Public Health Agency of Canada Quarterly Financial Report - For the quarter ended September 30, 2016

Table of contents

• 1.0 Introduction
  • 1.1 Authority, Mandate and Program
  • 1.2 Basis of Presentation
• 2.0 Highlights of Fiscal Quarter Results
  • 2.1 Significant Changes to Authorities
    • Vote 1 - Operating Expenditures
    • Vote 5 - Capital Expenditures
    • Vote 10 - Grants and Contributions (G&C)
    • Budgetary Statutory Authorities
  • 2.2 Significant Changes to Expenditures
    • Vote 1 - Operating Expenditures
    • Vote 5 - Capital Expenditures
    • Vote 10 - Grants and Contributions (G&C)
    • Budgetary Statutory Expenditures
• 3.0 Risks and Uncertainty
• 4.0 Significant Changes in Relation to Operations, Personnel and Programs
• 5.0 Approval by Senior Officials
• 6.0 Statement of Authorities (unaudited)
• 7.0 Agency Budgetary Expenditures by Standard Object (unaudited)

1.0 Introduction

This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act, in the form and manner prescribed by the Treasury Board (TB) Accounting Standard 1.3. This quarterly financial report should be read in conjunction with the Main Estimates and Supplementary Estimates. Please note that this quarterly financial report has not been subject to an external audit or review.

1.1 Authority, Mandate and Program

The Public Health Agency of Canada was created within the federal Health Portfolio in September 2004. The core mandate of the Agency is 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 public health capacities across Canada.
The Agency has the responsibility to:

• contribute to the prevention of disease and injury, and 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 national public health events;
• strengthen intergovernmental collaboration on public health and facilitate national approaches to public health policy and planning;
• serve as a central point for sharing Canada's expertise with international partners and to translate international knowledge and approaches to inform and support Canada's public health priorities and programs.

The Agency aims to achieve a strategic outcome of protecting Canadians and empowering them to improve their health by providing strategic policy advice and support to the Minister of Health on a range of program activities, including:

• Public Health Infrastructure;
• Health Promotion and Disease Prevention; and
• Health Security.

The Agency also delivers a number of grant and contribution programs related to these programs.

Further information on the mandate, roles, responsibilities and program of the Agency can be found in the 2016-17 Report on Plans and Priorities and the 2016-17 Main Estimates.

1.2 Basis of Presentation

This quarterly report has been prepared using an expenditure basis of accounting. The accompanying Statement of Authorities (Section 6.0) includes the Agency's spending authorities granted by Parliament, or received from Treasury Board Central Votes, and those used by the Agency consistent with the Main Estimates and Supplementary Estimates for the 2016-17 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.

The Agency uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

2.0 Highlights of Fiscal Quarter Results

This section highlights the significant items that contributed to the net increase in resources available for the year as well as actual expenditures for the second quarter of 2016-17, ending September 30, 2016.

The following graph provides a comparison of the net budgetary authorities and expenditures as of September 30, 2015 and September 30, 2016 for the Agency's combined Vote 1, Vote 5, Vote 10 and Statutory Votes.

Comparison of Budgetary Authorities and Expenditures as at September 30, 2015 and September 30, 2016

As at September 30, 2016, the Agency had a total of $606.1 million in authorities available for spending compared to $582.6 million on September 30, 2015. The Agency's year to date expenditures as at September 30, 2016 were $279.8 million compared to $278.4 million on September 30, 2015. Both authorities and expenditures fluctuate as the year progresses to reflect additional funding received throughout the fiscal year as well as increased actual expenditures.

2.1 Significant Changes to Authorities

When compared to the second quarter of the previous fiscal year, the authorities available for spending for the year have increased by $23.5 million or 4.0%, from $582.6 million to $606.1 million. This change in authorities is comprised of an increase in Vote 1 - Operating Expenditures ($16.6 million) and an increase in Vote 10 - Grants and Contributions ($6.8 million) as well as small increase in Budgetary Statutory Authorities ($0.4 million) offset by a decrease in Vote 5 - Capital ($0.3 million).

Vote 1 - Operating Expenditures

The Agency's Vote 1 increased by $16.6 million or 5.0 percent, mainly due to:

• An increase in funding to acquire medical countermeasures for smallpox and anthrax preparedness;
• An increase to support the Infectious Diseases and Climate Change Program;
• An increase due to the reprofile of 2015-16 funding for Ebola Preparedness and Response Initiatives to protect Canadians at home and abroad;
• An increase in funding for Aboriginal Head Start in Urban and Northern Communities;

Offset by:

• A decrease in sunset funding for Ebola Preparedness and Response Initiatives to protect Canadians at home and abroad; and
• A decrease in sunset funding for the Government of Canada's provision of essential federal services to the Toronto 2015 Pan American and Parapan American Games.

