TBAS 1.3 – Additional guidance: First quarter of Fiscal Year 2012-2013

Date sent:

To: Chief Financial Officers
Copy to: Deputy Chief Financial Officers

A message from Tom Scrimger, Assistant Comptroller, Financial Management Sector, Office of the Comptroller General

The purpose of this communication is to provide additional guidance with respect to the preparation of the first 2012-2013 quarterly financial report.

As a result of the Government's review of departmental spending and the intention to return to balanced budgets over the medium term as announced in Canada's Economic Action Plan 2012, departments and agencies are expected to implement new or renewed initiatives and savings measures over the next three fiscal years starting in fiscal year 2012-2013. The effect of these new or renewed initiatives and savings measures are to be expected in the quarterly financial reports, as their implementation impacts departmental authorities and expenditures.

A separate section called Budget 2012 Implementation should be added to address the expected impact of these initiatives and savings measures on the departmental financial plan. This section should include a description of the new or renewed initiatives and savings measures announced in Canada's Economic Action Plan 2012 that will have a significant influence on departmental authorities and expenditures. In preparing this description, departments and agencies should maximize the use of internal and external communications products approved for this year's budget. In addition, the Budget 2012 Implementation section of the quarterly financial report should be reviewed according to departmental communications protocols for public release.

As Budget 2012 initiatives and savings measures are being implemented, departments and agencies should highlight any significant variances in expenditures. Information should also be provided regarding the expected impact of these initiatives and savings measures on the departmental financial plan for the reporting period and the remainder of the year.

Departments and agencies also must include in their first quarterly financial report additional text as provided in the attached guidance, explaining that the savings measures announced in Canada's Economic Action Plan 2012 were not reflected in the 2012-2013 Main Estimates.

The effect of initiatives and savings measures from previous budgets should be reflected in the appropriate section of the first quarterly financial report (i.e. Highlights of Fiscal Quarter and Fiscal Year-to-Date Results, Risks and Uncertainties and Significant Changes in Relation to Operations, Personnel and Programs) depending on how their implementation impacts departmental authorities and expenditures.

Materiality should be considered in determining the level of detail provided in all of these sections.

The first quarterly financial report package provides additional guidance as well as an illustrative example of reporting on the implementation of Budget 2012 in Annex A. This example does not consider all unique circumstances and particularities. Departments and agencies should follow existing communications protocols and use approved internal and external materials as well as professional judgment in preparing their financial reports.

If you have any questions on the guidance, please do not hesitate to contact either Sylvain Michaud at 613-952-0886, or Andrée Pelchat at 613-957-9853.

Introduction

This section should indicate that the quarterly financial report is to be read in conjunction with the Main Estimates (and as applicable - Supplementary Estimates A and previous interim reports for the current year) as well as Canada’s Economic Action Plan 2012 (Budget 2012).

Basis of Presentation

The following should be included in this section in order to explain why the measures as announced in Budget 2012 have not been reflected in the current year’s 2012-2013 Main Estimates.

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year. Budget 2012 was tabled in Parliament on March 29, after the tabling of the Main Estimates on . As a result the measures announced in the Budget 2012 could not be reflected in the 2012-13 Main Estimates.

In fiscal year 2012-2013, frozen allotments will be established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012. In future years, the changes to departmental authorities will be implemented through the Annual Reference Level Update, as approved by Treasury Board, and reflected in the subsequent Main Estimates tabled in Parliament.

Highlights of fiscal quarter and fiscal year to date (YTD) results

Any significant variance in expenditures due to the implementation of incremental and savings measures announced in Budget 2012 should be identified and explained in the Budget 2012 Implementation section, whereas any significant variance in expenditures due to the implementation of measures announced in previous budgets should be identified and explained in this section.

Risks and Uncertainties

Any financial risks or uncertainties resulting from the implementation of Budget 2012 measures should be discussed in the Budget 2012 Implementation section, whereas any financial risks or uncertainties resulting from the implementation of measures from previous budgets should be discussed in this section.

