Quarterly Financial Report, quarter ended December 31, 2019: Environment and Climate Change Canada

Statement outlining results, risks and significant changes in operations, personnel and programs

Introduction

This third 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 and Budget 2019.

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

Authority, Mandate and Program Activities

Environment and Climate Change Canada (ECCC) is the lead federal department for a wide range of environmental issues. The department addresses these issues through various actions including the implementation of the Pan-Canadian Framework on Clean Growth and Climate Change; engaging with our strategic partners including provinces, territories and Indigenous peoples; monitoring; science-based research; policy and regulatory development; and, through the enforcement of environmental laws. The department's programs focus on minimizing threats to Canadians and their environment from pollution; equipping Canadians to make informed decisions on weather, water and climate conditions; and conserving and restoring Canada's natural environment.

The department's program focus reflects the interdependence between environmental sustainability and economic well-being.

Under the Department of the Environment Act, the powers, duties and functions of the Minister of Environment and Climate Change extend to matters such as:

A summary description of the ECCC Raison d’être and core responsibilities can be found in Part II of the Main Estimates and the Departmental Plan.

Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. 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 for the 2019‑20 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.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed an appropriation for the fiscal year in which it is issued.

The Department uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

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

Authority analysis

The Statement of Authorities presented in this quarterly financial report (see Table 1) reflects the authorities that were approved as of December 31, 2019. The funding available for use includes the 2019-20 Main Estimates, the Operating and Capital budget carry-forwards and the compensation allocations from Treasury Board Central Vote related to the new collective agreements. Authorities for the Supplementary Estimates “B” will follow later this year.

ECCC’s total available authorities for use for the year ending March 31, 2020 are higher by approximately $210.3M ($1,869.8M - $1,659.5M)Footnote 1  when compared to the same quarter of the previous year. This difference is explained by an increase in Vote 1 – Net Operating of $36.1M ($877.2M - $841.1M), in Vote 5 – Capital of $17.5M ($109.5M - $92.0M), in Vote 10 – Grants and Contributions of $154.1M ($787.7M - $633.6M) and in Budgetary Statutory authorities of $2.7M ($95.4M - $92.7M).

Vote 1 – Net Operating authorities

The $36.1M increase compared to last fiscal year in the net Operating authorities is mainly due to the following:

offset by:

Vote 5 – Capital authorities

The $17.5M increase compared to last fiscal year in the Capital authorities is mainly due to the following:

offset by:

Vote 10 – Grants and contributions authorities

The $154.1M increase compared to last fiscal year in the Grants and Contributions authorities is mainly due to the following:

offset by:

Statutory authorities

The $2.7M increase compared to last fiscal year in the Budgetary statutory authorities is mainly due to the following:

Expenditures analysis by vote

Details of expenditures by vote are presented in Tables 1 and 2.

In the third quarter of 2019-20, total budgetary expenditures were $348.3M compared to $278.3M reported for the same period in 2018-19, resulting in an increase of $70.0M or 25.2%. Year to date expenditures as of December 31, 2019 are $850.9M, which represents an increase of $110.4M or 14.9% ($850.9M - $740.5M) compared to the same period in 2018-19.

Vote 1 – Net Operating authorities used during the third quarter of 2019-20 totalled $224.0M, which represents an increase of $28.9M or 14.8% ($224.0M - $195.1M) compared to the same quarter in 2018‑19. This variance is mainly due to an increase of permanent salaries based on renewed collective agreements and to Protecting Canada’s Nature, Parks & Wild Spaces, the Revitalization of Canada's Weather Services and the Impact Assessment and Regulatory Regime Implementation.

Year to date expenditures as of December 31, 2019 are $622.1M which represents an increase of $60.8M or 10.8% ($622.1M - $561.3M) compared to the same period in 2018-19. This variance is mainly due to an increase of permanent salaries based on renewed collective agreements and to Protecting Canada’s Nature, Parks & Wild Spaces, the Revitalization of Canada's Weather Services and the Impact Assessment and Regulatory Regime Implementation. This is offset by a decrease in spending for the Clean Water Action Plan.

Vote 5 – Capital authorities used during the third quarter of 2019-20 totalled $47.9M, which represents an increase of $24.4M or 103.8% ($47.9M – $23.5M) compared to the same quarter in 2018-19. Year to date expenditures as of December 31, 2019 are $68.2M, which represents an increase of $26.8M or 64.7% ($68.2M - $41.4M) compared to the same period in 2018-19. Both variances are mainly due to an increase in engineering consulting fees related to radar replacement project and new funding related to the Strong Arctic and Northern Communities.

