Health Canada Quarterly Financial Report - For the quarter ended June 30, 2020
Table of Contents
- Basis of Presentation
- Highlights of Fiscal Quarter and Fiscal Year-to-Date Results
- Risks and Uncertainties
- Significant Changes in Relation to Operations, Personnel and Programs
- Statement of Authorities (unaudited)
- Departmental Budgetary Expenditures by Standard Object (unaudited)
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 for the 2020-2021 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 2020-2021, as well as budget adjustments approved by Treasury Board up to June 30, 2020.
The following graph provides a comparison of net budgetary authorities available for spending and year-to-date expenditures for the first quarter of the current and previous fiscal years.
Comparison of Net Budgetary Authorities and Expenditures for the Quarter Ended June 30 of Fiscal Years 2019-2020 and 2020-2021
Bar chart showing a comparison of net budgetary authorities available for spending and year-to-date expenditures for the quarter ended June 30 of fiscal years 2019-2020 and 2020-2021 in millions of dollars.
2019-2020 Net Budgetary Authorities = 2,482; 2019-2020 Expenditures for the Quarter Ended June 30 = 899;
2020-2021 Net Budgetary Authorities = 2,790; 2020-2021 Expenditures for the Quarter Ended June 30 = 995.
A. Significant Changes to Authorities
The following table provides a comparison of authorities by vote for the first quarter of the current and previous fiscal years.
|Authorities available (in millions of dollars)||2019-2020||2020-2021||Variance|
|Vote 1 – Operating expenditures||740||722||(18)|
|Vote 5 – Capital expenditures||18||14||(4)|
|Vote 10 – Grants and contributions||1,556||1,628||72|
Authorities available for spending in fiscal year 2020-2021 were $2,790 million at the end of the first quarter as compared with $2,482 million at the end of the first quarter of 2019-2020, representing an increase of $308 million, or 12%. This increase is primarily attributable to the following:
- $253.3 million in statutory funding for payments for drugs, medical devices, and virtual care pursuant to the Public Health Events of National Concern Payments Act;
- $150.0 million increase in funding to strengthen Canada's Home and Community Care and Mental Health and Addiction Services Initiative;
- $41.0 million in funding for compensation related to collective agreements;
- $24.8 million in funding for Bringing Innovation to Regulations;
- $21.2 million increase in funding to enhance the Federal Response to the Opioids Crisis in Canada;
- $17.6 million in funding to continue to legalize and strictly regulate cannabis;
- $15.1 million in funding for the Terry Fox Research Institute and Ovarian Cancer Canada to support cancer research;
- $11.5 million in funding for Canada Brain Research Fund Program; and,
- $9.3 million in statutory funding for payments to support Canada's initial response to COVID-19.
These increases in authorities are partially offset by decreases as follows:
- $216.9 million in authorities waiting receipt of full supply;
- $16.2 million decrease in funding to Expand Federal Thalidomide Financial Support; and,
- $10.1 million decrease in statutory spending authority for disbursements to Canada Health Infoway Inc.
The fluctuations in authorities available for spending are most notable in the following standard objects: personnel; acquisition of machinery and equipment; and transfer payments.
B. Significant Changes in Year-to-Date Expenditures
The following table provides a comparison of spending by vote for the first quarter of the current and previous fiscal years.
|Year-to-date expenditures (in millions of dollars)||2019-2020||2020-2021||Variance|
|Vote 1 – Operating expenditures||170||150||(20)|
|Vote 5 – Capital expenditures||1||-||(1)|
|Vote 10 – Grants and contributions||692||787||95|
|Total year-to-date expenditures||899||995||96|
At the end of the first quarter of 2020-2021, total budgetary expenditures were $995 million compared with $899 million reported for the same period of 2019-2020, representing an increase of $96 million or 11%.
Year-to-date net operating expenditures have decreased by approximately $20 million or 11% when compared to the first quarter of 2019-2020. The significant variances in operating expenditures are as follows:
- $12.6 million decrease in other subsidies and payments, related to additional one-time ex-gratia payments disbursed in the first quarter of 2019-2020 for approved survivors under the Canadian Thalidomide Survivors Support Program; and,
- $5.5 million decrease related to the timing of allocation of expenditures against statutory authorities under the Shared Services Partnership with the Public Health Agency of Canada.