Significant changes in relation to operations, personnel and programs

Any significant changes that have occurred in the department during the first quarter resulting from the implementation of Budget 2012 measures should be discussed in the Budget 2012 Implementation section, whereas any significant changes that have occurred in the department during the first quarter resulting from the implementation of measures from previous budgets should be discussed in this section.

Budget 2012 Implementation

This section of the report should identify and explain the impacts related to the implementation of new or renewed initiatives and savings measures as announced in Budget 2012 as implementation begins and has an effect on departmental authorities (i.e. Main and Supplementary Estimates) and expenditures. Departments and agencies should use existing communications protocols and approved internal and external materials as well as professional judgment in preparing this section.

The following should be included:

  • The overall expected impact of the new or renewed initiatives and savings measures as announced in Budget 2012 on the departmental financial plan. Departments and agencies may wish to use the text in Annex A of Budget 2012 in preparing this section.  The following paragraph should be added as an introduction.

    This section provides an overview of the savings measures announced in Budget 2012 that will be implemented in order to refocus government and programs; make it easier for Canadians and business to deal with their government; and, modernize and reduce the back office.

  • Information regarding the new or renewed initiatives and savings measures as announced in Budget 2012 for the first quarter.  This should include details regarding the changes that will need to occur in order to realize the expected spending reduction results.  
  • An explanation of any significant variance in current fiscal year expenditures due to the implementation of new or renewed initiatives and savings measures announced in Budget 2012.  Such variances would include decreases in actual expenditures and in relation to planned expenditures, compared to the same periods of the preceding fiscal year (quarter and YTD).  Significant variances that are not readily apparent from the quantitative analysis should also be explained, for example when the impact of the savings measures may be offset by the impact of new initiatives.
  • Information on significant financial risks and uncertainties related to the implementation of new or renewed initiatives and savings measures from Budget 2012 including the expected impact on the department's financial plan for the first quarter.  It should also briefly outline the strategies adopted to manage these risks and uncertainties.  Possible mitigating strategies to mention could include rigorous planning and monitoring activities and the application of sound project management techniques.      
  • Information regarding significant changes that have occurred in the department during the first quarter, as a result of the implementation of new or renewed initiatives and savings measures announced in Budget 2012.  This should include information regarding the impact on expenditures to date. 

SAMPLE DOCUMENT

Department's Name
Quarterly Financial Report
For the quarter ended

Statement of Authorities (unaudited)


Fiscal year 2012-2013 (in thousands of dollars)
  Total available for use for the year ending * ** Used during the quarter ended Year to date used at quarter end

More information is available in the attached table.

Suggested footnote. Wording can be modified as applicable.

* Includes only Authorities available for use and granted by Parliament at quarter end.

** Total available for use does not reflect measures announced in Budget 2012.

*** Departments should substitute the vote numbers and title by the appropriations ones.

Vote X*** - Net Operating expenditures      
Vote Y - Capital expenditures      
Vote Z - Grants and contributions      
Budgetary statutory authorities      
Total Budgetary authorities      
Non-budgetary authorities      
Total authorities      


Fiscal year 2011-2012 (in thousands of dollars)
  Total available for use for the year ending * Used during the quarter ended Year to date used at quarter end

More information is available in the attached table.

Suggested footnote. Wording can be modified as applicable.

* Includes only Authorities available for use and granted by Parliament at quarter end.

*** Departments should substitute the vote numbers and title by the appropriations ones.

Vote X*** - Net Operating expenditures      
Vote Y - Capital expenditures      
Vote Z - Grants and contributions      
Budgetary statutory authorities      
Total Budgetary authorities      
Non-budgetary authorities      
Total authorities      

SAMPLE DOCUMENT

Department's Name
Quarterly Financial Report
For the quarter ended

Departmental budgetary expenditures by Standard Object (unaudited)


Fiscal year 2012-2013 (in thousands of dollars)
  Planned expenditures for the year ending * Expended during the quarter ended Year to date used at quarter end

Suggested footnote. Wording can be modified as applicable.