Vote 10 – Grants and Contributions authorities used during the third quarter of 2019-20 totalled $52.6M, which represents an increase of $14.6M or 38.5% ($52.6M - $38.0M) compared to the same quarter in 2018-19. This variance is mainly due to the timing of payments submitted for Protecting Canada’s Nature, Parks & Wild Spaces offset by reduced funding for the National Conservation Plan. Year to date expenditures as of December 31, 2019 are $88.5M, which represents an increase of $15.7M or 21.6% ($88.5M - $72.8M) compared to the same period in 2018-19. This variance is mainly due to the timing of payments submitted for Protecting Canada’s Nature, Parks & Wild Spaces and the Low Carbon Economy Fund, offset by reduced funding for the National Conservation Plan.

Statutory authorities used during the third quarter of 2019-20 totalled $23.7M, which represents an increase of $2.1M or 9.7% ($23.7M - $21.6M) compared to the same quarter in 2018-19. Year to date expenditures as of December 31, 2019 are $72.0M, which represents an increase of $7.0M or 10.8% ($72.0M - $65.0M) compared to the same period in 2018-19. Both variances are mainly due to an increase related to the contributions to Employee Benefit Plans.

Expenditures analysis by Standard Object

Details of expenditures by Standard Object are presented in Tables 3 and 4.

Quarterly and year to date Personnel expenditures have increased respectively by $30.3M or 17.1% ($207.5M - $177.2M) compared to the same quarter last year, and by $58.3M or 11.3% ($575.1M - $516.8M) compared to the same quarter last year. Both variances are mainly due to an increase in permanent salaries based on renewed collective agreements and to an increase in full-time equivalent employees mainly related to Protecting Canada’s Nature, Parks & Wild Spaces.

Year to date Information expenditures have increased by $1.8M or 75.0% ($4.2M - $2.4M) compared to the same quarter last year. This increase is mainly due to an increase in advertising activities related to the Nature Legacy advertising campaign.

Quarterly and year to date Professional Services expenditures have increased respectively by $22.0M or 46.2% ($69.6M - $47.6M) compared to the same quarter last year, and by $25.7M or 25.8% ($125.4M – $99.7M) compared to the same quarter last year. Both variances are mainly due to an increase in consulting fees related to radar replacement project and the Strong Arctic and Northern Communities initiative, as well as increased related to the Federal Contaminated Sites Action Plan.

Quarterly Transfer payments expenditures have increased by $14.7M or 38.7% ($52.7M - $38.0M) compared to the same quarter last year. The increase is mainly due to the timing of payments submitted for Protecting Canada’s Nature, Parks & Wild Spaces offset by reduced funding for the National Conservation Plan. Year to date Transfer payments expenditures have increased by $15.7M or 21.6% ($88.5M – $72.8M) compared to the same quarter last year. The increase is mainly due to the timing of payments submitted for Protecting Canada’s Nature, Parks & Wild Spaces and the Low Carbon Economy Fund, offset by reduced funding for the National Conservation Plan.

Quarterly Revenue collections have decreased by $3.3M or 16.3% ($17.0M - $20.3M) compared to the same quarter last year. This is mainly due to decreased activities related to the Oil Sands Monitoring Program and the Canadian Coast Guard Program, and is offset by increased activities related to the NAVCAN Program. Year to date Revenue collections have decreased by $5.7M or 11.6% ($43.6M - $49.3M) compared to the same quarter last year. This is mainly due to decreased activities related to the Oil Sands Monitoring Program.

Risks and Uncertainties

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 revenues. ECCC’s planned spending reflects approved funding by Treasury Board and Parliament.

ECCC’s ability to deliver results for Canadians is influenced by a wide range of internal and external factors such as the increasing frequency of severe weather events, and the expectation to consult and collaborate with federal, provincial, territorial, Indigenous, and other partners to address common environmental challenges. In its financial management, the Department considers these factors and their potential impact related to the department’s financial plan. For example:

This additional funding represents new financial opportunities for ECCC in delivering on departmental expected outcomes. To ensure effective program delivery, ECCC will secure financial authorities in a timely manner so that program areas are able to quickly ramp up to meet new requirements and will continue to conduct program monitoring and proactive financial risk management and planning, all of which have been integrated into ECCC’s business planning and reporting processes.

There are known issues associated with the implementation of the Phoenix pay system that have resulted in salary over/underpayments to employees. ECCC has proactively implemented a number of compensatory controls to monitor this risk and will continue to monitor and report on the situation closely in consultation with Public Services and Procurement Canada and Treasury Board Secretariat.

