Quarterly Financial Report (QFR) for the Quarter Ended September 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 September 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 $1,867.5 million. As reflected in Table 1: Statement of authorities, the total budgetary authorities increased from $25,128.3 million in 2021–22 to $26,995.8 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 (Vote 1) Capital (Vote 5) Grants and contributions
(Vote 10)

Payments in respect of the long-term disability and life insurance plan for members of the Canadian Forces

(Vote 15)

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
Travel reduction (82.2) n/a n/a n/a n/a (82.2)
Miscellaneous departmental requirements (382.0) 50.8 1.5 n/a 29.0 (300.7)
Cumulative variance in authorities available for use 823.6 260.9 567.2 23.3 192.5 1,867.5

*A positive variance indicates an increase in authorities available for use in Q2 of 2022–23 compared to Q2 2021–22 and a negative variance indicates a decrease in authorities available for use in Q2 2022–23 compared to Q2 2021–22.

Note: Numbers may not add up due to rounding.

The year-to-date net increase in authorities of $1,867.5 million over the second quarter in 2022–23 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 $830.5 million. As reflected in Table 2: Departmental budgetary expenditures by standard object, the expenditures increased from $10,247.0 million in 2021–22 to $11,077.5 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
Transfer payments 363.8 31.9 331.9
Professional, special & other services 1,887.70 1,682.60 205.1
Other subsidies and payments 428.7 318.9 109.8
Transportation and communications 404.3 301.9
Utilities, materials and supplies 475.3 411.6 63.7
Rentals 291.8 258.7 33.1
Repair and maintenance 642.5 614.0 28.5
Acquisition of land, buildings and works 183.3 215.9 (32.6)
Other net minor items 6,400.1 6,411.5 (11.4)
Total net budgetary expenditures 11,077.5 10,247.0 830.5

Note: Numbers may not add up due to rounding.

Year-to-date net increase of $830.5 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 from anticipated spending.

The department continues to address the financial risks associated with Phoenix pay issues through the implementation of new controls and the strengthening of existing ones. The Civilian Quality Assurance program modified its sampling program and leveraged the use of robotic process automation to provide a better analysis of the current pay environment and lead to timelier corrective actions with the help of compensation advisors. Initiatives like the centralized data entry capability, the data integrity working group and the training working group continue to ensure sustained payment accuracy and iterative training.

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.

The pandemic has exacerbated the problems for the CAF to grow its Force, in addition to existing personnel issues and changing demographics. 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 on the globe.

As Canada is moving towards adapting to a post-pandemic landscape, the Government of Canada suspended its mandatory COVID-19 vaccination policy for federal public servants in June 2022. The Canadian Armed Forces amended the CAF directives on COVID-19 mandatory vaccination effective October 14, 2022. Vaccine requirements will be driven by operational necessity to maintain domestic and international operational viability, which is essential to the protection of Canadians and defence of Canada. In addition, the department is in the process of transitioning to a hybrid workforce, aligned with current Treasury Board of Canada Secretariat (TBS) direction.

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

Since February 2022, Canada has committed $626 million 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.

In an environment impacted by a global pandemic, the department continues to implement its various Strong Secure Engaged (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

5. Financial tables

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