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Foreign Affairs, Trade and Development Canada Quarterly Financial Report

For the quarter ended September 30, 2014

Statement outlining results, risks and significant changes in operations, personnel and programs

1. Introduction

This quarterly 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. The report has not been subject to an external audit or review, and should be read in conjunction with the Main Estimates and the Supplementary Estimates for the current year, as well as Canada’s Economic Action Plan 2012 (Budget 2012), Canada’s Economic Action Plan 2013 (Budget 2013), and Canada’s Economic Action Plan 2014 (Budget 2014).

A summary description of the Department's programs can be found in Part II of the Main Estimates.

Basis of Presentation

This quarterly 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 Main Estimates and Supplementary Estimates for the 2014-15 fiscal year. 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 moneys 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 of Foreign Affairs, Trade and Development (DFATD) uses the full accrual method of accounting to prepare and present its annual consolidated departmental financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

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

A. Significant changes to Authorities

The following table shows the total budget available for use of the Department. For comparison purposes, the 2013-14 figures include the amounts reported by the Canadian International Development Agency (CIDA) and the Department of Foreign Affairs and International Trade (DFAIT).

Table 1: Significant changes to Authorities
Authorities (In thousands of dollars)Fiscal Year 2014-2015Fiscal Year 2013-2014Variance
DFATD Total available for use for the year ending March 31, 2015DFATD Total available for use for the year ending March 31, 2014CIDA Total available for use for the year ending March 31, 20141Total$%
Operating expenditures1,449,5761,368,47467,4241,435,89813,6781%
Capital Expenditures320,300165,510-165,510154,79094%
Grants and contributions3,431,9453,010,876404,0443,414,92017,0250%
Locally engaged staff pensions, insurance and social security50,77965,380-65,380(14,601)(22%)
Budgetary statutory authorities
Contributions to employee benefit plans96,56498,5285,720104,248(7,684)(7%)
Ministers' salary and motor car allowance2432202024031%
Payments under the Diplomatic Service (Special) Superannuation Act250250-250-0%
Debt forgiveness to Pakistan172,252262,184-262,184(89,932)(34%)
Spending of proceeds from the disposal of surplus Crown assets1,2911,57321,575(284)(18%)
Refunds of amounts credited to revenues in previous years-24-24(24)(100%)
Payments to International Financial Institutions245,00030,744215,256246,000(1,000)(0%)
Payment to the World Bank for the Advance Market Commitment for Pneumococcal Vaccines10,91617,000-17,000(6,084)(36%)
Passport Office Revolving Fund-70,373-70,373(70,373)(100%)
Total Budgetary authorities5,779,1165,091,136692,4665,783,602(4,486)(0%)
Non-budgetary authorities79,63281,28629,291110,577(30,945)(28%)
Total Authorities5,858,7485,172,422721,7575,894,179(35,431)-1%
1Reflects the total available for use at the date of the amalgamation.
i. Budgetary Authorities

Operating expenditures authorities have increased by $14 million.  The increase is mainly due to the funding received for the Operating Budget Carry Forward, which is offset by reductions of $52 million in departmental authorities related to the Budget 2012 spending review.

Capital expenditures authorities increased by $155 million, mainly due to additional funding of $134 million received for the consolidation of the Canadian High Commission at Trafalgar Square, London, approved through the 2014-15 Supplementary Estimates A as well as to the Capital Budget Carry Forward.

Grants and contributions authorities increased by $17 million mainly due to funding requirements for the assessed contributions.

Locally engaged staff pension, insurance and social security programs authorities decreased by $15 million due to lower funding requirements.

a) Budgetary Statutory Authorities

Contributions to employee benefits plans (EBP) statutory authorities decreased by $8 million due to an adjustment (reduction) of the EBP rate imposed by the Treasury Board Secretariat.

Debt forgiveness to Pakistan of $172 million represents the available balance from previous years. For 2013-14, the opening balance was $262 million of which $90 million was used during the course of the year.

Passport Office Revolving Fund statutory authorities decreased by $70 million as a result of the Budget 2013 decision to transfer the primary responsibility for Passport Canada to Citizenship and Immigration Canada.

ii. Non-budgetary Authorities

The Department’s non-budgetary authorities decreased by $31 million compared to last year due to a reduction of anticipated payments to International Financial Institutions.

B. Significant changes to budgetary expenditures by standard object

The following table shows the budgetary expenditures and revenues netted against expenditures of the Department. For comparison purposes, the 2013-14 figures include the amounts reported by CIDA to the date of amalgamation. Passport Canada’s results have been removed from last year’s results to facilitate the year over year variance analysis.