* Planned expenditures do not reflect measures announced in Budget 2012.

Expenditures:
Personnel
     
Transportation and communications
     
Information
     
Professional and special services
     
Rentals
     
Repair and maintenance
     
Utilities, materials and supplies
     
Acquisition of land, buildings and works
     
Acquisition of machinery and equipment
     
Transfer payments
     
Public debt charges
     
Other subsidies and payments
     
Total gross budgetary expenditures      
Less Revenues netted against expenditures:
Revenues type 1
     
Revenues type 2
     
Total Revenues netted against expenditures:      
Total net budgetary expenditures      


Fiscal year 2011-2012 (in thousands of dollars)
  Planned expenditures for the year ending Expended during the quarter ended Year to date used at quarter end
Expenditures:
Personnel
     
Transportation and communications
     
Information
     
Professional and special services
     
Rentals
     
Repair and maintenance
     
Utilities, materials and supplies
     
Acquisition of land, buildings and works
     
Acquisition of machinery and equipment
     
Transfer payments
     
Public debt charges
     
Other subsidies and payments
     
Total gross budgetary expenditures      
Less Revenues netted against expenditures:
Revenues type 1
     
Revenues type 2
     
Total Revenues netted against expenditures:      
Total net budgetary expenditures      

Annex A: Illustrative Example Budget 2012 Implementation Section for the Quarter Ended

This section provides an overview of the savings measures announced in Budget 2012 that will be implemented in order to refocus government and programs; make it easier for Canadians and business to deal with their government; and, modernize and reduce the back office. 

Treasury Board Secretariat (Secretariat) will achieve Budget 2012 savings of $xx.x million by fiscal year 2014-15 through efficiency measures and program reductions that align resources to its core mandate, scaling back where the need is reduced; transforming how it works internally; and by consolidating and streamlining.  With these changes the Secretariat will focus on supporting management excellence and accountability across government.

In the first year of implementation, the Secretariat will achieve savings of approximately $xx.x million. Savings will increase to $xx.x million in 2013-14 and will result in ongoing saving of $xx.x million by 2014-15.

There is a variance of $x.x million in the Secretariat’s authorities between fiscal year 2011-12 and 2012-13 related to two Budget 2012 initiatives.  In its role as management board, Treasury Board Secretariat (TBS) provides funding to support departments and agencies in meeting government-wide management priorities.  When new approaches have been well entrenched, central funding can be reduced or eliminated.  Specifically savings are achieved in 2012-13 by eliminating funding to the following initiatives as the objectives of these projects have been met:

  • The Financial Interoperability and Stewardship Initiative (FISI) assisted departments and agencies in expediting and completing projects to improve interoperability and integration of financial data and systems.  The proposal would eliminate $x.x million in funding for FISI but would allow departments to capitalize on the guidance and tools already developed.
  • The Internal Audit Human Resource Management Framework provided HR guidance and tools for recruitment, training and retention of internal auditors to support increased capacity of the federal internal audit function. Given this work is significantly completed; $x.x million in savings will be achieved. 

The balance of 2012-13 Budget 2012 savings will be reflected later in the fiscal year. 

Expenditures in the first quarter of 2012-13 are only slightly less than the same period from last fiscal year. 

There are no financial risks or uncertainties related to these savings.

Other measures referenced in Budget 2012 include:

  • The development of an action plan by the President of the Treasury Board to address the Red Tape Reduction Commission’s Recommendations Report in the coming months, and the adoption of measures to implement the Canada-U.S. Border and Regulatory Action Plan commitments over the next two years;
  • The pursuit of additional standardization and consolidation opportunities as part of the ongoing implementation of the Administrative Services Review.

There was no incremental funding provided to TBS to complete the above work which is well under way. 

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