There was an increase in Vote 10 – Grants and contributions year-to-date expenditures of $95 million or 14%, resulting from the following offsetting factors:
- $76.0 million increase in contributions due mainly to increased amount of funding available in 2020-2021 for Home Care and Mental Health program and timing of payments; and,
- $13.5 million increase from the timing of grant payments to support the Territorial Health Investment Fund.
Statutory year-to-date expenditures have increased by $22 million or 58% from $36 million in 2019-2020 to $58 million in 2020-2021, which is comprised of the following two offsetting components:
- $17.5 million increase for virtual care pursuant to the Public Health Events of National Concern Payments Act, consisting primarily of expenditures for the mental health and substance use portal to provide Canadians with credible information about mental health, as well access to self-assessment tools, self-guided resources, peer support, and direct psycho-social support services (e.g. counselling) delivered through digital modalities;
- $7.0 million increase in advertising costs for COVID-19 messaging incurred on behalf of the Public Health Agency of Canada under the Shared Services Partnership;
- $5.5 million increase related to the timing of allocation of expenditures against statutory authorities under the Shared Services Partnership with the Public Health Agency of Canada; and,
- $10.1 million decrease in statutory payments made to Canada Health Infoway Inc., which were disbursed in accordance with the organization’s cash flow needs.
Risks and Uncertainties
Health Canada is dedicated to enhancing the health and well-being of Canadians. It operates in a dynamic and complex environment, facing several challenges as it works to deliver results for Canadians. Its organizational environment is characterized by both internal and external drivers of change, which could potentially be disruptive to the Department’s ability to achieve its objectives e.g., unforeseen health crises such as the 2019 coronavirus disease (COVID-19) pandemic, new innovative products, technologies, substances, foods and emerging product categories, evolving relationships between various levels of government, scientific and technological change, and cyber security.
The Department monitors and responds to health concerns, originating at home and internationally, that affect the health and safety of Canadians. This includes events such as the COVID-19 outbreak. This pandemic has reminded everyone of the risks associated with unforeseen health crises. Health Canada is working closely with the Public Health Agency of Canada, other organizations within the federal Health Portfolio, and other levels of government, to contribute to the global response to this public health challenge.
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, and 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 such as the COVID-19 pandemic), thus creating risk. For example, since the start of the COVID-19 outbreak in Canada, the Chief Financial Officer Branch at Health Canada has been a strategic partner and enabler with regard to the Department’s response to this public health crisis.
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
Dr. Harpreet S. Kochhar was appointed Associate Deputy Minister of Health Canada on April 1, 2020.
The following new program/existing program changes have been announced in response to the COVID-19 pandemic:
Virtual Care and Mental Health Tools for Canadians
The Prime Minister announced an investment of $240.5 million to develop, expand, and launch virtual care and mental health tools to support Canadians. Working with provinces, territories, and stakeholders, this investment will be used to create digital platforms and applications, improve access to virtual mental health supports, and expand capacity to deliver health care virtually, including projects to reach vulnerable Canadians. These supports will also help ease the burden on the health care system as we continue to deal with COVID-19.
Facilitating Access to Drugs and Medical Devices
The Government of Canada committed a total of $10.8 million in order to ensure that Canadians have timely access to safe drugs and medical devices that combat COVID-19. Funding will be used to provide rapid regulatory advice and services to support clinical trials and subsequent authorization of vaccines, diagnostic devices, personal protective equipment and/or treatments. In addition, this funding is to anticipate and manage further drug and medical device shortages that are expected to arise as a result of the COVID-19 pandemic.
Leading the Whole-of-Government Response
Health Canada and the Public Health Agency of Canada are providing support and national leadership to Canada’s domestic response to the COVID-19 outbreak. The Department is responsible for leading the whole-of-government response to the COVID-19 pandemic, including supporting the newly established governance structure put in place to facilitate decision-making by the new Cabinet Committee on COVID-19. As such, the Government of Canada committed $7.8 million to Health Canada to sustain its operations and coordinate the Government of Canada’s efforts to manage the spread of COVID-19 with the aim of protecting the health and safety of Canadians, ensuring economic resilience, maintaining domestic and international reputations, and maintaining government operations.
