Canadian Heritage’s quarterly financial report for the quarter ended June 30, 2018
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. Approval by senior officials
- Statement of authorities (unaudited)
- Departmental budgetary expenditures by standard object (unaudited)
This first quarterly financial report should be read in conjunction with the 2018-19 Main Estimates and Budget Implementation Vote items approved as of June 30, 2018 along with 2017-18’s Main Estimates 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 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 program activities
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.
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 Main Estimates for the 2018-19 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 2018-19 authorities available for use at the end of the first quarter have decreased by approximately $137.5 million when compared to the same quarter of 2017-2018. More specifically, the total available for use decreased by $114.5 million in Vote 5 - Grants and contributions, $22.8 million in Vote 1 - Operating expenditures and $0.2 million in Statutory authorities.
The following table provides details on the changes in authorities observed from 2017-18 to 2018-19 at the end of the first quarter:
|Items||Vote 1||Vote 5||Statutory||Total|
|New funding in Budget 2017 to support a new investment in the Canada Cultural Spaces Fund in order to strengthen cultural infrastructure||0.0||29.9||0.0||29.9|
|New funding in Budget 2017 for the Aboriginal Languages Initiative (ALI) to support the preservation, revitalization and promotion of Indigenous languages||3.1||19.1||0.4||22.6|
|Increase for negotiated salary adjustments||5.6||0.0||0.6||6.2|
|Increase in funding to support high-performance athletes||0.0||5.0||0.0||5.0|
|Increase in funding to support the Next Generation of Canadian Olympic and Paralympic athletes||0.0||5.0||0.0||5.0|
|Increase in funding to invest in community educational infrastructures in the provinces and territories||0.1||3.9||0.0||4.0|
|Increase in funding to support the provision of services in French and Indigenous languages in the Territories||0.0||3.2||0.0||3.2|
|Increase in funding to support Indigenous Youth and Sport||0.5||2.1||0.0||2.6|
|Increase due to the one time transfer to the National Arts Centre (NAC) for the 2017 Canada Scene (Canada 150)||0.0||1.5||0.0||1.5|
|Increase in funding to support the Youth Employment Strategy (YES)||0.0||0.2||0.0||0.2|
|Change in funding to support the Court Challenges Program||(0.5)||0.5||0.0||0.0|
|Decrease in funding for the Grants and Contributions Modernization Project and repairs to the roof of the Canadian Conservation Institute||(2.6)||0.0||(0.3)||(2.9)|
|Sunsetting of temporary funding to support the promotion of Canadian artists and cultural industries on the world stage (Budget 2016)||(2.4)||(2.6)||(0.2)||(5.2)|
|Sunsetting of temporary funding to support the celebrations of Montreal’s 375th anniversary||0.0||(6.4)||0.0||(6.4)|
|Sunsetting of the short term investment announced in Budget 2016 for Cultural Infrastructure||(0.3)||(83.9)||(0.1)||(84.3)|
|Sunsetting of temporary funding for the celebrations of the 150th anniversary of Confederation||(26.1)||(91.5)||(0.4)||(118.0)|
2.2. Departmental budgetary expenditures by standard object
Total expenditures for the first quarter of 2018-19 have decreased by $10.9M (3.4%) from $319.5M to $308.6M compared to the same quarter of 2017-18.
The Vote 5 – Grants and Contributions expenditures for the first quarter of 2018-19 have remained relatively constant compared to the previous year’s first quarter—still, a decrease of $10.4M, from $267.0M to $256.6M, was observed. This 3.9% decrease is mainly due to the net effect of the following increases and decreases:
- ($66.2M) – Canada Celebration & Commemoration Program: the decrease is triggered by Canada’s 150th anniversary of Confederation ($60.1M) and Montreal’s 375th anniversary ($6.1M);
- ($9.1M) – Enhancement of Official Languages Program: the decrease is mainly caused by payments being made later in 2018-19 compared to 2017-18. The difference will be resolved in the next quarter;
- ($6.9M) – Canada Cultural Spaces Fund: the decrease is due to a reduction in funding for the social infrastructure initiative which supports the improvement, renovation and construction of arts and heritage facilities, the acquisition of specialized equipment, and the conducting of feasibility studies for cultural infrastructure projects; and
- $71.0M – Canada Periodical Fund: the increase is mainly due to a timing in payments which were made in the first quarter of 2018-19 compared to the second quarter of 2017-18.
The Vote 1 – Operating expenditures for the first quarter of 2018-19 have decreased by $0.3M when compared to 2017-18. This is mainly due to the $1.7M decrease in Professional and special services, $0.6M decrease in Utilities, materials and supplies and $0.5M in Information. These decreases are offset by $1.8M increase in Personnel expenditures and $0.7M increase in Other subsidies and payments.
