Health Canada Quarterly Financial Report - For the quarter ended June 30, 2020

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 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
Comparison of Net Budgetary Authorities and Expenditures for the Quarter Ended June 30 of Fiscal Years 2019-2020 and 2020-2021
Text description

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.

Comparison of Authorities Available for Spending for the Year as at June 30 of Fiscal Years 2019-2020 and 2020-2021
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
Statutory 168 426 258
Total authorities 2,482 2,790 308

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:

These increases in authorities are partially offset by decreases as follows:

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.

Comparison of Year-to-Date Expenditures for the Quarter Ended June 30 of Fiscal Years 2019-2020 and 2020-2021
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
Statutory 36 58 22
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:

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:

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:

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

A. Personnel

Dr. Harpreet S. Kochhar was appointed Associate Deputy Minister of Health Canada on April 1, 2020. 

B. Programs

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.

Approved by:

Original signed by Stephen Lucas 
Stephen Lucas
Deputy Minister
Ottawa, Canada
Date:  August 25, 2020

Original signed by Edward de Sousa for
Randy Larkin
Assistant Deputy Minister and
Chief Financial Officer
Ottawa, Canada
Date:  August 21, 2020

Statement of Authorities (unaudited)

Fiscal year 2020-2021 (in thousands of dollars)
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
Total authorities 2,790,129 994,879 994,879
Footnote *

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

Return to footnote * referrer

(S) – Statutory Vote

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
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 - -
Total authorities 2,482,022 898,731 898,731
Footnote *

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

Return to footnote * referrer

(S) – Statutory Vote

Departmental Budgetary Expenditures by Standard Object (unaudited)

Fiscal year 2020-2021 (in thousands of dollars)
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
Expenditures:
Personnel

845,005

179,716

179,716

Transportation and communications 16,230 1,232 1,232
Information 17,816 7,717 7,717
Professional and special services 125,213 25,621 25,621
Rentals 13,973 1,381 1,381
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
Transfer payments 1,828,453 786,814 786,814
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
Services non-regulatory 28,321 1,761 1,761
Services regulatory 87,174 25,650 25,650
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
Fiscal year 2019-2020 (in thousands of dollars)
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
Expenditures:
Personnel 823,856 172,714 172,714
Transportation and communications 22,252 3,042 3,042
Information 23,011 2,887 2,887
Professional and special services 121,045 25,234 25,234
Rentals 19,422 2,675 2,675
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
Transfer payments 1,566,569 701,998 701,998
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 non-regulatory 30,386 3,899 3,899
Services regulatory 65,588 22,647 22,647
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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