Table 2: Significant changes to budgetary expenditures by standard object
(In thousands of dollars)April to Sept. 2014-15April to Sept. 2013-14 
DFATDDFATD
(a)
CIDA Q1
(b)
Passport
(c)
Total
(a)+(b)-(c)
Yr/Yr Variance%
Expenditures
Salaries and employee benefits531,829572,90540,24096,096571,04914,7803%
Transportation and communications47,53263,6141,25917,84847,0255071%
Information3,4923,90351,9691,9391,55380%
Professional and special services84,061104,5861,53822,06584,05920%
Rentals106,775110,11552211,58299,0557,7208%
Repair and maintenance10,32111,85332658211,597(1,276)(11%)
Utilities, Materials and Supplies17,07232,3965316,28316,1669066%
Other22,3591,70829,20816730,749(8,390)(27%)
Total Operating823,441901,08073,151166,592807,63915,8022%
Acquisition of land, buildings and works55,32217,900--17,90037,422209%
Acquisition of machinery and equipment9,78610,801151,1809,6361502%
Total Acquisition65,10828,701151,18027,53637,572136%
Transfer payments938,143618,326619,300-1,237,626(299,483)(24%)
Total gross budgetary expenditures1,826,6921,548,107692,466167,7722,072,801(246,109)(12%)
Less revenues netted against expenditures
Passport Respendable Revenue-218,008-218,008---
Revenue Credited to the Vote29,20931,135--31,135(1,926)(6%)
Total net budgetary expenditures1,797,4831,298,964692,466(50,236)2,041,666(244,183)(12%)
i. Operating expenditures

Salaries and employee benefits – The increase of $15 million is due to several factors, of which some are non-recurring.

The increase is mainly due to the following factors:

Rentals – The increase of $8 million in rental costs is mainly due to regular rent increases, timing differences on payments of rents between the two fiscal years as well as a significant prepaid payment of a rent that incurred in 2012-13 and expensed in fiscal year 2013-14.

Other – The decrease of $8 million in other expenditures is mainly due to last year’s revaluation of former CIDA’s investments and advances to International Financial Institutions denominated in foreign currencies at the time of their transfer to DFATD partly offset by the one-time transition payment of $19 million for implementing salary payment in arrears by the Government of Canada.

ii. Capital expenditures

Acquisition of land, building and works – The increase of $38 million is explained by the major construction costs incurred for the Canada House revitalization project in London in addition to the leasehold improvements done to the Chancery in Hong Kong.

iii. Grants and Contributions

The decrease of $299 million in transfer payments is mainly due to agreements ending in 2014, timing differences of disbursements, and decreased payments to the International Financial Institutions.

iv. Revenues

The decrease of $2 million in revenue is mainly due to the transfer of the International Youth Exchange Program to Citizenship and Immigration Canada (CIC) and the departmental amalgamation with CIDA. Transactions with former CIDA showing as revenue prior to the amalgamation are not recorded as such after the amalgamation.

3. Risks and Uncertainties

This quarterly report reflects the results of the current fiscal period in relation to the Main Estimates for which full supply was released.

The majority of DFATD’s salary, operating, capital and grants and contributions expenditures are funded through voted authorities. Over the last few years, the federal government has announced a series of initiatives and realignment strategies to renew and modernize its expenditure management system to ensure value for money of federal expenditures while operating more efficiently.

DFATD has been examining how it can improve its alignment with government policy and management priorities, and has been looking at more efficient ways of doing business and delivering services. DFATD systematically works with its partners to identify, assess, monitor and manage inherent risks to optimize its results. DFATD’s development portfolio works systematically with its partners to identify, assess, monitor, and manage risks to optimize development results. Because of the nature of development work, substantial risks are associated with its activities. These risks are managed to the degree possible and closely monitored in all cases, but are inherent to pursuing development results. Management must be continually vigilant in monitoring its environment and be resourceful in the development of responses to risks. Proactively managing risks increases the effectiveness of the development portfolio efforts to achieve concrete development results.

In recognition of the fiscal environment, DFATD will continue to examine its departmental program spending, making reallocations against identified priorities. The Department will continue to implement strategies to mitigate and manage the impact of these efficiency measures to achieve the best results for Canadians.

4. Significant changes in relation to operations, personnel and programs

There have been no significant changes in relation to operations, personnel and programs during the quarter ended September 30, 2014.

5. Budget 2012 Implementation

This section provides an overview of the savings announced in Budget 2012 that are being 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.

