Archived - Department of Finance Canada Quarterly Financial Report for the quarter ended December 31, 2022 (unaudited)
Table of Contents
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
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 2022-23 Main Estimates and Supplementary Estimates 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) helps the Government of Canada (the government) develop and implement strong and sustainable economic, fiscal, tax, social, security, international and financial sector policies and programs. It plays an important central agency role, working with other departments to ensure that the government's agenda is carried out and that ministers are supported with high-quality analysis and advice.
The Department's responsibilities include the following:
- Preparing the federal budget and the fall economic and fiscal update;
- 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 (2021-22 and 2022-23) 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 Program.
2. Highlights of Fiscal Quarter Results
The following section highlights the financial results and provides explanations for the fiscal quarter ended December 31, 2022 as compared to the same period last year.
| 2022-23 Authorities as at December 31, 2022 | 2021-22 Authorities as at December 31, 2021 | Variance in Authorities | Expenditures during the quarter ended December 31, 2022 | Expenditures during the quarter ended December 31, 2021 | Variance in Expenditures | |
|---|---|---|---|---|---|---|
| Budgetary Authorities | ||||||
| Vote 1 - Program Expenditures | 335,870 | 135,686 | 200,184 | 30,706 | 29,500 | 1,206 |
| Statutory Authorities | ||||||
| Major transfers to other levels of government | 84,185,883 | 83,283,291 | 902,592 | 20,120,326 | 19,469,354 | 650,972 |
| Interest on Unmatured Debt and Interest on Other Liabilities | 24,750,000 | 21,306,000 | 3,444,000 | 7,668,362 | 5,704,766 | 1,963,596 |
| Direct program expenses | 5,595,060 | 4,554,478 | 1,040,582 | 74,028 | 110,448 | (36,420) |
| Total Statutory Authorities | 114,530,943 | 109,143,769 | 5,387,174 | 27,862,716 | 25,284,568 | 2,578,148 |
| Total Budgetary Authorities | 114,866,813 | 109,279,455 | 5,587,358 | 27,893,422 | 25,314,068 | 2,579,354 |
| Non-Budgetary Authorities | 2,311,709 | 2,985,109 | (673,400) | 16,489,572 | 13,388,563 | 3,101,009 |
| Total Authorities | 117,178,522 | 112,264,564 | 4,913,958 | 44,382,994 | 38,702,631 | 5,680,363 |
2.1 Statement of Authorities
As per Table 1 – Statement of Authorities (unaudited), the total authorities available for use increased by $4,914 million, as compared to the same quarter in 2021-22, from $112,265 million to $117,179 million.
The following table provides a detailed explanation of the significant changes in the authorities available for use:
| Budgetary Authorities (2022-23 compared to 2021-22) |
Change |
|---|---|
| Vote 1 - Program Expenditures | |
Increases in Vote 1 - Program Expenditures are mainly due to an increase in funding in 2022-23 for the following programs:
These increases were offset by reductions in funding for:
|
200,184 |
| Sub-total Vote 1 - Program Expenditures | 200,184 |
| Statutory Authorities | |
| Increases in major transfers to other levels of government largely due to legislated increases for major transfer payments ($3.6 billion), transit and housing ($0.8 billion) and school ventilation improvements ($0.1 billion). These are offset by decreases in COVID-19 related payments ($3.0 billion) and increased recoveries related to the Alternative Payments for Standing Programs and the Youth Allowances Recovery ($0.6 billion). | 902,592 |
| Increase in direct program expenses mostly due to an increase in authorities related to planned payments to the Canada Infrastructure Bank and International Development Association. | 1,040,582 |
| Increase in interest on unmatured debt partially offset by a decrease in interest on other liabilities primarily due to higher interest rate expectations of Government of Canada bonds anticipated by private sector economists. | 3,444,000 |
| Sub-total Statutory Authorities | 5,387,174 |
| Total Budgetary Authorities | 5,587,358 |
| Non-Budgetary Authorities | |
| Decrease in non-budgetary authorities mostly due to authorities in 2021-22 for the purchase of shares in the Canada Enterprise Emergency Funding Corporation to support the Large Employer Emergency Financing Facility ($2.4 billion) and for the purchase of shares from the International Finance Corporation to increase funding to the private sector in developing countries ($224 million). These decreases were partially offset by authorities in 2022-23 for financial assistance to Ukraine ($2 billion). | (673,400) |
| Total Non-Budgetary Authorities | (673,400) |
| Total Authorities | 4,913,958 |
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 third quarter of 2022-23 increased by $2,579.4 million, as compared to the same quarter in 2021-22 largely due to the following:
- Expenditures related to Public debt charges increased by $1,964 million, primarily due to an increase in interest rates, Consumer Price Index adjustments on Real Return Bonds and an increase in the stock of debt of approximately $50 billion;
- Expenditures related to Transfer payments increased by $690.5 million, primarily due to legislated increases in major transfer payments to the provinces and territories ($924.1 million) and payment to the International Monetary Fund (IMF) Resilience and Sustainability Trust ($40.1 million). This increase is partially offset by recoveries for the Alternative Payments for Standing Programs ($287.9 million); and
- Expenditures related to Other subsidies and payments decreased by $71.3 million, primarily due to a decrease of $51 million in payments to the Canada Infrastructure Bank as a result of reduced needs versus last year and a loss of $20.9 million in foreign exchange on collateral deposits and sovereign loans.
