Quarterly Financial Report, quarter ended September 30, 2022

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

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 2022-23 Main Estimates.

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, including taking action on clean growth and climate change. The Department is also engaged in activities aimed at preventing and managing pollution, conserving nature, and predicting weather and environmental conditions. 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 and regulations.

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 ECCC’s spending authorities granted by Parliament and those used by the Department consistent with the Main Estimates for the 2022‑23 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 September 30, 2022. The funding available for use includes the 2022-23 Main Estimates and the Operating and Capital Budget Carry-Forwards.

ECCC’s total available authorities for use for the year ending March 31, 2023, are higher by approximately $196.2M ($2,040.7M - $1,844.5M)Footnote 1  when compared to the same quarter of the previous year. This increase of $196.2M includes an increase in Net Operating Authorities (Vote 1) of $84.2M ($1,016.7M - $932.5M), Capital Authorities (Vote 5) of $21.3M ($145.5M - $124.2M), Grants and Contribution Authorities (Vote 10) of $84.5M ($770.3M - $685.8M) and Budgetary Statutory Authorities of $6.2M ($108.2M - $102.0M).

Vote 1 – Net Operating Authorities

The $84.2M increase compared to the last fiscal year in the net Operating Authorities is mainly due to the following:

Offset by:

Vote 5 – Capital Authorities

The $21.3M increase compared to the last fiscal year in the Capital Authorities is mainly due to the following:

Offset by:

Vote 10 – Grants and Contributions Authorities

The $84.5M increase compared to the last fiscal year in the Grants and Contributions Authorities is mainly due to the following:

Offset by:

Statutory Authorities

The $6.2M increase compared to the 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 second quarter of 2022-23, total budgetary expenditures were $330.5M compared to $279.8M reported for the same period in 2021-22, resulting in an increase of $50.7M. Year-to-date expenditures as of September 30, 2022, were $612.3M, which represents an increase of $71.7M ($612.3M - $540.6M) compared to the same period in 2021-22.

Vote 1 – Net Operating Authorities used during the second quarter of 2022-23 totalled $238.2M, which represents an increase of $14.8M ($238.2M - $223.5M) compared to the same period last year. Year-to- date expenditures as of September 30, 2022, were $452.2M, which represents an increase of $27.0M ($452.2M - $425.2M) compared to the same period last year. These variances are mainly due to an increase in personnel, transportation and communication, professional and special services and utilities, materials and supplies.

Vote 5 – Capital Authorities used during the second quarter of 2022-23 totalled $21.1M, which represents an increase of $3.4M ($21.1M – $17.7M) compared to the same period last year. Year-to-date expenditures as of September 30, 2022, are $27.7M, which represents an increase of $2.5M ($27.7M - $25.2M) compared to the same period last year. The quarterly variance is mainly due to an increase in professional and special services, while the year-to-date variance is mainly explained by an increase in the acquisition of machinery and equipment.

Vote 10 – Grants and Contributions Authorities used during the second quarter of 2022-23 totalled $44.1M, which represents an increase of $29.7M ($44.1M - $14.4M) compared to the same period last year. Year-to-date expenditures as of September 30, 2022, are $77.8M, which represents an increase of $36.0M ($77.8M - $41.8M) compared to the same period last year. The quarterly variance is mainly due to the timing of payment submitted for initiatives related to Protecting Canada’s Nature, Parks and Wild Spaces and to Youth Employment and Skills Strategy and to an increase in funding available for initiatives related to conserving Canadaʼs land and freshwater, protecting species, advancing Indigenous reconciliation and increasing access to nature. The year-to-date variance is also due to an increase in funding available for initiatives related to Canada’s International Climate Finance and to implementing natural climate solutions in Canada.

Budgetary Statutory Authorities – Budgetary Statutory Authorities used during the second quarter of 2022-23 totalled $27.0M, which represents an increase of $2.8M ($27.0M - $24.2M) compared to the same period last year. Year-to-date expenditures as of September 30, 2022, are $54.6M, which represents an increase of $6.2M ($54.6M - $48.4M) compared to the same period last year. Both variances are mainly due to an increase in 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 increased by $8.7M ($218.1M - $209.4M) and $19.4M ($430.4M - $411.0M) compared to the same period last year. Both variances are mainly due to higher permanent salaries based on collective agreements and to the increase related to conserving Canadaʼs land and freshwater, protecting species, advancing Indigenous reconciliation and increaseing access to nature, as well as to carbon pollution pricing proceeds return initiatives.

