,840,435 | 7,888,064 | 12,679,631 | 2,728,838 | 5,737,729 |
| Fiscal Year 2020-21 | Fiscal Year 2019-20 | |||||
|---|---|---|---|---|---|---|
| Planned expenditures for the year ending March 31, 2021 | Expended during the quarter ending September 30, 2020 | Year to date used at quarter ended September 30, 2020 | Planned expenditures for the year ending March 31, 2020 | Expended during the quarter ending September 30, 2019 | Year to date used at quarter ended September 30, 2019 | |
| Expenditures | ||||||
| 1 Personnel | 532,137 | 166,985 | 292,023 | 567,184 | 116,813 | 207,969 |
| 2 Transportation and communications | 318,678 | 60,972 | 100,967 | 430,873 | 74,555 | 132,653 |
| 3 Information | 3,147 | 377 | 493 | 3,952 | 274 | 320 |
| 4 Professional and special services | 566,048 | 101,698 | 150,794 | 687,483 | 105,262 | 214,145 |
| 5 Rentals | 18,328 | 2,750 | 4,748 | 8,656 | 772 | 1,096 |
| 6 Purchased repair and maintenance | 10,300 | 470 | 1,088 | 7,381 | 537 | 745 |
| 7 Utilities, materials and supplies | 470,793 | 169,027 | 299,177 | 703,629 | 149,193 | 259,889 |
| 8 Acquisition of land, buildings and works | 2,896 | 193 | 193 | 4,017 | 21 | 21 |
| 9 Acquisition of machinery and equipment | 10,162 | 8,847 | 20,039 | 7,738 | 8,097 | 20,092 |
| 10 Transfer payments | 10,419,470 | 3,322,391 | 7,005,296 | 10,445,839 | 2,307,700 | 4,920,598 |
| 11 Public debt charges | 0 | 0 | 0 | 0 | 0 | 0 |
| 12 Other subsidies and payments | 2,000 | 6,725 | 15,246 | 2,058 | (8,650) | 5,938 |
| Total gross budgeary Expenditures | 12,353,959 | 3,840,435 | 7,890,064 | 12,868,810 | 2,754,574 | 5,763,465 |
| Less Revenues netted against expenditures | ||||||
| Services and Benefits to Indivuduals | (169,019) | 0 | (2,000) | (189,179) | (25,736) | (25,736) |
| Total Revenues netted against Expenditures | (169,019) | 0 | (2,000) | (189,179) | (25,736) | (25,736) |
| Total net budgetary Expenditures | 12,184,940 | 3,840,435 | 7,888,064 | 12,679,631 | 2,728,838 | 5,737,729 |