Treasury Board of Canada Secretariat’s Quarterly Financial Report for the Quarter Ended June 30, 2017

1.1 Basis of presentation

This report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Treasury Board of Canada Secretariat’s spending authorities granted by Parliament and those used by the Secretariat, consistent with the Main Estimates and Supplementary Estimates (A) for the fiscal year ending March 31, 2018. This 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.

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

1.2 Raison d’être

The Secretariat is the central agency that acts as the administrative arm of the Treasury Board, a committee of Cabinet. The Secretariat supports the Treasury Board in the following principal roles:

1.3 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 7 different central votes:

• Vote 5, Government Contingencies, supplements other appropriations to provide federal departments and agencies with temporary advances for urgent or unforeseen departmental expenditures between Parliamentary supply periods.
• Vote 10, Government-Wide Initiatives, supplements other appropriations to support the implementation of strategic management initiatives across the federal public service.
• Vote 15, Compensation Adjustments, supplements 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, provides the employer’s share of group benefit plan coverage costs as part of the Treasury Board’s role as the employer of the core public administration. These plans include the Public Service Health Care Plan, Public Service Dental Care Plan, Pensioners’ Dental Services Plan, Disability Insurance Plan, provincial payroll taxes (Manitoba, Newfoundland, Ontario and Quebec), Public Service Management Insurance Plan.
• Vote 25, Operating Budget Carry Forward, supplements other appropriations for the carry forward of unused operating funds from the previous fiscal year, up to 5% of the gross operating budget in an organization’s Main Estimates.
• Vote 30, Paylist Requirements, supplements other appropriations to meet legal requirements for the government as employer for items such as parental benefits and severance payments.
• Vote 33, Capital Budget Carry Forward, supplements 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 in these votes is approved by Parliament. With the exception of Vote 20, funding in 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 the Public Service Pension Plan, the Canada Pension Plan and the Québec Pension Plan, Employment Insurance premiums and Public Service Death Benefits. The Secretariat recovers from other government departments and agencies their share of the employer contributions under the Public Service Superannuation Act, and is subsequently charged by Public Services and Procurement Canada for actual expenditures in the same statutory vote. Adjustments are made at year-end to individual departments’ statutory votes (including those of the Secretariat) for the difference between periodic recoveries and actual expenditures.

This quarterly report highlights the financial results of Vote 1, Program Expenditures, related to the delivery of the Secretariat’s mandate; Vote 20, Public Service Insurance related to the Treasury Board’s role as employer; and statutory authorities related to the government’s obligation to pay the employer’s share of employee benefit plans.

2.1 Statement of voted and statutory authorities

Total budgetary authorities available for use decreased by $50.1 million (1.6%) from the previous fiscal year. Vote 1 authorities decreased by $5.8 million, Vote 20 authorities increased by $59.6 million, and statutory payments decreased by $103.9 million. The following table provides a detailed explanation of these changes.

2.2 Statement of departmental budgetary expenditures by standard object

By the end of the fiscal quarter ended June 30, 2017, budgetary expenditures had increased by $154.4 million (34.9%) compared with the same period in the previous year. Vote 1 expenditures increased by $1.2 million, Vote 20 expenditures increased by $57.3 million, and statutory payments increased by $95.9 million. The following table provides a detailed explanation of these changes by standard object.

3.1 Delivery of priorities (pace of implementation)

The government has set high expectations for the public service for high-quality advice and timely delivery of results for Canadians. From the outset, the Secretariat adopted a results and delivery approach by articulating clear goals and performance indicators for each initiative that were reported on regularly.

In 2016-17, the Secretariat appointed a Chief Results and Delivery Officer that was supported by a small Results and Delivery Unit. Over the course of the year, it refined its approach and enhanced capacity to provide strategic policy and advice to priority areas.

In 2017-18, the Secretariat will accelerate delivery of priority initiatives. There will be an increased focus on reviewing core business on an ongoing basis and eliminating unnecessary work in order to reallocate resources to emerging high priorities and to ensure that resources are being managed effectively to deliver results.

3.2 Information technology capacity

Many priority initiatives depend on information technology (IT), and there is a risk that the Secretariat’s current IT infrastructure and expertise may not evolve fast enough to support the organization’s objectives.

To address this risk, the Secretariat, in collaboration with Shared Services Canada, continuously reviews allocated server capacity and decommissions unused applications to ensure optimal efficiency and reduced cost. To ensure that highly available, secure and fully managed network and infrastructure is in place, the Secretariat is developing disaster recovery plans for “business critical” systems.

In 2017-18, the Secretariat will increase IT capacity through the use of alternate sources such as subscription services, software-as-a-service and infrastructure-as-a-service.

3.3 Capacity for delivery of government-wide initiatives

The Secretariat is playing an increasingly prominent role in government-wide initiatives and is leading a number of initiatives such as enabling functions transformation, open government, development of a new service strategy and revitalization of access to information across the government. Leading these initiatives is a challenge, particularly in an organization as large and complex as the federal government. There is therefore a risk that the Secretariat may not have sufficient capacity to support government-wide projects.

Starting in 2016-17, the Secretariat shifted its focus to monitoring the results and benefits of these government-wide initiatives. This included engaging with user communities, improving training strategies, as well as ensuring departmental readiness to implement these initiatives. The Secretariat also strengthened project governance and monitoring to course correct as required to achieve the desired results.

In 2017-18, the Secretariat will strengthen the accountability and skills of its project managers, as well as update the Secretariat’s investment plan.

3.4 Increasing cost of Public Service Health Care Plan

The cost of delivering the plan is driven by many variables. As a result, there could be significant shifts in spending in a given year owing 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 the rising cost of delivering public service insurance benefit plans.

For the quarter ended June 30 , 2017