Quarterly Financial Report For the quarter ended September 30, 2022
Table of Contents
- 1. Introduction
- 2. Highlights of Fiscal Quarter and Fiscal Year to Date Results
- 3. Risks and Uncertainties
- 4. Significant Changes in Relation to Operations, Personnel and Programs
- 5. Statement of Authorities (unaudited)
- 6. Departmental Budgetary Expenditures by Standard Object (unaudited)
- 7. Glossary
This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act (FAA) and in the form and manner prescribed by the Treasury Board. The report should be read in conjunction with the 2021-22 and 2022-23 Main Estimates. The Departmental Audit Committee (DAC) has reviewed the report, but no external audit or review has been conducted.
The glossary (Section 7) contains definitions for key financial terms that are hyperlinked in the text.
1.1 Justice Mandate
Established in 1868, the Department of Justice Canada (the Department) supports the dual roles of the Minister of Justice and the Attorney General of Canada. Under the Department of Justice Act, the Minister is the legal advisor to Cabinet and ensures that the administration of public affairs is in accordance with the law. The Minister of Justice is responsible for matters connected with the administration of justice that fall within federal jurisdiction and fulfils this responsibility by developing policies, laws, and programs to strengthen the national framework.Under the Department of Justice Act, the Attorney General of Canada is the chief law officer of the Crown. The Attorney General provides legal services to the government and its departments and agencies. These services include the provision of legal advice, the conduct of litigation and the drafting of legislation and regulations. The Attorney General represents the Crown and not individual departments or agencies. Therefore, the Attorney General seeks to protect interests for the whole of government when providing legal advice and conducting litigation.
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. 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.
The Department uses the full accrual method of accounting to prepare and present its annual departmental financial statements, which are part of the Departmental Results Report process. However, the spending authorities voted by Parliament remain on an expenditure basis.
Although the Department has implemented an advanced billing process, revenues are reported when they are earned rather than when they are collected, to ensure consistency of presentation and comparability with prior year reports.
1.3 Department of Justice Financial Structure
The Department of Justice financial structure is comprised of the following budgetary authorities:
- Vote 1 - Operating Expenditures;
- Vote 5 - Grants and Contributions; and
- Statutory authorities related to contributions to the Employee Benefit Plan (EBP), salary and motor car allowances for the Minister of Justice and Attorney General of Canada.
As the primary legal services provider to other government departments and agencies, the Department of Justice collects and spends revenue generated by these legal services as part of its Vote 1 authority. The Department of Justice also has the authority to spend revenues collected for providing internal administrative support services to other government departments. In departmental reporting, these revenues offset total departmental authorities and expenditures.
The primary recipients of the Department’s Vote 5 (Grants and Contributions) are Provincial and Territorial governments. Approximately 70% of the Vote 5 funding is related to cost-shared agreements with these recipients, which are usually accounted for in the last quarter of the fiscal year upon receipt of financial claims statements. As a result, a large proportion of expenditures in Vote 5 tend to occur in the fourth quarter.
2. Highlights of Fiscal Quarter and Fiscal Year to Date Results
This section highlights the significant items that contributed to the net increase in resources available for the year and net changes in actual expenditures for the quarter ended September 30, 2022. For both periods ending September 30, budgetary authorities and Vote-Netted Revenue (VNR) provided to the Department included: Main Estimates, and the Year-End Operating Budget Carry Forward.
2.1 Significant Changes to Authorities
(Please refer to the Statement of Authorities table presented in Section 5.)
