Public Health Agency of Canada Quarterly Financial Report – For the quarter ended December 31, 2012

• 1. Introduction
• 2. Highlights of Fiscal Quarter and Fiscal Year to Date (YTD) Results
• 3. Risks and Uncertainties
• 4. Significant Changes in Relation to Operations, Personnel and Programs
• 5. Budget 2012 Implementation
• 6. Statement of Authorities (unaudited)
• 7. Departmental budgetary expenditures by Standard Object (unaudited)

1. Introduction

This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board (TB), and should be read in conjunction with the Main Estimates and Supplementary Estimates A & B as well as Canada’s Economic Action Plan 2012 (Budget 2012). This quarterly report has not been subject to an external audit or review.

1.1 Public Health Agency of Canada’s Program Activities

The primary goals of the Public Health Agency of Canada (the Agency) are to strengthen Canada’s capacity to protect and improve the health of Canadians. This mandate is fulfilled by the promotion of health; prevention and control of chronic diseases and injuries; prevention and control of infectious diseases; preparing and responding to public health emergencies; and strengthening public health capacity in a manner consistent with a shared understanding of the determinants of health and of the common factors that maintain health or lead to disease and injury.

Further details on the Agency’s authority, mandate and program activities may be found in the Agency’s Main Estimates 2012-2013, at the following link: 2012-13 Part I and II – Main Estimates.

1.2 Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Agency’s spending authorities granted by Parliament and those used by the Agency, consistent with the Main Estimates and Supplementary Estimates for the 2012-2013 fiscal year. This quarterly report has been prepared using a special-purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before moneys can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year. Budget 2012 was tabled in Parliament on March 29, after the tabling of the Main Estimates on February 28, 2012. As a result the measures announced in the Budget 2012 could not be reflected in the 2012-2013 Main Estimates.

In fiscal year 2012-2013, frozen allotments were established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012. In future years, the changes to departmental authorities will be implemented through the Annual Reference Level Update, as approved by Treasury Board, and reflected in the subsequent Main Estimates tabled in Parliament.

As part of the departmental performance reporting process, the Agency prepares its annual departmental financial statements on a full accrual basis in accordance with the TB accounting policies, which are based on Canadian Generally Accepted Accounting Principles (GAAP) for the public sector. However, the spending authorities voted by Parliament are prepared on an expenditure basis.

2. Highlights of Fiscal Quarter and Fiscal Year to Date (YTD) Results

This section highlights the significant items that contributed to the net decrease in resources available for the year and actual expenditures for the quarter ended December 31, 2012.

The following graph provides a comparison of budgetary authorities and expenditures as of December 31, 2011, and December 31, 2012.

Comparison of Budgetary Authorities and Expenditures
as of December 31, 2011, and December 31, 2012

The above graph outlines the net budgetary authorities available for use in fiscal years 2011-2012 and 2012-2013. As of December 31, 2012, the Agency had a total of $638.9 million in authorities available for spending compared to $687.5 million as of December 31, 2011. The Agency’s year to date expenditures as of December 31, 2012, were $386.7 million compared to $425.7 million as of December 31, 2011. Both authorities and expenditures will change as the year progresses to reflect additional funding received throughout the year and increased expenditures.

2.1 Significant Changes to Authorities

When compared to the third quarter of the previous fiscal year, the authorities available for spending for the year have decreased by $48.6 million, or 7%, from $687.5 million to $638.9 million. The decrease is primarily attributable to decreases in authorities relating to operating and capital votes, which is partially offset by an increase in the grants and contributions vote.

Operating Expenditures (authorities)

Operating authorities available for use in fiscal year 2012-2013 have decreased $42.5 million, or 10% from $427.4 million in fiscal year 2011-2012 to $384.9 million.

The significant changes are as follows:

• decrease in projected costs to support the installation of an influenza fill line to secure, protect and improve ongoing domestic vaccine capacity in Canada for seasonal and pandemic influenza;
• decrease for sunsetting of Listeriosis funding which aimed to enhance the ability to prevent, detect and respond to outbreaks of food-borne illness;
• decrease for the transfer of authority to Shared Services Canada to streamline and modernize IT services, telecommunications and reduce administration costs;
• decrease in the Operating Budget Carryforward as compared to 2011-2012; and
• decrease in funding for the liquidation of severance pay due to revisions to specified collective agreements as compared to 2011-2012.

