Canadian Heritage's Quarterly Financial Report For the Quarter Ended September 30, 2011

Table of contents

1. Introduction

This quarterly financial report should be read in conjunction with the Main Estimates. It has been prepared by management as required by section 65.1 - Quarterly financial reports of the Financial Administration Act and in the form and manner prescribed by the Treasury Board Accounting Standard 1.3 - Departmental and Agency Quarterly Financial Report. The quarterly report has not been subject to an external audit or review.

1.1 Authority, Mandate and Program Activities

Canadian Heritage promotes an environment in which all Canadians take full advantage of dynamic cultural experiences, celebrating our history and heritage, and participating in building stronger communities.

Further details on PCH's authority, mandate and program activities can be found in the 2011-12 Report on Plans and Priorities and the 2011-12 Main Estimates.

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 to those used by the department consistent with the 2011-2012 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 funds can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation granting statutory spending authority for specific purposes.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

PCH uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

2. Highlights of Fiscal Quarter and Fiscal Year-to-Date (YTD) Results

2.1 Statement of Authorities

PCH's 2011-12 authorities available for use have decreased by approximately $148.4M when compared to the same quarter of 2010-2011. However, funding for the Canada Media Fund ($107.6M), the Cultural Connections for Aboriginal Youth ($24.6M) and the Canada Periodical Fund ($15.0M) will be sought through the     2011-12 Supplementary Estimates (B).

In 2010-11, the authorities presented in the quarterly financial report for the quarter ended September 30, 2010 included funding received in the 2010-11 Supplementary Estimates (A). However, for 2011-12, only items with specific authority urgently required through appropriation act (items that cannot be managed through interim supply) have been selected to be included in the 2011-12 Supplementary Estimates (A).

This following table summarizes the major changes in authorities from 2010-11 to 2011-12.

Items (in millions)
Vote 1 Vote 5 Total
Increase in funding for the Sport Support Program to support high-performance sport and to increase sport participation by all Canadians, including persons with a disability $0.7 $30.3 $31.0
Decrease in funding to support the creation of the Canada Media Fund ($0.5) ($107.1) ($107.6)
Decrease in funding for Cultural Connections for Aboriginal Youth ($1.9) ($22.7) ($24.6)
Decrease in funding for the Canadian Periodical Fund $0 ($15.0) ($15.0)
Decrease in funding due to past Government-wide resource re-allocation measures ($37.0) $0 ($37.0)

2.2 Statement of Departmental Budgetary Expenditures by Standard Object

Total expenditures, for the quarter ended September 30, have increased by $63.8M in 2011-12 when compared to the same quarter of 2010-11.

As noted in the table below, PCH has spent 34% ($391.5M) of its authorities in the second quarter of 2011-12, which is significantly higher than the 25% ($327.7M) that was spent during the same period in 2010-11.

This variation is mainly explained by an increase of $66.4M in transfer payment expenditures. This increase is mostly due to the Canada Periodical Fund ($54.0M) and the Sport Support Program ($11.7M) for which expenditures have increased in the second quarter of 2011-12 when compared to the same quarter of 2010-11.

A portion of the increase can also be attributed to the personnel expenditures which include immediate payment of civilian severance and termination benefits due to the revision of specified collective agreements. Treasury Board Secretariat will transfer funds to cover these expenditures.

The Year-to-date used in 2011-12 is 52% ($602.6M) compared to 45% ($586.1M) in 2010-11; this is mainly due to transfer payment expenditures, which have increased by $30.1M from 2010-11 to 2011-12. Part of the $30,1M can be attributed to programs such as the Official Languages programs ($9.1M) and the Canada Media Fund ($23.8M) which have spent more in 2011-12 than in 2010-11 at September 30th. Please note that the 2011-12 Year-to-date used would be more comparable to the 2010-11 Year-to-date used if authorities for items sought in the 2011-12 Supplementary Estimates (B) would have been received in the 2011-12 Supplementary (A). This would reduce the percentage of the Year-to-date used in 2011-12 to 46%.

