Quarterly Financial Report: Quarter ended June 30, 2021

Table of contents

1. Introduction

This Quarterly Financial Report should be read in conjunction with the Main Estimates for fiscal year 2021-22 as well as the Supplementary Estimates (A) for fiscal year 2021-22. 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 Policy on Financial Management. 

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

1.1 Authority, Mandate and Departmental Results

Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC) continues to renew the nation-to-nation, Inuit-Crown, government-to-government relationship between Canada and First Nations, Inuit and Métis; modernize Government of Canada structures to enable Indigenous Peoples to build capacity and support their vision of self-determination; and lead the Government of Canada's work in the North.

The responsibility for CIRNAC is shared between the Minister of Crown-Indigenous Relations and the Minister of Northern Affairs. 

Further details on CIRNAC's authority, mandate and departmental 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 and Supplementary Estimates for the 2021–22 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 accounting method 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.

1.3 General Descriptions

The following descriptions are referred to throughout the report:

  • Authority: Approvals from Parliament to spend up to a specific amount.
  • Operating (Vote 1): Amount approved for the fiscal year for the Department to spend on salary and operating expenditures.
  • Capital (Vote 5): Amount approved for the fiscal year for the Department to spend on capital purchases or for the construction of assets.
  • Grants and Contributions (G&C's) (Vote 10 and Statutory):
    • Vote 10: Amount approved for the fiscal year for the Department as Grants and Contributions (G&C's) transfer payments to recipients.
    • Statutory: Amount approved through an existing Act of Parliament where additional annual approvals are not required by the Department to access G&C's funding for recipients.
  • Debt Forgiveness (Vote 25): The forgiveness, as referred to in section 24.1 of the Financial Administration Act, of a debt due to Her Majesty in right of Canada.
  • Standard Object (SO): Classification or coding of transactions to permit the reporting of information about the nature of transactions in the Estimates and Public Accounts.

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

This section highlights the financial results for the quarter and fiscal year-to date ended June 30, 2021, and provides explanation of variances in authorities available for use compared with the same period last year.

CIRNAC's current total authorities available for use at the end of the first quarter in 2021-22 is $5.7 billion which is comprised of the Department's 2021-22 Main Estimates of $4.7 billion and the 2021-22 Supplementary Estimates (A) of $996.9 million.

CIRNAC's current total authorities available for use of $5.7 billion at the end of the first quarter in 2021-22 is $884.2 million higher than the same period in 2020-21. This is illustrated in Graph 1 below, in the Table 1: Statement of Authorities and in the Table 2: Departmental Budgetary Expenditures by Standard Object.

Graph 1: Comparison of Total Net Budgetary Authorities Available for Use as of June 30, 2021, and June 30, 2020 (in thousands of dollars)
Comparison of Total Net Budgetary Authorities Available for Use as of June 30, 2021, and June 30, 2020
Text alternative for Graph 1: Comparison of Total Net Budgetary Authorities Available for Use as of June 30, 2021, and June 30, 2020 (in thousands of dollars)
  Operating Capital G&C's Debt Forgiveness Total
FY 2021-22 2,526,410 1,821 3,165,735 515 5,694,482
FY 2020-21 2,170,319 201 2,639,728 0 4,810,248
Variance 356,091 1,620 526,007 515 884,234

The overall increase of $884.2 million is mainly comprised of the following:

CIRNAC's total expenditures for the quarter ended on June 30, 2021, was $1.4 billion as compared to $1.2 billion last year for the same period representing an increase of 0.2 billion. This is illustrated in Graph 2 below, in the Table 1: Statement of Authorities and in the Table 2: Departmental Budgetary Expenditures by Standard Object.

Graph 2: Comparison of Net First Quarter Authorities used and expended as at June 30, 2021, and June 30, 2020 (in thousands of dollars)
Comparison of Net First Quarter Authorities used and expended as at June 30, 2021, and June 30, 2020
Text alternative for Graph 2: Comparison of Net First Quarter Authorities used and expended as at June 30, 2021, and June 30, 2020 (in thousands of dollars)
  Operating Capital G&C's Total
FY 2021-22 523,068 54 919,043 1,442,165
FY 2020-21 61,261 0 1,182,177 1,243,438
Variance 461,807 54 -263,134 198,727

In 2021-22, CIRNAC spent $523.1 million in Operating compared to $61.3 million in 2020-21, for an increase of $461.8 million mainly due to increase payment on McLean Indian Day Schools class action (+$445.9 million).

In 2021-22, CIRNAC spent $919 million in G&C's as compared to $1.2 billion in 2020-21, for a decrease of $263.1 million which is mainly due to:

3. Risks and Uncertainties

The Department has in place risk management processes to identify, assess and address strategic and operational risks. Risk mitigation activities are in place or in development to protect the Department from exposure to these risks and the associated financial impacts.

The rapid pace of change being pursued by the Department, capacity challenges in internal services and ensuring oversight during a pandemic puts pressure on the Department's system of internal control. Important controls such as due diligence may therefore be weakened, leading to increased risk of fraud, malfeasance or inappropriate decision-making. These risks are currently being managed by some corporate frameworks (e.g. Values and Ethics Code for the Public Sector and for CIRNAC, as well as the departmental fraud risk assessment process), program-specific management control frameworks, and program oversight mechanisms and governance.

COVID-19 had a significant disruptive effect on the Department in terms of its workforce, its work environment and its way of doing business. At the same time, the pandemic also presented opportunities to rethink and redesign departmental approaches based on the many lessons learned during the pandemic. For instance, the move to a virtual operation opened up new opportunities for engagement with partners in remote areas that could be expanded to foster better, more efficient partner relationships. The risks arising from the pandemic are currently being managed by the development of CIRNAC's Workplace of the Future Strategy.

