Quarterly Financial Report, quarter ended September 30, 2016, Environment and Climate Change Canada

Introduction

This second quarterly 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 Treasury Board (TB). This quarterly report should be read in conjunction with the Main Estimates.

A summary description of the Environment and Climate Change Canada (ECCC) Raison d’être and program activities can be found in Part II of the Main Estimates.

This quarterly report has not been subject to an external audit or review.

Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting (modified cash accounting). The accompanying Statement of Authorities includes ECCC’s spending authorities granted by Parliament and those used by the Department, consistent with the Main Estimates and the Supplementary Estimates for the 2016-17 fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before money 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 full 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.

Highlights of fiscal quarter and fiscal year to date (YTD) results

Statement of Authorities (Table 1)

This quarterly report, ending September 30, 2016, reflects the authorities that were approved for this period. The funding available for use includes the 2016-17 Main Estimates as well as the Supplementary Estimates “A”. Authorities for Supplementary Estimates “B” and “C” will follow later this year. Funding for program renewals such as Federal Contaminated Sites Action Plan, Clean Growth and Climate Change as well as activities reducing Air Pollution were approved in Supplementary Estimates “A”; additional funding for Budget 2016 announcements is anticipated to be approved through the upcoming Supplementary Estimates “B” and “C”. Environment and Climate Change Canada’s authorities “Total available for use for the year ending March 31, 2017” is slightly lower by approximately $0.3M ($1,035.2M - $1,035.5M)Footnote1 when compared to the same quarter of the previous year. This difference is explained by decreases in Vote 1 - Operating of $6.0M ($738.1M - $744.1M)Footnote1 and in Vote 5 - Capital of $11.9M ($72.7M - $84.6M)Footnote1, offset by increases in Vote 10 - Grants and Contributions of $13.4M ($131.7M - $118.3M)Footnote1, and in Budgetary Statutory authorities for the Employee Benefit Plans and the Minister’s Salary and Motor car allowance of $4.3M ($92.7M - $88.4M)Footnote1.

Vote 1 - Operating authorities

The $6.0M net decrease compared to last fiscal year in the Operating authorities is mainly due to the following:

  • $69.2M decrease related to the Clean Air Regulatory Agenda;
  • $10.3M decrease related to the Government of Canada’s Weather Monitoring and Supercomputing Infrastructure;
  • $8.5M decrease related to the Contaminated Sediment Remediation Projects;
  • $4.8M decrease related to the International Climate Change Strategy Initiative;
  • $2.8M decrease related to the World Class Oil Spills Regime;
  • $0.9M decrease related to the 2015 Pan and Parapan American Games; and,
  • $0.5M decrease for various other smaller adjustments.

offset by:

  • $46.2M increase related to activities reducing Air Pollution;
  • $28.9M increase related to initiatives supporting Clean Growth and Climate Change;
  • $4.2M increase related to Meteorological and Navigational Warning Services for the Arctic Oceans;
  • $4.1M increase related to Revitalization of Canada’s Weather Services;
  • $2.9M increase related to the Federal Contaminated Sites Action Plan;
  • $2.1M increase related to the Federal Infrastructure Initiative;
  • $2.0M increase related to the Major Project Management Office Initiative; and,
  • $0.6M increase for pro-active reconciliation and management of Métis Aboriginal rights and the management of Métis and non-status Indian litigation.

Vote 5 - Capital authorities

The $11.9M net decrease compared to last fiscal year in the Capital authorities is mainly due to the following:

  • $8.3M decrease related to the Government of Canada’s Weather Monitoring and Supercomputing Infrastructure;
  • $4.5M decrease related to a reduction in the amount carried forward from previous year to continue work on specific projects;
  • $3.2M decrease related to the Clean Air Regulatory Agenda;
  • $0.8M decrease for a transfer to Shared Services Canada for the incremental cost of IT services; and,
  • $0.7M decrease related to the World Class Oil Spills Regime.

offset by:

  • $2.2M increase related to activities reducing Air Pollution;
  • $1.5M increase related to the National Conservation Plan;
  • $1.1M increase related to the Federal Infrastructure Initiative; and,
  • $0.8M increase from various other smaller adjustments.

Vote 10 - Grants and Contributions (G&C)

The $13.4M net increase compared to last fiscal year in the Grants and Contributions (G&C) authorities is mainly due to the following:

  • $11.3M increase related to the Sustainable Development Technology Fund;
  • $3.1M increase related to the Inuit Impact Benefit Agreement;
  • $1.6M increase related to initiatives supporting Clean Growth and Climate Change;
  • $1.3M increase related to activities reducing Air Pollution;
  • $0.5M increase related to the National Conservation Plan; and,
  • $0.4M increase related to the pro-active reconciliation and management of Métis Aboriginal rights and the management of Métis and non-status Indian litigation.

offset by:

  • $2.4M decrease related to the Clean Air Regulatory Agenda;
  • $1.6M decrease for facilitating Aboriginal participation in the West Coast Energy Development;
  • $0.7M decrease related to the Lake Winnipeg Basin Initiative (LWBI); and,
  • $0.1M decrease for various other smaller adjustments.

