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Canadian Heritage’s quarterly financial report for the quarter ended December 31, 2019

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1. Introduction

This third quarterly financial report should be read in conjunction with the 2019-20 Main Estimates, Budget Implementation Vote items and Supplementary Estimates A approved as of December 31, 2019 along with 2018-19 Main Estimates, Budget Implementation vote items and Supplementary Estimates A. It has been prepared by management as required by section 65.1 - Quarterly financial reports of the Financial Administration Act and is in the form and manner prescribed by the Treasury Board in accordance with the special purpose financial reporting framework described in the GC4400 policy instrument. The third quarterly report has not been subject to an external audit or review.

The quarterly financial report outlines the results, risks and significant changes in operations, personnel and programs and includes financial information tables for the quarter. The purpose of the quarterly financial information tables is to provide a comparison of in-year departmental spending with authorities granted by Parliament, as well as comparative financial information for the preceding year.

1.1. Authority, mandate and programs

The Department of Canadian Heritage (PCH) and its Portfolio organizations play a vital role in the cultural, civic and economic life of Canadians. Our policies and programs promote an environment where Canadians can experience dynamic cultural expressions, celebrate our history and heritage and build strong communities. The Department invests in the future by supporting the arts, our official and indigenous languages and our athletes and the sport system.

Further details on the Department of Canadian Heritage’s authority, mandate and programs can be found in the 2019-20 Departmental Plan and the 2019-20 Main Estimates.

1.2. Basis of presentation

This third quarterly financial 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, and those used by the department consistent with the Main Estimates, Budget Implementation Vote items and Supplementary Estimates approved as of December 31, 2019 for the 2019-20 fiscal year.

The authority of Parliament is required before money can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts, or through legislation in the form of statutory spending authority for specific purposes.

PCH uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results 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, Ministers’ Salary and motor car allowances and Statutory Payments for Lieutenant Governors.

2. Highlights of fiscal quarter and fiscal year-to-date (YTD) results

2.1. Statement of authorities

PCH’s 2019-20 authorities available for use at the end of the third quarter have increased by approximately $220.9 million when compared to the same quarter of 2018-19. More specifically, the total available for use increased by $209.0 million in Vote 5 - Grants and Contributions, $10.8 million in Vote 1 - Operating expenditures and $1.1 million in Statutory authorities.

The following table provides details on the changes in authorities observed from 2018-19 to 2019-20 at the end of the third quarter:

Changes in authorities observed from 2018-19 to 2019-20 at the end of the third quarter (in millions of dollars)
Items Vote 1 Vote 5 Statutory Total
Funding for the Action Plan for Official Languages (2018-2023) (Budget 2018) and to support minority language education in Canada 6.4 78.4 0.1 84.9
Funding for Strengthening Multiculturalism (Budget 2018), for the New Anti-Racism Strategy temporary funding (Budget 2019) and to address the Challenges faced by Black Canadians (Budget 2018) 9.4 25.7 0.6 35.7
New funding to support Artists, Cultural Events and Commemorations (Budget 2019) 1.3 34.1 0.1 35.5
Funding to successfully launch new initiatives for social development in Indigenous communities (Budget 2018), Gender equality (Budget 2018) and Ensuring a Safe and Healthy Sport System (Budget 2019) 1.4 24.3 0.2 25.9
New funding to support the implementation of the Indigenous Languages Act (Budget 2019) 0.4 14.6 0.1 15.1
New funding for Digital Democracy Project to address online disinformation 1.9 9.4 0.3 11.6
New funding to support local journalism (Budget 2018) 0.0 10.0 0.0 10.0
New funding to support the Harbourfront Centre 0.0 7.5 0.0 7.5
New funding to support the Francophone Digital platform – TV5MONDE 0.1 6.0 0.0 6.1
Funding for the Rideau Hall foundation 0.0 4.9 0.0 4.9
New funding for Canadians with Visual Impairments and other print disabilities to support Canada's independent publishing industry to increase the production of accessible reading materials (Budget 2019) 0.3 4.0 0.1 4.4
Funding to support the preparation of the 2026 FIFA World Cup 0.0 2.5 0.0 2.5
Other Adjustments (0.1) 0.6 (0.4) 0.1
Decrease in funding for the Grants and Contributions Modernization Project (4.3) 0.0 0.0 (4.3)
Decrease in funding compared to 2018-19 Operating Budget Carry Forward (5.4) 0.0 0.0 (5.4)
Sunsetting of funds to support the bid to host the 2026 Olympic and Paralympic Winter Games (0.6) (13.0) 0.0 (13.6)
Grand Total 10.8 209.0 1.1 220.9

