Health Canada Quarterly Financial Report - For the quarter ended September 30, 2015

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 A.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting and using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.  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 2015-2016 fiscal year. 

The authority of Parliament 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 public sector accounting standards.  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 Results

This quarterly financial report reflects the results of the current fiscal period in comparison to the authorities provided in the combination of the Main Estimates and Supplementary Estimates A for fiscal year 2015-2016, as well as budget adjustments approved by Treasury Board up to September 30, 2015.

A. Significant Changes to Authorities

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

Comparison of Authorities Available for Spending for the Year as at June 30 and September 30 of Fiscal Years 2014-2015 and 2015-2016

Bar chart showing a comparison of authorities available for spending for the year as at June 30 and September 30 of fiscal years 2014-2015 and 2015-2016 in millions of dollars.

2014-2015 Authorities available as at June 30 = 3,727; 2014-2015 Authorities available as at September 30 = 3,795; 2015-2016 Authorities available as at June 30 = 3,734; 2015-2016 Authorities available as at September 30 = 3,798.

(in Millions $)

The following table provides a comparison of authorities by vote for the second quarter of the current and previous fiscal years.

Comparison of Authorities Available for Spending for the Year as at September 30 of Fiscal Years 2014-2015 and 2015-2016
Authorities available (in millions of dollars) 2014-2015 2015-2016 Variance
Vote 1 – Operating expenditures 1,838 1,835 (3)
Vote 5 – Capital expenditures 35 35 -
Vote 10 – Grants and contributions 1,684 1,678 (6)
Statutory 238 250 12
Total authorities 3,795 3,798 3

Authorities available for spending in fiscal year 2015-2016 were $3,798 million at the end of the second quarter as compared with $3,795 million at the end of the second quarter of 2014-2015, representing a net increase of $3 million, or 0.1%.  This increase is primarily attributable to the following:

  • $63.5 million increase for the growth in First Nations and Inuit Health programs and services;
  • $29.3 million increase for the Implementation of the British Columbia Tripartite Framework Agreement on First Nation Health Governance for the transfer to the First Nations Health Authority;
  • $23.1 million increase for the Renewal of the First Nations Water and Wastewater Action Plan;
  • $23.0 million increase for the Territorial Health Investment Fund; and,
  • $8.2 million increase for Preventing Prescription Drug Abuse.

These increases are partially offset by the following decreases:

  • $140.8 million decrease for the sunsetting of funding in 2015-2016 for the Renewal of Federal Aboriginal Health Programs; and,
  • $6.0 million decrease for the sunsetting of funding in 2015-2016 for the Sir Frederick Banting Building Retrofit.

The fluctuations in authorities available for spending are most notable in the following standard objects: personnel; transportation and communications; professional and special services; and utilities, materials and supplies.

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.

Comparison of Net Budgetary Authorities and Year to Date Expenditures for the Quarters Ended June 30 and September 30 of Fiscal Years 2014-2015 and 2015-2016

Bar chart showing a comparison of net budgetary authorities and year to date expenditures for the quarters ended June 30 and September 30 of Fiscal Years 2014-2015 and 2015-2016 in millions of dollars.

2014-2015 Net Budgetary Authorities = 3,795; 2014-2015 Year to date Expenditures to June 30 = 1,133; 2014-2015 Year to date Expenditures to September 30 = 1,959; 2015-2016 Net Budgetary Authorities = 3,798; 2015-2016 Year to date Expenditures to June 30 = 1,033; 2015-2016 Year to date Expenditures to September 30 = 1,935.

(in Millions $)

The following table provides a comparison of spending by vote for the second quarter of the current and previous fiscal years.

Comparison of Year to Date Expenditures for the Quarter Ended September 30 of Fiscal Years 2014-2015 and 2015-2016
Year to date expenditures
(in millions of dollars)
2014-2015 2015-2016 Variance
Vote 1 – Operating expenditures 779 778 (1)
Vote 5 – Capital expenditures 5 5 -
Vote 10 – Grants and contributions 1,047 1,000 (47)
Statutory 128 152 24
Total year to date expenditures 1,959 1,935 (24)

At the end of the second quarter of 2015-2016, total budgetary expenditures were $1,935 million compared with $1,959 million reported for the same period of 2014-2015, representing a decrease of $24 million or 1.3%, primarily in expenditures relating to grants and contributions and statutory expenditures.

Year to date net operating expenditures have decreased by approximately $1 million or 0.1% when compared to the second quarter of 2014-2015.  The significant variances in operating expenditures reported by standard object are as follows:

  • $14.8 million decrease in personnel expenditures due primarily to the timing of recording of expenditures in relation to the spending of revenues collected under the Shared Services Partnership agreement with the Public Health Agency of Canada; and,
  • $25.5 million decrease in other subsidies and payments due primarily to the one-time transition payment for implementing salary payment in arrears by the Government of Canada in the prior year.

