Quarterly Financial Report: Quarter ended September 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 and Statutory):
    • Vote 1: Amount approved for the fiscal year for the Department to spend on operating expenditures.
    • Statutory: Amount approved through an existing Act of Parliament where additional annual approvals are not required by the Department to access on 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 (Vote 10 and Statutory):
    • Vote 10: Amount approved for the fiscal year for the Department as Grants and Contributions 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.
  • Government Contingencies (TB Vote 5): Temporary advances for urgent or unforeseen items that require funding in advance of the next Supplementary Estimates and related Supply bill.
  • Operating and Capital Carry Forward: Eligible funds lapsed in the previous fiscal year brought forward to the following year.
  • 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

2.1 Authorities available for use

This section highlights the financial results for the quarter and fiscal year-to date ended September 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 second quarter in 2021-22 is $5.8 billion which is comprised of the Department's 2021-22 Main Estimates of $4.7 billion, the 2021-22 Supplementary Estimates (A) of $996.9 million and allotment adjustment of $79.3 million. The most significant part of the allotment adjustment of $79.3 million in the second quarter was to access temporary contingency funding of $65.3 million towards Grants and Contributions.

2.1.1 Highlights of changes in authorities available for use (2021-22 compared to 2020-21)

CIRNAC's current total authorities available for use of $5.8 billion at the end of the second quarter in 2021-22 is $942.5 million higher than the same period in 2020-21 (which was set to $4.8 billion). 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 September 30, 2021, and September 30, 2020 (in thousands of dollars)
Comparison of Total Net Budgetary Authorities Available for Use as of September 30, 2021, and September 30, 2020 (in thousands of dollars)
Text alternative for Graph 1: Comparison of Total Net Budgetary Authorities Available for Use as of September 30, 2021, and September 30, 2020 (in thousands of dollars)
Fiscal Year Operating1 Capital Grants and contributions2 Debt Forgiveness Total
2021-22 2,540,221 1,944 3,231,065 515 5,773,745
2020-21 2,189,804 1,738 2,639,728 0 4,831,270
Variance 350,417 206 591,337 515 942,475
1 The Operating authorities includes both voted authorities (vote 1) and statutory authorities related to operating expenditures.
2 The Capital authorities includes both voted authorities (vote 10) and statutory authorities related to transfer payments.

The overall increase of $942.5 million is mainly comprised of the following:

  • Net increase of $350.4 million in Operating which is mainly attributable to:
    • Full authorities granted for the Main Estimates in 2021-22 in comparison to only interim partial authorities granted for Main Estimates as of the comparative quarter of the preceding year (+$125.5 million);
    • Increase funding for the Federal Indian Day Schools Settlement Agreement (McLean) (+$258.7 million);
    • Increase funding for Northern Abandoned Mines Reclamation Program (+$50.5 million);
    • Increase funding for Federal Contaminated Sites Action Plan (+$10.5 million);
    • Partially offset by:
    • Sunset of Indian Residential School Settlement Agreement (-$49.9 million); and
    • Timing of out of court settlements (-$45.0 million).
  • Net increase of $591.3 million in Grants and contributions which is mainly attributable to:
    • Full authorities granted for the Main Estimates in 2021-22 in comparison to only partial authorities granted for Main Estimates as of the comparative quarter of the preceding year (+$827.0 million);
    • Increase in temporary contingency funding for:
      • Funding to implement the Cowessess First Nation's child and family services law, "Miyo Pimatisowin Act" (+$25.3 million);
      • Funding for Indigenous Infrastructure Project (Budget 2021) (+$40.0 million).
    • Increase funding to Housing and Infrastructure Needs of the Governments of Nunavut and the Northwest Territories (+$50.0 million);
    • Increase in funding for Nutrition North Canada (+$30.9 million);
    • Increase in funding on Self-Government Agreements (+$24.4 million);
    • Increase funding to support Recognition of Indigenous Right and Self Determination Tables (+$18.2 million);
    • Partially offset by:
    • Decrease in funding profile for Specific Claims (-$219.0 million);
    • Decrease of one-time funding for initiatives related to the COVID-19 pandemic (-$114.9 million);
    • Decrease in funding for Metis Housing strategy (-$51.3 million);
    • Net decrease in funding for Northern Abandoned Mines Reclamation Program (-$27.5 million); and
    • Decrease in capital transfers for Comprehensive Land Claims (-$15.6 million).
  • Creation of a new debt forgiveness vote for the Stoney Nakoda First Nation perpetual loan in the amount of $0.5 million.

2.2 Authorities used and actual expenditures

CIRNAC's total year to date expenditures for the quarter ended on September 30, 2021, was $2.3 billion as compared to $2.1 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 Second Quarter Authorities to date used and expended as of September 30, 2021, and September 30, 2020 (in thousands of dollars)
Comparison of Net Second Quarter Authorities to date used and expended as of September 30, 2021, and September 30, 2020 (in thousands of dollars)
Text alternative for Graph 2: Comparison of Net Second Quarter Authorities to date used and expended as of September 30, 2021, and September 30, 2020 (in thousands of dollars)
Fiscal Year Operating1 Capital Grants and contributions2 Total
2021-22 920,064 197 1,353,269 2,273,530
2020-21 284,509 1,285 1,783,453 2,069,247
Variance 635,555 -1,088 -430,184 204,283
1 The Operating authorities used includes both voted authorities (vote 1) and statutory authorities related to operating expenditures.
2 The Capital authorities used includes both voted authorities (vote 10) and statutory authorities related to transfer payments.

