Department of Finance Canada Quarterly Financial Report for the quarter ended June 30, 2020 (unaudited)

Table of contents

1. Introduction

1.1 Authority, Mandate and Program Activities

1.2 Basis of Presentation

1.3 Department of Finance Canada – Financial Structure

2. Highlights of Fiscal Quarter Results

2.1 Statement of Authorities

2.2 Statement of 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

1. Introduction

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 Directive on Accounting Standards, GC 4400 Departmental Quarterly Financial Reports. This Quarterly Financial Report should be read in conjunction with the
2020–21 Main Estimates and Supplementary Estimates A of the Department of Finance Canada.

This Quarterly Financial Report has not been subject to an external audit or review.

1.1 Authority, Mandate and Program Activities

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 Departmental Plan.

1.2 Basis of Presentation

This Quarterly Financial Report has been prepared by management using an expenditure basis of accounting, and a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities. 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.

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 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 Department of Finance Canada – Financial Structure

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

2. Highlights of Fiscal Quarter Results

The following section highlights the financial results and provides explanations for the fiscal quarter ended June 30, 2020 as compared to the same period last year.

Highlights of the Fiscal Quarter Results
(thousands of dollars)
  2020-21 Authorities as at June 30, 2020 2019-20 Authorities as at June 30, 2019 Variance in Authorities Expenditures during the quarter ended June 30, 2020 Expenditures during the quarter ended June 30, 2019 Variance in Expenditures
Budgetary Authorities  
  Vote 1 - Program Expenditures 97,687 100,015 (2,328) 25,733 24,162 1,571
  Statutory Authorities   
  Major transfers to other levels of government 77,543,843 73,584,472 3,959,371 21,435,158 18,692,034 2,743,124
  Interest on Unmatured Debt and Interest on Other Liabilities 22,836,000 24,691,000 (1,855,000) 4,661,658 6,637,664 (1,976,006)
  Direct program expenses 569,749 590,152 (20,403) 195,885 296,139 (100,254)
  Total Statutory Authorities 100,949,592 98,865,624 2,083,968 26,292,701 25,625,837 666,864
Total Budgetary Authorities 101,047,279 98,965,639 2,081,640 26,318,434 25,649,999 668,435
Non-Budgetary Authorities 250,200 51,400 198,800 14,601,070 11,910,725 2,690,345
Total Authorities 101,297,479 99,017,039 2,280,440 40,919,504 37,560,724 3,358,780

2.1 Statement of Authorities

Total authorities available for use increased in 2020–21 from those in 2019–20 by $2,280.4 million, from $99,017.0 million to $101,297.4 million.

The following table provides a detailed explanation of the changes in the authorities available for use: 

Explanation of changes in authorities available for use (2020-21 compared to 2019-20)
Budgetary Authorities Change (thousands of dollars)
Vote 1 - Program Expenditures
Decrease in the authorities available for use is due to the reduced supply of the 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. The Department is expected to receive full supply for the 2020-21 Main Estimates in December 2020. (20,912)
Funding for an ex gratia payment to Saskatchewan related to the Fiscal Stabilization program. 18,584
Sub-total Vote 1 - Program Expenditures (2,328)
Statutory Authorities 
Increase in major transfers to other levels of government largely due to financial support to Alberta, Saskatchewan, and British Columbia to clean up orphan and inactive oil and gas wells, legislated growth for the Canada Health Transfer, the Canada Social Transfer, and Equalization, offset by an increase in recoveries under the Alternative Payments for Standing Programs.  3,959,371
Decrease in interest on unmatured debt and interest on other liabilities primarily due to the downward revision of forecasted short-term and long-term interest rates by private sector economists. (1,855,000)
Decrease in direct program expenses mostly due to a decrease in the payment to the International Development Association. (20,403)
Sub-total Statutory Authorities 2,083,968
Total Budgetary Authorities 2,081,640
Non-budgetary Authorities
Increase mainly due to financial support to the Alberta’s Orphan Well Association to clean up orphan oil and gas wells. 198,800
Total Non-budgetary Authorities 198,800
Total Authorities 2,280,440

2.2 Statement of Departmental Budgetary Expenditures by Standard Object

The increase of $668.4 million in total net budgetary expenditures in the first quarter of 2020–21 as compared to the same quarter in 2019–20 is primarily due to the following:

Expenditures related to Transfer payments increased by $2,782.9 million largely due to transfers to provinces and territories to support wage increases for low-income essential workers.

Expenditures related to Public debt charges decreased by $1,976.0 million primarily due to Consumer Price Index adjustments on Real Return Bonds.