When compared to the second quarter of the previous fiscal year, the total net budgetary authorities available for 2022-23 increased by $127.9 million, from $821.9 million in 2021-22 to $949.8 million in 2022-23. This comprises:
- Vote 1 - Operating Expenditures increased by $6.6 million
- Vote 5 - Grants and Contributions increased by $119.2 million
- Statutory authorities increased by $2.1 million
|Changes to voted and statutory authorities
(2022-23 compared to 2021-22)
|Vote 1 – Operating Expenditures|
|Funding to improve access to justice through Indigenous engagement on justice-related issues and the Reconciliation Secretariat (Budget 2021).||3.5|
|Funding to support the implementation of the United Nations Declaration on the Rights of Indigenous Peoples Act (Budget 2021).||2.8|
|Funding to support Indigenous justice systems (Fall Economic Statement 2020).||1.2|
|Funding for Strengthening Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime (Budget 2019).||0.9|
|Disaggregated Data Action Plan, Justice Data Modernization (Budget 2021).||0.8|
|Funding to implement an Act respecting First Nations, Inuit and Métis children, youth and families (Budget 2021).||0.6|
|Funding from the Operating Budget Carry Forward||0.6|
|Funding to advance the National Action Plan to End Gender-Based Violence (Budget 2021).||0.2|
|Funding to implement the impact of race and culture assessments for black and other racialized Canadians (Fall Economic Statement 2020).||0.1|
|Operating budget transfer to Shared Services Canada (Budget 2021), to support the Enterprise funding model for IT services. This amount represents the ongoing annual adjustment to the Department’s authorities.||(2.4)|
|Reducing Government Travel (Budget 2021) for departments and agencies with the highest historical travel costs as a result of the pandemic’s impact on government operations. This amount represents the ongoing annual adjustment to the Department’s authorities.||(1.6)|
|Decrease to funding for Bringing Innovation to Regulations to strengthen the Government’s capacity to draft legislation and regulatory changes needed to modernize regulations (Budget 2019). This decrease is a year-over-year adjustment to reference levels relating to the funding profile that was approved.||(0.9)|
|Other minor adjustments.||0.8|
|Vote 5 – Grants and Contributions|
|Funding for the Youth Justice Services Funding Program (Budget 2021).||43.3|
|Funding for Criminal Legal Aid (COVID-19 measure) (Fall Economic Statement 2020).||30.0|
|Funding to advance the National Action Plan to End Gender-Based Violence (Budget 2021).||23.8|
|Funding for Gladue Principles - Systemic and Community-led Responses to Address Overrepresentation of Indigenous People in the Criminal Justice System (Fall Economic Statement 2020).||12.1|
|Funding to improve access to justice for Indigenous people and to address systemic barriers in the criminal justice system (Budget 2021).||11.0|
|Funding to improve access to justice through Indigenous engagement on justice-related issues and the Reconciliation Secretariat (Budget 2021).||4.0|
|Funding to Support Community Justice Centres (Fall Economic Statement 2020).||6.6|
|Funding to Provide Legal Services and Supports for Racialized Communities (Budget 2021).||4.3|
|Funding to implement the impact of race and culture assessments for black and other racialized Canadians (Fall Economic Statement 2020).||1.2|
|Sunsetting of Immigration and Refugee Legal Aid Program funding approved under the initiative “Enhancing the Integrity of Canada’s Borders and Asylum System” (Budget 2019). This decrease is a year-over-year adjustment to reference levels relating to the funding profile that was approved from 2019-20 to 2021-22.||(16.7)|
|Other minor adjustments.||(0.4)|
|Increase in contributions to the employee benefit plan (EBP) related to the initiatives announced in Budget 2021 and Fall Economic Statement 2020 as listed under Vote 1 – Operating Expenditures.||1.5|
|Other minor adjustments.||0.6|
|Total increase in authorities||127.9|
2.2 Significant Changes to Budgetary Expenditures and Revenues
(Please refer to the Departmental Budgetary Expenditures by Standard Object table presented in Section 6.)
Total year-to-date net budgetary expenditures increased from $339.2 million in 2021-22 to $376.7 million in 2022-23. This net increase of $37.5 million consists of changes associated with the following items:
|Changes to expenditures and revenues
(2022-23 compared to 2021-22)
|Expenditures by Standard Object|
|Personnel: the increase in salaries and related employee benefit plan costs is mostly related to an increase in the workforce and to the mandatory cash out of excess earned leave.||2.9|
|Transportation and communications: the increase is mostly related to an increase in travel.||1.2|
|Rentals: the increase is mostly related to an increase in fees for application software.||1.0|
|Acquisition of machinery and equipment: the decrease is mostly related to the acquisition of communication equipment (e.g. cell phones) in 2021-22, which did not occur in 2022-23.||(0.8)|
|Transfer payments: the increase is mainly related to the timing of payments in accordance with the different contributions agreements and to the increase in spending authorities this fiscal year.||58.5|
|Other standard objects: a net decrease attributable to minor changes in expenditures, such as decreases in professional and special services (including consulting services and expert witnesses), decreases in repairs and maintenance (including leasehold improvements), and increases in other subsidies and payments (including payments made for shared agreements with other government departments such as Shared Services Canada).||(1.2)|
|Revenues netted against expenditures|
|Revenue: an increase in respendable revenues earned due to a timing difference in the finalization of agreements with client departments and an increase in demand for legal services.||24.1|
|Total increase in net budgetary expenditures||37.5|
3. Risks and Uncertainties
The COVID-19 pandemic has been a significant driver of financial risks and uncertainties. As the economy recovers from the pandemic, Justice Canada continues to employ measures to ensure business continuity and the wellbeing and safety of the Department’s employees as they fulfill their professional duties.
