Canadian Heritage’s Quarterly Financial Report for the quarter ended June 30, 2013

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
  6. Approval by Senior Officials

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 (Budget 2013). 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 2013-14 Report on Plans and Priorities and the 2013-14 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 2012-13, frozen allotments were established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012.  In 2013-14, the changes to departmental authorities were reflected in the 2013-14 Main Estimates tabled in Parliament. Changes in 2013-14 authorities due to Budget 2013 will be reflected when they will occur throughout the year.

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 2013-14 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 2013-14 authorities available for use have increased by approximately $76.2M when compared to the same quarter of 2012-13.  More specifically, the total available for use decreased by $16.8M in Vote 1 - Operating expenditures, increased by $93.8M in Vote 5 - Grants and contributions and decreased by $0.8M in Statutory authorities.

The decrease of $16.8M in Vote 1 - Operating expenditures is mainly due to the reduction in departmental spending authorities as part of the Budget 2012 savings measures ($11.3M – refer to section 5 of the report for more details), and to the decrease in funding for the Bicentennial commemoration of the War of 1812 ($5.3M).

The increase of $93.8M in Vote 5 - Grants and contributions is mainly due to funding received for the Toronto 2015 Pan American and Parapan American Games ($122.3M). This increase is offset in part by the reduction in departmental spending authorities as part of the Budget 2012 savings measures ($27.4M – refer to section 5 of the report for more details).

The following table summarizes the changes in authorities from 2012-13 to 2013-14.

Items(in millions of $)
Vote 1Vote 5StatutoryTotal
Increase in funding for the Hosting Program - Toronto 2015 Pan American and Parapan American Games 0.0 122.3 0.0 122.3
Decrease in Departmental Spending authorities as part of Budget 2012 savings measures (refer to section 5 of the report for more details) (11.2) (28.6) (0.4) (40.2)
Decrease in funding for the Bicentennial commemoration of the War of 1812 (5.3) (1.0) (0.1) (6.4)
Other items (0.3) 1.1 (0.3) 0.5
Grand Total (16.8) 93.8 (0.8) 76.2

2.2 Departmental Budgetary Expenditures by Standard Object

Total expenditures, for the quarter ended June 30, have increased by $38.8M in 2013-14 when compared to the same quarter of 2012-13.

The total variation is mainly explained by an increase of $39.5M in Vote 5 - Grants and contributions expenditures. This increase in transfer payment expenditures is mostly due to payments made earlier during the year for the following programs: Hosting Program - Toronto 2015 Pan American and Parapan American Games ($42.5M), Sport Support Program ($8.6M), Exchange Canada Program ($3.8M), Museum Assistance Program ($3.1M), Canada Arts Presentation Fund ($2.7M) and Canada Arts Training Fund ($2.1M). However, this increase is in part offset by decreases in expenditures for programs such as: Enhancement of Official Languages Program ($11.3M), Development of Official Languages Program ($5.4M) and reductions due to Budget 2012 savings measures ($6.4M - refer to section 5 of the report for more details).

Vote 1 - Operating expenditures for the first quarter are slightly lower ($0.5M) when compared to the 2012-13 expenditures. No significant variances are noticed for the expenditures by standard object related to the Operating expenditures.

There was a small decrease of $0.2M in Statutory authority - Contributions to employee benefit plans.

As noted in the table below, PCH has spent 17.0% ($224.1M) of its authorities in the first quarter of 2013-14, which is slightly higher than the 14.9% ($185.3M) that was spent during the same period in 2012-13.

Expenditures Compared to Annual Authorities

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3. Risks and Uncertainties

Canadian Heritage continues to adapt to social, economic and technological trends in order to operate within a changing and interconnected environment that provides both opportunities and challenges. This environment is influenced by external and internal factors that are considered in the Department’s risk management and decision-making processes. The Department integrates risk management to identify opportunities and risks, thereby ensuring that resource allocation is prioritized, and that complex systems and events are proactively managed.

As part of its business planning process, the Department identified key risks and developed corresponding response strategies in its 2012-15 Corporate Risk Profile. These risks are grouped in the following categories: People Management, Policy and Program Transformation Readiness and Financial Management. These risks are key concerns for the Department.

One of the financial risks for the Department continues to be the management of the expenditures related to Work Force Adjustment (WFA) due to the implementation of the Budget 2012 savings measures, which have to be funded internally.

As the Department continues to manage in a time of change and fiscal restraint, it will build upon its reputation for achieving results and providing service excellence to Canadians.

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

On July 15, 2013, the Right Honourable Stephen Harper, Prime Minister of Canada, announced that the Honourable Shelly Glover is the new Minister of Canadian Heritage and Official Languages.

5. Budget 2012 Implementation

This section provides an overview of the savings measures announced in Budget 2012 that are being 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 is moving to a more integrated policy framework that focuses on the socio-economic benefits that their programs offer to Canadians and their communities. The Department is also focusing on funding that leverages contributions from partners.

