Archived - Department of Finance Canada Quarterly Financial Report for the Quarter Ended December 31, 2015 (unaudited)

1. Introduction

1.1 Authority, Mandate and Program Activities
1.2 Basis of Presentation
1.3 Department of Finance – Financial Structure

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

2.1 Authorities Analysis
2.2 Expenditure Analysis

3. Risks and Uncertainties
4. Significant changes in relation to operations, personnel and programs
5. Approval by Senior Officials

This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board Accounting Standard 1.3. This quarterly financial report should be read in conjunction with the Main Estimates and Supplementary Estimates of the Department of Finance Canada.

The quarterly financial report has not been subject to an external audit or review.

The Department of Finance Canada (the ‘Department’) provides the Government of Canada with high quality advice on appropriate economic, fiscal, tax, social, security, international and financial sector policies and programs with the goal of strengthening the Canadian economy and maintaining sustainable fiscal policy and social programs.

The Department's responsibilities include the following:

The description of the program activities for the Department can be found in Part II of the Main Estimates and the Report on Plans and Priorities.

This quarterly 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 Supplementary Estimates for both fiscal years as well as transfers from Treasury Board central votes that are approved by the end of the quarter. This quarterly financial 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 monies 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.

The Department 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.

The Department has three major categories of expenditure authority. These categories are:

This Departmental Quarterly Financial Report (QFR) reflects the results of the current fiscal period in relation to the Main Estimates and Supplementary Estimates A & B of 2014-15.

Sections 2.1 and 2.2 below highlight the significant items that contributed to the increase in the resources available from 2014-15 to 2015-16 and the decrease in actual expenditures as at December 31, 2014 and December 31, 2015. Full details can be found in Table 1, Statement of Authorities found at the end of this document.

The following graph provides a comparison of budgetary authorities available for the full fiscal year and budgetary expenditures for the first nine months of 2014-15 and 2015-16.

Comparison of Budgetary Authorities and Year to Date Budgetary Expenditures for the Quarter ended December 31 of Fiscal Years 2014-15 and 2015-16

In 2015-16, Q3 Authorities were $89,651 million, Q3 Expenditures were $21,124 million, Q2 Expenditures were $22,168 million and Q1 Expenditures were $22,468 million. In 2014-15, Q3 Authorities were $87,956 million, Q3 Expenditures were $21,185 million, Q2 Expenditures were $21,147 million and Q1 Expenditures were $22,908 million.

Percentages reflect the utilization of authorities at quarter-end.

Non-budgetary authorities related to the value of loans disbursed to Crown Corporations participating in the Crown Borrowing Framework are not reflected in the Estimates.

The following table provides a comparison of cumulative authorities by vote for the current and previous fiscal years.

Comparison of Authorities Available for Use for the Year
as at December 31 of Fiscal Years 2014-15 and 2015-16

Variance

Authorities Available (in millions) 2015-16 2014-15 $ %
Budgetary
Voted: 104.7 120.5 (15.8) -13.1%
Vote 1 - Operating Expenditures 3.0 5.0 (2.0) -40.0%
Vote 5 - Grants and Contributions
Statutory:
Major transfers to other levels of government 63,312.4 60,561.0 2,751.4 4.5%
Interest on Unmatured Debt and Interest on Other Liabilities 25,618.0 25,970.1 (352.1) -1.4%
Direct program expenses 613.0 1,299.1 (686.1) -52.8%
Total statutory 89,543.4 87,830.2 1,713.2 2.0%
Total Budgetary authorities 89,651.1 87,955.7 1,695.4 1.9%
Non-Budgetary - - - -
Total authorities 89,651.1 87,955.7 1,695.4 1.9%

Authorities available in fiscal year 2015-16 are $89,651.1 million at the end of the third quarter as compared to $87,955.7 million at the end of the third quarter of 2014-15, representing an increase of $1,695.4 million.

