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

Table of Contents

• 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. Health Canada administers the Canada Health Act which embodies national principles to ensure a universal and equitable publicly-funded health care system. A summary of Health Canada's programs may be found in Part II of the Main Estimates.

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 September 30, 2022.

A. Significant Changes to Authorities

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

Figure 1 - Text Description

Bar chart showing a comparison of net budgetary authorities as at June 30 and September 30 of fiscal years 2021-22 and 2022-23 in millions of dollars.

2021-22 Authorities available as at June 30 = 4,869; 2021-22 Authorities available as at September 30 = 4,924; 2022-23 Authorities available as at June 30 = 5,687; 2022-23 Authorities available as at September 30 = 5,758.

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

Authorities available for spending in fiscal year 2022-23 were $5,758 million at the end of the second quarter as compared with $4,924 million at the end of the second quarter of 2021-22, representing a net increase of $834 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);
• $606.9 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 Rights and privileges.

B. Significant Changes in Year-to-Date Expenditures

The following graph provides a comparison of net budgetary authorities and year-to-date spending by quarter for the current and previous fiscal years.

Figure 2 - Text Description

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 2021-22 and 2022-23 in millions of dollars.

2021-22 Net budgetary authorities = 4,924; 2021-22 Year-to-date expenditures to June 30 = 1,120; 2021-22 Year-to-date expenditures to September 30 = 1,695; 2022-23 Net budgetary authorities = 5,758; 2022-23 Year-to-date expenditures to June 30 = 554; 2022-23 Year-to-date expenditures to September 30 = 1,376.

The following table provides a comparison of year-to-date spending by vote at the end of the second quarter of the current and previous fiscal years.

At the end of the second quarter of 2022-23, total budgetary expenditures were $1,376 million compared with $1,695 million reported for the same period of 2021-22, representing a decrease of $319 million, or 19%.

There was a decrease in Vote 10 – Grants and contributions year-to-date expenditures of $879 million or 78% primarily as a result of the following offsetting factors:

• $829.9 million decrease in contributions for strengthening Canada's Home and Community Care and Mental Health and Addictions Initiative (Home Care and Mental Health), due mainly to a timing difference in payments to the provinces and territories, and a decreased amount of funding in 2022-23;
• $53.1 million decrease in contributions to Canada Health Infoway, due mainly to a decreased amount of funding in 2022-23;
• $18.3 million decrease in contributions for Virtual Care Services, due to a decreased amount of funding in 2022-23;
• $10.7 million increase in contributions reflecting funding for the Improving Affordable Access to Prescription Drugs Program; and,
• $7.1 million increase in grants due to timing of payments made for the Territorial Health Investment Fund.

Statutory year-to-date expenditures have increased by $554 million or 579% from $96 million in 2021-22 to $650 million in 2022-23, primarily as a result of the following factors:

• $571.7 million increase in statutory spending for expenditures in relation to COVID-19 tests; and,
• $18.4 million decrease in expenditures incurred on behalf of the Public Health Agency of Canada under the Shared Services Partnership agreement, primarily for communications expenditures related to public announcements for COVID-19.

C. Quarterly Variances

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

Figure 3 - Text Description

Bar chart showing a comparison of quarterly expenditures for the quarters ended June 30 and September 30 of fiscal years 2021-22 and 2022-23 in millions of dollars.

2021-22 Expenditures for the quarter ended June 30 = 1,120; 2021-22 Expenditures for the quarter ended September 30 = 575; 2022-23 Expenditures for the quarter ended June 30 = 554; 2022-23 Expenditures for the quarter ended September 30 = 821.

Expenditures in the second quarter of fiscal year 2022-23 were $821 million compared with $575 million for the second quarter of 2021-22, representing an increase of $246 million or 43% in quarterly spending.

The increase in quarterly spending is primarily due to the following factors:

• $376.8 million increase in statutory expenditures in the category of utilities, materials and supplies and professional and special services for expenses in relation to COVID-19 tests;
• $132.5 million decrease in grants and contributions, due mainly to a timing difference in payments to the provinces and territories, for Strengthening Canada's Home and Community Care and Mental Health and Addiction Initiative (Home Care and Mental Health) and Virtual Care Services Initiative, as well as a decreased amount of funding in 2022-23;
• $16.2 million decrease in expenditures incurred on behalf of the Public Health Agency of Canada under the Shared Services Partnership agreement, primarily for communications expenditures related to public announcements for COVID-19; and,
• $11.7 million decrease in revenues, due primarily to timing of when invoices for services of a regulatory nature were processed and cash receipts were received.

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, global supply chain issues, and the opioid overdose crisis – are beyond the sole control of the Department and involve working collaboratively with federal partners, provinces and territories, Indigenous organizations, industry and international regulators.

Health Canada regulates health products and controlled substances and supports innovation and information sharing in Canada's health system to help Canadians maintain and improve their health. The Department also provides national leadership to foster sustainable health care systems that ensure access for Canadians to appropriate and effective health care. Health Canada's priorities continue to focus on how government investments can protect the health and safety of Canadians. As such, there are corporate and program risks related to the rapid delivery of government commitments, programs and services.

Health Canada uses a risk management framework and tools, and maintains a comprehensive and up-to-date Corporate Risk Profile, to support risk-based decision-making. The Department closely monitors its environment and operations to manage its corporate risks, ensures appropriate mitigation strategies are in place, and allocates and reallocates resources, as required. Sound risk management also supports effective service delivery, better project management, an increase in value for money, and ultimately better results for Canadians.

The Department 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:  November 16, 2022

Original signed by Serena Francis
Serena Francis
Assistant Deputy Minister and Chief Financial Officer
Ottawa, Canada
Date:  November 15, 2022

Statement of Authorities (unaudited)

Departmental Budgetary Expenditures by Standard Object (unaudited)