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Quarterly Financial Report - For the quarter ended December 31, 2020

Table of contents

  1. 1 Introduction
    1. 1.1 Authority, mandate and programs
    2. 1.2 Basis of presentation
    3. 1.3 Shared Services Canada financial structure
  2. 2 Highlights of fiscal quarter and fiscal year-to-date results
    1. 2.1 Significant changes to authorities
    2. 2.2 Explanations of significant variances from previous year expenditures
  3. 3 Risks and uncertainty
  4. 4 Significant changes in relation to operations, personnel and programs
  5. 5 Statement of authorities (unaudited)
  6. 6 Departmental budgetary expenditures by standard object (unaudited)
  7. 7 Glossary

Shared Services Canada Quarterly Financial Report For the quarter ended December 31, 2020 [PDF - 708 KB]

1 Introduction

This quarterly financial report should be read in conjunction with the 2020-21 Main Estimates, the 2020-21 Supplementary Estimates (A) and the 2020-21 Supplementary Estimates (B). This 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. It has not been subject to an external audit or review.

1.1 Authority, mandate and programs

Shared Services Canada (SSC) is responsible for digitally enabling government programs and services by providing IT services in the domains of networks and network security, data centers and cloud offerings, digital communications and providing IT tools that the public service needs to do its job. As a service provider to over 40 government departments and agencies, SSC is focused on moving toward an IT service delivery model that encourages sharing common solutions and platforms across departments in an effort to reduce the variety of IT solutions across the government. In taking this enterprise approach, SSC is working to solidify network capacity and security, equip and empower employees to collaborate, and support partners in the design and delivery of their digital service offering to Canadians. The Minister of Digital Government is responsible for SSC.

In carrying out its mandate, SSC is supporting the Digital Operations Strategic Plan: 2018 to 2022 and the Government of Canada Cloud Adoption Strategy, as well as working in partnership with public and private sector stakeholders, implementing enterprise-wide approaches for managing IT infrastructure services, and employing effective and efficient business management processes.

The Shared Services Canada Act and related Orders-in-Council set out the powers, duties and functions of the Minister responsible for SSC. Amendments to the Act in June 2017 allow the Minister to delegate to other Ministers the power to procure certain items, thereby making it easier for federal departments to buy some of the most frequently purchased IT goods and services. SSC remains responsible for setting up IT contracts, standing offers and supply arrangements, and will continue to ensure only trusted IT equipment and software are used. The Minister responsible for SSC may also, in exceptional circumstances, authorize another Minister to obtain services from within their own department or from a source other than SSC. However, this authorization cannot be used to exempt the entire department from using SSC's services.

In 2019, the Minister of Digital Government became the Minister responsible for SSC as per Order-in-Council 2019‑1366. The creation of the first stand-alone Minister of Digital Government underscores the importance of digital technology transforming society, and it centralizes decision-making with respect to GC-wide digital government policy and operations.

Further details on SSC's authority, mandate, responsibilities and programs may be found in the 2020-21 Main Estimates and in SSC's 2020-21 Departmental Plan.

1.2 Basis of presentation

This quarterly financial report has been prepared by management using an expenditure basis of accounting. The accompanying statement of authorities includes the Department's spending authorities granted by Parliament, and those used by the Department consistent with the 2020-21 Main Estimates, the 2020-21 Supplementary Estimates (A) and the 2020-21 Supplementary Estimates (B). 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 money 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.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

The Department uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis. The main difference between the quarterly financial report and the departmental financial statements is the timing of when revenues and expenses are recognized. The quarterly financial report presents revenues only when the money is received and expenses only when the money is paid out. The departmental financial statements report revenues when they are earned and expenses when they are incurred. In the latter case, revenues are recorded even if cash has not been received and expenses are incurred even if cash has not yet been paid out.