Total 2015-16 Vote 1 operating authorities available as at December 31, 2015 are $104.7 million compared to $120.5 million for the same period in 2014-15, representing a decrease of $15.8 million. This decrease is mainly attributable to the following factors:

At the end of the third quarter in 2015-16, Vote 5 authorities are $3.0 million compared to $5.0 million at the end of the third quarter of 2014-15. The year-to-year change in Vote 5 authorities is due to the payment schedule for the Harbourfront Centre Funding Program, which had spending of $5.0 million in 2014-15 and $3.0 million in 2015-16. From 2011-12 to 2015-16, the Harbourfront Centre Funding Program provided Harbourfront Centre with a total of $25.0 million over a five year period. Budget 2015 announced the program’s renewal with funding of $25.0 million over five years, from 2016-17 to 2020-21.

Statutory Authorities available in fiscal year 2015-16 are $89,543.4 million at the end of the third quarter compared to $87,830.2 million at the end of the same quarter of 2014-15, representing an increase of $1,713.2 million.

This increase of $1,713.2 million relates to three broad categories: an increase of $2,751.4 million in major transfers to other levels of government, offset by a decrease in authorities for direct program expenses of $686.1 million and a decrease of $352.1 million in Interest on Unmatured Debt and Interest on Other Liabilities. Additional details are provided below.

Authorities for major transfers to other levels of government as at December 31, 2015 are $63,312.4 million compared to $60,561.0 million for the same period in 2014-15. The increase of $2,751.4 million is mainly due to the net effect of the following factors:

Authorities for direct program expenses at the end of the third quarter of fiscal year 2015-16 are $613.0 million as compared to $1,299.1 million at the same period in 2014-15, representing a decrease of $686.1 million. This decrease is primarily due to the following factors:

Authorities for the Interest on Unmatured Debt and Interest on Other Liabilities as at December 31, 2015 are $25,618.0 million compared to $25,970.1 million at the same period in 2014-15. The decrease of $352.1 million is mainly due to the following factors:

Non-budgetary authorities related to the value of loans disbursed to Crown Corporations participating in the Crown Borrowing Framework are not reflected in the Estimates. The gross borrowing requirements for Crown Corporations are driven by the need to match the term and structure of the borrowing requirements of corporations’ clients. These activities are influenced by current and expectations of future, economic conditions and can vary greatly over a short period of time. For example, if clients of the Crown Corporation are seeking short-term, floating rate loans, the Crown Corporation will seek to match that with short-term borrowings from the government. This will result in the loan being refinanced several times through the year, with higher gross borrowings associated with a smaller net borrowing amount. This can change very quickly should market conditions suggest interest rates are going to rise and their clients seek to lock in their borrowing costs through longer term borrowings. As such, there can be very large and significant variances both inter-year and intra-year. Given the risk of forecast inaccuracy and that the gross advances to Crown Corporations are a non-budgetary item and do not impact on the net-debt of the government, the Department only reports on actual borrowings by the Crown Corporations.

The following table provides a comparison of cumulative spending by vote for the current and previous fiscal years.

Comparison of Year to Date Expenditures for the Quarter Ended
December 31 of Fiscal Years 2014-15 and 2015-16

Variance

Year to date expenditures (in millions) 2015-16 2014-15 $ %
Budgetary
Voted:
Vote 1 - Operating Expenditures 69.5 79.1 (9.6) -12.1%
Vote 5 - Grants and Contributions 3.0 3.0 0.0 0.0%
Statutory:
Major transfers to other levels of government 47,829.3 45,638.0 2,191.3 4.8%
Interest on Unmatured Debt and Interest on Other Liabilities 17,655.5 18,599.2 (943.7) -5.1%
Direct program expenses 203.5 920.5 (717.0) -77.9%
Sub Total Statutory 65,688.3 65,157.7 530.6 0.8%
Total Budgetary expenditures 65,760.8 65,239.8 521.0 0.8%
Non-Budgetary 43,071.4 61,212.2 (18,140.8) -29.6%
Total year to date expenditures 108,832.2 126,452.0 (17,619.8) -13.9%

At the end of the third quarter of the 2015-16 fiscal year, total expenditures were $108,832.2 million compared to $126,452.0 million reported in the same period of 2014-15, representing a decrease of $17,619.8 million or 13.9%.

