Canadian Heritage’s Quarterly Financial Report for the quarter ended September 30, 2012

Table of contents

Statement of Authorities (unaudited)

Departmental budgetary expenditures by Standard Object (unaudited)

1. Introduction

This quarterly financial report should be read in conjunction with the Main Estimates, Supplementary Estimates (A) as well as Canada’s Economic Action Plan 2012 (Budget 2012). 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 the Department of Canadian Heritage’s (PCH) authority, mandate and program activities can be found in the 2012-13 Report on Plans and Priorities and the 2012-13 Main Estimates.

1.2 Basis of Presentation

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1st preceding the new fiscal year.  Budget 2012 was tabled in Parliament on March 29, after the tabling of the Main Estimates on February 28, 2012.  As a result the measures announced in the Budget 2012 could not be reflected in the 2012-13 Main Estimates.

In fiscal year 2012-2013, frozen allotments will be established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012.  In future years, the changes to departmental authorities will be implemented through the Annual Reference Level Update, as approved by Treasury Board, and reflected in the subsequent Main Estimates tabled in Parliament.

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities compares the department’s spending authorities granted by Parliament to those used by the department consistent with the Main Estimates and Supplementary Estimates (A) for the 2012-13 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 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.

1.3 Canadian Heritage Financial Structure

PCH has a financial structure composed of voted budgetary authorities that include Vote 1 – Operating Expenditures and Vote 5 – Grants and Contributions, and statutory authorities which are composed of Contributions to employee benefits plans, Minister’s Salary and motor car allowance and Salaries of Lieutenant-Governors.

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

2.1 Statement of Authorities

PCH’s 2012-13 authorities available for use have increased by approximately $96.4M when compared to the same quarter of 2011-2012.  More specifically, the total available for use has decreased by $9.2M in Operating authorities, increased by $105.0M in Grants and Contributions authorities and by $0.7M in Statutory authorities.

The decrease of $9.2M in Operating authorities is mainly due to the transfer of funds to Shared Services Canada as part of the Administrative Services Review ($11.5M) and the transfer from Vote 1 to Vote 5 for Canadian Studies ($2.0M), offset in part by an increase in funding for the Commemoration of the War of 1812 ($2.8M) as well as for the War of 1812 Advertising Initiative ($3.0M).

The increase of $105.0M in Grants and contributions authorities is mainly due to funding received through the 2012-13 Main Estimates for the Canada Media Fund ($99.6M), the Aboriginal Peoples’ Program ($27.7M) and the Canada Periodical Fund ($14.8M) which was only received in the Supplementary Estimates (B) in 2011-12. 

This increase is offset in part by the transfer of responsibilities ($38.7M), as a result of government restructuring, to Aboriginal Affairs and Northern Development Canada of the following components of the Aboriginal Peoples’ Program: Cultural Connections for Aboriginal Youth, Aboriginal Friendship Centres and Young Canada Works for Aboriginal Urban Youth.

The following table summarizes the major changes in authorities from 2011-12 to 2012-13 at September 30th.

Items

(in millions of $)

Vote 1

Vote 5

Total

Increase in funding for the Canada Media Fund

 0.4 99.6 100.0

Increase in funding for the Aboriginal Peoples' Program

 2.0 27.7 29.7

Increase in funding for the Canada Periodical Fund

 0.2 14.8 15.0

Increase in funding for the Celebration and Commemoration Program - War of 1812

 2.8 5.0 7.8

Increase in funding for the Advertising Initiatives - War of 1812

 3.0 0.0 3.0

Transfer from Vote 1 to Vote 5 for the Canadian Studies Program

 (2.0) 2.0 0.0

Decrease in funding due to the reprofile of funds from 2010-11 to 2011-12 for the Youth Take charge Program

 0.0 (2.0) (2.0)

Decrease in funding due to the reprofile of funds from 2010-11 to 2011-12 for the Canada Interactive Fund

 0.0 (4.4) (4.4)

Decrease in funding due to the transfer to Shared Services Canada - Administrative Services Review

 (11.5) 0.0 (11.5)

Decrease in funding for the transfer to Aboriginal Affairs and Northern Development Canada

 (0.8) (38.7) (39.5)

2.2 Statement of Departmental Budgetary Expenditures by Standard Object

Total expenditures, for the quarter ended September 30, have decreased by $41.1M in 2012-13 when compared to the same quarter of 2011-12.

As noted in the table below, PCH has spent 35% ($432.2M) of its authorities in the first quarter of 2012-13, which is slightly higher than the 34% ($391.1M) that was spent during the same period in 2011-12.

This variation is mainly explained by an increase of $51.4M in transfer payment expenditures, and a decrease of $10.5M in operating expenditures.

The increase in transfer payment expenditures is mainly explained by higher expenditures in the second quarter of 2012-13, when compared to 2011-12, for the following programs: the Canada Media Fund ($16.4M), the Canada Periodical Fund ($16.3M), the Sport Support Program ($8.9M), the Celebration and Commemoration Program ($6.3M), and the Museums Assistance Program ($3.7M).

The operating expenditures in the second quarter are lower than those in the same quarter of 2011-12 (i.e. $43.3M for 2012-13 as compared to $53.8M for 2011-12). The decrease in operating expenditures can be attributed to the one-time payment made in 2011-12 in personnel expenditures due to the revision of collective agreements ($8.2M), to a decrease in professional and special services expenditures ($1.6M), and to a decrease in information expenditures ($1.4M). Expenditures Compared to Annual Authorities

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3. Risks and Uncertainties

There are external and internal factors that could influence the Department’s ability to realize its priorities and deliver on its mandate.