1.3 Shared Services Canada financial structure

SSC has a financial structure composed mainly of voted budgetary authorities, namely Vote 1 - Operating expenditures, including Vote netted revenues, and Vote 5 - Capital expenditures, including Vote netted revenues. Vote 10 - Making federal government workplaces more accessible, obtained in 2019-20, is no longer part of the voted budgetary authorities in 2020-21 since this funding has been included in Vote 1 for 2020-21. The statutory authorities comprise the authorities under the Public Health Events of National Concern Payments Act and the contributions to employee benefit plans (EBP). The contributions to EBP consist of the contributions for SSC's employees including the members of Royal Canadian Mounted Police.

At the end of the third quarter of 2020-21, 92% of the Department's budget was devoted to support its IT consolidation and standardization goals. This ensured that current and future IT infrastructure services offered to the Government of Canada are maintained in an environment of operational excellence. The remaining 8% was devoted to internal services, which are services in support of SSC's programs and/or required to meet SSC's corporate obligations.

Total Vote netted revenue authority for 2020-21 is $665.0 million, which consists of respendable revenue for IT infrastructure services provided by SSC to organizations on a cost-recovery basis.

2 Highlights of fiscal quarter and fiscal year-to-date results

The following graph provides a comparison of the net budgetary authorities available for spending, the year-to-date expenditures, and the expenditures for the quarters ended December 31, 2020 and December 31, 2019, for the Department's combined Vote 1 - Operating expenditures, Vote 5 - Capital expenditures, Vote 10 - Making federal government workplaces more accessible (for 2019-20 only), and statutory authorities.

Comparison of net budgetary authorities and expenditures as of December 31, 2020 and December 31, 2019 ($ millions)
Text description – Comparison of net budgetary authorities and expenditures

The graph shows total net budgetary authorities available for spending of $2,490.7 million as of December 31, 2020 and $2,254.5 million as of December 31, 2019. It also shows year-to-date expenditures totalling $1,362.3 million as of December 31, 2020 compared to $1,264.6 million as of December 31, 2019. Finally, it shows total expenditures of $430.0 million for the third quarter ended December 31, 2020 compared to $447.0 million for the third quarter ended December 31, 2019.

2.1 Significant changes to authorities

For the period ended December 31, 2020, the authorities available to the Department include the Main Estimates, the Supplementary Estimates (A), the Supplementary Estimates (B) and the Budget Carry Forward from 2019-20. Authorities available for spending in 2020-21 were $2,490.7 million at the end of the third quarter, compared to $2,254.5 million at the end of the third quarter of 2019‑20, representing an increase of $236.2 million, or 10.5%. This total increase is a combination of an increase of $180.1 million in Vote 1 – Gross operating expenditures, an increase of $44.2 million in Vote 5 – Gross capital expenditures, a decrease of $1.6 million in Vote 10 – Making federal government workplaces more accessible, and an increase in Budgetary statutory authorities of $13.5 million.

Comparison of net budgetary authorities for the quarters ended December 31, 2020 and December 31, 2019
Net authorities available ($ millions) 2020-21 2019-20 Variance
Vote 1 - Operating expenditures 2,512.3 2,332.2 180.1
Vote 5 - Capital expenditures 535.2 491.0 44.2
Vote 10 - Making federal government workplaces more accessible – 1.6 (1.6)
Vote netted revenues (665.0) (665.0) –
Statutory (EBP) 94.7 94.7 -
Statutory (Public Health Events of National Concern Payments Act) 13.5 – 13.5
Total net authorities 2,490.7 2,254.5 236.2

Vote 1 – Gross operating expenditures

The Department’s Vote 1 increased by $180.1 million, compared to the third quarter of 2019-20, mainly due to:

Vote 5 – Gross capital expenditures

The Department’s Vote 5 increased by $44.2 million, compared to the third quarter of 2019-20, mainly due to:

Vote 10 – Making federal government workplaces more accessible

The Department’s Vote 10 decreased by $1.6 million, compared to the third quarter of 2019-20, due to the initiative “Making federal government workplaces more accessible”, announced in Budget 2019. The funding has been included in Vote 1 for 2020-21 and is no longer part of Vote 10.