A portion of the Department’s funding comes from revenues through the provision of services to other client departments. The effects of the pandemic are still being felt in the courts across Canada. Canada’s courts have been adapting and modernizing their operations by means of virtual hearings and digital litigation, the result of which had a direct impact on the operations of the Department, mostly on litigation services. These disruptions to operations may continue to impact the provision of services to clients, and therefore revenue collected. To mitigate this financial risk, the Department continues to monitor its business volumes and its financial situation closely. This includes rigorous management of revenues, expenditures, forecasting and commitment monitoring. Moreover, the Department works closely with client departments to identify changing requirements and their impacts. In addition, the Department recognizes that progress on various justice system initiatives may continue to be impacted due to the reduced capabilities or capacity of key stakeholders or partners as a result of the pandemic. In response, the Department continues to advance work by virtual means and work with partners to set an appropriate pace of work.
The Department regularly monitors and identifies strategic risks that may affect the delivery of the Department’s mandate and expected results. Strategic risks that the Department is currently managing include risks related to cybersecurity and external relationship management, as well as internally focused risks concerning data and information, and employee wellness. The Department is also addressing risks related to technological disruption and the workspace of the future. In aggregate, these risks may have a financial impact on the Department. For more information, refer to the 2022-23 Departmental Plan.
4. Significant Changes in Relation to Operations, Personnel and Programs
The Department of Justice is temporarily incurring start-up expenditures in support of the revival of the Law Commission of Canada, this will continue until the Commission becomes fully operational. It is anticipated that some of these expenditures will be reimbursed to Justice once the Commission is fully established.
Approval by Senior Officials
A. François Daigle
Deputy Minister of Justice and
Deputy Attorney General of Canada
Bill Kroll, CPA, CMA
Chief Financial Officer and
Assistant Deputy Minister, Management Sector
November 29, 2022
5. Statement of Authorities (unaudited)
DEPARTMENT OF JUSTICE
Quarterly Financial Report
For the quarter ended September 30, 2022
Statement of authorities (unaudited)
(in thousands of dollars)
|Fiscal Year 2022-2023||Fiscal Year 2021-2022|
|Total available for use for the year ending March 31, 2023Footnote * of Table||Used during the quarter ended September 30, 2022||Year to date used at quarter-end||Total available for use for the year ending March 31, 2022Footnote * of Table||Used during the quarter ended September 30, 2021||Year to date used at quarter-end|
|Vote 1 – Net Operating Expenditures||302,182||54,692||190,964||295,512||79,724||212,953|
|Vote 5 – Grants and Contributions||562,235||110,622||143,087||443,048||69,399||84,623|
|Budgetary Statutory Authorities|
|Contributions to employee benefit plans||85,292||21,323||42,646||83,243||20,811||41,622|
|Minister of Justice and Attorney General of Canada – Salary and motor car allowance||92||23||46||91||22||45|
|Spending of proceeds from the disposal of surplus Crown assets||2||0||0||2||0||0|
|Total Budgetary Statutory Authorities||85,386||21,346||42,692||83,336||20,833||41,667|
6. Departmental Budgetary Expenditures by Standard Object (unaudited)
DEPARTMENT OF JUSTICE
Quarterly Financial Report
For the quarter ended September 30, 2022
Departmental budgetary expenditures by Standard Object (unaudited)
(in thousands of dollars)
|Fiscal Year 2022-2023||Fiscal Year 2021-2022|
|Planned expenditures for the year ending March 31, 2023Footnote * of Table||Expended during the quarter ended September 30, 2022||Year to date used at quarter-end||Planned expenditures for the year ending March 31, 2022Footnote * of Table||Expended during the quarter ended September 30, 2021||Year to date used at quarter-end|
|Transportation and communications||7,252||1,233||2,063||10,849||368||816|
|Professional and special services||41,773||5,867||10,534||42,685||6,658||11,353|
|Repair and maintenance||6,100||134||170||7,387||806||836|
|Utilities, materials and supplies||3,334||538||887||3,740||543||850|
|Acquisition of machinery and equipment||6,704||345||825||10,655||1,163||1,667|
|Other subsidies and payments||10,466||1,369||4,822||9,069||3,712||4,517|
|Total gross budgetary expenditures||1,316,603||299,117||526,744||1,188,696||264,207||465,158|
|Less: Revenues netted against expenditures||(366,800)||(112,457)||(150,001)||(366,800)||(94,251)||(125,915)|
|Total Net Budgetary Expenditures||949,803||186,660||376,743||821,896||169,956||339,243|
- Annual Appropriation Acts that specify the amounts and broad purposes for which funds can be spent; and
- Other specific statutes that authorize payments and set out the amounts and time periods for those payments.
