Canadian Heritage’s quarterly financial report for the quarter ended June 30, 2020

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1. Introduction

This first quarterly financial report should be read in conjunction with the 2020-21 Main Estimates, approved interim supply as of June 26, 2020, and the 2020-21 Supplementary Estimates A along with 2019-20 Main Estimates and Budget Implementation Vote items. 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 first 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 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 (PCH) authority, mandate and programs can be found in the 2020-21 Departmental Plan and the 2020-21 Main Estimates.

1.2. Basis of presentation

This first 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 interim supply for the 2020-21 Main Estimates approved as of June 26, 2020 and Supplementary Estimates A for the 2020-21 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, Statutory Payments for Lieutenant Governors and Statutory payment for COVID-19 Emergency Support Fund.

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

2.1. Statement of authorities

PCH’s 2020-21 authorities available for use at the end of the first quarter have increased by approximately $295.1 million when compared to the same quarter of 2019-20. More specifically, the total available for use increased by $418.0 million in Statutory authorities, decreased by $46.1 million in Vote 1 - Operating expenditures and decreased by $76.8 million in Vote 5 - Grants and Contributions.

On May 8, 2020, the Government of Canada announced $500 million for COVID-19 Emergency Support Fund for Cultural, Heritage and Sport Organizations. These funds are a temporary relief measure to meet the financial needs of cultural, heritage and sport organizations facing significant losses due to COVID-19, so they can continue to support artists and athletes. The goal of the $500 million in funding is to ensure business continuity for organizations whose viability has been negatively impacted by COVID-19. The Fund will provide financial support consistent with other assistance measures in place such as the Canada Emergency Business Account. It will be administered by Canadian Heritage with the support of its partners. The $500 million was divided between the following organizations: $418 million to the Department of Canadian Heritage, $55 million to the Canada Council for the Arts and $27 million to Téléfilm Canada.

A decrease of $159.5 million in the authorities available for use in Vote 1 – Operating expenditures and Vote 5 – Grants and Contributions is explained by the reduced supply of the Main Estimates. Due to the COVID-19 pandemic and limited sessions in the spring for Parliament to study supply, the Standing Orders of the House of Commons were amended to extend the study period into the Fall. Canadian Heritage is expected to receive full supply for the 2020-21 Main Estimates in December 2020.

Changes in authorities observed from 2019-20 to 2020-21 at the end of the first quarter (in millions of dollars)
Items Vote 1 Vote 5 Statutory Total
New funding to establish a COVID-19 Emergency Support Fund for Cultural, Heritage and Sport Organizations 0.0 0.0 418.0 418.0
New funding to support minority languages education in Canada 0.0 15.0 0.0 15.0
New funding to support local journalism (Budget 2018) 0.0 10.0 0.0 10.0
New funding to successfully launch new Sport initiatives for social development in more than 300 Indigenous communities (Budget 2018) 0.5 8.9 0.1 9.5
Reprofiling of funds for the Grants and Contributions Modernization Project 6.4 0.0 0.0 6.4
Overall increase in the Indigenous Languages and Cultures Program for the purpose of preserving, promoting and revitalizing indigenous languages (Budgets 2017 and 2019) (0.4) 6.3 0.1 6.0
Increase funding to successfully launch new initiatives for social development in Indigenous communities (Budget 2018) and Gender equality (Budget 2018) 0.0 3.2 0.0 3.2
New funding for Addressing the Challenges faced by Black Canadians (Budget 2018) 0.5 2.4 0.1 3.0
Additional funding to respond to youth-serving organizations’ increased demand in the Youth Take Charge Program and to expand its reach to a greater number of youth across Canada 0.0 2.5 0.0 2.5
Transfer of the Youth and LGBTQ2+ Secretariats from the Privy Council Office 2.2 0.0 0.2 2.4
Increase for negotiated salary adjustments 2.1 0.0 0.3 2.4
New funding to support the Francophone Digital platform – TV5MONDE 0.1 2.0 0.0 2.1
Other Adjustments (1.5) 0.0 (0.6) (2.1)
Decrease in funding to support the Youth Employment Strategy (0.1) (3.0) 0.0 (3.1)
Decrease funding for Digital Democracy Project to address online disinformation (0.1) (6.8) 0.0 (6.9)
Sunsetting of the additional two-year funding for Strengthening Multiculturalism (Budget 2018) and decrease in funding for the New Anti-Racism Strategy (Budget 2019) (5.0) (8.6) (0.2) (13.8)
Decrease in the authorities available for use due to the reduced supply of the 2020-21 Main Estimates (50.8) (108.7) 0.0 (159.5)
Grand Total (46.1) (76.8) 418.0 295.1

2.2. Departmental budgetary expenditures by standard object

Total expenditures for the first quarter of 2020-21 have increased by $169.6 million (51%) from $331.3 million to $500.9 million compared to the same quarter of 2019-20.

