Quarterly Financial Report for the quarter ended June 30, 2018

1.1 Authority, Mandate and Departmental Results

Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC) supports Indigenous peoples (First Nations, Inuit and Métis) and Northerners in their efforts to:

• Improve social well-being and economic prosperity;
• Develop healthier, more sustainable communities; and
• Participate more fully in Canadaʼs political, social and economic development – to the benefit of all Canadians.

The Minister of Crown-Indigenous Relations and is responsible for this organization^{Footnote *}.

Note: Until the established legislation is amended, the legal name of the department for Appropriation Acts remains Department of Indian Affairs and Northern Development (DIAND).

Further details on CIRNAC’s authority, mandate and department results can be found in Part II of the Main Estimates and the Departmental Plans.

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 2018-2019 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.

3.1 Risks and Uncertainties

Risk management and risk-based decision-making have become a critical component in the way the Department prioritizes and conducts its business. Resource allocation decisions are informed by risk and the Department's key corporate risks are discussed systematically by the senior management committee, which contributes to the better allocation of resources and ultimately better results.

The Department continues to monitor its risk exposure and take action as needed to mitigate the risk of not achieving anticipated outcomes or to deal with emerging pressures. Achievement of CIRNAC's core responsibilities and delivery of programs is dependent on timely access to appropriate authorities and funding levels.

In terms of transfer payment program and transfer payment recipient risk, the Department transfers funds to recipients each year, while balancing program and recipient risks to deliver on its mandate. The Department undertakes risk assessments on new, existing and reformed programs as well as an annual general assessment of each recipient to identify areas of risk. The Department also includes a risk section of each of its performance information profiles.

This year the Department is managing additional risks:

First, there are issues related to the Government of Canada Pay System in that there continues to be cases of salary over and under payments to employees.  The Department will continue to monitor this situation closely and resolve these issues as necessary. 

Second, as a result of the creation of ISC, both ISC and CIRNAC will operate in one financial system for 2018-2019. In addition to the creation of ISC, during the transition, there is an increased need to ensure proper control and coordination in the management of common funding agreements.

3.2 Risk Mitigating Strategies

Corporate and financial risk mitigation activities, reflected in the Department's Corporate Risk Profile, are monitored by senior management on a semi-annual basis and modified as required. A number of practices and internal controls help to manage risk departmentally, including senior management governance and oversight as established through committees, existing policies and procedures that ensure an appropriate level of monitoring, review and reporting.

The Department is managing its budget by aligning resources to needs and through rigorous monitoring against both financial and human resource targets. Management proactively and systematically manages and responds to risks to minimize adverse impacts and capitalize on opportunities. Budget and expenditure trends are monitored regularly, including a review and challenge function, through the Financial Status Report.

The implementation of the two-year fraud risk mitigation plan is near completion. The remaining actions items will be completed in 2018-2019.

In order to ensure effective controls, transparency and accountability, a diversity of regional approaches are used to confirm that recipients have met planned program results and that the funds were used for the intended purposes. In addition, the conduct of recipient and project audits, under the terms of their funding agreements; provides a further opportunity to ensure that First Nations have appropriate management, financial and administrative controls in place.

Since the past few years, the Department has put in place practices to detect, monitor and report over/under payments of employees affected by the Phoenix Pay system. Through the Phoenix Response Team and a pilot project with Public Service Pay Centre (PSPC), the Department is able to offer priority payments to employees who have been underpaid as a result of a Phoenix error. In addition, by working with PSPC, the Department has obtained full compensation accesses for Departmental Liaison Officers which allows assessment of accuracy and completeness of pay information by employee.

Table 1a: Statement of Authorities (unaudited)

Table 1b: Statement of Authorities (unaudited)(continued)

Table 2a: Departmental budgetary expenditures by Standard Object (unaudited)

Table 2b: Departmental budgetary expenditures by Standard Object (unaudited) (continued)