Expenditures related to Other subsidies and payments decreased by $141.8 million mainly due to a decrease in payments to the Canada Infrastructure Bank resulting from reduced funding requirements in the quarter.

Personnel expenditures increased by $2.5 million due to an increase in permanent salaries based on renewed collective agreements and a slight increase in full-time equivalents.

3. Risks and Uncertainties

The Department's Corporate Risk Profile provides a snapshot of the Department's key corporate risks. The Department monitors its corporate risks and associated risk responses to identify areas of opportunity and to reflect progress made in implementing mitigation strategies.

This year, the world experienced the onset of the COVID-19 pandemic. The Department became a key player in facilitating the federal government's crisis response to COVID-19. The Department will continue to monitor the risks associated with COVID-19, including on the health of employees.

4. Significant Changes in Relation to Operations, Personnel and Programs

There have been no significant changes in relation to operations, personnel, and programs.

5. Approval by Senior Officials

Approved by:

Paul Rochon, Deputy Minister
Ottawa, Canada
August 28, 2020

Darlene Bess, Chief Financial Officer
Ottawa, Canada
August 28, 2020

Department of Finance Canada
Quarterly Financial Report for the quarter ended June 30, 2020
Table 1 - Statement of Authorities (unaudited)
(in thousands of dollars)
  Fiscal year 2020-2021 Fiscal year 2019-2020
  Total available for use for the
year ending
March 31, 2021* 
Used during the
quarter ended June 30, 2020
Year to date used at
quarter-end
Total available for use for the
year ending
March 31, 2020*
Used during the
quarter ended June 30, 2019
Year to date used at
quarter-end
Budgetary Authorities            
  Voted authorities            
    Vote 1 - Program expenditures 97,687 25,733 25,733 100,015 24,162 24,162
  Total voted authorities 97,687 25,733 25,733 100,015 24,162 24,162
  Statutory authorities            
  Major transfers to other levels of government            
    Canada Health Transfer (Part V.1 - Federal-Provincial Fiscal Arrangements Act) 41,869,693 10,467,423 10,467,423 40,372,636 10,093,159 10,093,159
    Canada Social Transfer (Part V.1 - Federal-Provincial Fiscal Arrangements Act) 15,023,242 3,755,810 3,755,810 14,585,672 3,646,418 3,646,418
    Fiscal arrangements            
      Fiscal Equalization (Part I - Federal-Provincial Fiscal Arrangements Act) 20,572,844 5,143,211 5,143,211 19,837,259 4,959,315 4,959,315
      Territorial Financing (Part I.1 - Federal-Provincial Fiscal Arrangements Act) 4,180,225 1,621,927 1,621,927 3,948,403 1,531,980 1,531,980
      Statutory Subsidies (Constitution Acts, 1867-1982, and Other Statutory Authorities) 42,644 1,238 1,238 42,484 1,237 1,237
      Youth Allowances Recovery (Federal-Provincial Fiscal Revision Act, 1964) (1,024,033) (516,669) (516,669) (932,853) (466,427) (466,427)
      Other major transfers            
      Additional Fiscal Equalization Offset Payment to Nova Scotia (Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act) - - - 8,227 - -
      Additional Fiscal Equalization to Nova Scotia (Part I - Federal-Provincial Fiscal Arrangements Act) - - - (72,587) (22,456) (22,456)
      Alternative Payments for Standing Programs (Part VI - Federal-Provincial Fiscal Arrangements Act) (4,640,772) (1,162,397) (1,162,397) (4,204,769) (1,051,192) (1,051,192)
      Payment to the Province of Alberta pursuant to paragraph 60.2(2)b of the Financial Administration Act to clean up inactive oil and gas wells 1,000,000 - - - - -
      Payment to the Province of Saskatchewan pursuant to paragraph 60.2(2)b of the Financial Administration Act to clean up orphan and inactive oil and gas wells 400,000 - - - - -
      Payment to the Province of British Columbia pursuant to paragraph 60.2(2)b of the Financial Administration Act to clean up orphan and inactive oil and gas wells 120,000 - - - - -
      COVID-19 Essential Workers Support Fund (paragraph 60.2(2)b of the Financial Administration Act) - 2,124,615 2,124,615 - - -
  Total major transfers to other levels of government 77,543,843 21,435,158 21,435,158 73,584,472 18,692,034 18,692,034
  Interest on Unmatured Debt and Interest on Other Liabilities            
