Treasury Board of Canada Secretariat's Quarterly Financial Report for the Quarter Ended June 30, 2016

1.1 Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting.  The accompanying Statement of Authorities includes the Treasury Board Secretariat's (the Secretariat’s) spending authorities granted by Parliament and those used by the department, consistent with the Main Estimates and the Supplementary Estimates (A) for the 2016-17 fiscal year.  The 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 monies 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 Department 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.

1.2 Raison d'être

The Secretariat is the administrative arm of the TB, a committee of ministers. The Secretariat supports TB in undertaking the following principal roles:

Figure 1 - Text version

The image depicts the four roles that the Secretariat undertakes to support the Treasury Board.

The image is a ring. In the middle of the ring is a graphic of the Treasury Board coat of arms.

Situated on the top left of the ring is a graphic of a pot of money that depicts the Expenditure Manager role.

Situated on the top right of the ring is a graphic of the silhouettes of three people standing behind a podium, one man with a woman on each side of him, that depicts the Management Board role.

Situated on the bottom left of the ring is a graphic of a magnifying glass that depicts the Regulatory Oversight role.

Situated on the bottom right of the ring is a graphic of the silhouettes of three people, one man with a woman on each side of him, that depicts the Employer role.

1.3 The Secretariat's financial structure

The Secretariat manages both departmental and Treasury Board Central votes. Its departmental operating expenditures and revenues are managed under Vote 1, Program Expenditures.

The Secretariat manages seven different Central votes:

• Vote 5, Government Contingencies which serves to supplement other appropriations to provide government departments and agencies temporary advances for urgent or unforeseen departmental expenditures between Parliamentary supply periods; 
• Vote 10, Government-Wide Initiatives which serves to supplement other appropriations to support the implementation of strategic management initiatives that cut across many departments; 
• Vote 15, Compensation Adjustments which serves to supplement other appropriations to provide funding for adjustments made to terms and conditions of service or employment of the federal public administration as a result of collective bargaining;
• Vote 20, Public Service Insurance which provides the employer's share of group benefit plan coverage costs as part of Treasury Board’s role as the employer of the core public administration.  This includes the Public Service Health Care Plan (PSHCP), Public Service Dental Care Plan (PSDCP), Pensioners' Dental Services Plan (PDSP), Disability Insurance, Provincial Payroll Taxes (Manitoba, Newfoundland, Ontario and Québec), Public Service Management Insurance Plan (PSMIP) and other programs;
• Vote 25, Operating Budget Carry Forward which serves to supplement other appropriations for the carry forward of unused operating funds from the previous fiscal year, up to 5% of the operating budgets contained in an organization’s Main Estimates;
• Vote 30, Paylist Requirements which serves to supplement other appropriations to meet legal requirements for the government as employer for items such as parental benefits and severance payments; and
• Vote 33, Capital Budget Carry Forward which serves to supplement other appropriations for the carry forward of unused capital funds from the previous fiscal year, up to 20% of an organization’s Capital vote.   

The funding within these votes is approved by Parliament. With the exception of Vote 20, funding within Central votes is transferred from the Secretariat to individual departments and agencies, once specified criteria are met. Like any other department, the Secretariat also receives its own share of appropriations from these votes.  Any unused balance from these votes is returned to the fiscal framework at the end of the year and is reported as the Secretariat lapse.

Expenditures incurred against Statutory Authorities mainly reflect the government’s obligation to pay the employer's share of Public Service Pension Plans, Canada/Quebec Pension Plans (CPP/QPP), Employment Insurance (EI) premiums and Public Service Death Benefits. These expenditures are initially charged to the Secretariat's Statutory vote but are attributed throughout the fiscal year to individual departments’ Statutory votes, including that of the Secretariat.

This quarterly report will highlight the financial results of Vote 1 – Program Expenditures related to the delivery of the Secretariat's mandate, Vote 20 – Public Service Insurance related to TB's employer role, and Statutory Authorities related to the government's obligation to pay the employer's share of employee benefit plans.

Statement of voted and Statutory Authorities

Total budgetary authorities available for use increased in 2016-17 by $107.8M (3.6%) from those in 2015-16. The table below explains the changes in program funding that caused an increase in Vote 1 authorities of $18.4M, an increase in Vote 20 authorities of $88.9M, and an increase in authority to make statutory payments of $0.6M as explained below:

Statement of departmental budgetary expenditures by standard object

At the end of Q1, budgetary expenditures had decreased by $48.0M (9.8%) as compared to the same period last year.  The change in expenditures by standard object is summarized below:

Slow pace of implementation

Due to the number and complexity of priority initiatives, the Secretariat may not have the necessary capacity to generate sustainable results in the expected timeframes.

To address this emerging risk, the Secretariat adopted a results and delivery approach by articulating clear goals and performance indicators that will be reported on a quarterly basis. This approach is being led by a Chief Results and Delivery Officer and supported by a small Results and Delivery Unit. Moving forward, the Secretariat's efforts will focus on further prioritization and sequencing as well as strengthening an evidenced based approach to implementation and decision making.

Limited IT capacity

Many priority initiatives are IT dependent and there is always a risk that the current IT infrastructure and expertise may not evolve at the desired pace and subsequently not adequately support the Secretariat's objectives.  The Secretariat is acting to improve the acquisition of new IT infrastructure by strengthening its collaboration with Shared Services Canada. It will also focus on decommissioning old applications and optimizing its current IT infrastructure.

Insufficient capacity for delivery of government-wide projects

Insufficient capacity to support government-wide project delivery could also derail timely delivery of the Secretariat-led priorities.  The Secretariat’s risk response is focusing on strengthening governance for the Back Office Transformation Initiative in order to lead an integrated approach to enterprise-wide decision-making and resource allocation, as well as the project delivery capacity for both the Back Office and other horizontal initiatives. Other responses include development of a change management and communication strategy.

Security vulnerabilities

Constantly evolving cyber and insider threats could result in significant disruptions to program and service delivery. To address the potential disruptions the Secretariat will be conducting regular government-wide exercises to identify and monitor gaps in existing capacity, and will be renewing the Policy on Government Security and associated guidelines, tools and training, to comply with the evolving internal and external environment.

Increasing costs of PSHCP

The cost of delivering the PSHCP is driven by many variables.  As a result there could be significant shifts in spending in a given year due to: changes in plan membership; the cost of drugs and medical treatments; use of plan entitlements; and provincial tax regulations. The Secretariat continues to closely monitor spending activity and trends in Vote 20. 

For the quarter ended June 30, 2016