Quarterly Financial Report for the Quarter Ended September 30, 2022

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 (TBS’s) spending authorities granted by Parliament and those used by TBS, consistent with the Main Estimates and the Supplementary Estimates (A) for the fiscal year ending March 31, 2023. 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.

TBS 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

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

1.3 TBS’s financial structure

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

This quarterly report highlights the financial results of:

• Vote 1, Program Expenditures, related to the delivery of TBS’s mandate
• Vote 20, Public Service Insurance, related to the employer’s share of group benefit coverage to employees of the core public service under the various plans listed below
• Statutory authorities that cover any residual amounts between the government’s contributions to the various plans and the distribution of these costs to departments

TBS manages seven 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 (British Columbia, Manitoba, Newfoundland and Labrador, Ontario and Quebec), and the 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 35, 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 TBS to individual departments and agencies once specified criteria are met. Like any other department, TBS also receives its own share of appropriations transferred from these votes to its own Vote 1. Any unused balance from these central votes is returned to the fiscal framework at the end of the year and is reported as TBS’s 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. TBS 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 TBS) for the difference between periodic recoveries and actual expenditures. At year-end, the net effect on TBS’s financial statements will be zero.

Transfer amounts from all central votes mentioned above will be included in the financial reports of the individual recipient departments.

2.1 Statement of voted and statutory authorities

Total budgetary authorities available for use increased by $179.3 million (5.3%) from the previous fiscal year:

• Vote 1 authorities increased by $31.2 million
• Vote 20 authorities increased by $147.7 million
• Statutory authorities increased by $0.4 million

The following table provides a detailed explanation of these changes.

2.2 Statement of departmental budgetary expenditures by standard object

The year-to-date budgetary expenditures, as at September 30, 2022, have increased by $358.5 million (30.1%) compared to the same period in the previous year:

• Vote 1 expenditures increased by $7.0 million
• Vote 20 expenditures increased by $160.3 million
• Statutory payments increased by $191.2 million

For the fiscal quarter ended September 30, 2022, budgetary expenditures have increased by $329.2 million (58.2%) compared to the same period in the previous year:

• Vote 1 expenditures decreased by $1.6 million
• Vote 20 expenditures increased by $85.1 million
• Statutory payments increased by $245.7 million

Hybrid work model

Before the pandemic, employees worked largely on-site. Today, the majority of TBS employees have hybrid work arrangements that enable them to come on-site as needed.

TBS will continue to prioritize:

• increased inclusivity
• productivity
• the use of innovative tools
• a culture of open communication at all levels

TBS is committed to developing a hybrid work model. TBS’s hybrid model combines telework with a sustained weekly presence on-site to:

• deliver on the department’s mandate
• help the organization thrive
• provide employees with flexibility

However, there is a risk that adopting a hybrid work model may affect the department’s ability to remain an employer of choice and attract, develop, and retain a skilled and diverse workforce. To mitigate these risks, senior management and TBS governance committees:

• have implemented a testing period for the hybrid work model throughout the spring and summer
• have launched employee surveys
• regularly communicate to staff all survey results, employee comments and new information as it becomes available

As the COVID-19 pandemic evolves, TBS will continue to assess the pandemic’s impact on employees, the future of the workplace, and employees’ return to the workplace.

Employee wellness

The COVID-19 pandemic and other factors, such as workload pressures and the high rate of employee turnover, present a risk that employees’ physical and mental health will be negatively affected. In addition, there are other risks related to human resources management that include talent scarcity and the ability to retain TBS’s current workforce. These risks could result in increased short-term absenteeism and impede the organization’s ability to meet its objectives. To alleviate these risks, the TBS Wellness Program is available to employees, in addition to other support mechanisms, to:

• improve resilience
• manage stress
• eliminate stigma
• promote psychological and physical health and wellness

TBS is also taking actions to attract, develop and retain an agile, skilled and diverse workforce by:

• attracting talent from diverse backgrounds through targeted internal and external hiring
• developing a skilled and agile workforce to close current and emerging skills gaps
• retaining talent through employee recognition, opportunities for growth, continuous learning, and ongoing performance and talent management

Information technology capacity

There are risks to information technology (IT) capacity in which a system outage or cyber attack could impede the availability of IT resources, assets and information. In response, TBS became an early adopter of the cloud environment, eliminating its need to depend on the on-premise IT environment managed by Shared Services Canada. TBS has also implemented new collaboration tools to help its workforce be mobile and allow employees to continue to work remotely in case of further pandemic lockdowns.

Financial management

Lastly, there is a financial management risk that the department may not be funded appropriately to deliver on its expected results due to the volume of priorities taken on by TBS and assigned to it. Regular and rigorous financial monitoring will determine the projected financial situation for the current year and its potential impact on future years.

Resources may need to be reallocated to deliver on priority initiatives and TBS-led government-wide projects to ensure they are delivered within scope, on schedule and within budget. TBS will request that all associated funding is received for any incremental work through the fiscal framework and the budget process.