Health Canada Quarterly Financial Report - For the quarter ended June 30, 2019

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.

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 for the 2019-2020 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 for fiscal year 2019-2020, as well as budget adjustments approved by Treasury Board up to June 30, 2019.

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 2018-2019 and 2019-2020 (in millions of dollars)

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Text description

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 2018-2019 and 2019-2020 in millions of dollars.

2018-2019 Net Budgetary Authorities = 2,337; 2018-2019 Expenditures for the Quarter Ended June 30 = 340; 2019-2020 Net Budgetary Authorities = 2,482; 2019-2020 Expenditures for the Quarter Ended June 30 = 899.

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 2018-2019 and 2019-2020
Authorities available (in millions of dollars) 2018-2019 2019-2020 Variance
Vote 1 – Operating expenditures 750 740 (10)
Vote 5 – Capital expenditures 26 18 (8)
Vote 10 – Grants and contributions 1,387 1,556 169
Statutory 174 168 (6)
Total authorities 2,337 2,482 145

Authorities available for spending in fiscal year 2019-2020 were $2,482 million at the end of the first quarter as compared with $2,337 million at the end of the first quarter of 2018-2019, representing an increase of $145 million, or 6%. 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; professional and special services; repair and maintenance; 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 2018-2019 and 2019-2020
Year-to-date expenditures
(in millions of dollars)
2018-2019 2019-2020 Variance
Vote 1 – Operating expenditures 146 170 24
Vote 5 – Capital expenditures 1 1 -
Vote 10 – Grants and contributions 148 692 544
Statutory 45 36 (9)
Total year-to-date expenditures 340 899 559

At the end of the first quarter of 2019-2020, total budgetary expenditures were $899 million compared with $340 million reported for the same period of 2018-2019, representing an increase of $559 million or 164%.

Year-to-date net operating expenditures have increased by approximately $24 million or 16% when compared to the first quarter of 2018-2019. The significant variances in operating expenditures are as follows:

There was an increase in Vote 10 – Grants and contributions year-to-date expenditures of $544 million or 368%, resulting from the following offsetting factors:

Statutory year-to-date expenditures have decreased by $9 million or 20% from $45 million in 2018-2019 to $36 million in 2019-2020, which is comprised of the following two offsetting components:

Risks and Uncertainties

Health Canada is dedicated to improving the health and well-being of Canadians, as a trusted regulator and a credible source of information for the public. It 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 various levels of government, unforeseen health crises, scientific and technological change, and cyber security).

Health Canada recognizes that successfully 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 more effective service delivery, better project management, and an increase in value for money.

As a result, the Department raises awareness and promotes sound risk management practices based on Health Canada's integrated risk management approach, guidance and tools, including the development of a Corporate Risk Profile and monitoring of risk responses, 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 through the use of longer-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. 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.

Program expenditures experience natural fluctuations from year to year depending on a variety of factors beyond program control (e.g. emerging health events and novel drug therapies), 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. 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

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

Approved by:

Original signed by Pierre Sabourin for
Simon Kennedy
Deputy Minister
Ottawa, Canada
Date: August 29, 2019

Original signed by Randy Larkin
Assistant Deputy Minister and
Chief Financial Officer
Ottawa, Canada
Date: August 9, 2019

Statement of Authorities (unaudited)

Fiscal year 2019-2020 (in thousands of dollars)
Authority Total available for use for the year ending
March 31, 2020Table 3 Footnote *
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
Table 3 Footnote *

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

Return to table 3 footnote * referrer

(S) – Statutory Vote

Fiscal year 2018-2019 (in thousands of dollars)
Authority Total available for use for the year ending
March 31, 2019Table 4 Footnote *
Used during the quarter ended
June 30, 2018
Year-to-date used at quarter-end
Vote 1 – Operating expenditures 750,036 146,492 146,492
Vote 5 – Capital expenditures 26,098 590 590
Vote 10 – Grants and contributions 1,387,055 147,775 147,775
(S) Contributions to employee benefit plans 101,562 25,349 25,349
(S) Minister of Health – Salary and motor car allowance 86 21 21
(S) Spending of proceeds from the disposal of surplus Crown assets 386 79 79
(S) Refunds of amounts credited to revenues in previous years 3 3 3
(S) Payments in connection with the Patent Act (Patented medicines) 20,000 20,000 20,000
(S) Spending of revenues pursuant to section 4.2 of the Department of Health Act 51,463 - -
Total authorities 2,336,689 340,309 340,309
Table 4 Footnote *

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

Return to table 4 footnote * referrer

(S) – Statutory Vote

Departmental Budgetary Expenditures by Standard Object (unaudited)

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
Fiscal year 2018-2019 (in thousands of dollars)
Standard Object Planned expenditures for the year ending March 31, 2019 Expended during the quarter ended June 30, 2018 Year-to-date used at quarter-end
Expenditures:
Personnel 796,519 158,869 158,869
Transportation and communications 20,449 2,467 2,467
Information 27,081 1,819 1,819
Professional and special services 140,886 27,944 27,944
Rentals 17,556 2,193 2,193
Repair and maintenance 29,181 1,331 1,331
Utilities, materials and supplies 25,909 1,657 1,657
Acquisition of land, buildings and works - 371 371
Acquisition of machinery and equipment 26,097 878 878
Transfer payments 1,407,055 167,775 167,775
Other subsidies and payments 3,232 1,279 1,279
Total gross budgetary expenditures 2,493,965 366,583 366,583
Less revenues netted against expenditures:
Rights and privileges 62,530 11,312 11,312
Services non-regulatory 30,385 3,341 3,341
Services regulatory 64,361 11,621 11,621
Total revenues netted against expenditures 157,276 26,274 26,274
Total net budgetary expenditures 2,336,689 340,309 340,309
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