Significant changes in relation to operations, personnel and programs

The following major changes in relation to operations, personnel and programs occurred during the third quarter:

Approved by:

Dr. Martine Dubuc,
Associate Deputy Minister

Gatineau, Canada
Date:  February 25, 2020


Carol Najm,
Chief Financial Officer

Gatineau, Canada
Date:  February 21, 2020

Statement of Authorities (unaudited) – Table 1

Fiscal year 2019-20 (in thousands of dollars)
- Total available for use for the year ending March 31, 2020* Used during the quarter ended December 31, 2019 Year to date used at quarter end
Vote 1 – Net Operating expenditures 877,210
224,041 622,135
Vote 5 – Capital expenditures 109,541 47,901 68,171
Vote 10 – Grants and contributions 787,709 52,652 88,542
Budgetary Statutory – Employee Benefit Plans 95,294 23,620 70,861
Budgetary Statutory – Minister’s Salary and Motor Car Allowance 88
22 66
Budgetary Statutory – Spending of proceeds from the disposal of surplus Crown assets 0 84 1,119
Total Budgetary authorities 1,869,842 348,320 850,894
Non-Budgetary authorities - - -
Total authorities 1,869,842 348,320 850,894

* The funding available for use includes the 2019-20 Main Estimates, the Operating and Capital budget carry-forwards and the Compensation Allocations related to the new collective agreements. Authorities for Supplementary Estimates “B” will follow later this year.

Statement of Authorities (unaudited) – Table 2

Fiscal year 2018-19 (in thousands of dollars)
- Total available for use for the year ending March 31, 2019* Used during the quarter ended December 31, 2018 Year to date used at quarter end
Vote 1 – Net Operating expenditures 841,129 195,105
561,295
Vote 5 – Capital expenditures 92,041
23,542
41,430
Vote 10 – Grants and contributions 633,640
38,026 72,795
Budgetary Statutory – Employee Benefit Plans 92,642 21,590 64,771
Budgetary Statutory – Minister’s Salary and Motor Car Allowance 86 22 65
Budgetary Statutory – Spending of proceeds from the disposal of surplus Crown assets 0 8 158
Total Budgetary authorities 1,659,538 278,293 740,514
Non-budgetary authorities - - -
Total authorities 1,659,538
278,293 740,514

* The Total funding available for use includes the 2018-19 Main Estimates, the Budget Implementation Vote, the Supplementary Estimates “A”, the Operating and Capital budget carry-forwards, and the Compensation Allocations related to the new collective agreements.

Departmental budgetary expenditures by Standard Object (unaudited) – Table 3

Fiscal year 2019-20 (in thousands of dollars)
-
Planned expenditures for the year ending March 31, 2020* Expended during the quarter ended December 31, 2019 Year to date used at quarter end
Expenditures
Personnel 742,945
207,503 575,077
Transportation and communications 36,863 9,902 27,490
Information 6,881
1,658 4,220
Professional and special services 222,095 69,630 125,363
Rentals 33,611 3,888 22,894
Repair and maintenance 29,398 4,268 9,023
Utilities, materials and supplies 43,230 9,048 21,968
Acquisition of land, buildings and works 1,095 29
136
Acquisition of machinery and equipment 44,194 6,230 13,109
Transfer payments 787,709 52,652 88,542
Other subsidies and payments 4,331 493
6,634
Total gross budgetary expenditures 1,952,351 365,302 894,457
Less Revenues netted against expenditures :
Revenues 82,509 16,982
43,563
Total Revenues netted against expenditures : 82,509 16,982 43,563
Total net budgetary expenditures 1,869,842 348,320 850,894

* The planned expenditures available for use include the 2019-20 Main Estimates, the Operating and Capital budget carry-forwards and the Compensation Allocations related to the new collective agreements, and will be updated with Supplementary Estimates “B” later this year.

Departmental budgetary expenditures by Standard Object (unaudited) – Table 4

Fiscal year 2018-19 (in thousands of dollars)
- Planned expenditures for the year ending March 31, 2019* Expended during the quarter ended December 31, 2018 Year to date used at quarter end
Expenditures
Personnel 695,896
177,180
516,842
Transportation and communications 43,322
11,026
26,563
Information 6,077
1,148
2,363
Professional and special services 184,864
47,586
99,693
Rentals 37,449
5,025
24,131
Repair and maintenance 24,515
3,272
8,447
Utilities, materials and supplies 53,104
7,528
21,687
Acquisition of land, buildings and works 1,251
32
72
Acquisition of machinery and equipment 56,880
6,422
10,800
Transfer payments 633,640
38,026
72,795
Other subsidies and payments 6,359
1,297
6,380
Total gross budgetary expenditures 1,743,357 298,542 789,773
Less Revenues netted against expenditures :
Revenues 83,819 20,249 49,259
Total Revenues netted against expenditures : 83,819 20,249 49,259
Total net budgetary expenditures 1,659,538 278,293 740,514

* The planned expenditures available for use includes the 2018-19 Main Estimates, the Budget Implementation Vote, the Supplementary Estimates “A”, the Operating and Capital budget carry-forwards, and the Compensation Allocations related to the new collective agreements.

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