Quarterly and year-to-date transportation and communications expenditures increased by $3.0M ($7.4M - $4.4M) and $7.2M ($13.6M - $6.4M) compared to the same period last year. Both variances are mainly due to an increase in travel expenditures related to a return to pre-pandemic situation.

Quarterly and year-to-date professional and special services expenditures increased by $2.9M ($42.0M - $39.1M) and $2.3M ($65.5M - $63.2M) compared to the same period last year. The quarterly variance is mainly due to the timing of payments for information technology professional services and to an increase in funding for the Federal Contaminated Sites Action Plan.

Quarterly and year-to-date utilities, materials and supplies expenditures increased by $2.7M ($8.1M - $5.4M) and $2.6M ($13.1M - $10.5M) compared to the same period last year. Both variances are mainly due to an increase in meteorological and laboratory materials and supplies related to a return to pre-pandemic needs and an increase in fuel and utilities costs.

Quarterly and year-to-date acquisition of machinery and equipment expenditures increased by $1.5M ($5.0M - $3.5M) and $4.1M ($9.8M - $5.7M) compared to the same period last year. Both variances are mainly explained by the timing of payments for the acquisition of computer equipment and the timing of the acquisition of lab instruments related to a return to pre-pandemic needs.

Quarterly and year-to-date transfer payments expenditures increased by $29.7M ($44.1M - $14.4M) and $36.5M ($78.3M - $41.8M) compared to the same quarter last year. The quarterly variance is mainly due to the timing of payments submitted for initiatives related to Protecting Canada’s Nature, Parks and Wild Spaces and to Youth Employment and Skills Strategy and to an increase in funding available for initiatives related to conserving Canadaʼs land and freshwater, protecting species, advancing Indigenous reconciliation and increasing access to nature. The year-to-date variance is mainly due to an increase in funding available for initiatives related to Canada’s International Climate Finance Program and to implementing natural climate solutions in Canada.

Quarterly and year-to-date revenue collections increased by $0.5M ($8.5M - $8.0M) and $4.8M ($20.5M - $15.7M) compared to the same period last year. Both variances are mainly due to the timing of collections related to meteorological services provided to NAV Canada and to activities related to the Oil Sands Monitoring Program.

Risks and uncertainties

A wide range of internal and external factors have the potential to affect ECCC’s ability to deliver optimal and timely results for Canadians. With regard to financial management, the Department considers and addresses three key strategic risks to its financial plan: strategic partnerships; COVID-19 and post-pandemic uncertainties; and capital and technological infrastructure.

The Department’s ability to deliver results for Canadians requires extensive collaboration with strategic partners (federal, provincial, territorial, Indigenous, and international partners, the private and non-profit sectors, and civil society). This reliance can give rise to risks associated with the Department’s external relationships and partnerships if efforts are not well aligned and coordinated. To mitigate this risk, the Department, has continued to work collaboratively with key partners, build new relationships, maintain/improve existing relationships by developing a holistic approach to dealing with common partners, and work with external partners through existing governance bodies. The Department also promotes sound stewardship of departmental resources through the terms and conditions associated with all of its grants and contributions programs in order to leverage partner support, ensure efficient delivery of external funding, and reduce potential lapses.

COVID-19 and post pandemic realities continue to impact the Department’s ability to deliver services. In particular, supply chain issues could result in scheduled delays and increased costs, thus impeding the Department’s ability to complete technical fieldwork. ECCC continues to adjust its operations in response to these impacts through quarterly financial reviews and bi-annual business planning updates.

The Department also relies on its capital and technological infrastructure to achieve its mandate. This infrastructure requires maintenance and ongoing investment to prevent rust-out, stay abreast of technological advancements and ensure functionality in the face of changing and increasingly complex needs. ECCC undertakes capital and technological planning to improve upon the assessment of departmental-wide priorities and funding needs.

ECCC will continue to closely monitor its operating environment to reallocate resources to key priorities and ensure that resources are being managed effectively to deliver optimal and timely results through improved programs, policies, and services.

