Health Canada Quarterly Financial Report - For the quarter ended June 30, 2022

Introduction
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)

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 2022-23 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 2022-23, as well as budget adjustments approved by Treasury Board up to June 30, 2022.

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 2021-22 and 2022-23 (in millions of dollars)**

A. Significant Changes to Authorities

The following table provides a comparison of total authorities available by vote at the end of the first quarter of the current and previous fiscal years.

Comparison of Authorities Available for Spending as at June 30 of Fiscal Years 2021-22 and 2022-23
Authorities available (in millions of dollars)	2021-22	2022-23	Variance
Vote 1 – Operating expenditures	1,296	1,215	(81)
Vote 5 – Capital expenditures	18	17	(1)
Vote 10 – Grants and contributions	3,374	2,502	(872)
Statutory	181	1,953	1,772
Total authorities	4,869	5,687	818

Authorities available for spending in fiscal year 2022-23 were $5,687 million at the end of the first quarter as compared with $4,869 million at the end of the first quarter of 2021-22, representing a net increase of $818 million, or 17%. This variance is primarily attributable to the following increases:

$1,789.1 million in statutory funding for the procurement of additional rapid test kits (COVID-19);
$607.0 million in funding to support long term care, improved access to palliative care, and safe access to medical assistance in dying;
$500.0 million in funding to support emergency measures related to the pandemic (COVID-19);
$65.1 million in funding to address the opioid crisis; and,
$22.5 million in funding for innovative approaches to COVID-19 testing.

These increases in authorities are partially offset by the following decreases:

$1,002.7 million in funding for investments in long-term care (COVID-19);
$355.1 million in funding for the creation of a critical drug reserve in collaboration with provinces and territories to support access to drugs which treat COVID-19 symptoms for Canadians;
$300.0 million in funding to strengthen Canada's Home and Community Care and Mental Health and Addiction Services Initiative;
$198.0 million in funding for the Safe Restart Agreement for federal investments in testing, contact tracing and data management (COVID-19);
$115.9 million in funding for drugs, medical devices and virtual care (COVID-19);
$105.0 million in funding for Implementing a New Federal Framework for Legalization and Regulation of Cannabis; and,
$79.5 million in funding for regulatory and operational functions and to support critical COVID-19 focused operations.

The fluctuations in authorities available for spending are most notable in the following standard objects: Utilities, materials and supplies; Transfer payments; Professional and special services; and Personnel. Fluctuations are also noted in authorities for revenues netted against expenditures for Services of a regulatory nature and Rights and privileges.

B. Significant Changes in Year-to-Date Expenditures

The following table provides a comparison of year-to-date spending by vote at the end of 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 2021-22 and 2022-23
Year-to-date expenditures (in millions of dollars)	2021-22	2022-23	Variance
Vote 1 – Operating expenditures	191	179	(12)
Vote 10 – Grants and contributions	893	146	(747)
Statutory	36	229	193
Total year-to-date expenditures	1,120	554	(566)

At the end of the first quarter of 2022-23, total budgetary expenditures were $554 million compared with $1,120 million reported for the same period of 2021-22, representing a decrease of $566 million, or 51%.

Year-to-date net operating expenditures have decreased by approximately $12 million or 7% when compared to the first quarter of 2021-22. The variance in operating expenditures is mainly due to a $12.4 million decrease in utilities, materials and supplies for acquisition of pharmaceutical and other medicinal products in the prior year related to the critical drug reserve initiative.

There was a decrease in Vote 10 – Grants and contributions year-to-date expenditures of $747 million or 84% primarily as a result of the following offsetting factors:

$749.1 million decrease in contributions for Strengthening Canada's Home and Community Care and Mental Health and Addiction Initiative (Home Care and Mental Health) and Virtual Care Services Initiative, due mainly to a timing difference in payments to the provinces and territories, and a decreased amount of funding available in 2022-23; and,
$7.1 million increase in expenditures following a variation in timing of payments made to the territories for the Territorial Health Investment Fund.

Statutory year-to-date expenditures have increased by $193 million or 546% from $36 million in 2021-22 to $229 million in 2022-23, primarily due to payments for expenses in relation to COVID-19 tests.

Risks and Uncertainties

Health Canada operates in a complex and dynamic environment, facing several challenges as it works to deliver results for Canadians. Many of these challenges – such as the COVID-19 pandemic and the opioid overdose crisis – are beyond the sole control of the Department and involve working collaboratively with federal partners, provinces and territories (P/Ts), Indigenous organizations, industry and international regulators.

The emergence of COVID-19 variants continues to challenge Canadians and health systems across the country. Health Canada leverages its resources to minimize the impacts of COVID-19 on Canadians' health and safety. Procuring and distributing rapid antigen tests, authorizing COVID-19 vaccines, including boosters, and supporting P/Ts through targeted investments remain key priorities for the Department.

Health Canada recognizes that successfully fulfilling its mandate is directly related to effective management of risk. The Department has a well-established risk management process that enables the organization to respond proactively to change and uncertainty, and has appropriate internal control systems in place, proportionate to the risks being managed.

The Department employs an integrated risk management framework and tools, and maintains a comprehensive and up-to-date Corporate Risk Profile, to support risk-based decision-making. Sound risk management can also lead to more effective service delivery, better project management, an increase in value for money, and ultimately better results for Canadians.

Health Canada manages risks and uncertainty through effective engagement across the organization with agile and sound governance structures, as well as long-term planning. The executive-level committee on Finance, Investment Projects and Transformation recommends overall direction for financial management and control, and ensures alignment of investments with departmental strategies and transformation initiatives.

As we emerge from the pandemic, Health Canada will closely monitor departmental risks associated with COVID-19, as well as its environment and operations, ensure appropriate mitigation strategies are in place, and effectively deliver results.

Significant Changes in Relation to Operations, Personnel and Programs

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

Approved by:

Original signed by Stephen Lucas
Stephen Lucas
Deputy Minister
Ottawa, Canada
Date: August 22, 2022

Original signed by Serena Francis
Serena Francis
Assistant Deputy Minister and Chief Financial Officer
Ottawa, Canada
Date: August 19, 2022

Statement of Authorities (unaudited)

Fiscal year 2022-23 (in thousands of dollars)
Authority	Total available for use for the year ending March 31, 2023^{Table 3 Footnote *}	Used during the quarter ended June 30, 2022	Year-to-date used at quarter-end
Vote 1 – Operating expenditures	1,215,459	178,602	178,602
Vote 5 – Capital expenditures	17,149	509	509
Vote 10 – Grants and contributions	2,501,521	146,411	146,411
(S) Contributions to employee benefit plans	112,317	28,079	28,079
(S) Minister of Health – Salary and motor car allowance	93	46	46
(S) Collection agency fees	25	25	25
(S) Spending of proceeds from the disposal of surplus Crown assets	395	134	134
(S) Spending of revenues pursuant to section 4.2 of the Department of Health Act	51,463	4,700	4,700
(S) Payments for expenses in relation to COVID-19 tests	1,789,123	195,780	195,780
Total authorities	5,687,545	554,286	554,286
Table 3 Footnote * Includes only Authorities available for use and granted by Parliament at quarter end Table 3 Return to footnote * referrer (S) – Statutory Vote

Fiscal year 2021-22 (in thousands of dollars)
Authority	Total available for use for the year ending March 31, 2022^{Table 4 Footnote *}	Used during the quarter ended June 30, 2021	Year-to-date used at quarter-end
Vote 1 – Operating expenditures	1,295,609	191,402	191,402
Vote 5 – Capital expenditures	17,929	305	305
Vote 10 – Grants and contributions	3,374,407	892,750	892,750
(S) Contributions to employee benefit plans	128,979	28,438	28,438
(S) Minister of Health – Salary and motor car allowance	91	23	23
(S) Spending of proceeds from the disposal of surplus Crown assets	122	-	-
(S) Collection agency fees	1	1	1
(S) Spending of revenues pursuant to section 4.2 of the Department of Health Act	51,463	6,973	6,973
Total authorities	4,868,601	1,119,892	1,119,892
Table 4 Footnote * Includes only Authorities available for use and granted by Parliament at quarter end Table 4 Return to footnote * referrer (S) – Statutory Vote

Departmental Budgetary Expenditures by Standard Object (Unaudited)

Fiscal year 2022-23 (in thousands of dollars)
Standard Object	Planned expenditures for the year ending March 31, 2023	Expended during the quarter ended June 30, 2022	Year-to-date used at quarter-end
Expenditures:
Personnel	888,152	206,305	206,305
Transportation and communications	6,462	887	887
Information	25,086	1,809	1,809
Professional and special services	128,065	47,243	47,243
Rentals	12,356	4,526	4,526
Repair and maintenance	8,934	2,165	2,165
Utilities, materials and supplies	2,303,643	193,292	193,292
Acquisition of land, buildings and works	2,227	25	25
Acquisition of machinery and equipment	24,748	5,553	5,553
Transfer payments	2,501,521	146,411	146,411
Other subsidies and payments	3,503	1,228	1,228
Total gross budgetary expenditures	5,904,697	609,444	609,444
Less revenues netted against expenditures:
Rights and privileges	55,297	5,188	5,188
Services of a non-regulatory nature	31,815	2,436	2,436
Services of a regulatory nature	124,341	47,534	47,534
Services to other government departments	5,699	-	-
Total revenues netted against expenditures	217,152	55,158	55,158
Total net budgetary expenditures	5,687,545	554,286	554,286

Fiscal year 2021-22 (in thousands of dollars)
Standard Object	Planned expenditures for the year ending March 31, 2022	Expended during the quarter ended June 30, 2021	Year-to-date used at quarter-end
Expenditures:
Personnel	1,001,899	203,555	203,555
Transportation and communications	17,544	798	798
Information	32,089	9,104	9,104
Professional and special services	518,439	37,582	37,582
Rentals	14,797	5,052	5,052
Repair and maintenance	25,891	1,820	1,820
Utilities, materials and supplies	18,275	13,820	13,820
Acquisition of land, buildings and works	2,816	269	269
Acquisition of machinery and equipment	22,299	2,957	2,957
Transfer payments	3,374,407	892,750	892,750
Other subsidies and payments	11,444	1,395	1,395
Total gross budgetary expenditures	5,039,900	1,169,102	1,169,102
Less revenues netted against expenditures:
Rights and privileges	45,064	4,928	4,928
Services non-regulatory	30,802	2,790	2,790
Services regulatory	89,734	41,492	41,492
Other fees and charges	5,699	-	-
Total revenues netted against expenditures	171,299	49,210	49,210
Total net budgetary expenditures	4,868,601	1,119,892	1,119,892

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Date modified:: 2022-08-29

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