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

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1. Introduction

This second 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 and related authority granted under the Public Health Events of National Concern Payments Act 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 second 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 second 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, Supplementary Estimates A for the 2020‑21 fiscal year and related authority granted under the Public Health Events of National Concern Payments Act.

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 second quarter have increased by approximately $301.6 million when compared to the same quarter of 2019‑20. More specifically, the total available for use increased by $423.8 million in Statutory authorities, decreased by $45.3 million in Vote 1 - Operating expenditures and decreased by $76.9 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 is providing financial support consistent with other assistance measures in place such as the Canada Emergency Business Account. It is administered by Canadian Heritage with the support of its partners. The $500 million was divided between the following organizations: $407.4 million to the Department of Canadian Heritage, $62.8 million to the Canada Council for the Arts and $29.8 million to Telefilm Canada.

On June 25, 2020, the Government of Canada announced an urgent investment to support students and youth impacted by COVID-19 pursuant to the Public Health Events of National Concern payment Act. In the context of the Youth Employment and Skills Strategy, $15 million was allocated to Canadian Heritage to create up to 1,245 additional job placements and paid internships in various sectors and communities, including Official Language Minority Communities.

PCH has not yet received its full supply as per its 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. This situation explains a large portion of the decrease in voted authorities for the first two quarters of 2020‑21 compared to 2019‑20.

Changes in authorities observed from 2019‑20 to 2020‑21 at the end of the second 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 0.0 407.4 407.4
New funding to establish a COVID-19 Emergency Support Fund for Youth Employment and Skills Strategy 0.0 0.0 15.0 15.0
New funding to support minority-language education in Canada (off cycle) 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 My PCH Online project (formerly known as 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 (0.4) 6.3 0.1 6.0
Increase funding to support Indigenous Youth and Sport (Budget 2017) 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 youths across Canada (off-cycle) 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 for various groups 2.1 0.0 0.3 2.4
New funding to support the Francophone Digital platform – TV5MONDE (Fall Economic Update 2018) 0.1 2.0 0.0 2.1
Other Adjustments (0.7) (0.1) 0.8 0.0
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 (Off-cycle and Budget 2019) (0.1) (6.8) 0.0 (6.9)
Sunsetting of temporary 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 (45.3) (76.9) 423.8 301.6

2.2. Departmental budgetary expenditures by standard object

Total expenditures for the second quarter of 2020‑21 have increased by $155.6 million (46%) from $336.2 million to $491.8 million compared to the same quarter of 2019‑20.

The Statutory Expenditures for the second quarter of 2020‑21 increased by $244.7 million, from $4.4 million to $249.1 million. This steep increase is due to the new funding received for the COVID-19 Emergency Support Fund to support Cultural, Heritage and Sport organizations and students and youth impacted by COVID-19. As of September 30, 2020, payments for a total amount of $405.7 million were made of which $242.5 million was paid in the second quarter. Emergency Support Funds were disbursed in the following programs:

The Vote 1 – Operating expenditures for the second quarter of 2020‑21 have decreased by $3 million, from $50.6 million to $47.6 million compared to the same quarter of 2019‑20. This 6% decrease is mainly due to the net effect of the items below:

These decreases are partially offset by:

Due to PCH’s efforts to prioritize the disbursement of funds for the Emergency Support Fund to support Fund for Cultural, Heritage and Sport Organizations and students and youth impacted by the COVID-19, the Vote 5 – Grants and Contributions expenditures for the second quarter of 2020‑21 have decreased by $86.2 million (31%), from $281.2 million to $195 million. The same decrease is reflected in the year-to-date expenditures as of September 30, 2020, compared to 2019.

As noted in the table below, PCH has spent 27.2% of its authorities in the second quarter of 2020‑21, which is higher than last year’s consumption of 22.4%. This represents an increase of 46.3% of its expenditures, $491.8 million in 2020‑21 compared to $336.2 million in 2019‑20. Again, this is due to new funding received for the COVID-19 Emergency Support Fund to support Fund for Cultural, Heritage and Sport Organizations and students and youth impacted by COVID-19.

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 1,805 (100%) 1,504 (100%)
Used during the quarter 492 (27.2%) 336 (22.4%)
Year-to-date used 993 (55%) 667 (44.4%)

3. Risks and uncertainties

In the current context, PCH is exposed to heightened operational risks including human resources risk management as the Department is closely monitoring 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 federal government services. The Department continues to monitor emerging risks and has resumed its regular services since September 21, 2020 with the deactivation of its Business Continuity Plan.

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

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

In March 2020, PCH had activated its Business Continuity Plan. 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. Since September 21, 2020, the Canadian Heritage Business Continuity Plan has been deactivated allowing the Department to deliver its critical services while resuming all of its regular services.

The main priority was to keep Canadian Heritage running smoothly while setting up the COVID-19 Emergency Support Fund. As of September 30, 2020, 96% ($390 million out of $407 million) of the PCH funding to support Cultural, Heritage and Sport Organizations and 100% ($15 million) of the funding to support students and youth impacted by the COVID-19 was spent. Over 10,000 recipients received funding from PCH, Telefilm Canada and the Canada Council for the Arts in addition to payments made by third-party organizations to final recipients.

Canadian Heritage had to be flexible for funding Grants and Contributions recipients impacted by COVID-19 (such as cancelled events).

Canadian Heritage also had to be creative and find new ways to effectively deliver on 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.

Significant changes in Personnel

Since the end of the first quarter of 2020‑21, there has been no significant change in relation to personnel.

5. Approval by senior officials

Approved by:

Original signed
Hélène Laurendeau, Deputy Minister

Gatineau, Canada
Date: November 22, 2020

Original signed
Eric Doiron, Chief Financial Officer

Gatineau, Canada
Date: November 17, 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, 2021Footnote 1 Used during the quarter ended September 30, 2020 Year to date used at quarter-end 2020‑21 Total available for use for the year ending March 31, 2020Footnote 1 Used during the quarter ended September 30, 2019 Year to date used at quarter-end 2019‑20
Vote 1 - Operating expenditures 158,187 47,566 91,901 203,521 50,572 94,759
Vote 5 - Grants and contributions 1,196,067 195,037 481,715 1,272,919 281,178 561,773
Statutory - Contributions to employee benefit plans 26,333 6,250 12,500 24,920 4,060 10,151
Statutory - Minister of Canadian Heritage - Salary and motor car allowance 89 23 46 88 22 44
Statutory - Minister of State (Minister of Science and Sport) – Salary and 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 1,196 368 747 1,196 346 718
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
Statutory - COVID-19 Emergency Support Fund - Support for Cultural, Heritage and Sport Organizations 407,445 227,503 390,725 0 0 0
Statutory - COVID-19 Emergency Support Fund - Support for Youth Employment and Skills Strategy 15,000 15,000 15,000 0 0 0
Spending of Crown Asset Proceeds 12 0 0 5 0 0
Total Budgetary authorities 1,805,150 491,747 992,634 1,503,556 336,178 667,445
Total authorities 1,805,150 491,747 992,634 1,503,556 336,178 667,445

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, 2021Footnote 1 Used during the quarter ended September 30, 2020 Year to date used at quarter-end 2020‑21 Total available for use for the year ending March 31, 2020Footnote 1 Used during the quarter ended September 30, 2019 Year to date used at quarter-end 2019‑20
Personnel 159,247 46,825 93,042 191,989 44,905 90,237
Transportation and communications 3,699 66 306 4,611 885 1,691
Information 1,887 619 833 2,140 709 1,228
Professional and special services 17,789 5,547 8,533 29,046 4,079 7,480
Rentals 3,237 686 1,267 4,095 1,133 1,762
Repair and maintenance 978 258 357 879 184 301
Utilities, materials and supplies 2,193 404 531 2,529 600 859
Acquisition of machinery and equipment 1,743 452 664 3,255 507 750
Transfer payments 1,619,331 437,540 887,440 1,273,738 281,178 561,773
Other subsidies and payments 1,070 856 1,762 1,231 4,012 4,739
Total gross budgetary expenditures 1,811,174 493,253 994,735 1,513,513 338,192 670,820
Less revenues netted against expenditures:
Expenditures Total available for use for the year ending March 31, 2021Footnote 1 Used during the quarter ended September 30, 2020 Year to date used at quarter-end 2020‑21 Total available for use for the year ending March 31, 2020Footnote 1 Used during the quarter ended September 30, 2019 Year to date used at quarter-end 2019‑20
Revenue credited to the Vote -6,024 -1,506 -2,101 -9,957 -2,014 -3,375
Total Revenues netted against expenditures -6,024 -1,506 -2,101 -9,957 -2,014 -3,375
Total net budgetary expenditures 1,805,150 491,747 992,634 1,503,556 336,178 667,445
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