Quarterly Financial Report (QFR) for the Quarter Ended June 30, 2022

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

This section provides financial highlights and explanations for differences between the fiscal-quarter and fiscal-year-to-date results for the quarter ended on June 30, 2022, and the results of the same period last year.

2.1 Statement of authorities

When compared to those of the same quarter of the previous year, the department's year-to-date budgetary authorities available for use have increased by $2,172.4 million. As reflected in Table 1: Statement of authorities, the total budgetary authorities increased from $24,300.1 million in 2021–22 to $26,472.5 million in 2022–23. Major reasons for the changes are outlined below.

Year-to-date variances in authorities available for use (in millions of dollars)
Initiative Operating Capital Grants and contributions Payments in respect of the long-term disability and life insurance plan for members of the Canadian Forces Budgetary statutory authorities Total variances*
Contributions to the Ukraine operation n/a n/a 500.0 n/a n/a 500.0
Pay administration – Federal public servants and Canadian Armed Forces 351.0 n/a n/a n/a 134.7 485.7
Operation and sustainment (fleet maintenance) of military capabilities and operating requirements 429.0 n/a n/a n/a n/a 429.0
Heyder-Beattie Class Action 338.0 n/a n/a n/a 3.0 341.0
Budget 2021 initiatives 165.4 32.5 65.9 n/a 3.6 267.4
Implementation of SSE 98.5 (1.3) (0.2) n/a 13.7 110.7
Major capital equipment and infrastructure projects (94.1) 178.9 n/a n/a 8.5 93.3
Service Income Security Insurance Plan (SISIP) n/a n/a n/a 23.3 n/a 23.3
Miscellaneous departmental requirements (81.0) 50.8 1.5 n/a 32.9 4.2
Travel reduction (82.2) n/a n/a n/a n/a (82.2)
Cumulative variance in authorities available for use 1,124.6 260.9 567.2 23.3 196.4 2,172.4

*A positive variance indicates an increase in authorities available for use in the first quarter (Q1) of 2022–23 compared to Q1 2021–22 and a negative variance indicates a decrease in authorities available for use in Q1 2022–23 compared to Q1 2021–22.

The year-to-date net increase in authorities of $2,172.4 million over the first quarter in 2021–22 can be explained by variances in funding for a number of initiatives.

2.2 Departmental budgetary expenditures by standard object

When compared to those of the same quarter of the previous fiscal year, the department’s year-to-date total net budgetary expenditures have increased by $599.0 million. As reflected in Table 2: Departmental budgetary expenditures by standard object, the expenditures increased from $4,481.1 million in 2021–22 to $5,080.1 million in 2022–23.

Year-to-date variances in net budgetary expenditures (presented by standard object)(in millions of dollars)

Standard object


Year-to-date used at quarter-end


Year-to-date used at quarter-end

Year-to-date variance
Professional and special services 827.8 616.5 211.3
Other subsidies and payments 237.4 85.0 152.4
Transfer payments 67.5 5.8 61.7
Utilities, materials and supplies 248.2 189.1 59.1
Acquisition of machinery and equipment 522.8 474.4 48.4
Transportation and communications 155.5 107.7 47.8
Rentals 135.7 128.2 7.5
Acquisition of land, buildings and works 66.7 59.6 7.1
Information 5.8 5.4 0.4
Public debt charges 0.8 0.8 0
Repair and maintenance 231.8 237.2 (5.4)
Personnel 2,618.7 2,619.1 (0.4)
Revenues netted against expenditures (38.6) (47.7) 9.1
Total net budgetary expenditures 5,080.1 4,481.1 599.0

The year-to-date net increase in budgetary expenditures of $599.0 million can be mainly explained by the variances detailed below.

3. Risks and uncertainties

Following a successful vaccination campaign, a decrease of case counts, hospitalization and deaths, the COVID-19 pandemic is not over yet and there is still the possibility of future resurgence of cases or a new variant of concern. As such, vaccination continues to be one of the most effective tools to protect Canadians, the health care system, and the economy. The government is closely monitoring domestic and international scientific evidence to assess the need for additional public health measures, including the possible reintroduction of vaccination mandates. Meanwhile, the Canadian Armed Forces is currently assessing the need for an amendment to the Chief of the Defence Staff (CDS) Directive on COVID-19 Vaccination as the intent of the department is to continue to maintain a safe working environment while remaining ready to conduct CAF operations in support of Canadians at home and around the world. In addition to the risks associated with COVID-19, the other risks discussed below are still relevant.

The department’s financial transactions are exposed to a broad range of external financial and economic risks such as inflation, foreign exchange commodity price fluctuations and global supply chain. Currently we are seeing economic risks affecting increases to costs of goods and services, labour shortages, and supply chain delays. Depending on how these risks unfold, they could lead to higher- or lower-than-anticipated spending.

The department continues to address the financial risks associated with the Phoenix pay issues through the implementation of new controls and the strengthening of existing ones. As part of the department’s Phoenix risk mitigation efforts, several initiatives have been implemented such as the creation of data integrity and training working groups to improve payment accuracy and to identify training needs across the department.

While the department considers key economic and financial risk factors (including defence-specific inflation and foreign exchange) in developing expenditure strategies, these risks are outside of the control of the department.

The department’s capital acquisition program includes a number of large multi-year acquisition projects. Delays in contracting and procurement activities or delays in deliveries by suppliers for individual projects can lead to reduced expenditures or budgetary surpluses.

Risks also flow from claims and litigations involving the department’s normal operations. When the department receives a claim or litigation alleging liability in tort or extra contractual responsibility to cover losses, expenditures or damages, it is analyzed and an appropriate position is developed, based on legal advice. Litigation or settlement may be pursued and they are tracked through the department’s reporting.

Additionally, significant unforecasted operational demands can occur at any time, requiring the department to respond anywhere on the globe. Depending on the extent of the operational demand, the cost of unforecasted operations would be mitigated either through internal reallocations or by requesting incremental funding from the government.

4. Significant changes in relation to programs, operations and personnel

The Defence Team continues with increased contributions in support of Ukraine. 

In an environment impacted by a global pandemic, the department continues to implement its various SSE initiatives such as the renewal of its major equipment fleets including fighter aircraft and maritime warships.

Approved by:

// Original signed by //

Bill Matthews

Deputy Minister of National Defence

// Original signed by //

Cheri Crosby, CPA, CMA

Chief Financial Officer

Dated: August 26, 2022

Ottawa, Canada

5. Financial tables

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