ARCHIVED - Health Canada Quarterly Financial Report - For the quarter ended September 30, 2011
Table of Contents
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 as prescribed by Treasury Board Accounting Standard 1.3. 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 2010-11 and 2011-12 fiscal years. 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 in turn 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 fiscal year 2011-12 and subsequent budget adjustments approved by Treasury Board up to September 30, 2011.
A. Significant Changes to Authorities
The following graph and table present a comparison of authorities available for spending for the year at the end of each quarter, by fiscal year.
|Authorities available (in thousands of dollars)||2010-11||2011-12||Variance|
|Vote 1 - Net operating expenditures||2,011,667||1,860,580||(151,087)|
|Vote 5 - Capital expenditures||38,576||32,666||(5,910)|
|Vote 10 - Grants and contributions||1,510,370||1,444,698||(65,672)|
Authorities available for spending in fiscal year 2011-12 are $3.535 billion at the end of the second quarter as compared with $3.731 billion at the end of the second quarter of 2010-11, representing a reduction of $196 million, or 5.3%. 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 through the 2011-12 Supplementary Estimates 'B'.
Partially offsetting this decrease are increases for:
- $94.1M in budget carry forwards from the prior year;
- $34.3M in additional allotments received for pay list requirements for the liquidation of severance pay and termination benefits stemming from changes in collective agreements; and
- $15.3M in statutory authorities for disbursements to Canada Health Infoway Inc.
The fluctuations are most notable in the following standard objects; personnel, professional and special services, utilities, materials and supplies, transfer payments and revenues netted against expenditures.
Planned re-spendable revenues to be netted against planned expenditures have increased by $59.6 million over the prior year. The Department updated its user fee regulations to ensure that they are appropriately aligned with expected increases in the cost of providing services. The revised regulations came into effect for 2011-12.
B. Significant Changes in Year to Date Expenditures
The following graph provides a comparison of net budgetary authorities and cumulative spending by quarter for the current and previous fiscal years.
The following table provides a comparison of cumulative spending by vote for the current and previous fiscal years.
|Year to date expenditures (in thousands of dollars)||2010-11||2011-12||Variance|
|Vote 1 - Net operating expenditures||854,615||876,576||21,961|
|Vote 5 - Capital expenditures||5,749||2,367||(3,382)|
|Vote 10 - Grants and contributions||760,179||732,681||(27,498)|
|Total year to date expenditures||1,729,265||1,741,708||12,443|
At the end of the second quarter of fiscal year 2011-12, the total year to date expenditures were $1.742 billion, compared with $1.729 billion reported in the same period of 2010-11, representing an increase of $12.4 million, or 0.8%.
Year to date Vote 1 net operating expenditures for 2011-12 were $876.6 million compared to $854.6 million in 2010-11, an increase of $22.0 million, or 2.6%. The majority of this increase occurred during the second quarter in personnel expenditures and is attributable to the liquidation of severance pay and termination benefits amounting to $27.1 million. Also contributing to the increase in personnel costs was an increase in the number of employees and effect of annual increments in accordance with collective agreements. Offsetting these Vote 1 increases in personnel spending are decreases in expenditures for professional and special services, relating to the impact of sunsetting programs and increases in vote-netting revenues realized as a result of increased user fees.
Year to date Vote 10 grants and contributions expenditures decreased from $760.2 million in 2010-11 to $732.7 million in 2011-12, a reduction of $27.5 million or 3.6%. This resulted from sunsetting programs including the Canada Economic Action Plan in 2010-11 and changes in the timing of expenditures made to recipients as compared with the prior year.
Statutory year to date expenditures have increased from $108.7 million in 2010-11 to $130.1 million in 2011-12, an increase of $21.4 million or 19.7%. The most significant element of this variance is an increase in year to date expenditures made to Canada Health Infoway Inc. of $15.3 million. The payments for this statutory grant are expended according to the cash flow requirements requested by that organization for the fiscal year.
C. Quarterly Variances
The following graph presents a comparison of quarterly spending by quarter and by fiscal year.
Expenditures in the second quarter of fiscal 2011-12 were $868.0 million compared with $930.3 million for the second quarter of 2010-11, representing a decrease of $62.3 million or 6.7% in quarterly spending. This variance in spending for the most part reflects the change in timing of disbursements made to Canada Health Infoway Inc.
Risks and Uncertainties
At Health Canada, risk management is a fundamental underpinning of good management and decision making. Canadians expect the Department to be well managed and for its leaders to be accountable for the prudent stewardship of public funds, the safeguarding of public assets and the effective, efficient and economical use of its public resources. One of the principles that guides effective financial management is risk management. The Department is responsible to ensure that effective and efficient systems of internal controls are in place, and that these controls are proportionate to the risks they aim to mitigate while at the same time supporting the achievement of its departmental program objectives.