Statutory (Public Health Events of National Concern Payments Act)

A new statutory authority in the amount of $13.5 million for payments related to the Government's response to COVID-19 pursuant to the Public Health Events of National Concern Payments Act. In support of the Government of Canada's response to the COVID-19, departments brought forward funding requests to support government operations during the pandemic. A temporary statutory authority was granted to SSC through the Act in order to access the Information Management / Information Technology (IM/IT) funding associated with the respective initiatives. This represents 4% of the salary funding provided to departments to be used by SSC to cover certain IM/IT costs related to the initiatives.

2.2 Explanations of significant variances from previous year expenditures

Compared to the previous year, the total year-to-date expenditures, for the period ended December 31, 2020, have increased by $97.7 million, from $1,264.6 million to $1,362.3 million as per the table below. This represents an increase of 7.7% against expenditures recorded for the same period in 2019-20.

Comparison of year-to-date expenditures for the quarters ended December 31, 2020 and December 31, 2019
Net year-to-date expenditures ($ millions) 2020-21 2019-20 Variance
Vote 1 - Operating expenditures 1,483.8 1,349.3 134.5
Vote 5 - Capital expenditures 191.0 178.9 12.1
Vote 10 - Making federal government workplaces more accessible – – –
Vote netted revenues (397.4) (334.2) (63.2)
Statutory (EBP) 71.4 70.6 0.8
Statutory (Public Health Events of National Concern Payments Act) 13.5 – 13.5
Total net year-to-date expenditures 1,362.3 1,264.6 97.7

Vote 1 - Increase of $134.5 million

The net increase in operating expenditures, compared to the third quarter of 2019-20, is mainly attributed to:

Vote 5 - Increase of $12.1 million

The net increase in capital expenditures, compared to the third quarter of 2019-20, is mainly attributed to:

Vote netted revenues - Increase of $63.2 million

The increase in the collected Vote netted revenues, compared to the third quarter of 2019-20, is mainly due to an increase in demand for mobile devices, contact center services, workplace technology devices and network connectivity.

Statutory (Public Health Events of National Concern Payments Act) - Increase of $13.5 million

The increase of $13.5 million, compared to the third quarter of 2019-20, is due to the new statutory authority for payments related to the Government’s response to COVID-19 pursuant to the Public Health Events of National Concern Payments Act.

3 Risks and uncertainty

SSC's mandate to ensure the availability of adequate resources to provide IT infrastructure, email, data centres and network services across government involves risks for both SSC as a department as well as the Government of Canada as a whole, both in the present and in the future. Maintaining the Government of Canada's existing IT infrastructure services while simultaneously undertaking IT modernization initiatives requires an engaged employee base possessing a specialized skill set, as well as sustainable, and reliable funding model. How well SSC will manage these risks impacts whether its partners can fulfill the execution of the departmental mandate and realize the collective expectations of Canadians. Therefore, SSC should refocus its efforts on core business functions such as financial management, project management and people management which are essential to the successful implementation of spending plans in order to achieve the strategic objectives of the Department.

SSC promotes effective financial management practices and financial sustainability to ensure that it has the financial resources, systems and funding mechanisms in place to maintain and enhance mission-critical systems while funding the modernization initiatives. The Department is also taking steps to ensure a workforce with the right skills and capacity to sustain current, transitional and future business needs. These include:

Transitional strategies and future expectations of the Department have exposed SSC to new set of risks necessitating the revision of the existing risk profile of the Department.

Additional risks that may impact the Department's spending plans, adoption of new technologies and strategies, as well as steps to mitigate those risks caused by COVID-19, are described in SSC's 2020-21 Departmental Plan.

4 Significant changes in relation to operations, personnel and programs

On October 13, 2020, Samantha Hazen joined SSC as the new Assistant Deputy Minister and Chief Financial Officer.