Expenditures Compared to Annual Authorities
View this data in text format

3. Risks and Uncertainties

In 2010-11, the Department embarked on an important Transformation Initiative exercise. This exercise will continue over the course of fiscal year 2011-12. Its aim is to modernize the Department of Canadian Heritage's operations and seek innovative solutions to better serve Canadians and address departmental financial challenges. The following are key initiatives addressed through the Transformation Initiative to mitigate the risks related to previously planned departmental budget reductions:

  • An Internal Services Review initiative designed to streamline and simplify internal corporate processes to effectively support the Department's mandate while meeting central agency and legislative requirements.
  • A Grants and Contributions Modernization initiative designed to simplify processes for repeat, reliable clients, implement affordable technological improvements, and standardize our business processes to significantly reduce costs while improving services.

In addition to these planned reductions, Budget 2010 announced that the operating budgets of departments would be frozen at their 2010-11 levels for fiscal years    2011-12 and 2012-13. This freeze will also be addressed through efficiencies found in the Transformation Initiative.

4. Significant Changes in Relation to Operations, Personnel and Programs

There have been changes to senior level departmental personnel during the quarter.  The Chief Financial Officer left the department in August 2011 and a new Assistant Deputy Minister for the Cultural Affairs Sector was appointed in September 2011.

Approved by:

  • Daniel Jean, Deputy Minister
  • Jérôme Moisan, A/ Chief Financial Officer

Statement of Authorities (unaudited)

(in thousands of dollars)
  Fiscal year 2011-12Fiscal year 2010-11
Total available for use for the year ending March 31, 2012 *Used during the quarter ended
September 30, 2011		Year to date used at quarter-endTotal available for use for the year ended March 31, 2011*Used during the quarter ended
September 30, 2010		Year to date used  at quarter-end
Vote   1 - Net Operating expenditures  198,688 54,234 95,824 235,539 55,640 107,280
Vote 5 - Grants and contributions            932,804 331,553 495,429 1,039,349 265,297 465,324
Budgetary statutory authorities 22,885 5,709 11,352 27,858 6,772 13,544
Total Budgetary authorities 1,154,377 391,496 602,605 1,302,746 327,709 586,148
Total authorities 1,154,377 391,496 602,605 1,302,746 327,709 586,148

More information is available in the attached table.
*Includes only Authorities available for use and granted by Parliament at quarter-end. For fiscal year 2011-12, funding that was announced in the 2011 Federal Budget for Canada Media Fund, Cultural Connections for Aboriginal Youth and Canada Periodical Fund is being sought through the 2011-12 Supplementary Estimates (B) (third quarter).

Departmental budgetary expenditures by Standard Object (unaudited)

(In thousand of dollars)
ExpendituresFiscal year 2011-12Fiscal year 2010-11
Planned expenditures for the year ending March 31, 2012Expended during the quarter ended September 30, 2011Year to date used at quarter-endPlanned expenditures for the year ending March 31, 2011Expended during the quarter ended September 30, 2010Year to date used at quarter-end
Personnel 148,647 53,501 96,711 181,247 49,221 98,139
Transportation and communications 9,573 899 1,782 13,456 953 3,254
Information 14,954 3,144 3,431 10,986 1,196 1,608
Professional and special services 38,676 4,392 5,854 36,139 6,252 10,332
Rentals 2,135 453 845 1,953 883 1,468
Repair and maintenance 2,541 371 559 2,496 424 546
Utilities, materials and supplies 3,745 476 872 3,543 790 2,157
Acquisition of machinery and equipment 4,175 485 701 7,146 161 341
Transfer payments 933,623 331,728 495,693 1,040,168 265,297 465,324
Other subsidies and payments* 708 -2,991 -2,053 10,311 3,141 4,007
Total gross budgetary expenditures 1,158,777 392,458 604,395 1,307,446 328,320 587,177
Less Revenues netted against expenditures:            
Revenue credited to the Vote -4,400 -962 -1,790 -4,700 -611 -1,029
Total Revenues netted against expenditures: -4,400 -962 -1,790 -4,700 -611 -1,029
Total net budgetary expenditures 1,154,377 391,496 602,605 1,302,746 327,708 586,148

* Expenditures temporarily include credits which will be reallocated to other standard objects before the fiscal year-end.