2.2. Departmental budgetary expenditures by standard object

Total expenditures for the third quarter of 2019-20 have increased by $49.1M (20%) from $250.8M to $299.9M compared to the same quarter of 2018-19.

The Vote 5 – Grants and Contributions expenditures for the third quarter of 2019-20 increased by $46.0M, from $199.7M to $245.7M. This 23% increase is mainly due to the following items:

and also to the timing of payments which were more significant in 2019-20 third quarter compared to the same quarter in 2018-19;

Partially offset by:

The Vote 1 – Operating expenditures for the third quarter of 2019-20 have decreased by $1.1M, from $46.9M to $45.8M compared to the same quarter of 2018-19. This 2% decrease is mainly due to the net effect of the below items:

Partially offset by:

Statutory Expenditures for the third quarter of 2019-20 have increased by $4.2M from $4.3M to $8.5M compared to the same quarter of 2018-19. This 98% increase is mainly due to the timing of the recording of payments related to contributions to employee benefit plans in 2019-20. These expenses were recorded in the last quarter in 2018-19.

As noted in the table below, PCH has spent 19.0% ($300.0M) of its authorities in the third quarter of 2019-20, which is similar, in percentage, to last year’s consumption of 18.5% ($250.8M).

Expenditures compared to annual authorities (in millions of dollars)
Expenditures compared to annual authorities (in millions of dollars), text version below:
Expenditures compared to annual authorities (in millions of dollars) – text version
2019-20 2018-19
Total available for use 1,579 (100.0%) 1,359 (100.0%)
Used during the quarter 300 (19.0%) 251 (18.5%)
Year-to-date used 967 (61.3%) 830 (61.1%)

3. Risks and uncertainties

Canadian Heritage continues to operate in a time of change. The standardization and consolidation of processes, as part of the government-wide initiatives such as Financial Management Transformation (FMT) initiative, requires the analysis of financial and non-financial risks and the implementation of adequate internal controls and other risk mitigation strategies to ensure effective and efficient processes in order to support strong management oversight.

The Government of Canada has implemented a new pay system in 2015 as part of the pay transformation initiative. Since its implementation, Phoenix has experienced issues—under and over payments to employees—which Public Services and Procurement Canada (PSPC) is working hard to resolve. In order to mitigate against this impact, PCH has issued emergency salary advances to affected employees. Further, the department has strengthened and invested in its Internal Services, in particular in the human Resources and Financial Management branches in order to better support PCH employees. PCH has also put controls in place to monitor this risk and will monitor the situation closely in consultation with PSPC and Treasury Board Secretariat.

4. Significant changes in relation to operations, personnel and programs

On November 20, 2019, the Right Honourable Justin Trudeau, Prime Minister of Canada appointed the Honourable Steven Guilbeault as the new Minister of Canadian Heritage, supported by the Honourable Bardish Chagger, as the new Minister of Diversity and Inclusion and Youth. The Honourable Mélanie Joly was also appointed Minister of Economic Development and Official Languages.

Changes to the machinery of government which had an impact on the Department were also implemented by the new government as of November 20, 2019:

Further, since the second quarter of 2019-20, there were changes to Canadian Heritage’s senior management personnel:

Gina Wilson was appointed Senior Associate Deputy Minister of Diversity, Inclusion and Youth, effective January 27, 2020. Joëlle Montminy becomes Assistant Deputy Minister, Sport, Major Events, Commemorations and Portfolio Affairs, effective February 10, 2020. Finally, Lise Laneville was nominated Ombudsman and Director of the Office of Values and Ethics effective November 12, 2019.

