Future-Oriented Statement of Operations 2018-2019

Health Canada

Future-Oriented Statement of Operations (unaudited)
for the year ending March 31
(in dollars)
  Forecast
results
2017-18
Planned
results
2018-19
Expenses
Health Care Systems $ 444,403,659 $ 1,268,867,566
Health Protection and Promotion 821,510,158 843,829,538
First Nations and Inuit Health 2,272,812,456 -
Internal Services 409,071,569 308,068,457
Expenses incurred on behalf of Government 41,689 (51,589)
Total expenses 3,947,839,531 2,420,713,972
Revenues
Sales of goods and services Services of a regulatory nature 63,643,437 65,115,068
Rights and privileges 72,105,104 73,381,246
Services of a non-regulatory nature 160,970,685 82,747,566
Lease and use of public property 193,904 122,959
Revenues from fines 1,517,457 1,436,863
Interest 342,214 295,705
Other 162,308 76,884
Revenues earned on behalf of Government (14,608,147) (14,651,353)
Total revenues 284,326,962 208,524,938
Net cost of operations before government funding and transfers $ 3,663,512,569 $ 2,212,189,034

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 2017-18 is based on actual results as at December 31, 2017 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for fiscal year 2018-19.

The main assumptions underlying the forecasts are as follows:

  • The Department's activities will remain substantially the same as in the previous year except for the organizational change described in note 5.
  • 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, 2017.

2. Variations and changes to the forecast financial information

Although every attempt has been made to forecast final results for the remainder of 2017-18 and for 2018-19, 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 2017-18, 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.

Transfer payments are recorded as an expense in the year the transfer is authorized and all eligibility criteria have been met by the recipient.

Other expenses are generally recorded when goods are received or services are rendered and include expenses related to personnel, professional and special services, repair and maintenance, utilities, materials and supplies, as well as amortization of tangible capital assets. Provisions to reflect changes in the value of assets or liabilities, such as provisions for bad debts and advances, as well as utilization of prepaid expenses, and other are also included in other expenses.

(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 over 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 Department'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
2017-18
Planned
results
2018-19
Net cost of operations before government funding and transfers $ 3,663,512,569 $ 2,212,189,034
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (24,213,241) (24,729,971)
Loss on disposal of tangible capital assets (23,625) (64,235)
Services provided without charge by other government departments (129,288,437) (108,956,100)
Decrease (increase) in vacation pay and compensatory leave 2,309,629 (121,701)
Decrease in employee future benefits 530,699 465,999
Refund/adjustment of prior years' expenditures 14,117,376 8,345,741
Bad debt expense (635,112) (114,548)
Decrease in transfer payment accrual (12,618,505) -
Decrease in workforce adjustment measures 16,576 -
Statutory spending authority equivalent to revenues earned 51,462,891 51,462,891
Other (11,723,459) (192,081)
Total items affecting net cost of operations but not affecting authorities (110,065,208) (73,904,005)
Adjustments for items not affecting net cost of operations but affecting authorities:
Disbursement to Canada Health Infoway Inc. 25,847,647 24,629,485
Acquisition of tangible capital assets 38,085,342 26,097,447
Proceeds from disposal of Crown assets 65,871 26,888
Total items not affecting net cost of operations but affecting authorities 63,998,860 50,753,820
Requested authorities $ 3,617,446,221 $ 2,189,038,849
(b) Authorities requested (in dollars)
  Forecast
results
2017-18
Planned
results
2018-19
Authorities requested
Vote 1: operating expenditures $ 1,651,052,510 $ 743,074,960
Vote 5: capital expenditures 38,085,342 26,097,447
Vote 10: grants and contributions 1,698,376,527 1,243,455,426
Statutory amounts 229,931,842 176,411,016
Total authorities requested $ 3,617,446,221 $ 2,189,038,849

5. Transfer to the Department of Indigenous Services Canada

Effective November 30, 2017, the Department transferred the control and supervision of the First Nations and Inuit Health Branch to the Department of Indigenous Services Canada. Revenues and expenses attributed to the Department of Indigenous Services Canada from the effective date are not reflected in this Future-Oriented Statement of Operations.

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