Future-Oriented Statement of Operations

Health Canada
Future-Oriented Statement of Operations (unaudited)
for the year ending March 31
(in dollars)
Forecast results 2016-17 Planned results
A health system responsive to the needs of Canadians $ 387,037,190 $ 376,377,508
Health risks and benefits associated with food, products, substances and environmental factors are appropriately managed and communicated to Canadians 742,572,935 684,843,864
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 3,189,653,125 3,148,009,271
Internal services 309,392,537 260,156,134
Expenses incurred on behalf of Government 1,714,890 (533,120)
Total expenses 4,630,370,677 4,468,853,657
Sales of goods and services
Services of a regulatory nature 62,329,814 61,643,702
Rights and privileges 66,582,209 70,480,619
Services of a non-regulatory nature 223,956,297 87,522,421
Lease and use of public property 281,931 277,605
Revenues from fines 1,887,029 1,817,738
Interest 496,441 437,260
Other 451,672 267,144
Revenues earned on behalf of Government (14,772,909) (14,669,777)
Total revenues 341,212,484 207,776,712

Net cost of operations before government funding and transfers

$ 4,289,158,193 $  4,261,076,945

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 Departmental Plan.

The information in the forecast results for fiscal year 2016-17 is based on actual results as at December 31, 2016 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for fiscal year 2017-18.

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 past experience. The general historical pattern is expected to continue.

These assumptions are made as at December 31, 2016.

2. Variations and changes to the forecast financial information

Although every attempt has been made to forecast final results for the remainder of 2016-17 and for 2017-18, actual results achieved for both years are likely to differ 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 about the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are based on past experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, and are continually evaluated.

Factors that could lead to material differences between the Future-Oriented Statement of Operations and the historical statement of operations include:

  • the timing and the amount of acquisitions and disposals of property, plant and equipment, which may affect gains, losses and amortization expense;
  • the implementation of new collective agreements;
  • economic conditions, which may affect both the amount of revenue earned; and
  • other changes to the operating budget, such as new initiatives or technical adjustments later in the fiscal year.

After the Departmental Plan is tabled in Parliament, 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 Results Report.

3. Summary of significant accounting policies

The Future-Oriented Statement of Operations has been prepared using the Government of Canada's accounting policies that came into effect for fiscal year 2016-17, and is 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

The department records expenses 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 workers' 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 recipients have met all the eligibility criteria and the transfers are authorized by March 31. In the case of transfers that do not form part of an existing program, the transfers are considered to be authorized 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 statements.

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 fiscal 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. Although 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 as a 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 differs from financial reporting according to generally accepted accounting principles because authorities are based mainly 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
Planned results
Net cost of operations before government funding and transfers $ 4,289,158,193 $ 4,261,076,945
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (24,181,954) (25,071,323)
Loss on disposal of tangible capital assets (156,117) (106,561)
Services provided without charge by other government departments (131,671,972) (131,787,499)
Decrease (increase) in vacation pay and compensatory leave (926,571) 92,587
Decrease (increase) in employee future benefits 1,568,072 1,599,434
Refund/adjustment of prior years' expenditures 20,379,063 22,735,820
Bad debt expense 1,668,542 (656,333)
Increase (decrease) in transfer payment accrual 3,243,256 199,657
Decrease in workforce adjustment measures 128,398 -
Statutory spending authority equivalent to revenues earned 51,462,891 51,462,891
Other (60,718,816) 235,671
Total items affecting net cost of operations but not affecting authorities (139,205,208) (81,295,656)
Adjustments for items not affecting net cost of operations but affecting authorities:
Disbursement to Canada Health Infoway Inc. 37,877,924 37,877,924
Acquisition of tangible capital assets 36,586,833 37,032,428
Proceeds from disposal of Crown assets 46,074 43,258
Total items not affecting net cost of operations but affecting authorities 74,510,831 74,953,610

Requested authorities

$ 4,224,463,816 $ 4,254,734,899
(b) Authorities requested
(in dollars)
  Forecast results
Planned results
Authorities requested
Vote 1: operating expenditures $ 1,928,574,658 $ 1,892,235,299
Vote 5: capital expenditures 36,586,833 37,032,428
Vote 10: grants and contributions 2,039,368,714 2,116,553,920
Statutory amounts 219,933,611 208,913,252
Total authorities requested $ 4,224,463,816 $ 4,254,734,899
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