ARCHIVED – Quarterly Financial Report for the quarter ended June 30, 2012

1. Introduction

This quarterly report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by Treasury Board. This quarterly report should be read in conjunction with the Main Estimates, the Supplementary Estimates A as well as Canada’s Economic Action Plan 2012 (Budget 2012).

A summary description of the Citizenship and Immigration Canada (CIC) program activities may be found in Part II of the Main Estimates (PDF, 2.79 Mb).

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 and Supplementary Estimates (A) for the 2012-13 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 moneys 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.

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year. Budget 2012 was tabled in Parliament on March 29, after the tabling of the Main Estimates on February 28, 2012. As a result the measures announced in the Budget 2012 could not be reflected in the 2012-13 Main Estimates.

In fiscal year 2012-13, frozen allotments will be established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012. In future years, the changes to departmental authorities will be implemented through the Annual Reference Level Update, as approved by Treasury Board, and reflected in the subsequent Main Estimates tabled in Parliament.

Citizenship and Immigration Canada prepares its annual departmental financial statements that are part of the departmental performance reporting process, on a full accrual basis in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector. However, the spending authorities voted by Parliament remain on an expenditure basis.

This quarterly report has not been subject to an external audit or review.

2. Highlights of fiscal quarter and fiscal year to date (YTD) results

CIC’s 2011-12 authorities represent the total Main Estimates, whereas 2012-13 includes the amounts in the Main Estimates and the Supplementary Estimates (A). CIC did not request authorities through Supplementary Estimates (A) in 2011-12.

CIC’s net budgetary expenditures for the quarter ending June 30, 2012 were $355 million compared to $369 million as of June 30, 2011, representing 23% of the total budgetary authorities available for use for year ending March 31, 2013; approximately the same percentage (25%) used at quarter-end last year. The Department has therefore been consistent in its spending this quarter versus its authorities provided, compared to the first quarter of the previous fiscal year.

Statement of Authorities: Significant changes

As reflected in the Statement of Authorities, Citizenship and Immigration Canada’s total budgetary authorities available for use in fiscal year 2012-13 at June 30, 2012 are $1,557 million, compared to $1,492 million at June 30, 2011. CIC’s budgetary authorities available for use increased by approximately $65 million, when compared to the same quarter in 2011-12. This is due in large part to a change in the timing of the receipt of funds for a number of initiatives. Funding for the majority of these initiatives was received in Supplementary Estimates B or C for 2011-12 whereas, the funding for 2012-13 has now been included in CIC’s Main Estimates. This has resulted in an increase in authorities available at the end of the first quarter of 2012-13 as compared to the same quarter in 2011-12.

Vote 1 – Operating Expenditures

The Department’s Vote 1 net increase of $40 million or 8% is explained as follows:

• Increases of $84 million to reflect funding approvals:
  • Investment in the Biometrics project ($50 million)
  • Funding to Modernize the Immigration System and Manage Backlogs ($23 million)
  • Funding related to government advertising programs ($5 million)
  • Transfer from Foreign Affairs and International Trade (DFAIT) for the processing of applications under the International Experience Canada Program ($3 million)
  • Canada’s Program on Crimes Against Humanity and War Crimes Program ($2 million)
  • Funding to provide essential federal services for the 2015 Pan Am and Parapan Am Games ($1 million)
• Decreases of $44 million associated with the following:
  • Funding transferred to Shared Service Canada for the consolidation of information technology services ($24 million)
  • Net reduction of funding for the backlog reduction strategy associated with the reform of Canada’s Refugee system ($5 million)
  • Reduction due to foregone revenue for Visa lifting ($4 million)
  • Internal Transfer from non-salary to salary ($4 million)
  • Sunsetting of funding to manage immigration cases involving classified information (Security Certificate) ($3 million)
  • Additional savings identified as part of the government’s Strategic Review of departmental spending ($2 million)
  • Reduction of Temporary Resident Visa for Mexico ($1 million)
  • Transfer to Canada Border Service Agency ($1 million)

Vote 5 – Grants and Contributions (G&C)

The Department’s Vote 5 net increase of $19 million or 2% is explained as follows:

• Increases of $27 million to reflect new funding approvals:
  • Funding to the Grant for the Canada-Quebec Accord on immigration ($25 million)
  • Enhancement of the Resettlement Assistance program relating to the reform of Canada’s Refugee system ($2 million)
• Decreases of $8 million to reflect a reduction of funding:
  • Additional savings identified as part of the government’s Strategic Review of departmental spending ($6 million)
  • Sunsetting of the Community Historical Recognition Program and other ($2 million)

Budgetary Statutory Authorities

The 2012-13 statutory authorities level in the first quarter is approximately 11% higher than 2011-12. The increase of $6 million is mainly related to the Employee Benefits Plan costs associated with the change in the Department budgetary requirements for salary ($4 million), as well as Refund of previous years’ Revenues ($2 million).

Departmental Budgetary Expenditures by Standard Object: Significant Changes

The increase of $32 million in planned expenditures for personnel is mainly explained by an internal transfer in 2012-13 and future years to more accurately align authorities with actual spending patterns ($20 million). Funding for personnel received for the Biometrics project ($8 million) and for Modernizing the Immigration System and Managing Backlogs ($9 million), is partially offset by the transfer to Shared Services Canada ($7 million).

A realignment of planned expenditures between the standard object Rentals and the standard object Acquisition of Machinery and Equipment was completed in 2012-13, to reflect a more up-to-date spending trend in the Department.

Compared to the previous year, the total of budgetary expenditures in the first quarter, ending June 30, 2012, have decreased by $14 million or 4%, from $369 million to $355 million as per the Table of Departmental Budgetary Expenditures by Standard Object. This difference is for the most part explained by a decrease of $14 million under Transfer Payments.

