2020–2021 Health Canada Future-Oriented Statement of Operations

Health Canada

Future-Oriented Statement of Operations (unaudited)
for the year ending March 31
(in thousands of dollars) Forecast results 2019-20 Planned results 2020-2021
Expenses
Health Care Systems $ 1,610,978 $ 1,779,375
Health Protection and Promotion 940,635 894,235
Internal Services 420,234 367,705
Expenses incurred on behalf of Government (186) (369)
Total expenses 2,971,661 3,040,946
Revenues
Sales of goods and services Services of a regulatory nature 71,041 72,405
Rights and privileges 71,335 72,647
Services of a non-regulatory nature 135,000 141,275
Lease and use of public property 41 26
Revenues from fines 1,223 1,302
Interest 295 323
Other 45 79
Revenues earned on behalf of Government (16,158) (16,715)
Total revenues 262,822 271,342
Net cost of operations before government funding and transfers $ 2,708,839 $ 2,769,604

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 2019-20 is based on actual results as at November 29, 2019 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for fiscal year 2020-21.

The main assumptions underlying the forecasts are as follows:

These assumptions are made as at November 29, 2019.

2. Variations and changes to the forecast financial information

Although every attempt has been made to forecast final results for the remainder of 2019-20 and for 2020-21, 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:

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 2019-20, 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 items 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 a 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 thousands of dollars) Forecast results 2019-20 Planned results 2020-21
Net cost of operations before government funding and transfers $ 2,708,839 $ 2,769,604
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (23,141) (25,250)
Gain on disposal of tangible capital assets 106 88
Services provided without charge by other government departments (140,992) (141,684)
Increase in vacation pay and compensatory leave (3,811) (3,248)
Decrease in employee future benefits 1,117 1,140
Refund/adjustments of prior years' expenditures 5,709 6,300
Bad debt expense (394) (885)
Statutory spending authority equivalent to revenues earned 51,463 51,463
Other 346 (107)
Total items affecting net cost of operations but not affecting authorities (109,597) (112,183)
Adjustments for items not affecting net cost of operations but affecting authorities:
Disbursement to Canada Health Infoway Inc. 10,131 -
Acquisition of tangible capital assets 23,199 18,876
Proceeds from disposal of Crown assets 55 50
Total items not affecting net cost of operations but affecting authorities 33,385 18,926
Requested authorities forecasted to be used $ 2,632,627 $ 2,676,347
(b) Authorities provided/requested
(in thousands of dollars) Forecast results 2019-20 Planned results 2020-21
Authorities provided/requested
Vote 1: operating expenditures $ 879,652 $ 736,097
Vote 5: capital expenditures 23,199 18,875
Vote 10: grants and contributions 1,558,227 1,758,412
Statutory amounts 171,549 162,963
Total authorities provided/requested $ 2,632,627 $ 2,676,347
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