The Statutory Expenditures for the first quarter of 2020-21 increased by $163.4 million, from $6.5 million to $169.9 million. This 2,514% increase is mainly due to the new funding received for the COVID-19 Emergency Support Fund. Payments were made by the following programs to support Cultural, Heritage and Sport organizations:

The Vote 5 – Grants and Contributions expenditures for the first quarter of 2020-21 also increased by $6.1 million, from $280.6 million to $286.7 million. This 2% increase is explained by PCH’s efforts to disburse funds earlier in the year to the creative sector which is under extreme strain following the COVID-19 pandemic. Payments were made earlier this year by the two programs below:

These increases are partially compensated by decreases in spending in the first quarter of 2020-21 compared to 2019-20 for the following programs:

The Vote 1 – Operating expenditures for the first quarter of 2020-21 are at a similar level to those observed in 2019-20.

As noted in the table below, PCH has spent 27.9% of its authorities in the first quarter of 2020-21, which is slightly higher than last year’s consumption of 22.1%. However, this represents an increase of 51.2% of its expenditures, $500.8 million in 2020-21 compared to $331.3 million in 2019-20.

Expenditures compared to annual authorities (in millions of dollars)
Expenditures compared to annual authorities (in millions of dollars) - text version
2020-21 2019-20
Total available for use 1,794 (100%) 1,499 (100%)
Used during the quarter 501 (27.9%) 331 (22.1%)
Year-to-date used 501 (27.9%) 331 (22.1%)

3. Risks and uncertainties

In the current context, PCH is exposed to heightened operational risks including people risk as the department closely monitors the impact of the COVID-19 crisis. As the situation related to the COVID-19 virus continues to evolve, PCH’s primary concern remains the health of its employees and their families. Canadian Heritage must also contribute to public service-wide efforts to address this situation and maintain critical federal government services. The Department continues to monitor emerging risks and has activated its Business Continuity Plan to ensure that critical services, such as the delivery of Grants and Contributions programs, are maintained.

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

Significant changes in operations and programs in the context of COVID-19 crisis

In March 2020, PCH has activated its Business Continuity Plan. This means that only the Department's critical services are maintained until further notice. In line with the Treasury Board Secretariat’s Policy on Government Security and mindful of the unique nature of the current COVID-19 crisis, PCH's list of critical services has been modified to include the ongoing provision of grants and contributions to ensure the economic well-being of Canadians.

The main priority had been keeping Canadian Heritage running smoothly and in setting up the COVID-19 Emergency Support Fund. As a result, hundreds of organizations can continue to receive their funding and can benefit from much-needed emergency assistance. In addition, Canadian Heritage had to be creative and find new ways to effectively deliver its mandate specifically for annual celebrations and activities in Canada’s Capital Region that create a unique Canadian experience for all, celebrating Canadian identity and diversity. The Canada Day celebrations and virtual fireworks showed how PCH could rapidly adapt to the current context.

Canadian Heritage is also ensuring flexibility for funding recipients whose activities have been impacted by COVID-19 (such as cancelled events).

Significant changes in Personnel

Since April 2020, Isabelle Mondou, Associate Deputy Minister, has accepted an interim assignment to support a coherent government-wide approach to communications on the COVID-19 response. As the Deputy Minister for the COVID-19 Response (Communications), she’s working out of the Privy Council Office.

Maia Welbourne, Assistant Deputy Minister, Official Languages, Heritage and Regions (OLHR) has accepted a permanent transfer with the COVID-19 Secretariat at Health Canada where she has been leading, since April 2020, a team working on economic issues related to the pandemic.