Capital Expenditures (authorities)

Capital authorities available for use in fiscal year 2012-2013 have decreased by $9.6 million, or 34%, from $28.4 million in fiscal year 2011-2012 to $18.8 million. This reduction in authorities is mostly related to a decrease in construction activity as the JC Wilt Infectious Diseases Research Centre nears completion.

Grants and Contributions (authorities)

Grants and Contributions authorities available for use in fiscal year 2012-2013 have increased by $4.8 million, or 2%, from $197.6 million in fiscal year 2011-2012 to $202.4 million. This increase is primarily explained by an increase in funding to address sport and recreation injuries among Canadian children and youth and the transfer of the International Health Grants Program from Health Canada.

2.2 Significant Changes to Expenditures

When compared to the third quarter of the previous fiscal year, the expenditures decreased by $12.4 million, or 8%, from $151.2 million to $138.8 million. When compared year to date, the expenditures decreased by $39.0 million, or 9%, from $425.7 million to $386.7 million. The decrease was across operating and capital expenditures.

Operating Expenditures

Operating expenditures in the third quarter of fiscal year 2012-2013 were $68.9 million, a decrease of $7.3 million, or 10%, from $76.2 million in the same quarter of the previous year. When compared year to date, the expenditures decreased by $31.2 million, or 13%, from $231.3 million to $200.1 million. This decrease is primarily due to the reduced expenditures in personnel and professional services caused by the transfer of employees to Shared Services Canada and the Agency’s reduction of expenditures to achieve the savings identified in Budget 2012.

Capital Expenditures

Capital expenditures for the third quarter of fiscal year 2012-2013 were $1.6 million, a decrease of $5.5 million, or 78%, from $7.1 million in the same quarter of the previous year. When compared year to date, the expenditures decreased by $9.0 million, or 56%, from $16.1 million to $7.1 million. The reduction in expenditures relates primarily to a decrease in construction activity as the JC Wilt Infectious Diseases Research Centre nears completion.

Grants & Contributions

Grants & Contributions expenditures for the third quarter of fiscal year 2012-2013 were $60.1 million, an increase of $0.7 million, or 1%, from $59.5 million over the same quarter in the previous year. When compared year to date, the expenditures increased by $2.1 million, or 1%, from $152.7 million to $154.8 million.

3. Risks and Uncertainties

The dominant financial risks faced by the Agency relate to the nature of its mandate and the need to respond to unforeseeable events such as an influenza pandemic. Significant surge capacity would need to be activated in these instances.

To manage this financial risk, the Agency continues to strengthen its preparation and responsiveness to public health emergencies and public health capacity. In an emergency situation, the Agency would first consider internal re-allocation of resources in order to address unforeseeable events. The federal government also has systems and processes in place for departments to access funds, should an emergency arise.

4. Significant Changes in Relation to Operations, Personnel and Programs

Shared Services Canada

Shared Services Canada was created on August 4, 2011, pursuant to section 31.1 of the Financial Administration Act and Order in Council. Shared Services Canada's mandate is to streamline and reduce duplication of information technology services in the federal government in order to reduce costs, improve services, and leverage capacity in the public and private sectors through pooled resources and greater buying power. On November 15, 2011, pursuant to a second Order in Council, a transfer of employees from the Agency to Shared Services Canada occurred.

The authorities and expenditures for the third quarter of 2011-2012 have been revised to show a reduction of $2.7 million to account for the transfer of authorities to Shared Services Canada from the date of transfer to March 31, 2012, and a reduction of $0.7 million to the expenditures to account for the amount incurred on behalf of Shared Services Canada from the date of transfer to December 31, 2011.

5. Budget 2012 Implementation

This section provides an overview of the savings measures announced in Budget 2012 that will be implemented in order to refocus government and programs; make it easier for Canadians and business to deal with their government; and, modernize and reduce the back office.

The Agency will achieve Budget 2012 savings of $68.0 million by fiscal year 2014-2015 through efficiency measures and program reductions that align resources to its core mandate, scaling back where there is a need; transforming how it works internally; and by consolidating and streamlining.

The Agency has taken necessary steps and is on track to achieve savings of $13.7 million in 2012-2013. Savings increase to $35.7 million in 2013-2014 and $68.0 million starting in 2014-2015.

More information on these savings measures can be found at the following link: Supplementary Data on Budget 2012 Implementation.

The Public Health Agency of Canada was also referenced, along with other federal departments, in Budget 2012 to receive funding to continue measures to enhance surveillance and early detection of food safety risks, and improve response capabilities to food-borne illness emergencies.

Approved by: