Canadian Heritage’s quarterly financial report for the quarter ended September 30, 2018

On this page

1. Introduction
   • 1.1. Authority, mandate and program activities
   • 1.2. Basis of presentation
   • 1.3. Canadian Heritage financial structure
2. Highlights of fiscal quarter and fiscal year-to-date (YTD) results
   • 2.1. Statement of authorities
   • 2.2. Departmental budgetary expenditures by standard object
3. Risks and uncertainties
4. Significant changes in relation to operations, personnel and programs
5. Approval by senior officials
6. Statement of authorities (unaudited)
7. Departmental budgetary expenditures by standard object (unaudited)

1. Introduction

This second quarterly financial report should be read in conjunction with the 2018-19 Main Estimates and Budget Implementation Vote items approved as of September 30, 2018 along with 2017-18 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 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 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.

Further details on the Department of Canadian Heritage's (PCH) authority, mandate and program activities can be found in the 2018-19 Departmental Plan and the 2018-19 Main Estimates (PDF format, 1.8 MB).

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 Main Estimates and Budget Implementation Vote items approved as of September 30, 2018 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 second quarter have decreased by approximately $136.4 million when compared to the same quarter of 2017-18. More specifically, the total available for use decreased by $114.5 million in Vote 5 - Grants and Contributions, $21.7 million in Vote 1 - Operating expenditures and $0.2 million in Statutory authorities.

Changes in authorities observed from 2017-18 to 2018-19 at the end of the second quarter (in millions of dollars)

Items	Vote 1	Vote 5	Statutory	Total
New funding for the Aboriginal Languages Initiative (ALI) to support the preservation, revitalization and promotion of Indigenous languages (Budget 2017)	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 (Budget 2017)	0.0	5.0	0.0	5.0
Increase in funding to support the Next Generation of Canadian Olympic and Paralympic athletes (Budget 2015)	0.0	5.0	0.0	5.0
Increase in funding to invest in community educational infrastructures in the provinces and territories (Budget 2017)	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 (Budget 2016)	0.0	3.2	0.0	3.2
Increase in funding to support Indigenous Youth and Sport (Budget 2017)	0.5	2.1	0.0	2.6
Other Adjustments	0.4	1.7	(0.2)	1.9
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 the short term investment announced in Budget 2016 for Cultural Infrastructure, partially offset by new funding announced in Budget 2017 to strengthen Cultural Infrastructure	(0.3)	(54.0)	(0.1)	(54.4)
Sunsetting of temporary funding for the celebrations of the 150th anniversary of Confederation, including Montreal's 375th anniversary	(26.1)	(97.9)	(0.4)	(124.4)
Grand Total	(21.7)	(114.5)	(0.2)	(136.4)

2.2. Departmental budgetary expenditures by standard object

Total expenditures for the second quarter of 2018-19 have decreased by $137.0M (34%) from $407.5M to $270.5M compared to the same quarter of 2017-18.

The Vote 5 – Grants and Contributions expenditures for the second quarter of 2018-19 decreased by $123.8M, from $339.6M to $215.8M. This 36% decrease is mainly due to the following items:

• ($67.9M) – Canada Periodical Fund: the decrease 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;
• ($23.5M) – Canada Celebration & Commemoration Program: the decrease is a result of the sunsetting of the short term funding for Canada's 150th anniversary of Confederation;
• ($17.9M) – Canada Cultural Spaces Fund: the decrease is due to a reduction in funding for the social infrastructure initiative which support 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;
• ($7.5M) – Enhancement of Official Languages Program: the decrease is mainly caused by the timing of payments which will be made later in 2018-19 compared to 2017-18; and
• ($4.1M) – Canada Media Fund: the decrease is caused by the timing in payments which will be made later in 2018-19 compared to 2017-18.

The Vote 1 – Operating expenditures for the second quarter of 2018-19 have decreased by $13.2M, from $61.5M to $48.3M compared to the same quarter of 2017-18. This 22% decrease is mainly due to the net effect of the below items:

Decreases

• ($9.1M) in Personnel expenditures which is mainly explained by the disbursements of retroactive payments in 2017-18 due to the negotiated collective agreements;
• ($2.8M) in Information expenditures which is mainly due to Advertising Services used by the Capital Experience and Celebration & Commemoration programs as part of Canada's 150th anniversary initiative in 2017-18;
• ($1.0M) in Professional and Special services expenditures which is mainly due to the Capital Experience Program involvement in Canada's 150th anniversary of Confederation which incurred less expenses for events such as Canada Day celebrations and to the timing of legal services payments to Justice Canada which will be made later in 2018-19 compared to 2017-18;
• ($0.9M) in Rental expenditures which is mainly due to Capital Experience program's increased use of rental equipment such as Communications Networks for activities related to Canada's 150th anniversary of Confederation in 2017-18 compared to 2018-19 and to a decrease of License/Maintenance expenditures related to the GCDOCS initiative; and
• ($0.6M) in Transportation and Communication expenditures which is due to the reduction in travel expenditures related to the Games of La Francophonie in 2018-19.