5. Approval by senior officials

Approved by:

Original signed
Hélène Laurendeau, Deputy Minister

Gatineau, Canada
Date: August 17, 2020

Original signed
Eric Doiron, Chief Financial Officer

Gatineau, Canada
Date: August 12, 2020

Statement of authorities (unaudited)

Fiscal year 2020-21 and 2019-20 (in thousands of dollars)
Authorities Total available for use for the year ending March 31, 2021Table 3 note 1 Used during the quarter ended June 30, 2020 Year to date used at quarter-end 2020-21 Total available for use for the year ending March 31, 2020Table 3 note 1 Used during the quarter ended June 30, 2019 Year to date used at quarter-end 2019-20
Vote 1 - Operating expenditures 152,423 44,335 44,335 198,507 44,187 44,187
Vote 5 - Grants and contributions 1,196,067 286,678 286,678 1,272,919 280,595 280,595
Statutory - COVID-19 Emergency Support Fund - Support for Cultural, Heritage and Sport Organizations 418,000 163,222 163,222 0 0 0
Statutory - Contributions to employee benefit plans 25,000 6,250 6,250 24,920 6,091 6,091
Statutory - Minister of Canadian Heritage - Salary and motor car allowance 89 23 23 88 22 22
Statutory - Minister of State (Minister of Science and Sport) - Motor car allowance 0 0 0 88 0 0
Statutory - Minister of State (Minister of Diversity and Inclusion and Youth) - Motor car allowance 2 0 0 0 0 0
Statutory - Salaries of the Lieutenant Governors 1,196 380 380 1,196 372 372
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 6 0 0 4 0 0
Total Budgetary authorities 1,793,602 500,888 500,888 1,498,541 331,267 331,267
Total authorities 1,793,602 500,888 500,888 1,498,541 331,267 331,267

Table 3 notes

Table 3 Note 1

Includes only Authorities available for use and granted by Parliament at quarter-end. Due to the COVID-19 pandemic and limited sessions in the spring for Parliament to study supply, the Standing Orders of the House of Commons were amended to extend the study period into the Fall. Canadian Heritage is expected to receive full supply for the 2020-21 Main Estimates in December 2020.

Return to first table 3 footnote 1 referrer

Departmental budgetary expenditures by standard object (unaudited)

For fiscal year 2020-21 and 2019-20 (in thousands of dollars)
Expenditures Total available for use for the year ending March 31, 2021Table 4 note 1 Used during the quarter ended June 30, 2020 Year to date used at quarter-end 2020-21 Total available for use for the year ending March 31, 2020Table 4 note 1 Used during the quarter ended June 30, 2019 Year to date used at quarter-end 2019-20
Personnel 152,975 46,217 46,217 187,591 45,332 45,332
Transportation and communications 3,699 240 240 4,611 807 807
Information 1,887 215 215 2,140 519 519
Professional and special services 16,964 2,987 2,987 28,430 3,401 3,401
Rentals 3,237 581 581 4,095 628 628
Repair and maintenance 978 99 99 878 117 117
Utilities, materials and supplies 2,193 127 127 2,529 259 259
Acquisition of machinery and equipment 1,737 212 212 3,255 243 243
Transfer payments 1,614,886 449,900 449,900 1,273,738 280,595 280,595
Other subsidies and payments 1,070 905 905 1,231 727 727
Total gross budgetary expenditures 1,799,626 501,483 501,483 1,508,498 332,628 332,628

Table 4 notes

Table 4 Note 1

Includes only Authorities available for use and granted by Parliament at quarter-end. Due to the COVID-19 pandemic and limited sessions in the spring for Parliament to study supply, the Standing Orders of the House of Commons were amended to extend the study period into the Fall. Canadian Heritage is expected to receive full supply for the 2020-21 Main Estimates in December 2020.

Return to first table 4 footnote 1 referrer

Less revenues netted against expenditures
Expenditures Total available for use for the year ending March 31, 2021Table 5 note 1 Used during the quarter ended June 30, 2020 Year to date used at quarter-end 2020-21 Total available for use for the year ending March 31, 2020Table 5 note 1 Used during the quarter ended June 30, 2019 Year to date used at quarter-end 2019-20
Revenue credited to the Vote -6,024 -595 -595 -9,957 -1,361 -1,361
Total Revenues netted against expenditures -6,024 -595 -595 -9,957 -1,361 -1,361
Total net budgetary expenditures 1,793,602 500,888 500,888 1,498,541 331,267 331,267

Table 5 notes

Table 5 Note 1

Includes only Authorities available for use and granted by Parliament at quarter-end. Due to the COVID-19 pandemic and limited sessions in the spring for Parliament to study supply, the Standing Orders of the House of Commons were amended to extend the study period into the Fall. Canadian Heritage is expected to receive full supply for the 2020-21 Main Estimates in December 2020.

Return to first table 5 footnote 1 referrer

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