    Interest on Unmatured Debt and Other Public Debt Costs 17,352,000 3,283,020 3,283,020 18,684,000 5,094,251 5,094,251
    Interest on Other Liabilities 5,484,000 1,378,638 1,378,638 6,007,000 1,543,413 1,543,413
  Total Interest on Unmatured Debt and Interest on Other Liabilities 22,836,000 4,661,658 4,661,658 24,691,000 6,637,664 6,637,664
  Direct program expenses            
    Operating expenses            
      Purchase of Domestic Coinage 86,000 20,307 20,307 88,000 19,977 19,977
      Contributions to Employee Benefit Plans 12,523 3,131 3,131 12,364 3,064 3,064
      Minister of Finance - Salary and motor car allowance 89 22 22 88 22 22
      Minister of Middle Class Prosperity and Associate Minister of Finance – Motor car allowance 2          1             1 - - -
      Payments for government advertising programs pursuant to the Public Health Events of National Concern Payments Act 10,000 544 544 - - -
    Transfer payments            
      Payments to International Development Association (Bretton Woods and Related Agreements Act 423,240 - - 441,620 - -
      Debt payments on behalf of poor countries to International Organizations pursuant to section 18(1) of the Economic Recovery Act 37,895 - - 48,080 - -
      Establishment of a Canadian Securities Regulation Regime and Canadian Regulatory Authority (Budget Implementation Act, 2009) - 40,331 40,331 - - -
    Other            
      Losses on Foreign Exchange - 109,554 109,554 - 37,673 37,673
      Payment of Liabilities Previously Recorded as Revenue - 7,495 7,495 - 903 903
      Payment to the Canada Infrastructure Bank (Canada Infrastructure Bank Act) - 14,500 14,500 - 234,500 234,500
  Total direct program expenses 569,749 195,885 195,885 590,152 296,139 296,139
  Total statutory authorities 100,949,592 26,292,701 26,292,701 98,865,624 25,625,837 25,625,837
Total budgetary authorities 101,047,279 26,318,434 26,318,434 98,965,639 25,649,999 25,649,999
Non-budgetary authorities            
    Purchase of initial shares pursuant to the Asian Infrastructure Investment Bank Agreement Act 50,200 - - 51,400 - -
    Payment to Alberta’s Orphan Well Association pursuant to paragraph 60.2(2)b of the Financial Administration Act to clean up orphan oil and gas wells 200,000 - - - - -
    Advances to Crown corporations (Gross) - 13,802,601 13,802,601 - 11,902,725 11,902,725
    Advances pursuant to section 13(1) of the Financial Consumer Agency of Canada Act (Gross) - - - - 8,000 8,000
    Payments under Bretton Woods and Related Agreements Act- International Organizations (Gross) - 798,469 798,469 - - -
Total non-budgetary authorities 250,200 14,601,070 14,601,070 51,400 11,910,725 11,910,725
Total authorities 101,297,479 40,919,504 40,919,504 99,017,039 37,560,724 37,560,724
* Includes only Authorities available for use and granted by Parliament at quarter-end
Department of Finance Canada
Quarterly Financial Report for the quarter ended June 30, 2020
Table 2 -  Departmental budgetary expenditures by Standard Object (unaudited)
(in thousands of dollars)
  Fiscal year 2020-2021 Fiscal year 2019-2020
  Planned expenditures for the year
ending
March 31, 2021
Expended during the
quarter ended
June 30, 2020
Year to date
used at
quarter-end
Planned expenditures for the year
ending
March 31, 2020
Expended during the
quarter ended
June 30, 2019
Year to date
used at
quarter-end
Expenditures:            
  Personnel 76,074 24,378 24,378 92,952 21,858 21,858
  Transportation and communications 2,756 48    48 2,547 692 692
  Information 11,706 862 862 1,839 380 380
  Professional and special services 8,476 2,399 2,399 11,566 2,084 2,084
  Rentals 992 448 448 1,148 479 479
  Repair and maintenance 330 - - 322 12 12
  Utilities, materials and supplies 86,241 20,319 20,319 88,314 20,010 20,010
  Acquisition of machinery and equipment 1,210 416 416 1,893 44 44
  Transfer payments 78,005,004 21,475,489 21,475,489 74,074,207 18,692,584 18,692,584
  Public debt charges 22,836,000 4,661,658 4,661,658 24,691,000 6,637,664 6,637,664
  Other subsidies and payments 18,603 132,417 132,417             1 274,192 274,192
Total gross budgetary expenditures 101,047,392 26,318,434 26,318,434 98,965,789 25,649,999 25,649,999
Less Revenues netted against expenditures 113 - - 150 - -
Total net budgetary expenditures 101,047,279 26,318,434 26,318,434 98,965,639 25,649,999 25,649,999
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