Public Health Agency of Canada Quarterly Financial Report – For the quarter ended June 30, 2013

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 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

In September 2004, the Public Health Agency of Canada (the Agency) was created within the federal Health Portfolio to deliver on the Government of Canada's commitment to increase its focus on public health in order to help protect and improve the health and safety of all Canadians and to contribute to strengthening the health care system.

The Agency has the responsibility to: contribute to the prevention of disease and injury, and to the promotion of health; enhance the quality and quantity of surveillance data and expand the knowledge of disease and injury in Canada; provide federal leadership and accountability in managing public health emergencies; serve as a central point for sharing Canada's expertise with the rest of the world and for applying international research and development to Canada's public health programs; and strengthen intergovernmental collaboration on public health and facilitate national approaches to public health policy and planning.

The Agency aims to achieve a strategic outcome of protecting Canadians and empowering them to improve their health as supported through its program activities of: Public Health Infrastructure, Health Promotion and Disease Prevention, Health Security, and Internal Services.

Informed by the Government of Canada priorities, the Agency's domestic and global operating environment, human and financial resource capacity, and existing or emerging corporate risks, the Agency established the following priorities for 2013-2014:

• Strengthened public health capacity and science leadership;
• Leadership on health promotion and disease prevention;
• Enhanced public health security; and
• Excellence and innovation in management.

Further details on the Agency's authority, mandate and program activities may be found at the following links: 2013-2014 Report on Plans and Priorities and 2013-2014 Parts 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 2013-2014 Main Estimates. 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 Budget 2012 could not be reflected in 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 2013-2014, the changes to departmental authorities were reflected in 2013-2014 Main Estimates tabled in Parliament.

Note that the Agency prepares its annual departmental financial statements on a full accrual basis in accordance with the Government's accounting policies, which are based on Canadian public sector accounting standards. 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 June 30, 2013.

The following graph provides a comparison of budgetary authorities and expenditures as of June 30, 2012, and June 30, 2013.

Comparison of Budgetary Authorities and Expenditures as of June 30, 2012, and June 30, 2013

The above graph outlines the net budgetary authorities available for use in fiscal years 2012-2013 and 2013-2014. As of June 30, 2013, the Agency had a total of $582.8 million in authorities available for spending compared to $616.5 million as of June 30, 2012. The Agency's year-to-date expenditures as of June 30, 2013, were $120.2 million compared to $117.8 million as of June 30, 2012. 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 first quarter of the previous fiscal year, the authorities available for spending for the year have decreased by $33.7 million, or 5%, from $616.5 million to $582.8 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 2013-2014 have decreased $33.5 million, or 9% from $366.0 million in fiscal year 2012-2013 to $332.5 million.

The significant changes are as follows:

• decrease in funding levels as per the funding profile (no change to the total cost) 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 in funding levels as per the funding profile (no change to the total cost) for the short-term replenishment of the National Antiviral Stockpile;
• decrease in funding levels related to Budget 2012 implementation;
• increase in funding levels for the transfer of the Travelling Public Program from Health Canada; and
• increase in funding levels for collective bargaining agreements.

The above changes account for the majority of the variances in the standard object authorities compared to the previous fiscal year. The exception is the decrease to “Other subsidies and payments”, which had included planned transfers to other government departments (primarily Health Canada) in 2012-2013. These transfers are now allocated to the other standard objects according to the planned activities identified in the agreements (see Section 4 for more information on the Shared Services Partnership Agreement with Health Canada).

Capital Expenditures (authorities)

Capital authorities available for use in fiscal year 2013-2014 have decreased by $9.9 million, or 58%, from $17.1 million in fiscal year 2012-2013 to $7.2 million. This reduction in authorities is mostly related to the completion of construction at the JC Wilt Infectious Diseases Research Centre.

Grants and Contributions (authorities)

Grants and Contributions authorities available for use in fiscal year 2013-2014 have increased by $9.8 million, or 5%, from $200.6 million in fiscal year 2012-2013 to $210.3 million. This increase is primarily explained by the transfer of the International Health Program from Health Canada and additional funding for Automated External Defibrillators and Tobacco Control. It is partially offset by decreased funding for time-limited programming related to Injury Prevention, Lung and Neurological diseases and Budget 2012 implementation.

2.2 Significant Changes to Expenditures

When compared to the first quarter of the previous fiscal year, the expenditures increased by $2.4 million, or 2%, from $117.8 million to $120.2 million. The increase is primarily attributable to grants and contributions expenditures, which is partially offset by a slight decrease in operating and capital expenditures.

Operating Expenditures

Operating expenditures in the first quarter of fiscal year 2013-2014 were $49.8 million, a decrease of $4.8 million, or 9%, from $54.6 million in the same quarter of the previous year. This decrease is primarily due to the reduced expenditures in personnel related to the Agency's reduction of expenditures to achieve the savings identified in Budget 2012.

Capital Expenditures

Capital expenditures for the first quarter of fiscal year 2013-2014 were $1.0 million, a decrease of $0.6 million, or 36%, from $1.6 million in the same quarter of the previous year. The reduction in expenditures relates primarily to the completion of construction at the JC Wilt Infectious Diseases Research Centre.

Grants & Contributions

Grants & Contributions expenditures for the first quarter of fiscal year 2013-2014 were $61.3 million, an increase of $8.0 million, or 15%, from $53.3 million over the same quarter in the previous year. This increase is primarily due to the large number of agreements with recipients continuing from the previous fiscal year.

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

In June 2012, the Deputy Heads of Health Canada and the Public Health Agency of Canada signed a Shared Services Partnership Framework Agreement. Under this agreement, each organization retains responsibility for a different set of internal services and corporate functions. The creation of this new partnership was motivated by a joint desire to:

• reduce the overhead costs of internal services by consolidating capacity from the two organizations into shared functions that will benefit from the strengths and perspectives of both parties;
• bring a more "whole of portfolio" perspective to the work of both organizations;
• enable both organizations to structure their operations in more cost effective ways; and
• foster innovation in management and service delivery for the benefit of both organizations.

Health Canada provides the following internal services to the Agency: human resources, internal financial services, real property, communications, information management / information technology, and security. Planning highlights for these internal services can be found in Health Canada's Report on Plans and Priorities. Internal services provided to Health Canada by the Agency include emergency management, international affairs, internal audit services, and evaluation services.

As of April 1st, 2013, the Travelling Public Program Unit at Health Canada and some programs from the Office of Biohazard Containment and Safety at the Canadian Food Inspection Agency were transferred to the Agency. These transfers were identified as part of Budget 2012.

Budget 2013 did not identify any significant changes affecting the Agency. Please see below for the significant changes resulting from Budget 2012.

5. Budget 2012 Implementation

This section provides an overview of the savings measures announced in Budget 2012 that are being 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 achieved savings of $13.7 million in 2012-2013. The savings increase to $35.7 million in 2013-2014 and $68.0 million starting in 2014-2015.

In 2013-2014, the Agency's program activities will continue to implement Budget 2012 savings measures as follows:

• Public Health Infrastructure - streamline surveillance activities and publications without affecting program delivery;
• Health Promotion and Disease Prevention - reduce management and administration, travel and professional services, and streamline surveillance activities and publications. In addition, the Agency will improve the efficiency of grants and contributions administration by integrating efforts at the community level with those of other providers and by streamlining and consolidating programs with common risk factors or target populations; and
• Health Security - reduce management and administration, travel and professional services, and partnerships with other departments to provide consolidated services for emergency management, border health services, and pathogen control.

There are no new significant financial risks and uncertainties related to the implementation of initiatives and savings measures from Budget 2012 for the current quarter.

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

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