Statutory authority

The $4.3M net increase compared to last fiscal year in the Budgetary statutory authorities is mainly due to the following:

  • $4.3M net increase related to the Employee Benefit Plans (EBP).

Expenditure Analysis

In the second quarter of 2016-17, total net budgetary expenditures totaled $230.1M compared to the same period in 2015-16, resulting in a decrease of $13.6M or 5.6% ($230.1M - $243.7M). The year to date expenditures as of September 30, 2016 are $442.0M which represents an increase of $21.3M or 5.1% ($442.0M - $420.7M) compared to the same period in 2015-16.

Vote 1 - Operating authorities used during the second quarter of 2016-17 totaled $178.6M which represents a decreased of $3.7M or 2.0% ($178.6M - $182.3M) compared to the same quarter in 2015-16, resulting from the timing of the lease payment for the Pacific Environmental Centre (PEC) and the timing of revenue collections for various programs, offset by higher expenditures related to the Contaminated Sediment Remediation Projects. The year to date Operating authorities used increased by $11.8M or 3.6% ($336.3M - $324.5M) which also resulting from higher expenditures related to the Contaminated Sediment Remediation Projects.

Vote 5 - Capital authorities used during the second quarter of 2016-17 totaled $7.8M, which represents an increase of $4.8M or 160.0% ($7.8M - $3.0M) compared to the same quarter in 2015-16. Year to date expenditures have also increased by $4.3M or 61.4% ($11.3M - $7.0M) compared to the same period last year. Both increases are mainly attributable to the timing of expenditures being recorded for projects such as the Eureka Runway. 

Vote 10 - Grants and Contributions authorities used during the second quarter of 2016-17 totaled $23.1M, which represents a decrease of $13.4M or 36.7% ($23.1M - $36.5M) compared to the same quarter in 2015-16. This is mainly due to the timing of certain G&C payments. Year to date expenditures have increased by $5.5M or 12.1% ($50.9M - $45.4M) and is mainly due to a contribution payment to the Sustainable Development Technology Canada for the Sustainable Development Technology Fund and a statutory grant payment for the NextGen Biofuels Fund offset by the timing of certain G&C payments.

Statutory authorities used during the second quarter of 2016-17 totaled $20.6M, which represents a decrease of $1.3M or 5.9% ($20.6M - $21.9M) compared to the same quarter in 2015-16. This is mainly due to a reduction in expenditures tied to the Employee Benefit Plan. Year to date expenditures are similar to previous year.

Statement of Departmental Expenditures by Standard Object (Table 2)

Professional and special services quarterly and year to date expenditures have increased by $9.4M or 44.8% ($30.4M - $21.0M) and $17.1M or 55.0% ($48.2M - $31.1M) respectively compared to the same quarter last year, mainly due to higher expenditures made for the Contaminated Sediment Remediation Projects and an earlier payment for the Eureka Runway project. Further contributing to the year to date increase is the change in the invoicing process of legal services with Justice Canada which is now made in advance instead of being on a monthly basis.

Rentals expenditures have decreased by $5.6M or 49.6% ($5.7M - $11.3M) compared to the same quarter last year. This is mainly due to the timing of the lease payment for the Pacific Environmental Centre (PEC) which occurred earlier this year. However, year to date expenditures have increased by $3.2M or 24.4% ($16.3M - $13.1M) which is also due to the timing of the lease payment to Carleton University and the renewal of software licenses.

Acquisitions of machinery and equipment quarterly and year to date expenditures have increased by $2.3M or 127.8% ($4.1M - $1.8M) and $2.5M or 83.3% ($5.5M - $3.0M) respectively compared to the same quarter last year, mainly due to earlier expenditures being recorded for laboratory installation costs.

Transfer Payments expenditures have decreased by $13.4M or 36.7% ($23.1M - $36.5M) in the second quarter. This is mainly due to the timing of certain G&C payments. Year to date expenditures have increased by $7.8M or 17.2% ($53.2M - $45.4M) and is mainly due to a contribution payment to the Sustainable Development Technology Canada for the Sustainable Development Technology Fund and an earlier statutory grant payment for the NextGen Biofuels Fund offset by the timing of certain G&C payments.

Quarterly and year to date revenues collected have increased by $6.8M or 133.3% ($11.9M - $5.1M) and $10.3M or 72.0% ($24.6M - $14.3M) respectively compared to the same quarter last year which is mainly attributable to the timing of collections for various program activities related to NavCan, Oil Sand and National Defence.

