Health Canada Quarterly Financial Report - For the quarter ended December 31, 2019

Table of Contents

Introduction

Health Canada is the federal department responsible for helping Canadians maintain and improve their health.  In keeping with the Department’s commitment to making this country’s population among the healthiest in the world as measured by longevity, lifestyle and effective use of the public health care system, its main responsibilities are as a regulator, a service provider, a catalyst for innovation, a funder, and an information provider.  A summary of Health Canada’s programs may be found in Part II of the Main Estimates.  Health Canada administers the Canada Health Act which embodies national principles to ensure a universal and equitable publicly-funded health care system.

This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act in the form and manner prescribed by the Treasury Board, and should be read in conjunction with the Main Estimates and Supplementary Estimates A.

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. 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 and Supplementary Estimates A for the 2019-2020 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 results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

Highlights of Fiscal Quarter and Fiscal Year-to-Date Results

This quarterly financial report reflects the results of the current fiscal period in comparison to the authorities provided in the Main Estimates and Supplementary Estimates A for fiscal year 2019-2020, as well as budget adjustments approved by Treasury Board up to December 31, 2019.

  1. Significant Changes to Authorities

The following graph provides a comparison of net budgetary authorities available for spending at the end of each quarter of the current and previous fiscal years.

Figure 1.

Comparison of Net Budgetary Authorities as at June 30, September 30 and December 31 of Fiscal Years 2018-2019 and 2019-2020
Figure 1 - Text Description

Comparison of Net Budgetary Authorities as at June 30, September 30 and December 31 of Fiscal Years 2018-2019 and 2019-2020

Bar chart showing a comparison of net budgetary authorities as at June 30, September 30 and December 31 of fiscal years 2018-2019 and 2019-2020 in millions of dollars.

2018-2019 Net budgetary authorities as at June 30 = 2,337; 2018-2019 Net budgetary authorities as at September 30 = 2,387; 2018-2019 Net budgetary authorities as at December 31 = 2,413; 2019-2020 Net budgetary authorities at June 30 = 2,482; 2019-2020 Net budgetary authorities as at September 30 = 2,547; 2019-2020 Net budgetary authorities as at December 31 = 2,678.

The following table provides a comparison of total authorities available by vote at the end of the third quarter of the current and previous fiscal years.

Comparison of Authorities Available for Spending for the Year as at December 31 of Fiscal Years 2018-2019 and 2019-2020
Authorities available
(in millions of dollars)
2018-2019 2019-2020 Variance
Vote 1 – Operating expenditures 807 925 118
Vote 5 – Capital expenditures 29 23 (6)
Vote 10 – Grants and contributions 1,396 1,556 160
Statutory 181 174 (7)
Total authorities 2,413 2,678 265

Total authorities available for spending at the end of the third quarter of fiscal year 2019-2020 were $2,678 million as compared with $2,413 for 2018-2019, representing a net increase of $265 million, or 11%. This increase is primarily attributable to the following:

The increases noted above are partially offset by the following decreases:

The fluctuations in authorities available for spending are most notable in the following standard objects: personnel; professional and special services; repair and maintenance; transfer payments; and other subsidies and payments.

  1. Significant Changes in Year-to-Date Expenditures

The following graph provides a comparison of net budgetary authorities and year-to-date spending by quarter for the current and previous fiscal years.

Figure 2.

Comparison of Net Budgetary Authorities and Year-to-Date Expenditures for the Quarters Ended June 30, September 30 and December 31 of Fiscal Years 2018-2019 and 2019-2020
Figure 2 - Text Description

Comparison of Net Budgetary Authorities and Year-to-Date Expenditures for the Quarters Ended June 30, September 30 and December 31 of Fiscal Years 2018-2019 and 2019-2020

Bar chart showing a comparison of net budgetary authorities and year-to-date expenditures for the quarters ended June 30, September 30 and December 31 of fiscal years 2018-2019 and 2019-2020 in millions of dollars.

2018-2019 Net budgetary authorities = 2,413; 2018-2019 Year-to-date expenditures to June 30 = 340; 2018-2019 Year-to-date expenditures to September 30 = 653; 2018-2019 Year-to-date expenditures to December 31 = 1,509; 2019-2020 Net budgetary authorities = 2,678; 2019-2020 Year-to-date expenditures to June 30 = 899; 2019-2020 Year-to-date expenditures to September 30 = 1,264; 2019-2020 Year-to-date expenditures to December 31 = 2,162.

The following table provides a comparison of year-to-date spending by vote at the end of the third quarter of the current and previous fiscal years.

