Quarterly Financial Report (QFR) for the Quarter Ended June 30, 2023

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, 2023, 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 $32.9 million. As reflected in Table 1: Statement of authorities, the total budgetary authorities increased from $26,472.5 million in 2022–23 to $26,505.3 million in 2023–24. Major reasons for the changes are outlined below.

Year-to-date variances in authorities available for use (in millions of dollars)


(Vote 1)


(Vote 5)

Grants and contributions

(Vote 10)

Budgetary statutory authorities Total variances*
Operation and sustainment (fleet maintenance) of military capabilities and operating requirements 490.9 n/a n/a n/a 490.9
Budget 2021 initiatives 72.6 58.6 n/a (0.9) 130.3
Implementation of SSE 79.5 30.0 (2.5) 14.2 121.2
Miscellaneous departmental requirements (32.7) 30.4 6.4 49.5 53.6
Budget 2022 initiatives 42.3 0.7 1.5 6.5 51.0
Heyder-Beattie Class Action (314.0) 0.3 n/a (0.4) (314.1)
Ukraine Operation n/a n/a (500.0) n/a (500.0)
Cumulative variance in authorities available for use 338.6 120.0 (494.6) 68.9 32.9

*A positive variance indicates an increase in authorities available for use in Q1 2023–24 compared to Q1 2022–23 and a negative variance indicates a decrease in authorities available for use in Q1 2023–24 compared to Q1 2022–23.

Note: Numbers may not add up due to rounding.

The year-to-date net increase in authorities of $32.9 million over the first quarter in 2023–24 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 decreased by $269.2 million. As reflected in Table 2: Departmental budgetary expenditures by standard object, the expenditures decreased from $5,080.1 million in 2022–23 to $4,810.9 million in 2023–24.

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
Personnel 2,767.0 2,618.7 148.3
Other net minor items 578.7 557.8 20.9
Other subsidies and payments 62.6 237.4 (174.8)
Professional and special services 715.4 827.8 (112.4)
Transfer payments 0.6 67.5 (66.9)
Utilities, materials and supplies 201.4 248.2 (46.8)
Acquisition of machinery and equipment 485.2 522.8 (37.5)
Total net budgetary expenditures 4,810.9 5,080.1 (269.2)

Note: Numbers may not add up due to rounding.

Year-to-date net decrease of $269.2 million is attributable mainly to the following:

3. Risks and uncertainties

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 give rise to increases in costs of goods and services, labour shortages, and supply chain delays. Depending on how these risks unfold, they could lead to significant fluctuations in anticipated spending.

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 the control of the department.

The department continues to address the financial risks associated with Phoenix pay issues through the implementation of new controls as required and the strengthening of existing ones. The Civilian Quality Assurance program continues to leverage the use of robotic process automation to analyze the current pay environment and lead to more timely corrective actions with the help of compensation agents.  Initiatives such as the centralized data entry capability continue to ensure sustained payment accuracy.

The department’s capital acquisition program includes a number of large multi-year acquisition projects, mainly comprising of advanced fighter aircrafts, naval ships and armored vehicles. 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.

The COVID pandemic has exacerbated the CAF’s ability to grow its Force. As a result, the CAF is applying reconstitution measures at the tactical, operational, and strategic levels to restore units to an acceptable level of readiness to excel as a modern and combat-ready military force. This is intended to enable the CAF to adapt quickly to action when called for significant unexpected operational demands, which can occur at any time anywhere around the globe.

Additionally, significant unforecasted operational demands can occur at any time, requiring the department to respond anywhere in the world. 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

Since February 2022, Canada has made significant contributions of military support to Ukraine, which includes procurement of military equipment, artillery, combat support vehicles, satellite communication services, uniforms/gear, and training for Ukrainian troops.

Furthermore, the CAF has reallocated their current forces to continue to support Ukraine, maintain its NATO commitments, increase its presence in the Indo-Pacific, and reduce its presence in the Middle East. These movements will incur additional impacts on transportation, relocation, and overall military salary expenditures.

To address the shortfall and increase the recruitment pool of military personnel, the federal government announced policy changes in December 2022 that will allow permanent residents to join the CAF. A Temporary Recruitment Incentive has also been granted to unskilled members in 33 occupations, after successful completion of Basic Military Qualification.

On July 26, 2023, Prime Minister Justin Trudeau announced the appointment of Bill Blair as the new Minister of National Defence. In addition, the Honourable Ginette Petitpas Taylor was named as Minister of Veterans Affairs and Associate Minister of National Defence.

Approved by:

// Original signed by //

Bill Matthews

Deputy Minister of National Defence

// Original signed by //

Cheri Crosby, CPA, CMA

Chief Financial Officer

5. Financial tables

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