Risks and Uncertainties

Environment and Climate Change Canada (ECCC) is primarily funded through voted parliamentary spending authorities for operating expenditures, capital expenditures and transfer payments as well as statutory authorities. The Department is also partially funded through vote-netted revenue. ECCC's planned spending reflects approved funding by Treasury Board.

In its financial management, the Department needs to consider a set of specific circumstances with potential impact related to the department’s financial plan. For example, Budget 2016 provided to ECCC significant funding to secure a cleaner, more sustainable environment, to support the development of a pan-Canadian Framework on Clean Growth and Climate Change, the international environmental cooperation and the clean technology, to finance green infrastructure projects, and to address air pollution. This additional funding represents new financial opportunities for ECCC in delivering and clearly reporting on horizontal and departmental outcomes and expenditures related to the Minister’s mandate letter. ECCC will face this new challenge and provide effective governance, coordination, and alignment of environmental initiatives across several federal departments.

ECCC will remain focused on ensuring that financial authorities are secured in a timely manner so that program areas are able to ramp up to meet new requirements. Moreover, in order to support effective decision-making, ECCC will continue to conduct ongoing program monitoring and proactive financial risk management and planning, all of which have been integrated into ECCC’s business planning processes.

Significant changes in relation to operations, personnel and programs

There are no significant changes in relation to operations, personnel and programs to report during the second quarter of 2016-17.

Approved by:

(the original version was signed by)
November 21, 2016
Gatineau
Michael Martin, Deputy Minister
Date
City


(the original version was signed by)
November 17, 2016
Gatineau
Carol Najm, ADM
Corporate Services and Finance Branch, and Chief Financial Officer
Date
City
Environment and Climate Change Canada
For the quarter ended September 30, 2016
Statement of Authorities (unaudited) - Table 1
  Fiscal year 2016-17 Fiscal year 2015-16
(In thousands of dollars) Total available for use for the year ending March 31, 2017Table note* Used during the quarter ended September 30, 2016 Year to date used at quarter end Total available for use for the year ending March 31, 2016Table note* Used during the quarter ended September 30, 2015 Year to date used at quarter end
Vote 1 - Net Operating expenditures 738,101 178,557 336,317 744,070 182,307 324,504
Vote 5 - Capital expenditures 72,698 7,823 11,339 84,637 2,962 6,967
Vote 10 - Grants and contributions 131,734 23,103 50,869 118,341 36,490 45,364
Statutory - Employee Benefits Plan 92,567 20,462 40,924 88,322 21,900 43,800
Statutory - Minister’s Salary & Car Allowance 84 21 42 82 20 41
Statutory - Refund of previous years revenue 0 52 94 0 0 0
Statutory - Spending of proceeds from the disposal of surplus Crown assets 0 104 135 0 7 7
Statutory - Canada Foundation for Sustainable Development Technology Grant 0 0 2,290 0 0 0
Total Budgetary authorities 1,035,184 230,122 442,010 1,035,452 243,686 420,683
Non-budgetary authorities - - - - - -
Total authorities 1,035,184 230,122 442,010 1,035,452 243,686 420,683
Environment and Climate Change Canada
For the quarter ended September 30, 2016
Departmental budgetary expenditures by Standard Object (unaudited) - Table 2
  Fiscal year 2016-2017 Fiscal year 2015-2016
(In thousands of dollars) Planned expenditures for the year ending March 31, 2017Table note*.1 Expended during the quarter ended September 30, 2016 Year to date used at quarter end Planned expenditures for the year ending March 31, 2016Table note*.1 Expended during the quarter ended September 30, 2015 Year to date used at quarter end
Expenditures:
 
Personnel 622,105 155,973 306,596 613,442 155,856 309,040
Transportation and communications 42,248 7,695 12,845 41,149 7,427 11,782
Information 4,819 802 1,220 4,013 562 796
Professional and Special Services 166,807 30,438 48,237 170,350 21,028 31,050
Rentals 31,096 5,709 16,269 30,828 11,343 13,115
Purchased Repair and Maintenance 20,505 2,083 3,355 26,018 2,730 3,650
Utilities, Materials and Supplies 50,592 9,406 15,778 46,505 8,461 13,869
Acquisition of Land, Buildings and Works 800 46 47 1,592 20 25
Acquisition of Machinery and Equipment 48,950 4,097 5,496 67,565 1,834 3,008
Transfer payments 131,734 23,103 53,159 118,341 36,490 45,364
Other Subsidies and Payments 4,124 2,696 3,559 4,244 3,034 3,301
Total gross budgetary expenditures 1,123,780 242,048 466,561 1,124,047 248,785 435,000
Less Revenues netted against expenditures:
Revenues
88,596 11,926 24,551 88,595 5,099 14,317
Total revenues netted against expenditures 88,596 11,926 24,551 88,595 5,099 14,317
Total net budgetary expenditures 1,035,184 230,122 442,010 1,035,452 243,686 420,683
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