These decreases are partially offset by:

  • $15.1 million increase in transportation and communication as a result of increasing costs of transportation and a higher demand experienced during the year for nurses and patients associated with the Non-Insured Health Benefits program as compared with the prior year; and,
  • $24.8 million increase in utilities, materials and supplies due to an increase in expenses for pharmaceutical and medical supplies which are demand-driven and can vary from year to year.

There was a decrease in Vote 10 – Grants and contributions year to date expenditures of $47 million or 4.5%, primarily due to changes in timing of disbursements.  The most significant items include:

  • $17.9 million related to the sunsetting of large programs within the First Nations and Inuit Health programs, which were renewed in a Treasury Board Submission at the beginning of 2015-2016; and,
  • $13.1 million related to the contribution agreement with the Canadian Partnership Against Cancer.

Statutory year to date expenditures have increased $24 million or 18.1% from $128 million in 2014-2015 to $152 million in 2015-2016, primarily due to:

  • $3.6 million increase in employee benefit plan costs;
  • $5.9 million increase in transfer payments made to Canada Health Infoway Inc. which are disbursed in accordance with the cash flow needs of that organization; and,
  • $14.9 million increase due to the timing of recording of expenditures in relation to the spending of revenues collected under the Shared Services Partnership agreement.

C. Quarterly Variances

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

Comparison of Quarterly Expenditures for the Quarters Ended June 30 and September 30 of Fiscal Years 2014-2015 and 2015-2016

Bar chart showing a comparison of quarterly expenditures for the quarters ended June 30 and September 30 of Fiscal Years 2014-2015 and 2015-2016 in millions of dollars.

2014-2015 Expenditures for the Quarter Ended June 30 = 1,133; 2014-2015 Expenditures for the Quarter Ended September 30 = 826; 2015-2016 Expenditures for the Quarter Ended June 30 = 1,033; 2015-2016 Expenditures for the Quarter Ended September 30 = 902.

(in Millions $)

Expenditures in the second quarter of fiscal 2015-2016 were $902 million compared with $826 million for the second quarter of 2014-2015, representing an increase of $76 million or 9.1% in quarterly spending.

The increase in quarterly spending is due primarily to:

  • $10.3 million increase in transportation and communication as a result of increasing costs of transportation and a higher demand experienced during the year for nurses and patients associated with the Non-Insured Health Benefits Program;
  • $14.1 million increase in utilities, materials and supplies for pharmaceutical and medical supply costs resulting from increases in demand under the Non-Insured Health Benefits Program; and,
  • $69.0 million increase in transfer payments related to the timing of disbursements relating to various First Nations and Inuit Health programs.

This increase is partially offset by a $27.7 million decrease in personnel costs due to the number of pay periods for salary expenditures charged against appropriations during the quarter as compared to the prior year.

Risks and Uncertainties

Health Canada is dedicated to enhancing the health and well-being of Canadians and recognizes that its success in fulfilling its mandate is directly related to the 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, resource allocation, and, ultimately, better results for Canadians.  Additionally, it can lead to effective service delivery, better project management, and an increase in value for money.

Health Canada 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 First Nations and Inuit and various levels of government, unforeseen health crises, scientific and technological change, and cyber security).

The Department employs integrated risk management tools to proactively and systematically recognize, understand, accommodate and capitalize on new challenges and opportunities, with a focus on results.  In addition, the Department has effective internal control systems in place, proportionate to the risks being managed. 

Prudent management within the financial context of operating budget freezes and declining carry forwards, is required to manage potential impacts on departmental programs and services.  Health Canada continues to manage through effective engagement across the Department, an augmented governance structure, as well as through the use of longer-term planning.  As such, 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.  Each branch is required to have a multi-year financial management plan that has been reviewed by this committee to confirm that it has a plan in place to address the financial context.

As of Budget 2013, growth in the First Nations and Inuit health, Non-Insured Health Benefits Program is based on 5% growth on actual (annual) expenditures from the prior fiscal year. Program expenditures experience natural fluctuations from year to year depending on a variety of factors beyond program control (e.g. drug pricing, location of provincial and territorial health services) 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. Trend monitoring, 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

The following change in senior management was made during the second quarter of 2015-2016:

  • Ms. Shelley Borys was appointed Chief Audit Executive of the Portfolio Audit and Accountability Bureau in July 2015.