Comparison of Year-to-Date Expenditures for the Quarter Ended December 31 of Fiscal Years 2018-2019 and 2019-2020
Year-to-date expenditures
(in millions of dollars)
2018-2019 2019-2020 Variance
Vote 1 – Operating expenditures 557 669 112
Vote 5 – Capital expenditures 9 9 -
Vote 10 – Grants and contributions 840 1,372 532
Statutory 103 112 9
Total year-to-date expenditures 1,509 2,162 653

At the end of the third quarter of 2019-2020, total budgetary expenditures were $2,162 million compared with $1,509 million reported for the same period of 2018-2019, representing an increase of $653 million or 43%.

Year-to-date net operating expenditures have increased by approximately $112 million or 20% when compared to the third quarter of 2018-2019. The significant variances in operating expenditures are as follows:

There was an increase in Vote 10 – Grants and contributions year-to-date expenditures of $532 million or 63%, resulting from the following offsetting factors:

Statutory year-to-date expenditures have increased by $9 million or 9% from $103 million in 2018-2019 to $112 million in 2019-2020 that is mainly comprised of the following offsetting components:

  1. Quarterly Variances

The following graph presents a comparison of quarterly spending by quarter and by fiscal year.

Figure 3.

Comparison of Net Budgetary Authorities and Year-to-Date Expenditures for the Quarters Ended June 30, September 30 and December 31 of Fiscal Years 2018-2019 and 2019-2020
Figure 3 - Text Description

Comparison of Quarterly Expenditures for the Quarters Ended June 30, September 30 and December 31 of Fiscal Years 2018-2019 and 2019-2020

Bar chart showing a comparison of quarterly expenditures for the quarters ended June 30, September 30 and December 31 of fiscal years 2018-2019 and 2019-2020 in millions of dollars.

2018-2019 Expenditures for the quarter ended June 30 = 340; 2018-2019 Expenditures for the quarter ended September 30 = 312; 2018-2019 Expenditures for the quarter ended December 31 = 856; 2019-2020 Expenditures for the quarter ended June 30 = 899; 2019-2020 Expenditures for the quarter ended September 30 = 366; 2019-2020 Expenditures for the quarter ended December 31 = 897.

Expenditures in the third quarter of fiscal year 2019-2020 were $897 million compared with $856 million for the third quarter of 2018-2019, representing an increase of $41 million or 5% in quarterly spending.

The increase in quarterly spending is due primarily to:

Risks and Uncertainties

Health Canada is dedicated to enhancing the health and well-being of Canadians. It operates in a dynamic and complex environment characterized by internal and external drivers of change, which could potentially be disruptive to the Department’s ability to achieve its objectives (e.g., new innovative products, technologies, substances, foods and emerging product categories, evolving relationships between various levels of government, unforeseen health crises, scientific and technological change, shifting expectations around government service delivery and digital modernization, and cybersecurity threats).

Health Canada recognizes that successfully fulfilling its mandate is directly related to effective management of risk. Sound risk management equips the Department to respond proactively to change and uncertainty by using risk-based information to support effective decision-making. Additionally, it can lead to more effective service delivery, better project management, an increase in value for money, and, ultimately, better results for Canadians.

As a result, the Department employs integrated risk management tools, including the development of a Corporate Risk Profile and monitoring of risk management strategies, to proactively and systematically recognize, understand, accommodate and capitalize on new challenges and opportunities, with a focus on results. In addition, the Department has appropriate internal control systems in place, proportionate to the risks being managed.

Prudent management within a constrained fiscal environment is required to manage potential impacts on departmental programs and services. Health Canada continues to manage through effective engagement across the Department, a sound governance structure, as well as long-term planning. The Department’s executive-level committee on Finance, Investment Planning and Transformation recommends overall direction for financial management and control, and ensures alignment of investments with departmental strategies and transformation initiatives.

Program expenditures experience natural fluctuations from year to year depending on a variety of factors beyond program control (e.g., emerging health events and novel drug therapies), thus creating risk. Enhanced monitoring of expenditures is undertaken, including assessment of expenditures against projected spending as well as previous years’ trends and available resources to manage these risks. Cost management and planning are also in place and are reported regularly to senior management for decision-making.

Significant Changes in Relation to Operations, Personnel and Programs

Ms. Patty Hajdu was appointed Minister of Health in November 2019.

There have been no other significant changes in relation to operations, personnel and programs during this quarter.