In 2012-13, the Department achieved savings of $17.8M. Savings will increase to $40.2M in 2013-14 and will result in ongoing savings of $41.2M by 2014-15. The additional savings of $22.4M in 2013-14 related to Budget 2012 is due to the following additional initiatives:

  • Elimination of Katimavik Program;
  • Elimination of Cultural Capitals of Canada component of the Canada Cultural Investment Fund;
  • Reduction to the Music Entrepreneur component of the Canada Music Fund ;
  • Elimination of the Creators’ Assistance component of the Canada Music Fund;
  • Elimination of  Arts, Culture and Diversity Program;
  • Elimination of the Canadian Studies - Learning Material.

As mentioned earlier, one financial risk due to the implementation of the savings measures from Budget 2012 continues to be 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.

Approval by Senior Officials

Approved by:

Daniel Jean, Deputy Minister

Gatineau, Canada
Date: 27/08/2013

Robert Hertzog, Chief Financial Officer

Gatineau, Canada
Date: 14/08/2013

Statement of Authorities (unaudited)

Fiscal year 2013-2014 (in thousands of dollars)

 Total available for use for the year ending
March 31, 2014 *
Used during the quarter ended June 30, 2013Year to date used at
quarter-end
Vote 1 - Operating expenditures

163,428

41,026

41,026

Vote 5 - Grants and contributions

1,131,552

177,414

177,414

Statutory - Contributions to employee benefit plans

20,651

5,162

5,162

Statutory - Minister of Canadian Heritage and Official Languages - Salary and motor car allowance

78

20

20

Statutory - Minister of State (Sport) – Motor car allowance

2

1

1

Statutory  - Salaries of the Lieutenant-Governors

1,196

333

333

Statutory - Payments under the Lieutenant Governors Superannuation Act (R.S.C., 1985, c. L-8)

637

148

148

Statutory - Supplementary Retirement Benefits – Former Lieutenant-Governors

182

30

30

Total Budgetary authorities

1,317,726

224,134

224,134

Total authorities

1,317,726

224,134

224,134

More information is available in the attached table.

*Includes only Authorities available for use and granted by Parliament at quarter-end.

Fiscal year 2012-2013 (in thousands of dollars)

 Total available for use for the year ending
March 31, 2013 *, **
Used during the quarter ended June 30, 2012Year to date used at
quarter-end
Vote 1 - Operating expenditures

180,260

41,473

41,473

Vote 5 - Grants and contributions

1,037,755

138,132

138,132

Statutory - Contributions to employee benefit plans

21,473

5,368

5,368

Statutory - Minister of Canadian Heritage and Official Languages - Salary and motor car allowance

78

19

19

Statutory - Minister of State (Sport) – Motor car allowance

2

1

1

Statutory  - Salaries of the Lieutenant-Governors

1,196

336

336

Statutory - Payments under the Lieutenant Governors Superannuation Act (R.S.C., 1985, c. L-8)

637

0

0

Statutory - Supplementary Retirement Benefits – Former Lieutenant-Governors

182

0

0

Total Budgetary authorities

1,241,583

185,329

185,329

Total authorities

1,241,583

185,329

185,329

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 announced in Budget 2012.

Departmental budgetary expenditures by Standard Object (unaudited)

Fiscal year 2013-2014 (in thousands of dollars)

ExpendituresPlanned expenditures
for the year ending March 31, 2014
Expended during the quarter ended
June 30, 2013
Year to date used
at quarter-end
Personnel

140,598

41,748

41,748

Transportation and communications

5,988

310

310

Information

7,267

1,328

1,328

Professional and special services

25,336

2,607

2,607

Rentals

4,745

973

973

Repair and maintenance

1,667

51

51

Utilities, materials and supplies

3,439

165

165

Acquisition of machinery and equipment

630

45

45

Transfer payments

1,132,371

177,591

177,591

Other subsidies and payments

2,345

144

144

Total gross budgetary expenditures

1,324,385

224,962

224,962

Less Revenues netted against expenditures:

Revenue credited to the Vote

-6,659

-828

-828

Total Revenues netted against expenditures:

-6,659

-828

-828

Total net budgetary expenditures

1,317,726

224,134

224,134

Fiscal year 2012-2013 (in thousands of dollars)

ExpendituresPlanned expenditures
for the year ending March 31, 2013 *
Expended during the quarter ended
June 30, 2012
Year to date used
at quarter-end

Personnel

143,975

42,114

42,114

Transportation and communications

8,543

708

708

Information

9,480

1,120

1,120

Professional and special services

34,350

1,399

1,399

Rentals

3,176

913

913

Repair and maintenance

2,726

64

64

Utilities, materials and supplies

3,868

614

614

Acquisition of machinery and equipment

2,364

77

77

Transfer payments

1,038,574

138,132

138,132

Other subsidies and payments

816

1,110

1,110

Total gross budgetary expenditures

1,247,872

186,249

186,249

Less Revenues netted against expenditures:

Revenue credited to the Vote

-6,289

-920

-920

Total Revenues netted against expenditures:

-6,289

-920

-920

Total net budgetary expenditures

1,241,583

185,329

185,329

* Planned expenditures do not reflect measures announced in Budget 2012.

Expenditures Compared to Annual Authorities (in millions of dollars)
  2013-142012-13
Total available for use 1,318 (100.0%) 1,242 (100.0%)
Used during the quarter 224 (17.0%) 185 (14.9%)
Year-to-date used 224 (17.0%) 185 (14.9%)

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