2.3 Non-Budgetary Expenditures
Total net non-budgetary expenditures in the third quarter of 2022-23 increased by $3,101 million, as compared to the same quarter in 2021-22. This is largely due to an increase of $2,207 million in the value of loans disbursed to Crown corporations, resulting from an increase in their business requirements, $500 million in loan resources provided to the Government of Ukraine to help meet its urgent balance of payment needs and support its macroeconomic stability and $400 million for the IMF's Resilience and Sustainability Trust.
3. Risks and Uncertainties
The Department's Corporate Risk Profile provides a snapshot of the Department's key corporate risks. The Department's financial management framework supports strategic planning and allows for decisions on allocating resources to achieve the Department's objectives, mitigate risks and invest in people and tools in a fiscally prudent manner.
The Department monitors its operating environment to identify areas of most significant corporate risk and to reflect on progress made in implementing mitigation strategies. This allows the Department to continue to carry out its core responsibility for economic and fiscal policy, while managing corporate risks as they evolve in the current economic environment.
4. Significant Changes in Relation to Operations, Personnel and Programs
Joe Wild was appointed on November 14, 2022 as Senior Advisor to the Deputy Minister to work on the design and implementation of Indigenous equity participation in the Trans Mountain project.
Mark Perlman joined the Departmental Audit Committee (DAC), effective November 4, 2022, as an external member, for a four-year term. Kevin Dancey stepped down as DAC Chair and external member, effective December 18, 2022 with Linda Lizotte-Macpherson replacing him as DAC Chair, effective December 19, 2022.
5. Approval by Senior Officials
Approved by:
Michael Sabia, Deputy Minister
Ottawa, Canada
February 24, 2023
Christopher Veilleux CPA, CMA, PMP
Chief Financial Officer
Ottawa, Canada
February 24, 2023
| Fiscal year 2022-2023 | Fiscal year 2021-2022 | |||||
|---|---|---|---|---|---|---|
| Total available for use for the year ending March 31, 2023* |
Used during the quarter ended December 31, 2022 |
Year to date used at quarter-end |
Total available for use for the year ending March 31, 2022* |
Used during the quarter ended December 31, 2021 |
Year to date used at quarter-end |
|
| Budgetary Authorities | ||||||
| Voted authorities | ||||||
Program expenditures |
335,870 | 30,706 | 278,781 | 135,686 | 29,500 | 85,836 |
| Total voted authorities | 335,870 | 30,706 | 278,781 | 135,686 | 29,500 | 85,836 |
| Statutory authorities | ||||||
| Major transfers to other levels of government | ||||||
Canada Health Transfer (Part V.1 - Federal-Provincial Fiscal Arrangements Act) |
45,207,608 | 11,301,902 | 33,905,706 | 43,125,784 | 10,781,446 | 32,344,338 |
Canada Social Transfer (Part V.1 - Federal-Provincial Fiscal Arrangements Act) |
15,938,157 | 3,984,540 | 11,953,618 | 15,473,939 | 3,868,484 | 11,605,454 |
Payments to the provinces and territories in respect of Canada's COVID-19 immunization plan (Subsection 198(2) - Budget Implementation Act, 2021, No. 1) |
- | - | - | 1,000,000 | - | 1,000,000 |
Payments related to Canada Health Transfer (Sections 24.72 and 24.73 - Federal-Provincial Fiscal Arrangements Act) |
2,000,000 | - | 2,000,000 | 4,000,000 | - | 4,000,000 |
Fiscal arrangements |
||||||
Fiscal Equalization (Part I - Federal-Provincial Fiscal Arrangements Act) |
21,920,222 | 5,480,056 | 16,440,167 | 20,910,789 | 5,227,697 | 15,683,092 |
