Canadian Heritage’s Quarterly Financial Report for the quarter ended December 31, 2012
Table of contents
- 1. Introduction
- 2. Highlights of Fiscal Quarter and Fiscal Year-to-Date (YTD) Results
- 3. Risks and Uncertainties
- 4. Significant Changes in Relation to Operations, Personnel and Programs
- 5. Budget 2012 Implementation
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) and Supplementary Estimates (B) 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 have been 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, Supplementary Estimates (A) and Supplementary Estimates (B) 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 decreased by approximately $73.8M when compared to the same quarter of 2011-2012. More specifically, the total authorities available for use has decreased by $35.1M in Operating authorities, $34.2M in Grants and Contributions authorities and by $4.5M in Statutory authorities.
The decrease of $35.1M in Operating authorities is mainly due to the transfer of funds to Shared Services Canada as part of the Administrative Services Review ($11.5M), the decrease in pay list requirements ($13.9M) and the reduction in departmental spending authorities as part of the Budget 2012 implementation ($10.3M – refer to section 5 of the report for more details).
The decrease of $34.2M in Grants and Contributions authorities is mainly due to 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 and the reduction in departmental spending authorities as part of the Budget 2012 implementation ($7.2M – refer to section 5 of the report for more details).
This decrease is offset in part by the increase in funding for the Hosting Program – Toronto 2015 Pan American and Parapan American Games ($14.4M) and the Celebration and Commemoration Program – 100th Grey Cup anniversary celebrations ($5.0M).
The following table summarizes the major changes in authorities from 2011-12 to 2012-13 at December 31st.
| Items | (in millions of $) | ||
|---|---|---|---|
| Vote 1 | Vote 5 | Total | |
| Increase in funding for the Hosting Program - Toronto 2015 Pan American and Parapan American Games | 0.0 | 14.4 | 14.4 |
| Increase in Funding for the Celebration and Commemoration Progam to support the 100th Grey Cup anniversary celebrations | 0.0 | 5.0 | 5.0 |
| Increase in funding for the Sport Support Program to support ParticipACTION and Le Grand défi Pierre Lavoie | 0.0 | 3.0 | 3.0 |
| Increase in funding for the Hnatyshyn Foundation | 0.0 | 2.5 | 2.5 |
| Decrease in funding for the Sport Support Program (High Performance Sport) – Previously planned/approved reductions in program funding | 0.0 | (3.0) | (3.0) |
| Decrease in funding due to previously planned/approved reductions in program funding for the Hosting Program | 0.0 | (4.3) | (4.3) |
| 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 due to reduced pay list requirements | (13.9) | 0.0 | (13.9) |
| Decrease in Departmental Spending authorities as part of Budget 2012 implementation (refer to section 5 of the report for more details) | (10.3) | (7.2) | (17.5) |
| Decrease in funding due to the transfer of programs to Aboriginal Affairs and Northern Development Canada | (0.8) | (38.7) | (39.5) |
2.2 Statement of Departmental Budgetary Expenditures by Standard Object
As noted in the table below, PCH has spent 17.5% of its authorities in the third quarter of 2012-13, which is slightly higher than the 17.3% that was spent during the same period in 2011-12. This increase in percentage is explained by a decrease of the total available for use for the Department from 2011-12 to 2012-13.
However, total expenditures, for the quarter ended December 31, have decreased by $10.1M in 2012-13 when compared to the same quarter of 2011-12.
This variation is mainly explained by a decrease of $6.5M in operating expenditures and $4.3M in statutory expenditures.
The operating expenditures in the third quarter are lower than those in the same quarter of 2011-12 (i.e. $45.5M for 2012-13 as compared to $52.0M for 2011-12). The decrease in operating expenditures is explained by a decrease in personnel expenditures ($5.4M) which can mainly be attributed to the one-time payment made in 2011-12 in personnel expenditures due to the revision of collective agreements and to a decrease in transportation and communications expenditures ($2.2M). These decreases are offset in part by increases in information expenditures ($0.8M) and professional and special services expenditures ($0.1M).