Increases

• $0.7M in Acquisition of machinery and equipment expenditures which is due to the timing of planned computer equipment purchases which were bought earlier in the year compared to 2017-18; and
• $0.9M in Other subsidies and payments expenditures which is due to an increase in interdepartmental settlement expenses compared to the first quarter of 2017-18.

Statutory Expenditures are at a similar level to those observed in 2017-18.

As noted in the table below, PCH has spent 20.4% ($271.0M) of its authorities in the second quarter of 2018-19, which is similar to last year's consumption of 27.9% ($408.0M).

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

Since the Department's first quarter of 2018-19, there were changes to Canadian Heritage's senior management personnel.

On September 21 2018, the Right Honorable Justin Trudeau, Prime Minister of Canada, announced the appointment of Hélène Laurendeau as Deputy Minister of Canadian Heritage, effective October 9, 2018 in replacement of Graham Flack who was appointed Deputy Minister of Employment and Social Development. Isabelle Mondou was appointed Associate Deputy Minister of Canadian Heritage, effective October 22, 2018 in replacement of Guylaine F. Roy who was appointed Deputy Minister of Tourism, Official Languages and La Francophonie. Her appointment took effect on August 13, 2018.

Further, Charles Slowey was appointed Assistant Deputy Minister of Citizenship, Heritage and Regions, effective September 4, 2018.

5. Approval by senior officials

Approved by:
Original signed
Hélène Laurendeau, Deputy Minister
Gatineau, Canada
Date: November 25, 2018

Original signed
Andrew Francis, Chief Financial Officer
Gatineau, Canada
Date: November 21, 2018

Statement of authorities (unaudited)

Fiscal year 2018-19 and 2017-18 (in thousands of dollars)

Authorities	Total available for use for the year ending March 31, 2019*	Used during the quarter ended September 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 September 30, 2017	Year to date used at quarter-end 2017-18
Vote 1 - Operating expenditures	196,611	48,310	94,161	218,360	61,553	107,709
Vote 5 - Grants and contributions	1,102,160	215,828	472,420	1,216,635	339,641	606,627
Statutory - Contributions to employee benefit plans	23,569	5,892	11,785	23,757	5,929	11,858
Statutory - Minister of Canadian Heritage and Multiculturalism - Salary and motor car allowance	86	29	50	84	22	43
Statutory - Minister of State (Minister of Science and Sport) - 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	453	730	1,196	357	716
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	37	0	0
Total Budgetary authorities	1,324,463	270,512	579,146	1,460,890	407,502	726,953
Total authorities	1,324,463	270,512	579,146	1,460,890	407,502	726,953

*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 September 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 September 30, 2017	Year to date used at quarter-end 2017-18
Personnel	184,579	44,953	89,587	183,561	54,097	96,969
Transportation and communications	3,810	948	1,864	6,739	1,539	2,366
Information	3,580	422	707	5,721	3,263	4,037
Professional and special services	23,006	5,561	9,071	38,622	6,595	11,829
Rentals	3,940	986	1,772	7,233	1,885	2,761
Repair and maintenance	871	180	259	2,271	384	548
Utilities, materials and supplies	3,600	615	994	5,423	880	1,875
Acquisition of machinery and equipment	6,347	1,195	1,461	3,766	454	625
Transfer payments	1,102,979	215,828	472,420	1,217,454	339,642	606,626
Other subsidies and payments	1,708	2,121	4,190	2,707	1,181	2,502
Total gross budgetary expenditures	1,334,420	272,809	582,325	1,473,497	409,920	730,138

Less revenues netted against expenditures (in thousands of dollars)

Expenditures	Total available for use for the year ending March 31, 2019*	Used during the quarter ended September 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 September 30, 2017	Year to date used at quarter-end 2017-2018
Revenue credited to the Vote	-9,957	-2,297	-3,179	-12,607	-2,418	-3,185
Total Revenues netted against expenditures	-9,957	-2,297	-3,179	-12,607	-2,418	-3,185
Total net budgetary expenditures	1,324,463	270,512	579,146	1,460,890	407,502	726,953

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