Note that the 2016-17 Operating Budget Carry Forward funding ($15.0 million) was received from Treasury Board this quarter (same as last fiscal year).

Vote 5 - Capital Expenditures

The Agency's Vote 5 decreased by $0.3 million or 4.8 percent in 2016-17 compared to 2015-16. The Agency did not receive Capital Budget Carry Forward this fiscal year but did in 2015-16.

Vote 10 - Grants and Contributions (G&C)

The Agency's Vote 10 increased by $6.8 million or 3.4 percent, mainly due to:

• An increase for the establishment of the Canadian Centre for Aging for Brain Health Innovation;
• An increase in funding for Aboriginal Head Start in Urban and Northern Communities; and

Offset by:

A decrease due to sunset of funding for the installation of automated external defibrillators and associated training in recreational hockey arenas across Canada.

Budgetary Statutory Authorities

The increase of $0.4 million or 1.0 percent in 2016-17 is, for the most part, related to the Employee Benefit Plans (EBP) costs associated with the change in the Agency budgetary requirements for salary.

2.2 Significant Changes to Expenditures

The second quarter expenditures increased by $1.3 million, or 1.1 percent, in 2016-17, compared to 2015-16, from $124.3 million to $125.6 million.

This overall increase in spending is a combination of a:

• 4% decrease in Vote 1 - Operating Expenditures of $4.1 million (from $103.2 million to $99.1 million);
• 137% increase in Vote 5 - Capital Expenditures of $0.6 million (from $0.4 million to $1.0 million);
• 49% increase in Vote 10 - Grants and Contributions of $5.1 million (from $10.5 million to $15.6 million); and
• 3% decrease in Statutory Expenditures - EBP, Proceeds from Disposal of Crown Assets and Respendable Revenue of $0.3 million (from $10.1 million to $9.8 million.)

Overall, year-to-date expenditures as at September 30, 2016 increased by $1.4 million, or 0.5 percent, in 2016-17, compared to 2015-16, from $278.4 million to $279.8 million

Vote 1 - Operating Expenditures

The Agency's Vote 1 second quarter 2016-17 expenditures decreased by $4.1 million over the same quarter in 2015-16 mainly due to timing issues on an installment payment to Health Canada through the Shared Services Partnership Agreement. The decrease is offset by the newly implemented advanced billing model for legal services and other minor increases.

Vote 5 - Capital Expenditures

The Agency's Vote 5 second quarter 2016-17 expenditures increased by $0.6 million over the same quarter in 2015-16 mainly due to the purchase of mainframe servers for the National Microbiology Lab in the second quarter of 2016-17.

Vote 10 - Grants and Contributions (G&C)

The Agency's Vote 10 second quarter 2016-17 expenditures increased by $5.1 million over the same quarter in 2015-16 mainly resulting from new payments for the the Canadian Centre for Aging for Brain Health Innovation and the International Health Grants Program. There was also a noted increase in payments for the Community Action Plan for Children as well as the Innovation Strategy contribution programs

Budgetary Statutory Expenditures

The Agency's Budgetary Statutory Expenditures decreased by $0.3 million over the same quarter in 2015-16 mainly because of a 20% decrease in respendable revenues in the second quarter of 2016-17. The Agency charged $2.2 million to Health Canada under the Shared Services Partnership Framework Agreement for the second quarter compared to $2.7 million in the same quarter of 2015-16.

3.0 Risks and Uncertainty

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.

4.0 Significant Changes in Relation to Operations, Personnel and Programs

There have been no significant changes in relation to operations, personnel and programs during this quarter.

5.0 Approval by Senior Officials

Approved by:

Dr. Siddika Mithani, President
Public Health Agency of Canada
Ottawa, Canada
Date:

Carlo Beaudoin, Chief Financial Officer
Public Health Agency of Canada
Ottawa, Canada
Date:

6.0 Statement of Authorities (unaudited)

Public Health Agency of Canada
For the quarter ended September 30, 2016

7.0 Agency Budgetary Expenditures by Standard Object (unaudited)

Public Health Agency of Canada
For the quarter ended September 30, 2016