The decrease in statutory expenditures is mainly explained by the non-recurrent level of the spending of proceeds from the disposal of surplus crown assets (Sale of Canada’s Pavilion at Expo 2010 in Shanghai) in 2011-12 ($2.7M) and by the decrease in Employee Benefit Plans expenditures which can be attributed to the decrease in personnel expenditures.
View this image in text format
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 third 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. The following programs have been affected by these saving measures:
- International Expositions Program;
- Human Rights Program (Grants and Contributions only);
- Canada Interactive Fund.
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
Gatineau, Canada
Date: February 26, 2013
Robert Hertzog, Chief Financial Officer
Gatineau, Canada
Date: February 25, 2013
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 December 31, 2012 | Year to date used at quarter-end | Total available for use for the year ended March 31, 2012 | Used during the quarter ended December 31, 2011 | Year to date used at quarter-end ** | |
| Vote 1 - Net Operating expenditures |
184,516 |
45,516 |
130,262 |
219,579 |
51,996 |
146,847 |
| Vote 5 - Grants and contributions |
1,055,824 |
172,132 |
693,222 |
1,090,002 |
171,481 |
666,910 |
| Budgetary statutory authorities |
23,568 |
3,935 |
15,652 |
28,083 |
8,247 |
19,599 |
| Total Budgetary authorities |
1,263,907 |
221,582 |
839,136 |
1,337,665 |
231,724 |
833,356 |
| Total authorities |
1,263,907 |
221,582 |
839,136 |
1,337,665 |
231,724 |
833,356 |
More information is available in the attached table.
*Includes only Authorities available for use and granted by Parliament at quarter-end.
**The 2011-12 Year to date used at quarter end presented in the 2011-12 Quarterly Financial Report for the quarter ending December 31, 2011 was overstated by $973K. This correction is reflected in the figures presented above.
Departmental budgetary expenditures by Standard Object (unaudited)
| (In thousands 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 December 31, 2012 | Year to date used at quarter-end | Planned expenditures for the year ending March 31, 2012 | Expended during the quarter ended December 31, 2011 | Year to date used at quarter-end * | |
| Personnel |
153,741 |
39,990 |
126,359 |
168,781 |
45,365 |
142,076 |
| Transportation and communications |
8,136 |
724 |
2,091 |
10,722 |
2,885 |
4,667 |
| Information |
6,623 |
2,706 |
5,610 |
15,874 |
1,861 |
5,292 |
| Professional and special services |
32,777 |
4,988 |
9,149 |
40,932 |
4,856 |
10,710 |
| Rentals |
3,048 |
339 |
1,668 |
2,448 |
379 |
1,224 |
| Repair and maintenance |
2,645 |
126 |
581 |
2,760 |
482 |
1,041 |
| Utilities, materials and supplies |
3,680 |
346 |
1,331 |
4,127 |
753 |
1,625 |
| Acquisition of machinery and equipment |
2,177 |
91 |
229 |
4,344 |
330 |
1,030 |
| Transfer payments |
1,056,642 |
172,132 |
693,501 |
1,090,821 |
171,481 |
667,174 |
| Other subsidies and payments |
726 |
2,208 |
3,151 |
1,256 |
4,209 |
1,184 |
| Total gross budgetary expenditures |
1,270,196 |
223,650 |
843,671 |
1,342,065 |
232,601 |
836,023 |
| Less Revenues netted against expenditures: | ||||||
| Revenue credited to the Vote |
-6,289 |
-2,068 |
-4,535 |
-4,400 |
-877 |
-2,667 |
| Total Revenues netted against expenditures: |
-6,289 |
-2,068 |
-4,535 |
-4,400 |
-877 |
-2,667 |
| Total net budgetary expenditures |
1,263,907 |
221,582 |
839,136 |
1,337,665 |
231,724 |
833,356 |
*The 2011-12 Year to date used at quarter end presented in the 2011-12 Quarterly Financial Report for the quarter ending December 31, 2011 was overstated by $973K. This correction is reflected in the figures presented above.
| 2012-13 | 2011-12 | |
|---|---|---|
| Total available for use | 1,264 (100.0%) | 1,338 (100.0%) |
| Used during the quarter | 222 (17.5%) | 232 (17.3%) |
| Year-to-date used | 839 (66.4%) | 833 (62.3%) |