Territorial Financing (Part I.1 - Federal-Provincial Fiscal Arrangements Act) |
4,552,785 | 928,768 | 3,624,017 | 4,379,879 | 893,495 | 3,486,383 |
Statutory Subsidies (Constitution Acts, 1867-1982, and Other Statutory Authorities) |
42,639 | 1,237 | 22,557 | 42,639 | 1,238 | 22,557 |
Youth Allowances Recovery (Federal-Provincial Fiscal Revision Act, 1964) |
(1,151,088) | - | - | (1,043,982) | - | (521,991) |
Other major transfers |
||||||
Additional Fiscal Equalization Offset Payment to Nova Scotia (Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act) |
47,772 | - | - | 130,063 | - | 85,626 |
Alternative Payments for Standing Programs (Part VI - Federal-Provincial Fiscal Arrangements Act) |
(5,222,212) | (1,676,910) | (4,288,016) | (4,735,820) | (1,389,006) | (3,756,916) |
Hibernia Dividend Backed Annuity Agreement (Budget Implementation Act, 2021, No. 1, Part 4, division 14) |
- | 100,733 | 100,733 | - | 86,000 | 86,000 |
Payments for school ventilation improvement pursuant to the Economic and Fiscal Update Implementation Act, 2021 |
100,000 | - | 100,000 | - | - | - |
Payments in relation to transit and housing (Budget Implementation Act, 2022, No. 1) |
750,000 | - | 750,000 | - | - | - |
| Total major transfers to other levels of government | 84,185,883 | 20,120,326 | 64,608,782 | 83,283,291 | 19,469,354 | 64,034,543 |
| Interest on Unmatured Debt and Interest on Other Liabilities | ||||||
Interest on Unmatured Debt and Other Public Debt Costs |
19,638,000 | 6,279,147 | 19,188,450 | 16,173,000 | 4,428,934 | 13,506,358 |
Interest on Other Liabilities |
5,112,000 | 1,389,215 | 3,982,095 | 5,133,000 | 1,275,832 | 3,853,228 |
| Total Interest on Unmatured Debt and Interest on Other Liabilities | 24,750,000 | 7,668,362 | 23,170,545 | 21,306,000 | 5,704,766 | 17,359,586 |
| Direct program expenses | ||||||
Operating expenses |
||||||
Purchase of Domestic Coinage |
82,000 | 20,596 | 66,952 | 84,000 | 26,216 | 65,460 |
Contributions to Employee Benefit Plans |
14,988 | 3,737 | 11,213 | 13,037 | 3,236 | 9,707 |
Deputy Prime Minister and Minister of Finance – Salary and motor car allowance |
93 | 23 | 69 | 91 | 23 | 68 |
Minister of Tourism and Associate Minister of Finance – Motor car allowance |
2 | - | - | 2 | - | 1 |
Transfer payments |
||||||
Payments to the International Development Association (Bretton Woods and Related Agreements Act) |
911,436 | - | - | 423,240 | - | - |
Debt payments on behalf of poor countries to International Organizations pursuant to section 18(1) of the Economic Recovery Act |
53,424 | - | - | 53,132 | - | - |
Payments of any amount that is required for the purpose of providing financial assistance, pursuant to section 8.3 of the Bretton Woods and Related Agreements Act |
- | 138 | 190 | - | - | - |
Grant Contribution to the IMF's Resilience and Sustainability Trust (Bretton Woods and Related Agreements Act, Section 8.1(2)) |
- | 40,144 | 40,144 | - | - | - |
Other |
||||||
Losses on Foreign Exchange |
- | (5,687) | 7,759 | - | 17,114 | 18,953 |
Payment of Liabilities Previously Recorded as Revenue |
- | 4,076 | 10,185 | - | 1,875 | 6,302 |
Payments to the Canada Infrastructure Bank (Canada Infrastructure Bank Act) |
4,533,117 | 11,000 | 384,450 | 3,967,976 | 61,984 | 176,411 |
Payment under subsection 12(2) of the Canadian Commercial Corporation Act to the Canadian Commercial Corporation |
- | - | - | 13,000 | - | 13,000 |
Payment to the Bank of Canada pursuant to section 60.2 of the Financial Administration Act |
- | 1 | 1 | - | - | - |
| Total direct program expenses | 5,595,060 | 74,028 | 520,963 | 4,554,478 | 110,448 | 289,902 |