Externally, significant demographic shifts, increased global connectivity, economic uncertainty, rapid technological advances and globalization in the trading environment are contributing to the transformation of Canada. In this environment, the Department’s policy challenges cross geographic, political and disciplinary boundaries and affect an increasingly diverse set of stakeholders in policy development and implementation.

Internally, as part of the focus on responsible fiscal management and the return to balanced budgets, the Government of Canada is taking measures to ensure effective and efficient delivery of programs that remain responsive and of value to Canadians.

In 2011-12, PCH’s Executive Committee approved a long term financial strategy to restore financial stability in the department’s Vote 1 Operating Expenditures budget, with implementation starting in 2012-13.

The Department also understands the importance of managing these influences within the context of integrated risk management and that by doing so, the organization approaches its work with a confident, creative and innovative mindset as the basis for sound decision-making.

In addition to these external and internal factors, 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. Savings to offset increased costs are being achieved through internal operating budget reallocations, as part of the department’s resource allocation and financial plans.

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

There have been no significant changes in relation to operations, personnel and programs in the second quarter of 2012-13.

5. Budget 2012 Implementation

This section provides an overview of the savings measures announced in Budget 2012 that will be implemented in order to refocus government and programs; make it easier for Canadians and business to deal with their government; and, modernize and reduce the back office.

In order to achieve Budget 2012 savings, Canadian Heritage will move to a more integrated policy framework that focuses on the socio-economic benefits that their programs offer to Canadians and their communities. The Department will also focus on funding that leverages contributions from partners.

For 2012-13, the Department will achieve savings of approximately $17.8M.  Savings will increase to $40.2M in 2013-14 and will result in ongoing savings of $41.2M by 2014-15.

The main financial risk due to the implementation of the saving measures from Budget 2012 is the management of the expenditures related to Work Force Adjustment (WFA), which will have to be funded internally by the Department of Canadian Heritage. 

Through rigorous planning and regular reporting on progress, the Department expects to manage the risks associated with achieving the reductions required as a result of Budget 2012.

Approved by:

Daniel Jean, Deputy Minister
Robert Hertzog, Chief Financial Officer

Statement of Authorities (unaudited)

(in thousands of dollars)

Fiscal year 2012-13

Fiscal year 2011-12

Total available for use for the year ending March 31, 2013 *, **

Used during the quarter ended
September 30, 2012

Year to date used at quarter-end

Total available for use for the year ended March 31, 2012*

Used during the quarter ended
September 30, 2011

Year to date used  at quarter-end

Vote   1 - Net Operating expenditures 

189,483

43,273

84,746

198,688

53,815

95,405

Vote 5 - Grants and contributions           

1,037,755

382,959

521,091

932,804

331,553

495,429

Budgetary statutory authorities

23,568

5,993

11,717

22,885

5,709

11,352

Total Budgetary authorities

1,250,806

432,225

617,554

1,154,377

391,077

602,186

Total authorities

1,250,806

432,225

617,554

1,154,377

391,077

602,186

More information is available in the attached table.
*Includes only Authorities available for use and granted by Parliament at quarter-end.
**Total available for use does not reflect measures annonced in Budget 2012

Departmental budgetary expenditures by Standard Object (unaudited)

(In thousand of dollars)

Expenditures

Fiscal year 2012-13

 

Fiscal year 2011-12

Planned expenditures for the year ending March 31, 2013 *

Expended during the quarter ended September 30, 2012

Year to date used at quarter-end

Planned expenditures for the year ending March 31, 2012

Expended during the quarter ended September 30, 2011

Year to date used at quarter-end

Personnel

153,198

44,255

86,369

148,647

52,304

95,514

Transportation and communications

8,543

659

1,367

9,573

2,096

2,979

Information

9,480

1,784

2,904

14,954

3,144

3,431

Professional and special services

34,350

2,762

4,161

38,676

4,392

5,854

Rentals

3,176

416

1,329

2,135

453

845

Repair and maintenance

2,726

390

454

2,541

371

559

Utilities, materials and supplies

3,868

372

985

3,745

477

872

Acquisition of machinery and equipment

2,364

62

138

4,175

485

701

Transfer payments

1,038,574

383,238

521,370

933,623

331,726

495,693

Other subsidies and payments

816

-167

943

708

- 3,410

- 2,472

Total gross budgetary expenditures

1,257,095

433,772

620,021

1,158,777

392,039

603,976

Less Revenues netted against expenditures:

 

 

 

 

 

 

Revenue credited to the Vote

-6,289

-1,547

-2,467

-4,400

-962

-1,790

Total Revenues netted against expenditures:

-6,289

-1,547

-2,467

-4,400

-962

-1,790

Total net budgetary expenditures

1,250,806

432,225

617,554

1,154,377

391,077

602,186

*Planned expenditures do not reflect measures announced in Budget 2012

Expenditures Compared to Annual Authorities
(in millions of dollars)

 

2012-13

2011-12

Total available for use

1,250.8 (100%)

1,154.4 (100%)

Used during the quarter

432.2 (35%)

391.1(34%)

Year-to-date used

617.6(49%)

602.2 (52%)

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