In 2021-22, CIRNAC spent $920.1 million in Operating compared to $284.5 million in 2020-21, for an increase of $635.6 million mainly due to increased payments on the McLean Indian Day Schools class action (+$650 million).

In 2021-22, CIRNAC spent $1.4 billion in Grants and contributions as compared to $1.8 billion in 2020-21, resulting in a decrease of $430.2 million which is mainly due to:

  • decrease of payments on specific claims settlements (-$326 million); and
  • decrease of one-time funding for initiatives related to the COVID-19 pandemic (-$114.9 million).

3. Risks and Uncertainties

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

Ongoing internal controls are in place to manage financial risks and the risks to resiliency, including information technology security measures and action plans in response to fraud risk assessments. To supplement current mitigation measures, the Department is also reviewing its existing governance arrangements to identify opportunities to strengthen processes related to oversight, due diligence and direction-setting and redefine and reinforce leadership behaviours that are needed to help foster a more strategic, accountable and results-oriented culture at all levels of the organization.

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. The Department continues to monitor the impacts of COVID-19 on departmental spending.

In addition, the Department continues to monitor the risk that there be insufficient controls and coordination in place in the management of common funding agreements between CIRNAC and the Department of Indigenous Services Canada. To mitigate any risks pertaining to common funding agreements with the Department of Indigenous Services Canada budget and expenditure trends 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 Annie Boudreau from her position as Chief, Finances, Results and Delivery Officer, effective September 4, 2021. Consequently, Jean-François Talbot assumed the position of interim, Chief Finances, Results and Delivery Officer until the permanent appointment of Darlene Bess, effective October 12, 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:

____________________________
Darlene Bess, FCPA, FCA
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 September 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 September 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 September 30, 2020 Year to date used at quarter-end
Vote 1 - Operating expenditures 2,514,200 390,541 906,250 2,161,646 216,461 271,175
Vote 5 - Capital expenditures 1,944 143 197 1,738 1,285 1,285
Vote 10 - Grants and contributions 3,226,939 434,226 1,348,205 2,505,140 576,276 1.654,920
Vote 25 - Debt Forgiveness 515 0 0 0 0 0
S - Budgetary statutory authorities - Operating Expenditures:
Contributions to employee benefit plans 23,960 5,760 11,521 26,099 6,525 13,050
Minister of Crown-Indigenous Relations – Salary and motor car allowance 91 22 44 89 22 44
Minister of Northern Affairs – Salary and motor car allowance 91 22 45 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 0 651 2,204 0 240 240
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 0 5,064 19,688 0 13,633
Payments related to Public Health Events of National Concern and income support 0 0 0 114,900 25,000 114,900
Total Budgetary Authorities 5,773,745 831,365 2,273,530 4,831,270 825,809 2,069,247
Non-Budgetary Authorities:
Loans to native claimants 25,903 920 1,254 19,427 0 0
Total Non-Budgetary Authorities 25,903 920 1,254 19,427 0 0
Total Authorities 5,799,648 832,285 2,274,784 4,850,697 825,809 2,069,247
* Including only authorities available for use and granted by Parliament at quarter-end.
Note: Due to rounding, figures may not add to totals shown.
Table 2: Departmental budgetary expenditures by Standard Object (unaudited) for the quarter ended September 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 September 30, 2021 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2021 Expended during the quarter ended September 30, 2020 Year to date used at quarter-end
Expenditures:
1. Personnel 186,208 55,537 109,694 188,093 48,506 98,098
2. Transportation and communications 4,002 508 632 18,167 324 529
3. Information 5,597 862 1,382 5,593 670 1,145
4. Professional and special services 337,210 41,267 53,621 253,890 59,681 63,118
5. Rentals 4,524 2,307 2,370 11,260 97 133
6. Purchased repair and maintenance 1,322 146 165 3,662 75 94
7. Utilities, materials and supplies 1,571 158 221 3,756 119 209
8. Acquisition of land, buildings and works 268 40 40 1,537 1,235 1,235
9. Acquisition of machinery and equipment 1,676 35 122 201 181 227
10. Transfer payments 3,231,065 434,226 1,353,269 2,639,728 601,277 1,783,453
11. Public debt charges 0 0 0 0 0 0
12. Other subsidies and payments 2,033,368 303,160 758,895 1,737,582 113,644 121,011
Total gross budgetary expenditures 5,806,812 838,246 2,280,411 4,863,469 825,809 2,069,252
Less: Revenues netted against expenditures
Internal Services (33,067) (6,882) (6,882) (32,199) 0 (5)
Total Revenues netted against expenditures (33,067) (6,882) (6,882) (32,199) 0 (5)
Total net budgetary expenditures 5,773,745 831,364 2,273,530 4,831,270 825,809 2,069,247
Note: Due to rounding, figures may not add to totals shown.

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