Total 2015-16 Vote 1 operating expenditures at the end of the third quarter were $69.5 million compared to $79.1 million for the same period in fiscal year 2014-15, representing a decrease of $9.6 million or 12.1%. The decrease is mainly attributable to costs associated with the move to the James Michael Flaherty building which the department incurred in the first half of 2014-15.

There is no change to 2015-16 Vote 5 expenditures compared to the same period in fiscal year 2014-15.

Total statutory expenditures at the end of the third quarter of 2015-16 are $65,688.3 million as compared to $65,157.7 million at the end of the third quarter of 2014-15 representing an increase of $530.6 million or 0.8%.

This increase is primarily attributable to an increase of $2,191.3 million in major transfers to other levels of government, offset by a decrease of $717.0 million in direct program expenses, and a decrease of $943.7 million in Interest on Unmatured Debt and Interest on Other Liabilities (decrease of $454.9 million and decrease of $488.8 million, respectively).

Expenditures related to major transfers to other levels of government as at December 31, 2015 are $47,829.3 million compared to $45,638.0 million for the same period in 2014-15 representing an increase of $2,191.3 million. This increase is mainly due to the net effect of the following factors:

Explanations for the increases in the items listed above are consistent with the explanations found under the statutory budgetary authorities in Section 2.1.

Direct Program Expenditures at the end of the third quarter of fiscal year 2015-16 are $203.5 million as compared to $920.5 million at the same period in 2014-15, representing a decrease of $717.0 million. This decrease is primarily due to the net effect of the following factors:

Expenditures for the Interest on Unmatured Debt and Interest on Other Liabilities as at December 31, 2015 are $17,655.5 million compared to $18,599.2 million at the same period in 2014-15 representing a decrease of $943.7 million. The decrease is mainly due to the following factors:

Non-budgetary expenditures at the end of the third quarter of 2015-16 are $43,071.4 million compared to $61,212.2 million at the end of the same quarter in the prior year representing a decrease of $18,140.8 million. This decrease is due to the net effect of the following factors:

Table 2, located at the end of this report, presents Budgetary Expenditures by Standard Object (SO). The main variance in expenditures between 2015-16 and 2014-15 by standard object are as follows:

The year over year variances are explained in detail in the preceding Section 2.2.

Expenditures in the third quarter of fiscal 2015-16 were $34,561.3 million compared with $41,047.3 million for the third quarter of 2014-15, representing a decrease of $6,486.0 million or 15.8% in quarterly spending and is primarily related to the value of loans disbursed to CrownCorporations participating in the Crown Borrowing Framework.

Comparison of Quarterly Expenditures for the Third Quarter Ended
December 31 of Fiscal Years 2014-15 and 2015-16

Variance

Expenditures for the Third Quarter (in millions) 2015-16 2014-15 $ %
Budgetary
Voted:
Vote 1 - Operating Expenditures 23.0 29.6 (6.5) -22.1%
Vote 5 - Grants and Contributions 0.5 0.5 0.0 0.0%
Statutory:
Major transfers to other levels of government 15,854.1 15,139.5 714.5 4.7%
Interest on Unmatured Debt and Interest on Other Liabilities 5,220.3 5,836.7 (616.4) -10.6%
Direct program expenses 26.1 178.3 (152.2) -85.4%
Sub Total Statutory 21,100.5 21,154.6 (54.1) -0.3%
Total Budgetary expenditures 21,124.0 21,184.6 (60.6) -0.3%
Non-Budgetary 13,437.3 19,862.7 (6,425.4) -32.3%
Total expenditures for the third quarter 34,561.3 41,047.3 (6,486.0) -15.8%

Variance explanations of the quarterly spending are in line with year to date variance explanations provided in Section 2.2.

Private sector economists expect moderate growth in the Canadian economy, as ongoing strength in domestic demand is expected to be moderated by a fragile global recovery and sharp declines in global crude oil prices. In the euro area, the recovery is uncertain and the risk of deflation is increasing. In China, the challenges that the authorities face in introducing necessary policy reforms while maintaining their targeted growth objectives could lead to slower and more-variable-than-expected growth. Furthermore, volatility in other global commodity markets also poses challenges and risks to Canada’s economy. In contrast to these developments, the U.S. economic recovery appears to be gaining traction.

