ARCHIVED - Health Canada Quarterly Financial Report - For the quarter ended June 30, 2011

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 program activities 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.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities presents the spending authorities granted to Health Canada by Parliament and those used by the Department consistent with the Main Estimates and Supplementary Estimates for the 2011-12 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.

Parliamentary authority is required before any money can be spent by the Government. Such authorities 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.

As part of the departmental performance reporting process, Health Canada prepares its annual departmental financial statements on a full accrual basis in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector. However, the spending authorities voted by Parliament remain on an expenditure basis.

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

Highlights of Fiscal Quarter and Fiscal Year to Date (YTD) Results

This quarterly financial report reflects the results of the current fiscal period in relation to the Main Estimates for which full supply was released on June 27, 2011.

The following graph provides a comparison of net budgetary authorities and expenditures for the quarter ended June 30, 2010 and June 30, 2011.

Comparison of Net Budgetary Authorities and Expenditures for the Quarter Ended June 30, 2010 and June 30, 2011 (in Millions $)

Comparison of Net Budgetary Authorities and Expenditures for the Quarter Ended June 30, 2010 and June 30, 2011

Total authorities available for the year as at June 30, 2011 have decreased $254.4 million as compared with the same quarter of the prior year. This decrease is primarily due to the sunsetting of programs including First Nations and Inuit Health Services Program Integrity, Chemical Management Plan, Clean Air Regulatory Agenda, Federal Contaminated Sites Action Plan and Adaptation to Climate Change, which the Department is currently seeking to renew. The decrease in authorities available at June 30, 2011 has been partially offset by an increase in statutory authorities of $62.4 million for Canada Health Infoway Inc. statutory grant, reflecting a difference in timing of expenditures made in this fiscal year as compared with last year.

During the first quarter of the 2011-12 fiscal year, total budgetary expenditures were $873.7 million compared with $798.9 million reported in the same period of 2010-11, representing an increase of $74.9 million or 9.4%.

This increase is primarily due to a change in timing of transfer payments to Canada Health Infoway Inc. in the amount of $62.4 million. The funds for this statutory grant are expended according to the identified cash flow requirements of that organization for the fiscal year.

In addition, there was an overall increase in Vote 10 - Grants and contributions expenditures of $17.7 million resulting from changes in timing of payments made under grant agreements as well as increases in First Nations and Inuit Health contribution spending. This increase in transfer payments was partially offset by decreases resulting from the sunsetting of the Canada Economic Action Plan in 2010-11.

Compared to the prior year, there was also a net decrease in Vote 1 - Operating expenditures of $7.2 million. This is attributable to the impact of sunsetting programs. The aforementioned reductions are primarily reflected in the decreases for professional and special services.

Risks and Uncertainties

At Health Canada, risk management is a fundamental underpinning of good management and decision-making.  Moreover, risk management is a truly integrated process designed to address risk in any area or level within the Department, whether at strategic, program or project levels, in order to provide reasonable assurance regarding the achievement of corporate objectives and desired outcomes.

Health Canada faces the risk of adverse financial constraints due to challenges arising in response to emerging issues and increasing health care costs. All departments are expected to operate within their allotted budgets. Shifts in the operating environment for unforeseeable events such as H1N1; responding to an increasingly complex environment driven by the globalization of health products and rapid technological change; and addressing financial constraints from rising program costs associated with delivering health care services to First Nations and Inuit can create pressures and result in a reallocation of resources away from other programs. If the risk materializes it could potentially have an adverse impact program implementation and the Department's capacity to deliver services to Canadians.

The Department has risk mitigation strategies in place to manage these pressures and constraints to ensure that impacts on critical programs and service to Canadians are minimized. Further, the Department is seeking opportunities to address sustainability and is ensuring that investment plan priorities are established, projects are prioritized and that major upcoming expenditures are integrated with the departmental operating plans.

Budget 2010 announced that the operating budgets of departments would be frozen at their 2010-11 levels for the fiscal years 2011-12 and 2012-13. Management has reviewed and continues to consider various options to adjust to this constraint in funding. The impact on departmental activities is being managed through a variety of mitigation strategies.

Significant Changes in Relation to Operations, Personnel and Programs

Ms. Glenda Yeates was appointed Deputy Minister in April 2010.

Mr. Jamie Tibbetts was appointed to the position of Chief Financial Officer, on March 14, 2011. In the interim, from April 2010, Mr. Germain Tremblay, the Deputy Chief Financial Officer fulfilled the responsibilities of the position.