| Total statutory authorities | 114,530,943 | 27,862,716 | 88,300,290 | 109,143,769 | 25,284,568 | 81,684,031 |
| Total budgetary authorities | 114,866,813 | 27,893,422 | 88,579,071 | 109,279,455 | 25,314,068 | 81,769,867 |
| Non-budgetary authorities | ||||||
Purchase of initial shares pursuant to the Asian Infrastructure Investment Bank Agreement Act |
- | - | - | 49,000 | - | - |
Advances to Crown corporations (Gross) |
- | 15,589,572 | 44,543,771 | - | 13,382,563 | 43,277,826 |
Advances pursuant to section 13(1) of the Financial Consumer Agency of Canada Act (Gross) |
- | - | 19,000 | - | 6,000 | 18,000 |
| Payments under Bretton Woods and Related Agreements Act- International Organizations (Gross) | - | 400,000 | 400,000 | - | - | - |
Payment to the Canada Enterprise Emergency Funding Corporation to purchase shares pursuant to paragraph 60.2(2)(a) of the Financial Administration Act to support the Large Employer Emergency Financing Facility |
- | - | - | 2,350,000 | - | 2,670,000 |
Payment to the International Finance Corporation for purchase of shares (Bretton Woods and Related Agreements Act, Subsection 8(2)) |
- | - | - | 224,400 | - | - |
Financial assistance to the International Development Association (Bretton Woods and Related Agreements Act, Section 8) |
361,709 | - | - | 361,709 | - | - |
Financial Assistance to Ukraine through IMF Administered Account (Bretton Woods and Related Agreements Act, Section 8.3) |
1,450,000 | 500,000 | 1,950,000 | - | - | - |
Bilateral Loan to Ukraine (Bretton Woods and Related Agreements Act, Section 8.3) |
500,000 | - | 500,000 | - | - | - |
| Total non-budgetary authorities | 2,311,709 | 16,489,572 | 47,412,771 | 2,985,109 | 13,388,563 | 45,965,826 |
| Total authorities | 117,178,522 | 44,382,994 | 135,991,842 | 112,264,564 | 38,702,631 | 127,735,693 |
* Includes only Authorities available for use and granted by Parliament at quarter-end |
||||||
| Fiscal year 2022-2023 | Fiscal year 2021-2022 | |||||
|---|---|---|---|---|---|---|
| Planned expenditures for the year ending March 31, 2023 |
Expended during the quarter ended December 31, 2022 |
Year to date used at quarter-end |
Planned expenditures for the year ending March 31, 2022 |
Expended during the quarter ended December 31, 2021 |
Year to date used at quarter-end |
|
| Expenditures: | ||||||
| Personnel | 122,004 | 29,015 | 83,673 | 103,940 | 26,806 | 81,265 |
| Transportation and communications | 3,095 | 661 | 1,413 | 2,690 | 289 | 509 |
| Information | 4,671 | 435 | 2,577 | 11,344 | 2,107 | 3,972 |
| Professional and special services | 19,601 | 3,359 | 8,031 | 15,510 | 2,193 | 6,632 |
| Rentals | 2,679 | 319 | 1,203 | 3,081 | 521 | 1,358 |
| Repair and maintenance | 187 | 89 | 200 | 562 | 12 | 85 |
| Utilities, materials and supplies | 82,372 | 20,709 | 67,121 | 84,327 | 26,252 | 65,556 |
| Acquisition of land, buildings and works | - | - | - | - | - | 49 |
| Acquisition of machinery and equipment | 6,860 | 338 | 830 | 1,864 | 158 | 471 |
| Transfer payments | 85,150,779 | 20,160,608 | 64,649,116 | 83,769,292 | 19,470,154 | 64,035,626 |
| Public debt charges | 24,750,000 | 7,668,362 | 23,170,545 | 21,306,000 | 5,704,766 | 17,359,586 |
| Other subsidies and payments | 4,724,715 | 9,527 | 594,362 | 3,980,995 | 80,810 | 214,758 |
| Total gross budgetary expenditures | 114,866,963 | 27,893,422 | 88,579,071 | 109,279,605 | 25,314,068 | 81,769,867 |
| Less Revenues netted against expenditures | 150 | - | - | 150 | - | - |
| Total net budgetary expenditures | 114,866,813 | 27,893,422 | 88,579,071 | 109,279,455 | 25,314,068 | 81,769,867 |
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