On November 18, 2020, Sarah Paquet, the former Executive Vice-President, left SSC.

Effective December 18, 2020, Melanie Scott began a one-year secondment as Acting Assistant Deputy Minister, Digital Services to replace Kristin Brunner.

On December 30, 2020, Denis Bombardier, Senior Assistant Deputy Minister and Chief Financial Officer, retired.

Approval by senior officials

Original signed by

Paul Glover
President

Original signed by Scott Davis for

Samantha Hazen, CPA, CA
Assistant Deputy Minister and Chief Financial Officer

Ottawa, Canada
February 22, 2021

5 Statement of authorities (unaudited) (in thousands of dollars)

Fiscal year 2020-21 Fiscal year 2019-20
Total available for use for the year ending March 31, 2021Footnote * Used during the quarter ended December 31, 2020 Year-to-date used at quarter-end Total available for use for the year ending March 31, 2020Footnote * Used during the quarter ended December 31, 2019 Year-to-date used at quarter-end
Vote 1 - Operating expenditures
Gross operating expenditures 2,512,315 489,666 1,483,769 2,332,211 466,839 1,349,319
Vote netted revenues (595,000) (155,045) (394,021) (595,000) (107,552) (329,070)
Net operating expenditures 1,917,315 334,621 1,089,748 1,737,211 359,287 1,020,249
Vote 5 - Capital expenditures
Gross capital expenditures 535,241 70,335 191,007 490,979 69,386 178,955
Vote netted revenues (70,000) (1,883) (3,392) (70,000) (5,149) (5,149)
Net capital expenditures 465,241 68,452 187,615 420,979 64,237 173,806
Vote 10 - Making federal government workplaces more accessible - - - 1,620 - -
(S) Contributions to employee benefit plans 94,710 24,553 71,457 94,656 23,522 70,565
(S) Public Health Events of National Concern Payments Act 13,480 2,400 13,480 - - -
Total budgetary authorities 2,490,746 430,026 1,362,300 2,254,466 447,046 1,264,620

6 Departmental budgetary expenditures by standard object (unaudited) (in thousands of dollars)

Fiscal year 2020-21 Fiscal year 2019-20
Planned expenditures for the year ending March 31, 2021Footnote * Expended during the quarter ended December 31, 2020 Year-to-date used at quarter-end Planned expenditures for the year ending March 31, 2020Footnote * Expended during the quarter ended December 31, 2019 Year-to-date used at quarter-end
Expenditures:
Personnel (includes EBP) 739,934 203,264 587,530 717,598 171,891 522,048
Transportation and communications 750,961 119,743 321,236 686,579 123,213 293,964
Information 1,456 663 694 1,288 374 638
Professional and special services 344,724 89,120 226,784 316,962 70,025 181,604
Rentals 474,951 43,480 267,874 428,223 71,431 234,713
Repair and maintenance 191,627 46,458 133,696 174,404 37,102 121,752
Utilities, materials and supplies 10,924 1,670 3,438 10,049 1,899 4,158
Acquisition of land, buildings and works 19,267 1,411 2,853 13,783 1,465 5,430
Acquisition of machinery and equipment 613,873 78,626 206,652 563,221 83,415 228,469
Transfer payments - - - - - -
Public debt charges 5,724 1,964 4,904 5,031 791 2,465
Other subsidies and payments 2,305 555 4,052 2,328 (1,859) 3,598
Total gross budgetary expenditures 3,155,746 586,954 1,759,713 2,919,466 559,747 1,598,839
Less revenues netted against expenditures:
Vote netted revenues 665,000 156,928 397,413 665,000 112,701 334,219
Total revenues netted against expenditures 665,000 156,928 397,413 665,000 112,701 334,219
Total net budgetary expenditures 2,490,746 430,026 1,362,300 2,254,466 447,046 1,264,620

7 Glossary

Appropriations / Authorities

Expenditure authorities are approvals from Parliament for individual government organizations to spend up to specific amounts. Expenditure authority is provided in two ways: annual appropriation acts that specify the amounts and broad purposes for which funds can be spent; and other specific statutes that authorize payments and set out the amounts and time periods for those payments. The amounts approved in appropriation acts are referred to as voted amounts, and the expenditure authorities provided through other statutes are called statutory authorities.