Significant changes in relation to operations, personnel and programs

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

(the original version was signed by)

T. Christine Hogan,
Deputy Minister
Gatineau, Canada
Date: November 25, 2022

(the original version was signed by)

Linda Drainville,
Chief Financial Officer
Gatineau, Canada
Date: November 25, 2022

Statement of Authorities (unaudited) – Table 1

Fiscal year 2022-23 (in thousands of dollars)
- Total available for use for the year ending March 31, 2023* Used during the quarter ended September 30, 2022 Year-to-date used at quarter end
Vote 1 – Net Operating Expenditures 1,016,738 238,242 452,226
Vote 5 – Capital Expenditures 145,524 21,058 27,689
Vote 10 – Grants and Contributions 770,282 44,136 77,793
Budgetary Statutory – Employee Benefit Plans 108,101 27,025 54,051
Budgetary Statutory – Minister’s Salary and Motor Car Allowance 93 23 46
Budgetary Statutory – Distribution of Fuel and Excess - - 464
Total Budgetary Authorities 2,040,738 330,484 612,269
Non-Budgetary Authorities - - -
Total Authorities 2,040,738 330,484 612,269

* The funding available for use includes the 2022-23 Main Estimates and the Operating and Capital Budget Carry-Forwards.

Totals may not add up due to rounding.

Statement of Authorities (unaudited) – Table 2

Fiscal year 2021-22 (in thousands of dollars)
- Total available for use for the year ending March 31, 2022* Used during the quarter ended September 30, 2021 Year-to-date used at quarter end
Vote 1 – Net Operating Expenditures 932,490 223,461 425,249
Vote 5 – Capital Expenditures 124,285 17,692 25,173
Vote 10 – Grants and Contributions 685,762 14,386 41,752
Budgetary Statutory – Employee Benefit Plans 101,864 24,193 48,386
Budgetary Statutory – Minister’s Salary and Motor Car Allowance 91 23 46
Total Budgetary Authorities 1,844,492 279,755 540,606
Non-Budgetary Authorities - - -
Total Authorities 1,844,492 279,755 540,606

* The funding available for use includes the 2021-22 Main Estimates, Supplementary Estimates A and the Operating and Capital Budget Carry-Forwards.

Totals may not add up due to rounding.

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

Fiscal year 2022-23 (in thousands of dollars)
Expenditures Planned expenditures for the year ending March 31, 2023* Expended during the quarter ended September 30, 2022 Year to date used at quarter end
Personnel 829,758 218,092 430,354
Transportation and communications 19,036 7,361 13,610
Information 9,495 3,604 4,317
Professional and special services 271,074 41,993 65,548
Rentals 76,261 5,003 10,052
Repair and maintenance 26,606 3,141 4,881
Utilities, materials and supplies 44,191 8,064 13,079
Acquisition of land, buildings and works 1,773 32 75
Acquisition of machinery and equipment 58,293 4,994 9,762
Transfer payments 770,282 44,136 78,257
Public debt charges 577 - -
Other subsidies and payments 7,606 2,567 2,844
Total gross budgetary expenditures 2,114,952 338,987 632,779
Less Revenues netted against expenditures:
Revenues 74,214 8,503 20,510
Total Revenues netted against expenditures: 74,214 8,503 20,510
Total net budgetary expenditures 2,040,738 330,484 612,269

* The planned expenditures available for use includes the 2022-23 Main Estimates and the Operating and Capital Budget Carry-Forwards.

Totals may not add up due to rounding.

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

Fiscal year 2021-22 (in thousands of dollars)
Expenditures Planned expenditures for the year ending March 31, 2022* Expended during the quarter ended September 30, 2021 Year to date used at quarter end
Personnel 789,557 209,371 410,951
Transportation and communications 47,508 4,430 6,423
Information 8,535 2,226 2,988
Professional and special services 240,437 39,146 63,194
Rentals 33,702 4,822 8,772
Repair and maintenance 19,863 1,930 3,409
Utilities, materials and supplies 43,792 5,419 10,540
Acquisition of land, buildings and works 1,934 90 169
Acquisition of machinery and equipment 40,901 3,453 5,653
Transfer payments 685,762 14,387 41,753
Public debt charges 531 - -
Other subsidies and payments 7,729 2,444 2,504
Total gross budgetary expenditures 1,920,251 287,718 556,356
Less Revenues netted against expenditures:
Revenues 75,759 7,963 15,750
Total Revenues netted against expenditures: 75,759 7,963 15,750
Total net budgetary expenditures 1,844,492 279,755 540,606

* The planned expenditures available for use includes the 2021-22 Main Estimates, Supplementary Estimates A and the Operating and Capital Budget Carry-Forwards.

Totals may not add up due to rounding.

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