Canadian Heritage’s quarterly financial report for the quarter ended June 30, 2016

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 creative communities.

Further details on the Department of Canadian Heritage’s (PCH) authority, mandate and program activities can be found in the 2016-2017 Report on Plans and Priorities and the 2016-2017 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 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 2016-2017 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.

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.

2.1 Statement of authorities

PCH’s 2016-2017 authorities available for use at the end of the first quarter have increased by approximately $138.3M when compared to the same quarter of 2015-2016. More specifically, the total available for use increased by $11.6M in Vote 1 - Operating expenditures, $125.6M in Vote 5 - Grants and contributions and by $1.1M in Statutory authorities.

The increase of $11.6M in Vote 1 - Operating expenditures is mainly due to the following:

Increases

• $20.4M – Increase in funding to support the Celebration of Canada’s 150^th anniversary of Confederation;
• $1.3M – Increase in funding for affordable housing and social infrastructure projects to support new and old arts and heritage facilities (Budget 2016).

Decreases

• $7.2M – Decrease in funding for the government advertising programs – Canada 150 campaign;
• $1.9M – Decrease in funding for the Aboriginal People’s Program mainly explained by the sunset of a portion of funding for the Cultural Connections for Aboriginal Youth component which remained at Canadian Heritage since its transfer to Indigenous and Northern Affairs Canada.

The variance of $125.6M in Vote 5 - Grants and contributions is mainly due to the following:

Increases

• $83.7M – Increase in funding to support the Celebration of Canda’s 150^th anniversary of Confederation;
• $82.1M – Increase in funding for affordable housing and social infrastructure projects to support new and old arts and heritage facilities (Budget 2016);
• $8.5M – Transfer of funding and responsibilities for the Multiculturalism Program from Immigration, Refugees and Citizenship Canada.

Decreases

• $37.5M – Decrease in funding for the Toronto 2015 Pan American and Parapan American Games as the Games came to a close in August 2015;
• $10.0M – Decrease in funding for the Celebration of Canada’s 150^th anniversary of Confederation – Road to 2017;
• $2.0M – Decrease in funding for the Cultural Strategy for the Toronto 2015 Pan American and Parapan American Games – Reprofile of funds.

The following table provides more details on the changes in authorities observed from 2015-2016 to 2016-2017 at the end of the first quarter (main estimates and supplementary estimates (A)).

2.2 Departmental budgetary expenditures by standard object

Total expenditures for the first quarter of 2016-2017 have increased by $118.4M when compared to the same quarter of 2015-2016.

Most of the variance is observed in Vote 5 - Grants and contributions expenditures which have increased by $124.1M. This variance is mainly explained by a change in timing of payments for the programs listed below, as payments made under these programs in the first quarter of 2016-2017 were higher than in 2015-2016. This change in timing of payments is mainly explained by the implementation, in December 2015, of a new delegation of authority for the approval for Grants and Contributions at Canadian Heritage.

Increases:

• $68.9M – Canada Periodical Fund;
• $26.2M – Sport Support Program;
• $5.3M – Development of Official-Language Communities Program;
• $5.3M – Canada Music Fund;
• $4.5M – Canada Arts Training Fund;
• $2.2M – Building Communities through Arts & Heritage (BCAH);
• $1.7M – Canada Arts Presentation Fund;
• $1.5M – Canada Cultural Spaces Fund;
• $1.2M – Aboriginal Peoples’ Program.

An increase of $9.0M is also observed in the Celebration and Commemoration Program which is due to funding allocated as part of the Celebration of Canada’s 150^th anniversary of Confederation activities.

The Vote 1 – Operating Expenditures for the first quarter of 2016-2017 have decreased by $5.9M when compared to 2015-2016. This is mainly due to a decrease of $4.3M in Personnel and $1.8M in Information expenditures. The variation in Personnel is due to a difference in the timing of the expenditure recognition in this quarter compared to the same quarter of 2015-2016. Statutory Expenditures are at a comparable level to those observed in 2015-2016.

As noted in the table below, PCH has spent 22.7% ($316.3M) of its authorities in the first quarter of 2016-2017, which is higher than the 15.8% ($197.9M) that was spent during the same period in 2015-2016. As indicated above, this increase in spending is mainly due to the timing differences observed in grant and contribution payments.