Department of Finance Canada Quarterly Financial Report for the quarter ended September 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

2.3 Non-Budgetary Expenditures

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 (2019–20 and 2020–21) 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 September 30, 2020 as compared to the same period last year.

Highlights of the Fiscal Quarter Results
(thousands of dollars)
2020-21 Authorities as at September 30, 2020 2019-20 Authorities as at September 30, 2019 Variance in Authorities Expenditures during the quarter ended September 30, 2020 Expenditures during the quarter ended September 30, 2019 Variance in Expenditures
Budgetary Authorities
  Vote 1 - Program Expenditures 101,752 101,744 8 43,855 23,807 20,048
Statutory Authorities
  Major transfers to other levels of government 77,543,843 73,584,472 3,959,371 33,608,010 18,350,871 15,257,139
  Interest on Unmatured Debt and Interest on Other Liabilities 22,836,000 24,691,000 (1,855,000) 5,704,952 5,956,689 (251,737)
  Direct program expenses 569,749 590,152 (20,403) 223,527 24,392 199,135
  Total Statutory Authorities 100,949,592 98,865,624 2,083,968 39,536,489 24,331,952 15,204,537
Total Budgetary Authorities 101,051,344 98,967,368 2,083,976 39,580,344 24,355,759 15,224,585
Non-Budgetary Authorities 250,200 51,400 198,800 8,974,574 10,636,247 (1,661,673)
Total Authorities 101,301,544 99,018,768 2,282,776 48,554,918 34,992,006 13,562,912

2.1 Statement of Authorities

As per Table 1 – Statement of Authorities (unaudited), the total authorities available for use increased by $2,282.8 million, as compared to the same quarter in 2019–20, from $99,018.7 million to $101,301.5 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 due to a reduction in supply of the Main Estimates. The Department is expected to receive full supply for the 2020-21 Main Estimates in December 2020. (21,020)
Funding for an ex gratia payment to Saskatchewan related to the Fiscal Stabilization program. 18,584
Increase in lapsing funds from 2019-20 that contributed to the operating budget carry forward into 2020-21. 2,444
Sub-total Vote 1 - Program Expenditures 8
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 2,083,976
Non-Budgetary Authorities
Increase mainly due to a loan to Alberta’s Orphan Well Association to clean up orphan oil and gas wells. 198,800
Total Non-Budgetary Authorities 198,800
Total Authorities 2,282,776

2.2 Statement of Departmental Budgetary Expenditures by Standard Object

As per Table 2 - Departmental budgetary expenditures by Standard Object (unaudited), the total net budgetary expenditures in the second quarter of 2020–21 increased by $15,224.6 million, as compared to the same quarter in 2019–20.

In total, expenditures related to Transfer payments increased by $15,256.6 million over this period, largely due to measures implemented through the government’s COVID-19 Economic Response Plan, such as the following:

Other budgetary expenditures in the second quarter included:

2.3 Non-Budgetary Expenditures

Total net non-budgetary expenditures in the second quarter of 2020–21 decreased by $1,661.7 million, as compared to the same quarter in 2019–20. This is largely due to a decrease in the value of loans disbursed to Crown corporations participating in the Crown Borrowing Framework, resulting from a reduction in business requirements of the participating entities.

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.

The impacts of COVID-19 continue to be felt globally and the Department has played a pivotal role in enabling the government to implement a broad span of support measures as part of the Government of Canada’s economic response. As the pandemic continues to unfold, the Department will monitor departmental risks associated with COVID-19, including the health of its employees, and ensure mitigation strategies are in place.

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

Effective August 18, 2020, the Honourable Chrystia Freeland, Deputy Prime Minister, was appointed as Minister of Finance, replacing the Honourable Bill Morneau.

Effective August 11, 2020, Ava Yaskiel, Associate Deputy Minister, was appointed as Associate Deputy Minister with G7 and G20 responsibilities.

5. Approval by Senior Officials

Approved by:

Paul Rochon, Deputy Minister
Ottawa, Canada
November 27, 2020

Darlene Bess, Chief Financial Officer
Ottawa, Canada
November 27, 2020

Department of Finance Canada
Quarterly Financial Report for the quarter ended September 30, 2020
Table 1 - Statement of Authorities (unaudited)
(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 September 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 September 30, 2019
Year to date used at
quarter-end
Budgetary Authorities            
  Voted authorities            
    Vote 1 - Program expenditures 101,752 43,855 69,588 101,744 23,807 47,969
  Total voted authorities 101,752 43,855 69,588 101,744 23,807 47,969
  Statutory authorities            
  Major transfers to other levels of government            
    Canada Health Transfer (Part V.1 - Federal-Provincial Fiscal Arrangements Act) 41,869,693 10,467,424 20,934,847 40,372,636 10,093,159 20,186,318
    Canada Social Transfer (Part V.1 - Federal-Provincial Fiscal Arrangements Act) 15,023,242 3,755,811 7,511,621 14,585,672 3,646,418 7,292,836
    Fiscal arrangements            
        Fiscal Equalization (Part I - Federal-Provincial Fiscal Arrangements Act) 20,572,844 5,143,211 10,286,422 19,837,259 4,959,314 9,918,629
        Territorial Financing (Part I.1 - Federal-Provincial Fiscal Arrangements Act) 4,180,225 852,766 2,474,693 3,948,403 805,475 2,337,455
        Statutory Subsidies (Constitution Acts, 1867-1982, and Other Statutory Authorities) 42,644 20,084 21,322 42,484 20,087 21,324
        Youth Allowances Recovery (Federal-Provincial Fiscal Revision Act, 1964) (1,024,033) - (516,669) (932,853) - (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) (44,912)
        Alternative Payments for Standing Programs (Part VI - Federal-Provincial Fiscal Arrangements Act) (4,640,772) (1,162,397) (2,324,794) (4,204,769) (1,051,193) (2,102,385)
        Refund of prior year expenditures - - - - (103,000) (103,000)
        Payment under subsection 24(1) of the Financial Administration Act resulting from a remission order issued pursuant to subsection 23(2.1) of that Act - - - - 3,067 3,067
        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 400,000 400,000 400,000 - - -
        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 120,000 120,000 120,000 - - -
        Payment to the Government of Newfoundland and Labrador to support offshore energy sector workers  - 320,000 320,000 - - -
        Payments to the COVID-19 Essential Workers Support Fund pursuant to paragraph 60.2(2)b of the Financial Administration Act - 414,385 2,539,000 - - -
        Payments to the Safe Restart Agreement pursuant to paragraph 60.2(2)b of the Financial Administration Act - 12,276,726 12,276,726 - - -
        Payments to the Safe Return to Class Fund pursuant to paragraph 60.2(2)b of the Financial Administration Act - 1,000,000 1,000,000 - - -
  Total major transfers to other levels of government 77,543,843 33,608,010 55,043,168 73,584,472 18,350,871 37,042,905
  Interest on Unmatured Debt and Interest on Other Liabilities            
    Interest on Unmatured Debt and Other Public Debt Costs 17,352,000 4,360,890 7,643,910 18,684,000 4,459,978 9,554,229
    Interest on Other Liabilities 5,484,000 1,344,062 2,722,700 6,007,000 1,496,711 3,040,124
  Total Interest on Unmatured Debt and Interest on Other Liabilities 22,836,000 5,704,952 10,366,610 24,691,000 5,956,689 12,594,353
  Direct program expenses            
    Operating expenses            
        Purchase of Domestic Coinage 86,000 22,609 42,916 88,000 30,366 50,343
        Contributions to Employee Benefit Plans 12,523 3,130 6,261 12,364 3,063 6,127
        Minister of Finance - Salary and motor car allowance 89 15 37 88 22 44
        Minister of Middle Class Prosperity and Associate Minister of Finance – Motor car allowance 2 - 1 - - -
        Payments for government advertising programs pursuant to the Public Health Events of National Concern Payments Act 10,000 9,456 10,000 - - -
    Transfer payments            
        Payment to the 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 - - -
    Other            
        Losses on Foreign Exchange - 181,776 291,330 - (15,963) 21,710
        Payment of Liabilities Previously Recorded as Revenue - 3,856 11,351 - 1,266 2,169
        Payment to the Canada Infrastructure Bank (Canada Infrastructure Bank Act) - 2,685 17,185 - 3,138 237,638
        Payment under subsection 12(2) of the Canadian Commercial Corporation Act to the Canadian Commercial Corporation - - - - 2,500 2,500
  Total direct program expenses 569,749 223,527 419,412 590,152 24,392 320,531
  Total statutory authorities 100,949,592 39,536,489 65,829,190 98,865,624 24,331,952 49,957,789
Total budgetary authorities 101,051,344 39,580,344 65,898,778 98,967,368 24,355,759 50,005,758
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 200,000 200,000 200,000 - - -
    Advances to Crown corporations (Gross) - 8,671,574 22,474,175 - 10,616,006 22,518,731
    Advances pursuant to section 13(1) of the Financial Consumer Agency of Canada Act (Gross) - 3,000 3,000 - - 8,000
    Payments under Bretton Woods and Related Agreements Act- International Organizations (Gross) - - 798,469 - 20,241 20,241
    Purchase shares of the Canada Enterprise Emergency Funding Corporation pursuant to paragraph 60.2(2)(a)(i) of the Financial Administration Act - 100,000 100,000 - - -
Total non-budgetary authorities 250,200 8,974,574 23,575,644 51,400 10,636,247 22,546,972
Total authorities 101,301,544 48,554,918 89,474,422 99,018,768 34,992,006 72,552,730
* Includes only Authorities available for use and granted by Parliament at quarter-end
Department of Finance Canada
Quarterly Financial Report for the quarter ended September 30, 2020
Table 2 - Departmental budgetary expenditures by Standard Object (unaudited)
(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 September 30, 2020
Year to date
used at
quarter-end
Planned expenditures for the year
ending
March 31, 2020
Expended during the
quarter ended
September 30, 2019
Year to date
used at
quarter-end
Expenditures:            
  Personnel 77,724 26,060 50,438 93,202 23,619 45,477
  Transportation and communications 2,756 86 134 2,547 579 1,271
  Information 11,706 9,779 10,641 1,839 271 651
  Professional and special services 9,080 1,861 4,260 12,303 1,758 3,842
  Rentals 1,596 105 553 1,885 143 622
  Repair and maintenance 330 26 26 322 108 120
  Utilities, materials and supplies 86,241 22,653 42,972 88,319 30,424 50,434
  Acquisition of machinery and equipment 2,417 166 582 1,893 18 62
  Transfer payments 78,005,004 33,608,010 55,083,499 74,074,207 18,351,421 37,044,005
  Public debt charges 22,836,000 5,704,952 10,366,610 24,691,000 5,956,689 12,594,353
  Other subsidies and payments 18,603 206,646 339,063 1 (9,271) 264,921
Total gross budgetary expenditures 101,051,457 39,580,344 65,898,778 98,967,518 24,355,759 50,005,758
Less Revenues netted against expenditures 113 - - 150 - -
Total net budgetary expenditures 101,051,344 39,580,344 65,898,778 98,967,368 24,355,759 50,005,758
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