Original signed by Stephen Lucas
Date: August 25, 2020
Original signed by Edward de Sousa for
Assistant Deputy Minister and
Chief Financial Officer
Date: August 21, 2020
Statement of Authorities (unaudited)
|Authority||Total available for use for the year ending
March 31, 2021Footnote *
|Used during the quarter ended
June 30, 2020
|Year-to-date used at quarter-end|
|Vote 1 – Operating expenditures||721,930||150,113||150,113|
|Vote 5 – Capital expenditures||14,156||103||103|
|Vote 10 – Grants and contributions||1,628,453||786,826||786,826|
|(S) Contributions to employee benefit plans||111,361||27,840||27,840|
|(S) Minister of Health – Salary and motor car allowance||89||22||22|
|(S) Spending of proceeds from the disposal of surplus Crown assets||123||-||-|
|(S) Collection agency fees||1||1||1|
|(S) Payment pursuant to section 24(1) of the Financial Administration Act||-||(12)||(12)|
|(S) Spending of revenues pursuant to section 4.2 of the Department of Health Act||51,463||12,464||12,464|
|(S) Payments to support Canada’s initial response to COVID-19 pursuant to the Public Health Events of National Concern Payments Act||9,288||150||150|
|(S) Payments for drugs, medical devices and virtual care pursuant to the Public Health Events of National Concern Payments Act||253,265||17,372||17,372|
(S) – Statutory Vote
|Authority||Total available for use for the year ending
March 31, 2020Footnote *
|Used during the quarter ended
June 30, 2019
|Year-to-date used at quarter-end|
|Vote 1 – Operating expenditures||739,872||169,556||169,556|
|Vote 5 – Capital expenditures||18,135||751||751|
|Vote 10 – Grants and contributions||1,556,438||691,867||691,867|
|(S) Contributions to employee benefit plans||105,818||26,399||26,399|
|(S) Minister of Health – Salary and motor car allowance||88||22||22|
|(S) Spending of proceeds from the disposal of surplus Crown assets||72||-||-|
|(S) Canada Health Infoway Inc.||10,131||10,131||10,131|
|(S) Collection agency fees||5||5||5|
|(S) Spending of revenues pursuant to section 4.2 of the Department of Health Act||51,463||-||-|
(S) – Statutory Vote
Departmental Budgetary Expenditures by Standard Object (unaudited)
|Standard Object||Planned expenditures for the year ending March 31, 2021||Expended during the quarter ended June 30, 2020||Year-to-date used at quarter-end|
|Transportation and communications||16,230||1,232||1,232|
|Professional and special services||125,213||25,621||25,621|
|Repair and maintenance||13,902||1,436||1,436|
|Utilities, materials and supplies||19,670||535||535|
|Acquisition of land, buildings and works||1,782||-||-|
|Acquisition of machinery and equipment||57,623||18,622||18,622|
|Other subsidies and payments||5,235||1,714||1,714|
|Total gross budgetary expenditures||2,944,902||1,024,788||1,024,788|
|Less revenues netted against expenditures|
|Rights and privileges||34,054||2,498||2,498|
|Other Fees and Charges||5,224||-||-|
|Total revenues netted against expenditures||154,773||29,909||29,909|
|Total net budgetary expenditures||2,790,129||994,879||994,879|
|Standard Object||Planned expenditures for the year ending March 31, 2020||Expended during the quarter ended June 30, 2019||Year-to-date used at quarter-end|
|Transportation and communications||22,252||3,042||3,042|
|Professional and special services||121,045||25,234||25,234|
|Repair and maintenance||15,467||1,765||1,765|
|Utilities, materials and supplies||24,617||1,938||1,938|
|Acquisition of land, buildings and works||-||4||4|
|Acquisition of machinery and equipment||22,100||1,843||1,843|
|Other subsidies and payments||3,364||14,615||14,615|
|Total gross budgetary expenditures||2,641,703||928,715||928,715|
|Less revenues netted against expenditures:|
|Rights and privileges||63,707||3,326||3,326|
|Services to other government departments||-||112||112|
|Total revenues netted against expenditures||159,681||29,984||29,984|
|Total net budgetary expenditures||2,482,022||898,731||898,731|
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