The Department of Finance Canada’s Corporate Risk Profile provides a snapshot of the Department’s key corporate risks. It focuses the attention and action of senior management on measures to mitigate the adverse effects of global economic uncertainty and their impact on the Canadian economy. The Department monitors its corporate risks and associated risk responses to identify areas of opportunity and to reflect progress made in implementing measures to mitigate risks.

Effective November 4th, 2015, The Honourable Bill Morneau was appointed to the position of Minister of Finance.

Approved by:

Original signed by
Paul Rochon, Deputy Minister
Original signed by
Randy Larkin, Chief Financial Officer

Ottawa, Canada
February 26, 2016

Department of Finance Canada
Quarterly Financial Report for the quarter ended December 31, 2015
Table 1 - Statement of Authorities (unaudited)
(in thousands of dollars)

Fiscal year 2015-2016 Fiscal year 2014-2015


Total available for use for the
year ending
March 31, 2016 *
Used during the
quarter ended
December 31, 2015
Year to date used at
quarter-end
Total available for use for the
year ending
March 31, 2015 *
Used during the
quarter ended
December 31, 2014
Year to date used at
quarter-end
Budgetary Authorities
Voted authorities
Operating expenditures 104,670 23,017 69,484 120,502 29,555 79,080
Grants and contributions 3,035 500 3,002 5,035 500 3,000


Total voted authorities 107,705 23,517 72,486 125,537 30,055 82,080


Statutory authorities
Major transfers to other levels of government
Canada Health Transfer (Part V.1 - Federal-Provincial Fiscal Arrangements Act) 34,026,107 8,505,241 25,518,295 32,114,033 8,028,594 24,085,611
Canada Social Transfer (Part V.1 - Federal-Provincial Fiscal Arrangements Act) 12,959,181 3,239,795 9,719,386 12,581,729 3,145,433 9,436,297
Fiscal arrangements
Fiscal Equalization (Part I - Federal-Provincial Fiscal Arrangements Act) 17,341,310 4,335,328 13,005,983 16,669,278 4,167,320 12,501,959
Territorial Financing (Part I.1 - Federal-Provincial Fiscal Arrangement Act) 3,561,034 726,451 2,834,583 3,469,215 707,720 2,761,496
Statutory Subsidies (Constitution Acts, 1867-1982, and Other Statutory Authorities) 34,378 1,237 18,419 34,119 1,237 18,426
Youth Allowances Recovery (Federal-Provincial Fiscal Revision Act, 1964) (853,046) - (417,261) (814,071) - (407,036)
Other major transfers
Addtional Fiscal Equalization Offset Payment to Nova Scotia (Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act) 36,779 - - 64,481 - -
Additional Fiscal Equalization to Nova Scotia (Part I - Federal-Provincial Fiscal Arrangements Act) 79,348 - - 138,275 - -
Alternative Payments for Standing Programs (Part VI - Federal-Provincial Fiscal Arrangements Act) (3,872,657) (954,002) (2,850,075) (3,696,022) (910,791) (2,758,802)


Total major transfers to other levels of government 63,312,434 15,854,050 47,829,330 60,561,037 15,139,513 45,637,951
Interest on Unmatured Debt and Interest on Other Liabilities
Interest on Unmatured Debt and Other Public Debt Costs 17,988,000 3,351,060 11,949,705 17,817,322 3,768,733 12,404,579
Interest on Other Liabilities 7,630,000 1,869,279 5,705,844 8,152,756 2,068,010 6,194,649