The rise in Personnel expenditures is mainly due to the ongoing effect of the remnants of last year's ratified collective agreements, completed personnel hiring related to initiatives in the recent Federal Budget and other pay related issues. Together, these occurrences triggered a higher amounts in regular basic pay for permanent and casual employees. Further, the $0.7M increase in Other subsidies and payments is due to an increase in interdepartmental settlement expenses compared to the first quarter of 2017-18. The $1.7M decrease in Professional and Special services compared to the same quarter in 2017-18 is a result of the Capital Experience Program involvement in Canada's 150th anniversary of Confederation which incurred less expenses for such events like Canada Day celebrations than in the same quarter of 2017-18. On the same note, the $0.6M decrease in Utilities, materials and supplies is mainly related to Canada 150th promotional materials. Lastly, the decrease in Information is due to last year's Advertising Services used by the Capital Experience and Celebration & Commemoration programs as part of Canada's 150th anniversary initiative.
Statutory Expenditures are at a similar level to those observed in 2017-18.
As noted in the table below, PCH has spent 23.5% ($309M) of its authorities in the first quarter of 2018-19, which is relatively on par with last year's 22.0% ($319M) for the same period of 2017-18.
Expenditures compared to annual authorities (in millions of dollars)
Expenditures compared to annual authorities (in millions of dollars) – text version:
|Total available for use||1,314 (100.0%)||1,452 (100.0%)|
|Used during the quarter||309 (23.5%)||319 (22.0%)|
|Year-to-date used||309 (23.5%)||319 (22.0%)|
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 enabling functions 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 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. 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 July 18, 2018, the Right Honourable Justin Trudeau, Prime Minister of Canada announced that the Honourable Pablo Rodriguez is the new Minister of Canadian Heritage and Multiculturalism. The Honourable Mélanie Joly is the new Minister of Tourism, Official Languages and La Francophonie and the Honourable Kirsty Duncan is the Minister of Science and Sport.
The Department will support Minister Joly in her role of Minister responsible for Official Languages and Minister Duncan in her role of the Minister responsible for Sport.
Since last quarter, changes to the senior management personnel were implemented. As of May 7, 2018, Véronique Dériger was appointed Director General, Human Resources and Workplace Management Branch and Chantal Reinert was appointed Director General, Communications and Bimal Sandhu was appointed Chief Audit Executive on July 19, 2018.
5. Approval by senior officials
Graham Flack, Deputy Minister
Date: August 23, 2018
Andrew Francis, Chief Financial Officer
Date: August 23, 2018
Statement of authorities (unaudited)
|Expenses||Total available for use for the year ending March 31, 2019*||Used during the quarter ended June 30, 2018||Year to date used at quarter-end 2018-19||Total available for use for the year ending March 31, 2018*||Used during the quarter ended June 30, 2017||Year to date used at quarter-end 2017-18|
|Vote 1 - Operating expenditures||186,316||45,852||45,852||209,085||46,156||46,156|
|Vote 5 - Grants and contributions||1,102,160||256,591||256,591||1,216,635||266,985||266,985|
|Statutory - Contributions to employee benefit plans||23,569||5,892||5,892||23,757||5,929||5,929|
|Statutory - Minister of Canadian Heritage - Salary and motor car allowance||86||22||22||84||22||22|
|Statutory - Minister of State (Minister of Sport and Persons with Disabilities) - Motor car allowance||2||0||0||2||0||0|
|Statutory - Minister of State (Minister of Status of Women) - Motor car allowance||0||0||0||0||0||0|
|Statutory - Salaries of the Lieutenant-Governors||1,196||276||276||1,196||359||359|
|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||20||0||0||21||0||0|
|Total Budgetary authorities||1,314,168||308,633||308,633||1,451,599||319,451||319,451|
*Includes only Authorities available for use and granted by Parliament at quarter-end.
Departmental budgetary expenditures by standard object (unaudited)
Expenditures for fiscal year 2018-19 and 2017-18 (in thousands of dollars)
|Expenditures||Total available for use for the year ending March 31, 2019*||Used during the quarter ended June 30, 2018||Year to date used at quarter-end 2018-19||Total available for use for the year ending March 31, 2018*||Used during the quarter ended June 30, 2018||Year to date used at quarter-end 2017-18|
|Transportation and communications||3,692||916||916||6,532||828||828|
|Professional and special services||19,160||3,509||3,509||37,736||5,234||5,234|
|Repair and maintenance||871||78||78||2,220||164||164|
|Utilities, materials and supplies||2,988||379||379||5,304||994||994|
|Acquisition of machinery and equipment||5,294||267||267||3,689||170||170|
|Other subsidies and payments||1,708||2,069||2,069||2,707||1,321||1,321|
|Total gross budgetary expenditures||1,324,125||309,515||309,515||1,464,206||320,218||320,218|
Less revenues netted against expenditures for fiscal year 2018-19 and 2017-18 (in thousands of dollars)
|Expenditures||Total available for use for the year ending March 31, 2019*||Used during the quarter ended June 30, 2018||Year to date used at quarter-end 2018-2019||Total available for use for the year ending March 31, 2018*||Used during the quarter ended June 30, 2017||Year to date used at quarter-end 2017-2018|
|Revenue credited to the Vote||-9,957||-882||-882||-12,607||-767||-767|
|Total Revenues netted against expenditures||-9,957||-882||-882||-12,607||-767||-767|
|Total net budgetary expenditures||1,314,168||308,633||308,633||1,451,599||319,451||319,451|
*Includes only Authorities available for use and granted by Parliament at quarter-end.
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