Archived - Department of Finance Canada Quarterly Financial Report for the quarter ended September 30, 2020 (unaudited)
Table of contents
1.1 Authority, Mandate and Program Activities
1.3 Department of Finance Canada – Financial Structure
2. Highlights of Fiscal Quarter Results
2.2 Statement of Departmental Budgetary Expenditures by Standard Object
2.3 Non-Budgetary Expenditures
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:
- Preparing the federal budget and the Update of Economic and Fiscal Projections;
- Preparing the Annual Financial Report of the Government of Canada and the Public Accounts of Canada, in cooperation with the Treasury Board of Canada Secretariat and the Receiver General for Canada;
- Developing tax and tariff policy and legislation;
- Managing federal borrowing on financial markets;
- Designing and administering major transfers of federal funds to the provinces and territories;
- Developing financial sector policy and legislation; and
- Representing Canada in various international financial institutions and groups.
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:
- Voted budgetary authorities: Included in this category are the operational expenditures of the Department itself as well as authorized expenditures under grant and contribution programs. These expenditures must be specifically approved by Parliament through an appropriation act.
- Statutory budgetary authorities: Included in this category are expenditure authorities that are granted through an existing Act of Parliament. Further parliamentary approval is not required for expenditures related to statutory amounts and it is within the normal course of business that statutory expenditures may, in some cases, exceed planned spending estimates.
- Non-budgetary authorities: Included in this category are disbursements made by the Department that do not have a direct budgetary impact to the Government. This includes the value of loans initially disbursed to Crown corporations participating in the Crown Borrowing Framework.
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.
| 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:
| 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:
- Safe Restart Agreement ($12,276.7 million);
- Safe Return to Class Fund ($1,000.0 million);
- Essential Workers Support Fund ($414.4 million);
- Financial support to clean up orphan and inactive oil and gas wells ($520.0 million); and
- Financial support for offshore energy sector workers ($320.0 million).
Other budgetary expenditures in the second quarter included:
- Expenditures related to Other subsidies and payments, which increased by $215.9 million primarily due to the revaluation of International Monetary Fund related accounts and an ex gratia payment to Saskatchewan related to the Fiscal Stabilization program;
- Expenditures related to Information, which increased by $9.5 million as a result of increased advertising to inform Canadians and businesses of financial assistance available to support them during the COVID-19 pandemic;
- Personnel expenditures, which increased by $2.4 million due to an increase in permanent salaries based on renewed collective agreements and a slight increase in full-time equivalents;
- Expenditures related to Public debt charges, which decreased by $251.7 million mainly reflecting a decrease in the average Government of Canada short-term and long-term bond rates; and
- Expenditures related to the Acquisition of machinery and equipment, which decreased by $7.8 million mostly due to a decrease in the purchase of domestic coinage during the COVID-19 pandemic.
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
| 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 | ||||||
| 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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