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

Approved by:

Original signed by Simon Kennedy

Simon Kennedy
Deputy Minister
Ottawa, Canada
Date:  November 13, 2015

Original signed by Jamie Tibbetts

Jamie Tibbetts
Assistant Deputy Minister and Chief Financial Officer
Ottawa, Canada
Date:  November 10, 2015

Statement of Authorities (Unaudited)

Fiscal year 2015-2016 (in thousands of dollars)
  Total available for use for the year ending March 31, 2016Table 3 footnote * Used during the quarter ended September 30, 2015 Year to date used at quarter-end

Table 3 footnotes

Table 3 footnote *

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

Return to table 3 footnote * referrer

Vote 1 – Operating expenditures 1,835,136 435,930 777,794
Vote 5 – Capital expenditures 34,629 2,749 5,017
Vote 10 – Grants and contributions 1,678,425 416,567 999,888
(S) Contributions to employee benefit plans 122,777 30,695 61,389
(S) Minister of Health – Salary and motor car allowance 82 20 41
(S) Spending of proceeds from the disposal of surplus Crown assets 427 9 19
(S) Refunds of amounts credited to revenues in previous years 200 33 200
(S) Canada Health Infoway Inc. 74,222 - 74,222
(S) Collection agency fees 2 - 2
(S) Court awards 13 - 13
(S) Transfer payments in connection with the Budget Implementation Act 444 189 444
(S) Spending of revenues pursuant to section 4.2 of the Department of Health Act 51,463 15,569 15,569
Total authorities 3,797,820 901,761 1,934,598
Fiscal year 2014-2015 (in thousands of dollars)
  Total available for use for the year ending March 31, 2015Table 4 footnote * Used during the quarter ended September 30, 2014 Year to date used at quarter-end

Table 4 footnotes

Table 4 footnote *

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

Return to table 4 footnote * referrer

Vote 1 – Operating expenditures 1,837,796 445,908 778,699
Vote 5 – Capital expenditures 35,150 3,569 5,055
Vote 10 – Grants and contributions 1,683,745 347,404 1,047,133
(S) Contributions to employee benefit plans 115,510 28,878 57,755
(S) Minister of Health – Salary and motor car allowance 80 20 40
(S) Spending of proceeds from the disposal of surplus Crown assets 714 19 23
(S) Refunds of amounts credited to revenues in previous years 551 116 551
(S) Canada Health Infoway Inc. 68,364 - 68,364
(S) Collection agency fees 3 1 3
(S) Court awards 165 119 164
(S) Transfer payments in connection with the Budget Implementation Act 1,082 359 1,082
(S) Spending of revenues pursuant to section 4.2 of the Department of Health Act 51,463 - 626
Total authorities 3,794,623 826,393 1,959,495

Departmental Budgetary Expenditures by Standard Object (Unaudited)

Fiscal year 2015-2016 (in thousands of dollars)
  Planned expenditures for the year ending March 31, 2016 Expended during the quarter ended September 30, 2015 Year to date used at quarter-end
Expenditures:
Personnel 880,640 206,121 399,482
Transportation and communications 267,358 57,665 94,432
Information 13,938 2,901 3,644
Professional and special services 532,573 117,217 194,481
Rentals 6,927 4,233 5,494
Repair and maintenance 20,774 3,344 5,102
Utilities, materials and supplies 558,036 131,971 238,858
Acquisition of land, buildings and works 1,375 1,966 4,096
Acquisition of machinery and equipment 33,254 8,420 14,317
Transfer payments 1,753,091 416,756 1,074,554
Other subsidies and payments 9,147 2,114 2,429
Total gross budgetary expenditures 4,077,113 952,708 2,036,889
Less revenues netted against expenditures:
Rights and privileges 56,481 6,470 13,011
Services non-regulatory 164,034 33,120 68,241
Services regulatory 58,778 11,357 20,853
Services to other government departments - - 186
Total revenues netted against expenditures 279,293 50,947 102,291
Total net budgetary expenditures 3,797,820 901,761 1,934,598
Fiscal year 2014-2015 (in thousands of dollars)
  Planned expenditures for the year ending March 31, 2015 Expended during the quarter ended September 30, 2014 Year to date used at quarter-end
Expenditures:
Personnel 842,617 233,837 402,790
Transportation and communications 223,259 47,346 79,315
Information 28,548 1,579 2,134
Professional and special services 775,723 109,083 185,047
Rentals 23,254 3,321 6,029
Repair and maintenance 35,890 4,303 6,110
Utilities, materials and supplies 345,421 117,857 214,015
Acquisition of land, buildings and works 9,815 1,706 2,533
Acquisition of machinery and equipment 25,335 7,810 13,237
Transfer payments 1,753,191 347,762 1,116,578
Other subsidies and payments 2,410 684 27,966
Total gross budgetary expenditures 4,065,463 875,288 2,055,754
Less revenues netted against expenditures:
Rights and privileges 55,115 5,166 16,343
Services non-regulatory 158,010 34,562 63,539
Services regulatory 57,715 9,143 16,353
Services to other government departments - 24 24
Total revenues netted against expenditures 270,840 48,895 96,259
Total net budgetary expenditures 3,794,623 826,393 1,959,495
Report a problem or mistake on this page
Please select all that apply:

Thank you for your help!

You will not receive a reply. For enquiries, contact us.

Date modified: