Future-Oriented Statement of Operations (Unaudited)

Organization:

Date published: 2016-03-07
Health Canada
Future-Oriented Statement of Operations (Unaudited)
For the Year Ending March 31
(in dollars)
Forecast
Results
2015-16
Planned
Results
2016-17
Expenses
A health system responsive to the needs of Canadians $ 353,531,609 $ 343,595,151
Health risks and benefits associated with food, products, substances and environmental factors are appropriately managed and communicated to Canadians 680,154,383 644,947,098
First Nations and Inuit communities and individuals receive health services and benefits that are responsive to their needs so as to improve their health status 2,820,418,509 2,851,372,901
Internal services 366,803,774 301,354,333
Expenses incurred on behalf of Government (1,272,516) 2,568,330
Total expenses 4,219,635,759 4,143,837,813
Revenues
Sales of goods and services
Services of a regulatory nature 57,286,983 61,223,235
Rights and privileges 66,065,311 67,201,790
Services of a non-regulatory nature 217,548,893 223,961,556
Lease and use of public property 289,090 289,918
Revenues from fines 2,139,772 1,997,970
Interest 466,514 540,746
Other (5,844) 435,789
Revenues earned on behalf of Government (14,139,205) (14,526,358)
Total revenues 329,651,514 341,124,646

Net cost of operations before government funding and transfers

$ 3,889,984,245 $ 3,802,713,167

The accompanying notes form an integral part of the future-oriented statement of operations.

Notes to the Future-Oriented Statement of Operations (Unaudited)

1. Methodology and Significant Assumptions

The future-oriented statement of operations has been prepared on the basis of government priorities and departmental plans as described in the Report on Plans and Priorities.

The information in the forecast results for fiscal year 2015-16 is based on actual results as at December 31, 2015 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2016-17 (i.e., the future year) fiscal year.

The main assumptions underlying the forecasts are as follows:

  • The Department's activities will remain substantially the same as in the previous year.
  • Expenses and revenues, including the determination of amounts internal and external to the government, are based on experience. The general historical pattern is expected to continue.

These assumptions are adopted as at December 31, 2015.

2. Variations and Changes to the Forecast Financial Information

While every attempt has been made to forecast final results for the remainder of 2015-16 and for 2016-17, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing this future-oriented statement of operations, Health Canada has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Factors that could lead to material differences between the future-oriented statement of operations and the historical statement of operations include the following:

  • The timing and amount of acquisitions and disposals of property, plant and equipment may affect gains/losses and amortization expense.
  • Implementation of new collective agreements.
  • Economic conditions may affect the amount of revenue earned.
  • Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.

Once the Report on Plans and Priorities is presented, Health Canada will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

3. Summary of Significant Accounting Policies

The future-oriented statement of operations has been prepared using the Government's accounting policies that came into effect for the 2015-16 fiscal year, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

(a) Expenses

Expenses are recorded on an accrual basis. Expenses for the Department's operations are recorded when goods are received or services are rendered, including services provided without charge for accommodation, employer contributions to health and dental insurance plans, legal services and worker's compensation, which are recorded as expenses at their estimated cost. Vacation pay and compensatory leave, as well as severance benefits, are accrued and expenses are recorded as the benefits are earned by employees under their terms of employment.

Transfer payments are recorded as expenses when the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement or, in the case of transactions that do not form part of an existing program, when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statement.  Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.

Expenses also include provisions to reflect changes in the value of assets, including provisions for bad debt on accounts receivable and provision for valuation on advances, or liabilities, including contingent liabilities and environmental liabilities, to the extent the future event is likely to occur and a reasonable estimate can be made.

Expenses also include amortization of tangible capital assets, which are capitalized at their acquisition cost. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset.

(b) Revenues

Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.

Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in which the related expenses are incurred.

Funds that have been received are recorded as deferred revenue, provided the Department has an obligation to other parties for the provision of goods, services or the use of assets in the future.

Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

Revenues that are non-respendable are not available to discharge the Department's liabilities. While the deputy head is expected to maintain accounting control, he has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of the entity's gross revenues.

4. Parliamentary Authorities

The Department is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the Department do not parallel financial reporting according to generally accepted accounting principles because authorities are primarily based on cash flow requirements. Items recognized in the future-oriented statement of operations in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, the Department has different net cost of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

(a) Reconciliation of net cost of operations to requested authorities
(in dollars)
  Forecast Results 2015-16 Planned Results 2016-17
Net cost of operations before government funding and transfers $ 3,889,984,245 $ 3,802,713,167
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (27,143,694) (25,363,158)
Loss on disposal of tangible capital assets (1,675,981) (1,781,392)
Services provided without charge by other government departments (126,660,660) (129,766,062)
Decrease (increase) in vacation pay and compensatory leave 519,340 (222,544)
Decrease (increase) in employee future benefits 1,043,859 959,366
Refund/adjustment of prior years' expenditures 34,969,125 35,252,587
Bad debt expense (1,676,846) 2,556,252
Increase (decrease) in transfer payment accrual 2,792,730 (3,648,034)
Decrease in workforce adjustment measures 706,824 -
Statutory spending authority equivalent to revenues earned 51,462,891 51,462,891
Other (79,833) (965,387)
Total items affecting net cost of operations but not affecting authorities (65,742,245) (71,515,481)
Adjustments for items not affecting net cost of operations but affecting authorities:
Disbursement to Canada Health Infoway Inc. 82,700,467 68,790,309
Acquisition of tangible capital assets 34,939,454 25,407,249
Proceeds from disposal of Crown assets 48,530 51,366
Total items not affecting net cost of operations but affecting authorities 117,688,451 94,248,924

Requested authorities

$ 3,941,930,451 $ 3,825,446,610
(b) Authorities requested
(in dollars)
  Forecast Results 2015-16 Planned Results 2016-17
Authorities requested:
Vote 1 - Operating expenditures $ 1,836,239,891 $ 1,768,947,704
Vote 5 - Capital expenditures 34,939,454 25,407,249
Vote 10 - Grants and contributions 1,810,889,706 1,785,339,382
Statutory 259,861,400 245,752,275
Requested authorities $ 3,941,930,451 $ 3,825,446,610
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