The Department is operating in a dynamic environment characterized by internal and external drivers of change such as user fee and cost recovery models and new funding approved through Supplementary Estimates etc. Proactive, ongoing risk management in decision making is required to minimize any adverse impacts on services, program delivery, and the Department's overall capacity to deliver services to Canadians. In 2011-12, investment plan priorities were established and approved by senior management. Included in Vote 1 net operating authorities are anticipated re-spendable revenues relating to the revised user fee regulations which came into effect for fiscal year 2011-12. This revenue model adds an element of risk to the Department's financial management environment should these user fees not be realized by year end. Management is applying sound risk based management to the financial stewardship of its departmental resources.
Significant Changes in Relation to Operations, Personnel and Programs
The Department is pleased to report that it signed the British Columbia Tripartite Framework Agreement on Health Governance between the Federal Government, the Province of British Columbia and the First Nations of British Columbia. The Framework Agreement signed on October 13, 2011 is the legal agreement that sets in motion the process for transferring Health Canada's role in designing and delivering health programs and services to First Nations in BC to a new First Nations Health Authority, which is expected to be completed by 2013-14.
There have been no other significant changes in relation to operations, personnel and programs over the last year.
Date: November 25, 2011
Chief Financial Officer
Date: November 25, 2011
Statement of Authorities (unaudited)
|Total available for use for the year ending March 31, 2012*||Used during the quarter ended September 30, 2011||Year to date used at quarter-end|
|Vote 1 - Net operating expenditures||1,860,580||501,064||876,576|
|Vote 5 - Capital expenditures||32,666||2,185||2,367|
|Vote 10 - Grants and contributions||1,444,698||331,132||732,681|
|(S) Contributions to employee benefit plans||134,151||33,537||67,075|
|(S) Minister of Health - Salary and motor car allowance||78||20||39|
|(S) Spending of proceeds from the disposal of surplus Crown assets||219||8||56|
|(S) Refunds of amounts credited to revenues in previous years||511||19||511|
|(S) Canada Health Infoway Inc.||62,387||0||62,387|
|(S) Collection agency fees||16||2||16|
|Total available for use for the year ending March 31, 2011*||Used during the quarter ended September 30, 2010||Year to date used at quarter-end|
|Vote 1 - Net operating expenditures||2,011,667||471,891||854,615|
|Vote 5 - Capital expenditures||38,576||4,174||5,749|
|Vote 10 - Grants and contributions||1,510,370||376,324||760,179|
|(S) Contributions to employee benefit plans||122,825||30,707||61,413|
|(S) Minister of Health - Salary and motor car allowance||79||20||39|
|(S) Spending of proceeds from the disposal of surplus Crown assets||498||1||9|
|(S) Refunds of amounts credited to revenues in previous years||164||109||164|
|(S) Canada Health Infoway Inc.||47,092||47,092||47,092|
|(S) Collection agency fees||5||2||5|
Departmental Budgetary Expenditures by Standard Object (unaudited)
for the year ending March 31, 2012*
|Expended during the quarter ended
September 30, 2011
|Year to date used at
|Transportation and communications||258,452||52,460||88,123|
|Professional and special services||439,495||102,491||171,198|
|Repair and maintenance||44,327||8,314||19,831|
|Utilities, materials and supplies||414,690||109,897||199,523|
|Acquisition of lands, buildings and works||6,415||656||697|
|Acquisition of machinery and equipment||40,674||7,352||12,231|
|Other subsidies and payments||2,381||(771)||(3,683)|
|Total gross budgetary expenditures||3,664,502||890,119||1,777,355|
|Less revenues netted against expenditures:|
|Rights and privileges||52,165||7,863||11,954|
|Total revenues netted against expenditures||129,196||22,152||35,647|
|Total net budgetary expenditures||3,535,306||867,967||1,741,708|
for the year ending March 31, 2011*
|Expended during the quarter ended
September 30, 2010
|Year to date used at
|Transportation and communications||235,391||47,302||84,084|
|Professional and special services||496,180||104,063||178,925|
|Repair and maintenance||49,165||6,448||17,595|
|Utilities, materials and supplies||476,453||106,596||195,968|
|Acquisition of lands, buildings and works||4,256||869||1,783|
|Acquisition of machinery and equipment||52,590||7,939||13,141|
|Other subsidies and payments||1,865||696||(2,073)|
|Total gross budgetary expenditures||3,800,901||945,013||1,758,532|
|Less revenues netted against expenditures:|
|Rights and privileges||20,556||2,889||9,063|
|Total revenues netted against expenditures||69,625||14,693||29,267|
|Total net budgetary expenditures||3,731,276||930,320||1,729,265|
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