Bijural: Relates to the coexistence and interaction of two legal systems or legal traditions in a given legal framework. In Canada, this relates to Quebec civil law and Canadian common law, taking into account other sources of federal law, including Indigenous rules and customs.
Budget Implementation Vote: Treasury Board central vote for new measures or initiatives announced in the Federal Budget. The central vote facilitates timely availability of supply for Budget measures to be carried out in the upcoming fiscal year.
Compensation Adjustments: Treasury Board central vote that allocates supplementary funds for adjustments made to terms and conditions of service or employment of the federal public administration as a result of collective bargaining.
Deferred Revenues: An amount received or recorded as receivable but not yet earned and meanwhile carried forward to be taken into income in future periods.
Employee Benefit Plan (EBP): A statutory item that includes employer costs for the Public Service Superannuation Plan, the Canada and the Quebec Pension Plans, Death Benefits, and the Employment Insurance accounts. Expressed as a percentage of salary, the EBP rate is changed every year as directed by the Treasury Board Secretariat.
Full Accrual Method of Accounting: Costs are reported based on their consumption. Revenues are reported when earned.
Main Estimates: Each year, the government prepares estimates in support of its request to Parliament for authority to spend public funds. This request is formalized through the introduction of appropriation bills in Parliament. In support of the Appropriation Act, the Main Estimates identify the spending authorities (Votes) and amounts to be included in subsequent appropriation bills. Parliament is asked to approve these Votes to enable the government to proceed with its spending plans.
Operating Budget Carry Forward (OBCF): Treasury Board centrally managed vote that permits departments to bring forward eligible lapsing funds from one fiscal year to the next in an amount up to five percent of the operating budgets contained in their Main Estimates. (See also Voted and statutory appropriations.)
Reference level: The amount of funding that the Treasury Board has approved for departments and agencies to carry out policies and programs for each year of the planning period.
Respendable Revenues Collected: Represents revenues that the department has specific authority from Parliament to respend which may be comprised of deferred revenues and revenues netted against expenditures.
Respendable Revenues Earned: Represents revenues that are recognized when they are earned (usually when services are rendered).
Special Purpose Financial Reporting Framework: The Quarterly Financial Report requirements and structure as defined in the GC 4400 Departmental Quarterly Financial Report.
Standard Objects: A system in accounting that classifies and summarizes records by categories, such as type of goods or services acquired, for monitoring and reporting.
Sunsetting: The end of temporary funding.
Supplementary Estimates: The President of the Treasury Board tables two Supplementary Estimates, in late fall and late winter, to obtain the authority of Parliament to adjust the government’s expenditure plan set out in the Main estimates for that fiscal year. Supplementary Estimates serve two purposes. First, they seek authority for revised spending levels that Parliament will be asked to approve in an Appropriation Act. Second, they provide Parliament with information on changes in the estimated expenditures to be made under the authority of statutes previously passed by Parliament. Each Supplementary Estimates document is identified alphabetically (A, B).
Voted and Statutory Appropriations: Expenditures made by government require the authority of Parliament. That authority is provided in two ways: annual Appropriation Acts or Supply Bills specify the amounts and broad purposes for which funds can be spent; and other specific statutes authorize payments and set out the amounts and time periods for those payments. The amounts approved in appropriation acts are referred to as voted amounts, and the expenditure authorities provided through other statutes are called statutory authorities.
- Vote 1–Operating Expenditures: A vote that covers most day-to-day expenses, such as salaries and utilities.
- Vote 5–Grants and Contributions: A vote used when grants and/or contributions expenditures equal or exceed $5 million.
Vote-Netted Revenue: The authority by which the Department of Justice has permission to collect and spend revenue earned from the provision of legal and internal services within government.
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