The reduction of $14 million or 6%, in Transfer Payments expenditures (Vote 5) is mainly attributable to delays in receiving claims for payment from British Columbia, under the Contribution to provinces ($27 million), compared to the same quarter of 2011-12. It is partially offset by an increase in grant payments to Quebec under the Canada Quebec Accord ($12 million). Transfer Payments expenditures represent 24% of planned transfer payments at the end of Q1 as opposed to 26% last year at this time.

The operating expenditures of the first quarter are lower than previous year due to the transfer to Shared Services Canada, mainly in Personnel, Transportation and Communications and Repair and Maintenance. These reductions are offset by a number of other operating budgetary expenditures which support CIC’s activities.

With respect to the increase of $2.4 million in Professional and Special Services expenditures, this is mainly explained by timing differences in the recording of transactions under the Interim Federal Health Program, as a result of a transition to a new claims administrator in January 2011.

3. Risks and Uncertainties

CIC is funded through annual appropriations. As a result, its operations can be impacted by any changes approved by Parliament. This departmental Quarterly Financial Report reflects the results of the current fiscal period in relation to the Main Estimates for which full supply was released on June 29, 2012.

CIC consistently receives more immigration and citizenship applications than can be processed in a year. This situation gives rise to significant backlogs of applications awaiting processing and an inventory which must be managed within the immigration levels plan submitted annually to Parliament and within the resources available. As previously mentioned in the section “Statement of Authorities: Significant Changes”, the Department has received funding to embarked on an ambitious modernization agenda which aims to provide simpler and more accessible services; continuous, innovative and adaptable operational improvements, as well as robust program integrity and the delivery of quality service at lower costs.

Budget 2010 announced that the operating budgets for departments would be frozen at their 2010-11 levels for fiscal years 2011-12 and 2012-13. The area most impacted by this freeze had been personnel costs as they amount to 64% of planned expenditures, excluding transfer payments. The recent wage increases as a result of collective bargaining, must be absorbed within existing budgets. CIC has estimated the impact of this government- initiative to be approximately $5 million in 2012-13. CIC has taken steps to closely manage costs in this area by establishing staffing (full-time equivalent) and salary budgets in addition to implementing rigorous monthly monitoring to ensure that annual budgets are respected.

4. Significant changes in relation to operations, personnel and programs

Strategic Review

CIC is in the final year of implementing the Strategic Review reduction of $67.6 million, of which $59 million in 2012-13, came from the national settlement funding. Settlement allocations have more than tripled since 2005-06, and more services are being provided. Realigning settlement funding based mainly on immigrant intake will allow us to advance fairness across the country.

Other savings were found through operating efficiencies including the use of a global technology network to process medical records, web-based applications forms, and other services that reduce the use of expensive paper and mail, and that better track applicants as they move through the immigration system.

Shared Services Canada

Effective August 4, 2011, Shared Services Canada (SSC) was created by an Order in Council (OIC) under the Financial Administration Act, to standardize and consolidate information technology services in the federal government in order to reduce costs, improve services, and leverage capacity in the public and private sector through pooled resources and greater buying power.

On November 15, 2011, a second set of Orders-in-Council were signed. The Department was required to identify the amounts, by vote, of authorities related to functions transferred to Shared Services Canada. Amounts for future years are addressed in the 2012-13 Annual Reference Level Updates.

A total of $8.3 million was transferred from CIC to SSC in 2011-12 and $23.8 million in 2012-13, including amounts in connection with corporate, administrative and other support for e-mail, networks and data centre services.

5. Budget 2012 Implementation

This section provides an overview of the savings measures announced in the Budget 2012 that will be implemented in order to refocus government and programs; make it easier for Canadians and business to deal with their government; and, modernize and reduce the back office.

CIC will change the way it operates in Canada and abroad by reducing overhead costs and continuing to streamline operations and program delivery to provide better value for Canadians. In this regard, it will continue to take steps to more efficiently process immigration applications by centralizing more of its visa processing, and by allowing in-Canada applicants to be processed in Canada.

In addition, through the Economic Action Plan 2012, CIC will:

• Realign the Temporary Foreign Worker Program to better meet labour market demands.
• Support further improvements to foreign credential recognition and identify the next set of target occupations beyond 2012.
• Move to an increasingly fast and flexible immigration system where priority focus is on meeting Canada’s labour market needs.
• Return applications and fees to certain federal skilled worker applicants who have been waiting for processing to be completed.

These actions will contribute to making the immigration system truly proactive, fast and flexible in a manner that will be responsive to labour market needs.

In the first year of implementation, CIC will achieve Budget 2012 savings of approximately $26.5 million. Savings will increase to $59.0 million for fiscal year 2013-14; and will result in ongoing savings of $71.2 million by 2014-15. Savings for 2012-13 will be reflected later in the fiscal year as initiatives are implemented and corresponding changes to the department’s total authorities and expenditures are realized.

Approved by:

Citizenship and Immigration Canada
Quarterly Financial Report
For the quarter edned June 30, 2012

Statement of Authorities (unaudited)

* Includes only authorities available for use and granted by Parliament at quarter-end
** Total available for use does not reflect measures announced in Budget 2012
*** Represents the net of loans collected and loans issued
**** Budgetary Statutory Authorities are comprised of $56.8 M related to EBP; $78 K related to Minister's Salary and Motor Car Allowance; and $3.2 M related to Refund of Previous Year Revenues and others.

Citizenship and Immigration Canada
Quarterly Financial Report
For the quarter edned June 30, 2012

Departmental Budgetary Expenditures by Standard Object (unaudited)

* Planned expenditures do not reflect measures announced in Budget 2012