Total Interest on Unmatured Debt and Interest on Other Liabilities 25,618,000 5,220,339 17,655,549 25,970,078 5,836,743 18,599,228
Direct program expenses
Operating expenses
Purchase of Domestic Coinage 108,000 14,356 62,978 122,500 27,972 82,837
Contributions to Employee Benefit Plans 12,097 3,024 9,073 12,115 2,985 8,954
Minister of Finance - Salary and motor car allowance 82 15 56 80 20 60
Minister of State – Motor car allowance 2 - 1 2 1 2
Transfer payments
Incentive for Provinces to Eliminate Taxes on Capital (Part IV - Federal-Provincial Fiscal Arrangements Act) - 24,100 52,100 95,042 4,942 95,042
Payments to International Development Association 441,610 - - 883,220 - 441,610
Debt payments on behalf of poor countries to International Organizations pursuant to section 18(1) of the Economic Recovery Act 51,200 - - 51,200 - -
Canadian Securities Regulation Regime Transition Office (Canadian Securities Regulation Regime Transition Office Act) - - - 9,100 - -
Establishment of a Canadian Securities Regulation Regime and Canadian Regulatory Authority (Budget Implementation Act, 2009) - - - 115,800 108,900 154,700
Payment to the International Bank for Reconstruction and Development for the Agriculture Advance Market Commitment (Bretton Woods and Related Agreements Act, section 8) - - - 10,000 - -
Other
Losses on Foreign Exchange - (16,061) 77,235 - 32,719 134,723
Refunds of Previous Years Revenue - - - - - 127
Payment of Liabilities Previously Recorded as Revenue - 671 1,941 - 766 2,487


Total direct program expenses 612,991 26,105 203,384 1,299,060 178,305 920,542


Total statutory authorities 89,543,425 21,100,494 65,688,263 87,830,175 21,154,561 65,157,721


Total budgetary authorities 89,651,130 21,124,011 65,760,749 87,955,712 21,184,616 65,239,801


Non-budgetary authorities
Advances to Crown corporations (Gross) - 13,348,832 42,774,027 - 19,647,422 60,576,973
Advances pursuant to section 13(1) of the Financial Consumer Agency of Canada Act (Gross) - 3,000 8,000 - 4,000 10,000
Payments under Bretton Woods and Related Agreements Act - National Governements (Gross) - - - - - 200,000
Payments under Bretton Woods and Related Agreements Act - International Organizations (Gross) - 67,173 160,761 - - 3,481
Payments to the International Monetary Fund New Arrangements to Borrow - 18,247 128,631 - 211,245 421,778


Total non-budgetary authorities - 13,437,252 43,071,419 - 19,862,667 61,212,232


Total authorities 89,651,130 34,561,263 108,832,168 87,955,712 41,047,283 126,452,033
* Includes only Authorities available for use and granted by Parliament at quarter-end

Department of Finance Canada
Quarterly Financial Report for the quarter ended December 31, 2015
Table 2 - Departmental budgetary expenditures by Standard Object (unaudited)
(in thousands of dollars)

Fiscal year 2015-2016 Fiscal year 2014-2015


Planned expenditures for the year
ending
March 31, 2016
Expended during the
quarter ended
December 31, 2015
Year to date
used at
quarter-end
Planned expenditures for the year
ending
March 31, 2015
Expended during the
quarter ended
December 31, 2014
Year to date
used at
quarter-end
Expenditures:
Personnel 88,791 21,035 62,149 87,908 21,524 63,695
Transportation and communications 2,309 582 1,619 2,689 769 2,015
Information 8,763 1,391 6,934 11,072 3,001 3,732
Professional and special services 13,159 2,417 6,450 18,905 3,233 7,640
Rentals 1,156 104 574 1,757 505 924
Repair and maintenance 79 29 77 42 16 69
Utilities, materials and supplies 108,363 14,530 63,266 123,737 28,090 83,112
Acquisition of land, buildings and works 115 114 114 2,031 629 2,082
Acquisition of machinery and equipment 2,217 137 228 7,188 2,729 4,767
Transfer payments 63,808,279 15,878,650 47,884,432 61,730,434 15,313,437 46,407,336
Public debt charges 25,618,000 5,220,339 17,655,549 25,970,078 5,836,743 18,599,228
Other subsidies and payments 49 (15,291) 79,408 20 (26,010) 65,251

Total gross budgetary expenditures 89,651,280 21,124,037 65,760,800 87,955,862 21,184,666 65,239,851
Less Revenues netted against expenditures 150 26 51 150 50 50

Total net budgetary expenditures 89,651,130 21,124,011 65,760,749 87,955,712 21,184,616 65,239,801
Report a problem or mistake on this page
Please select all that apply:

Thank you for your help!

You will not receive a reply. For enquiries, contact us.

Date modified: