Management Discussion and Analysis – Agency Activities

Introduction

This section of the Financial Statements provides unaudited supplementary information on Agency Activities, as reported in the audited Statement of Operations – Agency Activities.

Agency management

The Canada Customs and Revenue Agency is organized and primarily managed along five business lines. Within the business lines, the functional program branches (e.g., Customs, Assessment and Collections, Compliance Programs, etc.) provide a further level of desegregation whereby variances can be identified and explanations constructed. The larger part of the expenditure variances between fiscal years relates to the new authorities received by the Agency in 2001-2002 such as submissions to Treasury Board for the February 2000 Federal Budget Omnibus Submission ($60.1 million), the October 2000 Economic Statement Submission ($0.5 million), the Resource and Management Review ($225.3 million), and the Public Security and Anti-Terrorism Initiatives ($62.8 million).

A number of key business drivers impacted the Agency's business and account in part for increased expenditures in 2001-2002, such as clearing travellers entering Canada and processing tax files for individuals and corporations. In addition, collective agreements were signed, leading to increased expenditures.

Net cost of operations

The CCRA's total 2001-2002 spending increased by $366 million or 11% from 2000-2001. The Agency costs, as detailed in its annual Financial Statements (modified accrual accounting basis), are made up of approximately 77% in personnel costs (salaries, other allowances, and benefits) and nearly 23% in other costs. Much of the latter are linked to personnel costs (e.g., travel for auditors, computers, accommodation, furniture replacement, etc.) and therefore personnel costs are the primary cost drivers for the Agency, as illustrated below:

Exhibit 1: Net cost of operations

Personnel costs (salaries, other allowances, and benefits)

The CCRA's personnel costs (salaries, other allowances, and benefits) increased by some 11% or $283 million over 2000-2001. Of this amount, $221 million relates mainly to collective agreements funding received from Treasury Board; new authorities approved by the Treasury Board; and other personnel actions including overtime.

The remaining $62 million of the $283 million increase relates to other allowances and benefits, and is directly linked to the increase in the salaries noted above [e.g., employee severance benefits ($9 million), other allowances and benefits such as maternity benefits and performance pay ($21 million), health insurance ($56 million), etc.] totaling some $86 million, offset by a decrease in employee benefit plans of $24 million.

Other Costs

Other costs increased by 11% or some $83 million. The majority of these expenses all have a support relationship to the salary increases noted above. Major components of this increase relate to: accommodation ($8 million), professional and special services ($39 million), transportation and communication ($10 million), purchased repair and maintenance ($5 million), equipment ($17 million), and land, building and works ($14 million), etc, for $93 million; offset by decreases in transfer payments ($11 million) and other services ($3 million) for $14 million; and decreases in non-tax revenue for $4 million.

Date modified:

2002-11-07