Approved by:

Original signed by Stephen Lucas
Stephen Lucas
Deputy Minister
Ottawa, Canada
Date: February 23, 2020

Original signed by Edward de Sousa for
Randy Larkin
Assistant Deputy Minister and
Chief Financial Officer
Ottawa, Canada
Date: February 14, 2020

Statement of Authorities (unaudited)

Fiscal year 2019-2020 (in thousands of dollars)
Authority Total available for use for the year ending March 31, 2020Footnote * Used during the quarter ended December 31, 2019 Year-to-date used at quarter-end
Vote 1 – Operating expenditures 925,358 226,783 668,426
Vote 5 – Capital expenditures 22,857 4,474 9,365
Vote 10 – Grants and contributions 1,556,438 620,892 1,371,751
Footnote (S) Contributions to employee benefit plans 111,200 26,399 79,196
Footnote (S) Minister of Health – Salary and motor car allowance 88 22 66
Footnote (S) Spending of proceeds from the disposal of surplus Crown assets 119 - -
Footnote (S) Refunds of amounts credited to revenues in previous years 59 - 59
Footnote (S) Canada Health Infoway Inc. 10,131 - 10,131
Footnote (S)  Collection Agency Fees 23 5 23
Footnote (S) Spending of revenues pursuant to section 4.2 of the Department of Health Act 51,463 18,447 22,487
Total authorities 2,677,736 897,022 2,161,504
Footnote *

Includes only Authorities available for use and granted by Parliament at quarter end

Return to footnote * referrer

Footnote (S)

Statutory Vote

Return to footnote (S) referrer

Fiscal year 2018-2019 (in thousands of dollars)
Authority Total available for use for the year ending March 31, 2019Footnote * Used during the quarter ended December 31, 2018 Year-to-date used at quarter-end
Vote 1 – Operating expenditures 807,319 230,012 556,797
Vote 5 – Capital expenditures 28,944 5,648 8,814
Vote 10 – Grants and contributions 1,396,133 594,954 839,931
Footnote (S) Contributions to employee benefit plans 102,430 25,349 76,046
Footnote (S) Minister of Health – Salary and motor car allowance 86 21 64
Footnote (S) Spending of proceeds from the disposal of surplus Crown assets 478 17 62
Footnote (S) Refunds of amounts credited to revenues in previous years 3 - 3
Footnote (S) Canada Health Infoway Inc. 5,937 - 5,937
Footnote (S) Payments in connection with the Patent Act (Patented medicines) 20,000 - 20,000
Footnote (S) Spending of revenues pursuant to section 4.2 of the Department of Health Act 51,463 - 1,001
Total authorities 2,412,793 856,001 1,508,655
Footnote *

Includes only Authorities available for use and granted by Parliament at quarter end

Return to footnote * referrer

Footnote (S)

Statutory Vote

Return to footnote (S) referrer

Departmental Budgetary Expenditures by Standard Object (unaudited)

Fiscal year 2019-2020 (in thousands of dollars)
Standard Object 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  899,077  241,882  609,424
Transportation and communications  26,035  5,216  11,215
Information  26,766  7,100  15,659
Professional and special services  148,529  37,104  96,741
Rentals  22,140  6,370  12,526
Repair and maintenance  17,846  4,260  8,063
Utilities, materials and supplies  29,024  4,930  11,453
Acquisition of land, buildings and works  -   907  3,896
Acquisition of machinery and equipment  27,525 4,583 9,060
Transfer payments  1,566,569  620,892  1,381,881
Other subsidies and payments  73,847 803  96,011
Total gross budgetary expenditures  2,837,358  934,047  2,255,929
Less revenues netted against expenditures:
Rights and privileges  28,689  10,027  12,505
Services non-regulatory  30,386  5,737  18,907
Services regulatory  100,547  15,664  57,304
Services to other government departments - 5,597 5,709
Total revenues netted against expenditures  159,622  37,025  94,425
Total net budgetary expenditures 2,677,736 897,022 2,161,504
Fiscal year 2018-2019 (in thousands of dollars)
Standard Object 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 805,000 213,898 554,794
Transportation and communications 24,491 7,701 13,889
Information 32,754 8,994 14,245
Professional and special services 167,419 40,532 98,684
Rentals 19,940 5,180 8,948
Repair and maintenance 34,347 5,198 10,412
Utilities, materials and supplies 31,032 4,845 11,389
Acquisition of land, buildings and works - 2,857 4,109
Acquisition of machinery and equipment 28,944 4,469 8,760
Transfer payments 1,422,070 594,953 865,867
Other subsidies and payments 4,072 760 3,628
Total gross budgetary expenditures 2,570,069 889,387 1,594,725
Less revenues netted against expenditures:
Rights and privileges 62,530 13,151 30,814
Services non-regulatory 30,385 4,524 16,145
Services regulatory 64,361 13,718 36,999
Services to other government departments - 1,993 2,112
Total revenues netted against expenditures 157,276 33,386 86,070
Total net budgetary expenditures 2,412,793 856,001 1,508,655
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