Quarterly Financial Report for the quarter ended December 31, 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

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 2020-21 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 third quarter, the Department has total budgetary authorities of $16.3 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 dollars)
2020-21 Budgetary Authorities to March 31,2021 2019-20
Budgetary Authorities to March 31, 2020		 Variance in Budgetary Authorities 2020-21 Q3
Expenditures		 2019-20 Q3
Expenditures		 Variance between 2020-21 Q3 and 2019-2020 Q3 Expenditures Year-to-date Expenditures as at Q3 2020-21 (December 31, 2020) Year-to-date Expenditures as at Q3 2019-20 (December 31, 2019) Variance between 2020-21 year-to-date and 2019-20 year-to-date Expenditures
Vote 1: Operating Expenditures 2,272,652 2,229,238 43,414 489,965 493,701 (6,631) 1,291,795 1,260,326 4,838
Vote 5: Capital Expenditures 8,466 10,212 (1,746) 1,373 2,386 (1,013) 2,143 2,636 (493)
Vote 10: Grants and Contributions 12,212,014 10,410,039 1,801,975 2,595,640 2,670,924 (75,284) 8,411,317 7,549,520 861,797
Statutory Authorities 1,848,748 126,477 1,722,271 456,495 37,087 419,408 1,726,282 73,808 1,652,474
Total 16,341,880 12,775,966 3,565,914 3,543,473 3,204,098 336,480 11,431,537 8,886,290 2,518,616

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 $3.6 billion fom the previous year:

  • Vote 1 authorities increased by $43.4 million
  • Vote 10 authorities increased by $1.8 billion
  • Statutory authorities increased by $1.7 billion

The net increase of $43.4 million in Operating authority Vote 1 is mainly due to the following:

  • $45 million increase for Non-insured Health Benefits (NIHB);
  • $27 million increase for Jordan Principle First Child Initiative.

Offset by a decrease for:

  • $22 million decrease for Internal Services;
  • $4 million decrease for New Fiscal Relationship;
  • $3 million decrease for Clinical and Client Care;
  • $3 million decrease for Education.

The net increase of $1.8 billion in the Grants and Contributions authority (Vote 10) is mainly due to the following:

  • $709 million, First Nations Child and Family Services (FNCFS);
  • $349 million, Indigenous Entrepreneurship and Business Development;
  • $275 million, Jordan's Principle First Child Initiative;
  • $215 million, Education;
  • $62 million, Non-insured Health Benefits (NIHB);
  • $57 million, Land, Natural Resources and Environmental Management;
  • $48 million, Other Community Infrastucture and Activities;
  • $48 million, Water and Wastewater;
  • $35 million, Income Assistance.

The net increase of $1.7 billion in Statutory authority (Operating and Grants & Contributions) includes:

  • $610 million, Indigenous Communities;
  • $281 million, Enhance COVID-19 measures in First Nations and Inuit Communities;
  • $263 million, Income Assistance;
  • $237 million, Restart in Indigenous Communities;
  • $90 million, Expanded Youth Employment and Supporting Students during COVID-19;
  • $83 million, Mental Wellness;
  • $75 million, Urban and Indigenous Organizations;
  • $10 million, Family Violence Prevention and Response to COVID-19;
  • $10 million, Support to Canada's response to COVID-19.

2.2 Expenditures analysis by standard object

Departmental Budgetary Expenditures were $3.5 billion for the quarter ended December 31, 2020.

Departmental Budgetary Expenditures were $336.5 million 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 dollars)
Standard Object Changes to Standard Object expenditures Variance between 2020-21 Q3 and 2019-20 Q3 Expenditures (December 31, 2020) Variance between 2020-21 year-to-date and 2019-20 Expenditures (April 1 to December 31, 2020)
Expenditures:
1-Personnel The increase is due to additional staffing, collective agreement renewal, and employees employees who were charged to Crown-Indigenous Relations and Northern Affairs (CIRNAC) in 2019-20 during the transition of certain functions to Indigenous Services Canada in July 2019. 7,020 100,681
2-Transportation and communications The decrease is mainly due to the reduced payments for medical transportation non-insured benefits as a result of the impact from COVID-19. (3,934) (35,133)
3-Information 98 426
4-Professional and special services In 2019-20, most of the expenditures for the Information Management Branch were still charged CIRNAC. These charges were subsequently transferred to Indigenous Services Canada in the last quarter of the year. 9,522 (49,026)
5-Rentals In 2019-20, most rental expenditures related to internal services were still charged to CIRNAC. These charges were subsequently transferred to Indigenous Services Canada in the last quarter of the year. 2,207 6,193
6-Purchased repair and maintenance (154) 231
7-Utilities, materials and supplies The decrease is mainly due to the pandemic restrictions and the timing of Product Listing Agreement rebates for Pharmacy and the change in payment schedules under the new Health Information and Claims Processing Services Contract. (19,185) 20,184
8-Acquisition of land, buildings and works 67 239
9-Acquisition of machinery and equipment 732 712
10-Transfer payments Transfer payment expenditures* 331,578 2,452,359
11-Public debt charges 0 0
12-Other subsidies and payments 8,529 21,750
Total gross budgetary expenditures 336,480 2,518,616

*The net increase of $331.6 million in transfer payment expenditures is mainly due to the following:

  • $113 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;
  • $95 million increase for Communicable Disease Control Management;
  • $53 million increase for Mental Wellness;
  • $48 million increase resulting from the transfer of Land and Economic Development Programs from Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC) in 2019;
  • $38 million for Clinical and Client Care;
  • $34 million for Health Facilities;
  • $32 million for Healthy Child Development;
  • $25 million for Urban Programming for Aboriginal Peoples.