5. Approval by senior officials

Approved by:

Original signed
Hélène Laurendeau, Deputy Minister

Gatineau, Canada
Date: February 19, 2020

Original signed
Eric Doiron, Chief Financial Officer

Gatineau, Canada
Date: February 19, 2020

Statement of authorities (unaudited)

Fiscal year 2019-20 and 2018-19 (in thousands of dollars)
Authorities Total available for use for the year ending March 31, 2020 Table 3 note 1 Used during the quarter ended December 31, 2019 Year to date used at quarter-end 2019-20 Total available for use for the year ending March 31, 2019Table 3 note 1 Used during the quarter ended December 31, 2018 Year to date used at quarter-end 2018-19
Vote 1 - Operating expenditures 215,933 45,771 140,530 205,146 46,862 141,023
Vote 5 - Grants and contributions 1,336,187 245,675 807,448 1,127,167 199,650 672,070
Statutory - Contributions to employee benefit plans 25,073 8,121 18,272 24,107 3,929 15,713
Statutory - Minister of Canadian Heritage - Salary and motor car allowance 88 22 66 86 7 57
Statutory - Minister of State (Minister of Sport and Persons with Disabilities) - Motor car allowance 88 0 0 2 0 0
Statutory - Salaries of the Lieutenant Governors 1,196 385 1,104 1,196 362 1,092
Statutory - Payments under the Lieutenant Governors Superannuation Act (R.S.C., 1985, c. L-8) 637 0 0 637 0 0
Statutory - Supplementary Retirement Benefits - Former Lieutenant Governors 182 0 0 182 0 0
Spending of Crown Asset Proceeds 14 0 0 20 0 0
Total Budgetary authorities 1,579,398 299,974 967,420 1,358,543 250,810 829,955
Total authorities 1,579,398 299,974 967,420 1,358,543 250,810 829,955

Table 3 notes

Table 3 Note 1

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

Return to first table 3 footnote 1 referrer

Departmental budgetary expenditures by standard object (unaudited)

For fiscal year 2019-20 and 2018-19 (in thousands of dollars)
Expenditures Total available for use for the year ending March 31, 2020Table 4 note 1 Used during the quarter ended December 31, 2019 Year to date used at quarter-end 2019-20 Total available for use for the year ending March 31, 2019Table 4 note 1 Used during the quarter ended December 31, 2018 Year to date used at quarter-end 2018-19
Personnel 195,725 50,163 140,401 189,473 40,903 130,489
Transportation and communications 4,611 1,245 2,936 3,810 1,232 3,097
Information 2,140 297 1,525 3,580 263 970
Professional and special services 37,329 5,840 13,320 27,078 6,017 15,087
Rentals 4,095 918 2,680 3,940 1,150 2,922
Repair and maintenance 879 249 550 871 393 651
Utilities, materials and supplies 2,575 650 1,509 3,708 715 1,710
Acquisition of machinery and equipment 3,764 244 994 6,347 347 1,808
Transfer payments 1,337,006 245,675 807,448 1,127,985 199,650 672,070
Other subsidies and payments 1,231 -2,455 2,284 1,708 2,448 6,638
Total gross budgetary expenditures 1,589,355 302,826 973,647 1,368,500 253,118 835,442

Table 4 notes

Table 4 Note 1

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

Return to first table 4 footnote 1 referrer
Less revenues netted against expenditures (in thousands of dollars)
Expenditures Total available for use for the year ending March 31, 2020Table 5 note 1 Used during the quarter ended December 31, 2019 Year to date used at quarter-end 2019-20 Total available for use for the year ending March 31, 2019Table 5 note 1 Used during the quarter ended December 31, 2018 Year to date used at quarter-end 2018-19
Revenue credited to the Vote -9,957 -2,852 -6,227 -9,957 -2,308 -5,487
Total Revenues netted against expenditures -9,957 -2,852 -6,227 -9,957 -2,308 -5,487
Total net budgetary expenditures 1,579,398 299,974 967,420 1,358,543 250,810 829,955

Table 5 notes

Table 5 Note 1

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

Return to first table 5 footnote 1 referrer

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