  • Vote 1 - Operating expenditures: A vote that covers most day-to-day expenses, such as salaries, utilities and minor capital expenditures.
  • Vote 5 - Capital expenditures: Capital expenditures are those made for the acquisition or development of items that are classified as tangible capital assets as defined by Government accounting policies. This vote is generally used for capital expenditures that exceed $10,000.
Capital Budget Carry Forward

Treasury Board centrally managed vote that permits departments to bring forward eligible lapsing funds from one fiscal year to the next in an amount up to 20% of their year-end allotments in the Capital Expenditures Vote as reflected in Public Accounts.

Cash method of accounting

The cash method recognizes revenues when they are received and expenses when they are paid for.

Collective agreement

Collective agreement means an agreement in writing entered into under the Public Service Staff Relations Act between the employer and a bargaining agent and containing provisions covering terms and conditions of employment and related matters.

Departmental Plan

The Departmental Plan is an expenditure plan for each department and agency (excluding Crown corporations). It describes departmental priorities, expected results and associated resource requirements covering a three-year period, beginning with the year indicated in the title of the report.

Employee Benefit Plans (EBP)

A statutory item that includes employer contributions for the Public Service Superannuation Plan, the Canada and the Quebec Pension Plans, Death Benefits, and the Employment Insurance accounts. Expressed as a percentage of salary, the EBP rate is changed every year as directed by the Treasury Board Secretariat.

Expenditure basis of accounting

An accounting method that combines elements of the two major accounting methods, the cash method and the accrual method. The expenditure basis of accounting method recognizes revenues when cash is received and expenses when liabilities are incurred or cash is paid out.

Frozen allotments

Frozen allotments are used to prohibit the spending of funds previously appropriated by Parliament. There are two types of frozen allotments:

  • permanent: where the Treasury Board has directed that funds lapse at the end of the fiscal year
  • temporary: where an appropriation is frozen until such time as conditions have been met
Full accrual method of accounting

An accounting method that measures the performance and position of an organization by recognizing economic events regardless of when cash transactions occur. Therefore, the full accrual method of accounting recognizes revenues when they are earned (for example, when the terms of a contract are fulfilled) and expenses when they are incurred.

Main Estimates

Each year, the government prepares estimates in support of its request to Parliament for authority to spend public funds. This request is formalized through the introduction of appropriation bills in Parliament. In support of the Appropriation Act, the Main Estimates identify the spending authorities (Votes) and amounts to be included in subsequent appropriation bills. Parliament is asked to approve these Votes to enable the government to proceed with its spending plans.

Operating Budget Carry Forward

Treasury Board centrally managed vote that permits departments to bring forward eligible lapsing funds from one fiscal year to the next in an amount up to 5% of their Main Estimates gross Operating Budget allotment.

Standard objects

A system in accounting that classifies and summarizes the expenditures by categories, such as type of goods or services acquired, for monitoring and reporting.

Supplementary Estimates

The President of the Treasury Board tables up to three Supplementary Estimates usually in May, in late October or early November and in February to obtain the authority of Parliament to adjust the government's expenditure plan set out in the estimates for that fiscal year. Supplementary Estimates serve two purposes. First, they seek authority for revised spending levels that Parliament will be asked to approve in an Appropriation Act. Second, they provide Parliament with information on changes in the estimated expenditures to be made under the authority of statutes previously passed by Parliament. Each Supplementary Estimates document is identified alphabetically (A, B and C).

Vote netted revenues authority

The authority by which Shared Services Canada has permission to collect and spend revenue earned and collected from the provision of IT services within the government.

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