With respect to financial risks, in 2020-21 the Department identified a risk that COVID-19 could interrupt operations and result in the Department surplusing funds. The Department mitigated this risk by reviewing forecasts regularly and reallocating available funding as quickly as possible. For 2021-22, the Department continues to monitor the impacts of COVID-19 on departmental spending. To date, there is no indication that COVID-19 will result in significant surpluses.

In addition, there is a risk that there are insufficient controls and coordination in place in the management of common funding agreements between CIRNAC and the Department of Indigenous Services Canada. To mitigate this risk, budget and expenditure trends, particularly for programs with common funding, are monitored closely on a regular basis including formal quarterly reviews that are presented to and discussed by senior management.

4. Significant changes in relation to Operations, Personnel and Programs

During this quarter there was a change in personnel, namely the departure of Ross Pattee from his position as Assistant Deputy Minister, Implementation Sector effective June 30, 2021. Consequently, Heather McLean was appointed acting Assistant Deputy Minister for the Implementation Sector, effective July 2, 2021. There have been no significant changes in operations and programs.

5. Approval by Senior Officials

Approved, as required by the Treasury Board Policy on Financial Management:

____________________________
Annie Boudreau, CPA, CA
Chief Finances, Results and Delivery Officer, Crown-Indigenous Relations and Northern Affairs

Date: _______________
City: Gatineau (Canada)

_________________________
Daniel Quan-Watson
Deputy Minister, Crown-Indigenous Relations and Northern Affairs

Date: _______________
City: Gatineau (Canada)

Table 1: Statement of Authorities (unaudited) For the quarter ended June 30, 2021 (in thousands of dollars)
  Fiscal year 2021-22 Fiscal year 2020-21
  Total available for use for the year ending March 31, 2022* Used during the quarter ended June 30, 2021 Year to date used at quarter-end Total available for use for the year ending March 31, 2021* Used during the quarter ended June 30, 2020 Year to date used at quarter-end
Vote 1 - Operating expenditures  2,500,389 515,709 515,709 2,142,161 54,714 54,714
Vote 5 - Capital expenditures 1,821 54 54 201 0 0
Vote 10 - Grants and contributions 3,161,609 913,979 913,979 2,505,140 1,078,644 1,078,644
Vote 25 - Debt Forgiveness 515 0 0 0 0 0
S - Budgetary statutory authorities - Operating Expenditures:
Contributions to employee benefit plans 23,960 5,761 5,761 26,099 6,525 6,525
Minister of Crown-Indigenous Relations – Salary and motor car allowance 91 22 22 89 22 22
Minister of Northern Affairs – Salary and motor car allowance 91 23 23 89 0 0
Payments to comprehensive claim beneficiaries in compensation for resource royalties 1,866 0 0 1,866 0 0
Grassy Narrows and Islington Bands Mercury Disability Board 15 0 0 15 0 0
Other 0 1,553 1,553 0 0 0
S - Budgetary statutory authorities - Transfer Payments:
Grants to Aboriginal organizations designated to receive claim settlement payments pursuant to Comprehensive Land Claim Settlement Acts  4,126 5,064 5,064 19,688 13,633 13,633
Payments related to Public Health Events of National Concern and income support 0 0 0 114,900 89,900 89,900
Total Budgetary Authorities 5,694,482 1,442,165 1,442,165  4,810,248 1,243,438 1,243,438
Non-Budgetary Authorities:
Loans to native claimants 25,903  334 334 19,427 0 0
Loans to First Nations in British Columbia for the purpose of supporting their participation in the British Columbia Treaty Commission Process 0 0 0 0 0 0
Total Non-Budgetary Authorities 25,903 334 334 19,427 0 0
Total Authorities 5,720,385 1,442,499 1,442,499 4,829,675 1,243,438 1,243,438
* Including only authorities available for use and granted by Parliament at quarter-end.
Table 2: Departmental budgetary expenditures by Standard Object (unaudited) For the quarter ended June 30, 2021 (in thousands of dollars)
  Fiscal year 2021-22 Fiscal year 2020-21
  Planned expenditures for the year ending March 31, 2022 Expended during the quarter ended June 30, 2021 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2021 Expended during the quarter ended June 30, 2020 Year to date used at quarter-end
Expenditures:
1 Personnel 183,230 54,157 54,157 188,093 49,592 49,592
2 Transportation and communications 3,880 124  124 16,972 205 205
3 Information 5,426 520 520 5,225 475 475
4 Professional and special services 326,898 12,354 12,354 237,195 3,437  3,437
5 Rentals 4,386 63 63 10,520 36 36
6 Purchased repair and maintenance 1,282 19 19 3,422 19 19
7 Utilities, materials and supplies 1,523 63 63 3,509 90 90
8 Acquisition of land, buildings and works 268 0 0 0 0 0
9 Acquisition of machinery and equipment 1,553 87 87 201 46 46
10 Transfer payments 3,165,735 919,043 919,043 2,639,728 1,182,176 1,182,176
11 Public debt charges 0 0 0 0 0 0
12 Other subsidies and payments 2,033,368 455,735 455,735 1,737,582 7,367 7,367
Total gross budgetary expenditures 5,727,548 1,442,165  1,442,165 4,842,447 1,243,443 1,243,443
Less: Revenues netted against expenditures
Internal Services (33,067) 0 0 (32,199) (5) (5)
Total Revenues netted against expenditures (33,067) 0 0 (32,199) (5) (5)
Total net budgetary expenditures 5,694,482 1,442,165 1,442,165 4,810,248 1,243,438 1,243,438

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