Offset by a decrease for:

  • $44 million decrease for New Fiscal Relationship;
  • $38 million decrease for Income Assistance;
  • $29 million decrease for Jordan Principle Fisrt Child Initiative.

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 funding recipients have appropriate management, financial and administrative controls in place. The Department is also engaging with First Nations, Inuit and Métis partners with respect to its activities, including funding, in order to increase readiness and effectiveness of planned activities. Furthermore, interim processes have been implemented during COVID-19 for recipient approval of funding agreements and amendments by email as well as streamlining the approach to flow funds related to COVID-19 emergency response for Indigenous communities. These processes were implemented to respond to the impacts of the COVID-19 pandemic and the requirement to flow funding to recipients in a timely manner.

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 third quarter of fiscal year 2020-21 include:

Effective November 16, 2020, Joanne Wilkinson moved to a special deployment as Special Advisor to the Senior Assistant Deputy Minister, Regional Operations. She was previously the Assistant Deputy Minister, Child and Family Services Reform.

Effective November 27, 2020, James Sutherland was appointed Acting Assistant Deputy Minister, Child and Family Services Reform.

Effective November 27, 2020, Mary-Luisa Kapelus, Assistant Deputy Minister, Education and Social Development Programs and Partnerships (ESDPP), left the Department. David Peckham and Candice St-Aubin assumed the responsibilities of the Assistant Deputy Minister, Education and Social Development Programs and Partnerships (ESDPP) on a rotational basis.

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)
(In thousands dollars)
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
December 31, 2020		 Year to date used at quarter ended December 31, 2020 Total available for use for the year ending
March 31, 2020 		Used during the quarter ended
December 31, 2019		 Year to date used at quarter ended December 31, 2019
Vote 1: Operating expenditures 2,272,652 489,965 1,291,795 2,229,238 493,701 1,260,326
Vote 5: Capital expenditures 8,466 1,373 2,143 10,212 2,386 2,636
Vote 10: Grants and Contributions 12,212,01 2,595,640 8,411,317 10,410,039 2,670,924 7,549,521
S- Statutory Authorities: Operating expenditures
Contributions to employee benefit plan 81,767 20,184 60,550 65,302 15,380 46,139
Court awards–Crown Liability and Proceedings Act 0 231 231 0 0 0
Minister of Indigenous Services Canada – Salary and motor car allowance 89 22 67 88 (10) 34
Liabilities in respect of loan guarantees made ot Indian for Housing and Economic Development 2,000 0 0 2,200 0 0
Payments related to Public Health Events of National Concern and income support 0 7,455 45,448 0 0 0
Other 0 26 1,789 0 1 1
S- Statutory Authorities: Transfer Payments
Gas Tax Fund - Financing municipal infrastructure 0 8,507 12,537 0 0 0
Contributions in connection with First Nations Infrastructure 29,684 0 0 59,088 21,716 27,634
Indian Annuities Treaty payments 2,100 149 216 0 0 0
Payments related to Public Health Events of National Concern and income support 1,733,108 419,921 1,605,444 0 0 0
Subtotal Statutory Authorities 1,848,748 456,495 1,726,282 126,477 37,087 73,808
Total Authorities 16,341,880 3,543,473 11,431,537 12,775,966 3,204,098 8,886,290
Departmental budgetary expenditures by standard object (Unaudited)
(In thousands dollars)
Expenditures Fiscal Year 2020-21 Fiscal Year 2019-20
Planned expenditures for the year ending March 31, 2021 Expended during the quarter ending   31, 2020 Year to date used at quarter ended December 31, 2020 Planned expenditures for the year ending March 31, 2020 Expended during the quarter ending December 31, 2019 Year to date used at quarter ended December 31, 2019
1-Personnel 661,770 157,783 449,806 581,689 150,763 349,125
2-Transportation and communications 464,715 70,854 171,821 440,226 74,788 206,954
3-Information 4,065 432 925 3,425 334 499
4-Professional and special services 781,863 144,898 295,692 690,021 135,376 344,718
5-Rentals 23,249 3,250 7,998 7,356 1,043 1,085
6-Purchased repair and maintenance 5,817 607 1,695 7,575 761 1,464
7-Utilities, materials and supplies 694,147 119,217 418,394 705,358 138,402 398,210
8-Acquisition of land, buildings and works 2,896 71 264 1,233 4 25
9-Acquisition of machinery and equipment 12,627 11,627 31,666 8,980 10,895 30,954
10-Transfer payments 13,919,090 3,024,218 10,029,514 10,469,127 2,692,640 7,577,155
11-Public debt charges 0 0 0 0 0 0
12-Other subsidies and payments 2,000 11,419 26,665 50,146 2,890 4,915
Total gross budgetary expenditures 16,572,239 3,544,376 11,434,440 12,965,146 3,207,896 8,915,824
Less Revenues netted against expenditures
Services and Benefits to Individuals (230,359) (903) (2,903) (189,179) (3,798) (29,534)
Total Revenues netted against expenditures 230,359) (903) (2,903) (189,179) (3,798) (29,534)
Total net budgetary Expenditures 16,341,880 3,543,473 11,431,537 12,775,966 3,204,098 8,886,290

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