Future-Oriented Statement of Operations 2019-2020

Health Canada

Future-Oriented Statement of Operations (unaudited)
for the year ending March 31

(in dollars)		Forecast results 2018-19	Planned results 2019-20
Expenses
Health Care Systems		$ 1,299,671,734	$ 1,610,276,436
Health Protection and Promotion		944,618,121	839,000,548
Internal Services		409,743,937	305,550,312
Expenses incurred on behalf of Government		(198,442)	(27,153)
Total expenses		2,653,835,350	2,754,800,143
Revenues
Sales of goods and services	Services of a regulatory nature	66,488,947	70,408,861
	Rights and privileges	75,036,385	71,588,451
	Services of a non-regulatory nature	82,765,819	83,631,559
	Lease and use of public property	69,091	58,444
Revenues from fines		1,428,117	1,301,840
Interest		294,972	282,097
Other		(72,270)	76,103
Revenues earned on behalf of Government		(15,724,587)	(16,251,639)
Total revenues		210,286,474	211,095,716
Net cost of operations before government funding and transfers		$ 2,443,548,876	$ 2,543,704,427

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 2018-19 is based on actual results as at December 31, 2018 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for fiscal year 2019-20.

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, 2018.

2. Variations and changes to the forecast financial information

Although every attempt has been made to forecast final results for the remainder of 2018-19 and for 2019-20, 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 2018-19, 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

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 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.

Deferred revenue consists of amounts received in advance of the delivery of goods and rendering of services that will be recognized as revenue in a subsequent fiscal year as it is earned.

Other revenues are recognized in the period the event giving rise to the revenues occurred.

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 2018-19	Planned results 2019-20
Net cost of operations before government funding and transfers	$ 2,443,548,876	$ 2,543,704,427
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets	(23,699,049)	(24,393,554)
Gain on disposal of tangible capital assets	153,021	66,180
Services provided without charge by other government departments	(101,940,780)	(124,087,768)
Decrease (increase) in vacation pay and compensatory leave	2,750,884	(1,375,442)
Decrease in employee future benefits	1,338,062	1,364,823
Refund/adjustment of prior years’ expenditures	4,667,675	5,345,381
Bad debt expense	(390,711)	(57,423)
Statutory spending authority equivalent to revenues earned	51,462,891	51,462,891
Other	1,697,484	(72,294)
Total items affecting net cost of operations but not affecting authorities	(63,960,523)	(91,747,206)
Adjustments for items not affecting net cost of operations but affecting authorities:
Disbursement to Canada Health Infoway Inc.	14,260,425	10,208,554
Acquisition of tangible capital assets	29,144,205	18,135,187
Proceeds from disposal of Crown assets	45,712	51,714
Total items not affecting net cost of operations but affecting authorities	43,450,342	28,395,455
Requested authorities	$ 2,423,038,695	$ 2,480,352,676

(b) Authorities requested

(in dollars)	Forecast results 2018-19	Planned results 2019-20
Authorities requested
Vote 1: operating expenditures	$ 809,477,866	$ 738,373,612
Vote 5: capital expenditures	29,144,205	18,135,187
Vote 10: grants and contributions	1,395,307,328	1,556,438,144
Statutory amounts	189,109,296	167,405,733
Total authorities requested	$ 2,423,038,695	$ 2,480,352,676