There have been no other significant changes in relation to operations, personnel and programs over the last year.

Approved by:

Glenda Yeates
Deputy Minister
Ottawa, Canada
Date: August 22, 2011

Jamie Tibbetts
Chief Financial Officer
Ottawa, Canada
Date: August 22, 2011

Statement of Authorities (unaudited)

Fiscal year 2011-12 (in thousands of dollars)
Total available for use for the year ending March 31, 2012* Used during the quarter ended June 30, 2011 Year to date used at quarter-end

* Includes only Authorities available for use and granted by Parliament at quarter end
(S) - Statutory Vote

Vote 1 - Operating expenditures 1,734,817 375,512 375,512
Vote 5 - Capital expenditures 30,043 182 182
Vote 10 - Grants and contributions 1,444,698 401,549 401,549
(S) Contributions to employee benefit plans 134,151 33,538 33,538
(S) Minister of Health - Salary and motor car allowance 78 19 19
(S) Spending of proceeds from the disposal of surplus Crown assets 180 48 48
(S) Refunds of amounts credited to revenues in previous years 492 492 492
(S) Canada Health Infoway Inc. 62,387 62,387 62,387
(S) Collection agency fees 14 14 14
Total authorities 3,406,860 873,741 873,741
Fiscal year 2010-11 (in thousands of dollars)
Total available for use for the year ending March 31, 2011* Used during the quarter ended June 30, 2010 Year to date used at quarter-end

* Includes only Authorities available for use and granted by Parliament at quarter end
(S) - Statutory Vote

Vote 1 - Operating expenditures 1,988,889 382,724 382,724
Vote 5 - Capital expenditures 38,576 1,575 1,575
Vote 10 - Grants and contributions 1,510,370 383,855 383,855
(S) Contributions to employee benefit plans 122,825 30,706 30,706
(S) Minister of Health - Salary and motor car allowance 79 19 19
(S) Spending of proceeds from the disposal of surplus Crown assets 497 8 8
(S) Refunds of amounts credited to revenues in previous years 55 55 55
(S) Canada Health Infoway Inc. 0 0 0
(S) Collection agency fees 3 3 3
Total authorities 3,661,294 798,945 798,945

Departmental Budgetary Expenditures by Standard Object (unaudited)

Fiscal year 2011-12 (in thousands of dollars)
Planned expenditures for the year ending March 31, 2012* Expended during the quarter ended June 30, 2011 Year to date used at quarter-end

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

Expenditures:
Personnel 879,509 212,185 212,185
Transportation and communications 243,545 35,663 35,663
Information 12,596 335 335
Professional and special services 403,187 68,707 68,707
Rentals 15,697 3,238 3,238
Repair and maintenance 34,084 11,517 11,517
Utilities, materials and supplies 394,897 89,626 89,626
Acquisition of lands, buildings and works 6,022 41 41
Acquisition of machinery and equipment 38,444 4,879 4,879
Transfer payments 1,507,085 463,957 463,957
Other subsidies and payments 990 (2,912) (2,912)
Total gross budgetary expenditures 3,536,056 887,236 887,236
Less revenues netted against expenditures:
Rights and privileges 52,165 4,091 4,091
Services non-regulatory 21,876 3,371 3,371
Services regulatory 55,155 6,033 6,033
Total revenues netted against expenditures 129,196 13,495 13,495
Total net budgetary expenditures 3,406,860 873,741 873,741
Fiscal year 2010-11 (in thousands of dollars)
Planned expenditures for the year ending March 31, 2011* Expended during the quarter ended June 30, 2010 Year to date used at quarter-end

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

Expenditures:
Personnel 882,148 210,112 210,112
Transportation and communications 231,678 36,782 36,782
Information 27,486 459 459
Professional and special services 487,136 74,862 74,862
Rentals 15,696 3,583 3,583
Repair and maintenance 46,614 11,147 11,147
Utilities, materials and supplies 471,532 89,372 89,372
Acquisition of lands, buildings and works 4,256 914 914
Acquisition of machinery and equipment 52,590 5,202 5,202
Transfer payments 1,510,370 383,855 383,855
Other subsidies and payments 1,413 (2,769) (2,769)
Total gross budgetary expenditures 3,730,919 813,519 813,519
Less revenues netted against expenditures:
Rights and privileges 20,556 6,174 6,174
Services non-regulatory 21,434 1,298 1,298
Services regulatory 27,635 7,102 7,102
Total revenues netted against expenditures 69,625 14,574 14,574
Total net budgetary expenditures 3,661,294 798,945 798,945
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