Public Health Agency of Canada Quarterly Financial Report - For the quarter ending December 31, 2015

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 as well as Budgets 2013-2015. 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 (the Agency) 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 the health care system.

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; and
• 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 2015-2016 Report on Plans and Priorities and the 2015-2016 Main Estimates.

1.2 Basis of Presentation

This Quarterly Financial 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.

The authority of Parliament is required before funds can be spent by the Government. Approvals are given in the form of annual limits provided through Appropriation Acts or through legislation in the form of statutory spending authority for specific purposes.

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 Government's accounting policies, which are based on Canadian generally accepted accounting principles for the public sector. However, the spending authorities voted by Parliament remain on an expenditure basis, as do the expenditures presented in this Report.

2.0 Highlights of Fiscal Quarter Results

This section highlights the significant items that contributed to the net decrease in resources available for the year as well as a net decrease in actual expenditures for the third quarter of 2015-2016, ending December 31, 2015.

The following graph provides a comparison of the net budgetary authorities and expenditures as of December 31, 2014 and December 31, 2015 for the Agency's combined Vote 1, Vote 5, Vote 10 and Statutory Votes.

As at December 31, 2015, the Agency had a total of $579.9 million in authorities available for spending compared to $632.7 million on December 31, 2014. The Agency's year-to-date expenditures as at December 31, 2015 were $397.4 million compared to $411.3 million on December 31, 2014. 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 third quarter of the previous fiscal year, the authorities available for spending for the year have decreased by $52.8 million or 8.3% from $632.7 million to $579.9 million. This change in authorities is primarily comprised of a decrease in Vote 10 - Grants and Contributions ($53.2 million) and Vote 5 - Capital ($2.6 million) offset by a small increase in Vote 1 - Operating Expenditures ($2.4 million) as well as small increase in Budgetary Statutory Authorities ($0.6 million).

Vote 1 - Operating Expenditures

The Agency's Vote 1 Authorities increased by $2.4 million (0.7%), mainly due to:

• a temporary increase to support the Government of Canada's provision of essential federal services to the Toronto 2015 Pan American and Parapan American Games;
• an increase due to temporary funding for Ebola Preparedness and Response Initiatives to Protect Canadians at Home and Abroad;

Offset by:

• a decrease in funding for the Pandemic Vaccine Fill Line as it nears completion; and
• a decrease for program funding for Aboriginal Head Start in Urban and Northern Communities, which sunset in 2014-2015. It was subsequently renewed in 2015-2016.

Vote 5 - Capital Expenditures

The Agency's Vote 5 decreased by $2.6 million (30%) largely resulting from a planned reduction of funding for the Single Window Initiative. Work on this Initiative has been completed in accordance with the planned funding profile and workplan.

Vote 10 - Grants and Contributions (G&C)

The Agency's Vote 10 decreased by $53.2 million (21%) mainly due to:

• a decrease due to the completion and final payment of the Hepatitis C Health Care Services Program in 2014-2015; and
• a decrease as a result of Aboriginal Head Start in Urban and Northern Communities which sunset in 2014-2015. It was subsequently renewed in 2015-2016.

Budgetary Statutory Authorities

The increase of $0.6 million or 1.4% in 2015-2016 is, for the most part, related to the Agency's share of the Employee Benefit Plans which is based on an annual projection of personnel expenditures as well as a small amount for disposal of crown assets. The statutory authority for services provided by the Agency and charged to Health Canada under the Shared Services Partnership Framework Agreement remains relatively stable from year to year.

2.2 Significant Changes to Expenditures

The third quarter expenditures decreased by $16.9 million, or 12%, in 2015-2016, compared to the third quarter of 2014-2015, from $135.9 million to $119.0 million. This overall decrease in spending is a combination of:

• 11% decrease in Vote 1 - Operating Expenditures of $7.5 million (from $67.2 million to $59.7 million);
• 33% decrease in Vote 5 - Capital Expenditures of $0.3 million (from $0.8 million to $0.5 million);
• 15% decrease in Vote 10 - Grants and Contributions of $8.7 million (from $56.4 million to $47.7 million); and
• 11% decrease in Budgetary Statutory Expenditures of $0.4 million (from $11.4 million to $11.0 million).

Vote 1 - Operating Expenditures

The Agency's Vote 1 expenditures in the third quarter of 2015-2016 decreased by $7.5 million over the same quarter in 2014-2015 mainly because of decreased spending on the Pandemic Fill Line as it nears completion. Also, additional payments to Health Canada under the Shared Services Partnership Agreement were paid in the third quarter of 2014-2015 and not in 2015-2016.

Vote 5 - Capital Expenditures

The Agency's Vote 5 third quarter 2015-2016 expenditures decreased by $0.3 million over the same quarter in 2014-2015 mainly due to reduction of spending for JC Wilt as well as some minor capital upgrades made to the National Microbiology Laboratory in the third quarter of 2014-2015 but not in 2015-2016.

Vote 10 - Grants and Contributions (G&C)

The Agency's Vote 10 third quarter 2015-2016 expenditures decreased by $8.7 million over the same quarter in 2014-2015 mainly resulting from administrative changes and efficiencies in response to the Blue Ribbon Panel on Grants and Contributions. These changes resulted in increased payments released in the first quarter of 2015-2016. In addition, the third quarter of 2015-2016 saw a reduction in spending for Automated External Defibrillators as the program nears completion and similar reductions related to Aboriginal Head Start in Urban and Northern Communities because the program sunset in 2014-2015; it was subsequently renewed in 2015-2016.

Budgetary Statutory Expenditures

The Agency's Budgetary Statutory Expenditures decreased by $0.4 million primarily because of a small decrease in respendable revenues in the third quarter of
2015-2016.

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. Currently, the Agency is closely tracking costs related to the Ebola outbreak in West Africa; the response to which has required significant Agency resources. 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:

• Carlo Beaudoin, Chief Financial Officer
  Public Health Agency of Canada
  Ottawa, Canada
  Date:
• Krista Outhwaite, President
  Public Health Agency of Canada
  Ottawa, Canada
  Date:

6.0 Statement of Authorities (unaudited)

7.0 Agency Budgetary Expenditures by Standard Object (unaudited)