The savings initiatives reported below comprise those announced in Budget 2012 under the former Department of Foreign Affairs and International Trade (DFAIT) and the former Canadian International Development Agency (CIDA). These savings include those resulting from the horizontal review of the International Assistance Envelope (IAE). This review was driven by three criteria: alignment to the Government of Canada’s priorities, foreign policy and international assistance commitments; demonstration of effectiveness and tangible results; and, efficiency and value for money.

DFATD will achieve Budget 2012 savings of $516.3 million by fiscal year 2014-15. The Department achieved cumulative savings of $240.0 million in 2012-13 and 336.1$ million in 2013-14. As actual savings are presently on track with the planned savings, there is no significant variance to report.

Since April 1, 2012, the Department has achieved substantial savings through modernizing its operations, restructuring its Canadian offices, foreign properties and missions, reducing the back office and transforming how it works internally to achieve efficiencies and adjusting programming. To achieve the planned savings, the Department has and continues to undertake the following key initiatives:

The Department continues to implement the efficiency measures approved in Budget 2012 Canada’s Economic Action Plan, and any financial risks and uncertainties are being mitigated by sound financial management.

The Department will continue to put in place rigorous planning, monitoring and financial risk management measures to achieve the budgetary savings as expected.

Approval by Senior Officials

Approved, as required by the Policy on Financial Resource Management, Information and Reporting:

Daniel Jean
Deputy Minister of Foreign Affairs

Simon Kennedy
Deputy Minister of International Trade

Malcolm Brown
Deputy Minister of International Development

Nadir Patel
Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology

Ottawa, Ontario
Date: November 28, 2014

Table 3: Statement of Authorities (Unaudited)
(In thousands of dollars)Fiscal Year 2014-2015Fiscal Year 2013-2014
Total available for use for the year ending March 31, 20151Used during the quarter ended Sept. 30, 2014Year to date used at quarter endTotal available for use for the year ending March 31, 20141 3Used during the quarter ended Sept. 30, 2013Year to date used at quarter end2 3
1 Includes only Authorities available for use and granted by Parliament at quarter-end.
2 Excludes the Canadian International Development Agency results for the period before the amalgamation with the Department of Foreign Affairs and International Trade. Total expenditures for the first quarter of 2013-2014 represented an amount of $692,966 thousands of dollars.
3 The Department had one revolving fund, Passport Canada, which was included up to July 1, 2013. The Passport revolving fund has been transferred to Citizenship and Immigration Canada effective July 2, 2013.
4 Total available for use for the year ending March 31, 2015 has been updated to reflect an amount of $172,252 million ($262,184 in 2014), a statutory budgetary item transferred from previous years.
Operating expenditures1,449,576350,579710,4231,368,474345,476621,779
Capital expenditures320,30051,69477,617165,51023,78138,898
Grants and contributions3,431,945456,415727,9183,010,876578,846584,581
Locally engaged staff pensions, insurance and social security50,77911,36822,37065,38012,97623,027
Budgetary statutory authorities
Contributions to employee benefit plans96,56432,35548,80798,52833,15447,059
Ministers' salary and motor car allowance243611212204686
Payments under the Diplomatic Service (Special) Superannuation Act25061682501440
Debt forgiveness to Pakistan4172,252--262,184--
Spending of proceeds from the disposal of surplus Crown assets1,291--1,573--
Refunds of amounts credited to revenues in previous years---241325
Payments to International Financial Institutions245,00016,705199,24330,74416,70516,705
Payment to the World Bank for the Advance Market Commitment for Pneumococcal Vaccines10,91610,91610,91617,00017,00017,000
Passport Office Revolving Fund3---70,373(58,325)(50,236)
Total Budgetary authorities5,779,116930,1541,797,4835,091,136969,6861,298,964
Non-budgetary authorities79,632(2,300)8,08881,286(3,709)484
Total Authorities5,858,748927,8541,805,5715,172,422965,9771,299,448
Table 4: Departmental budgetary expenditures by Standard Object (unaudited)
(In thousands of dollars)Fiscal Year 2014-2015Fiscal Year 2013-2014
Planned expenditures for the year ending March 31, 20151Expended during the quarter ended Sept. 30, 2014Year to date used at quarter endPlanned expenditures for the year ending March 31, 20141 3Expended during the quarter ended Sept. 30, 2013Year to date used at quarter end2 3
1 Includes only Authorities available for use and granted by Parliament at quarter-end.
2 Excludes the Canadian International Development Agency results for the period before the amalgamation with the Department of Foreign Affairs and International Trade. Total expenditures for the first quarter of 2013-2014 represented an amount of $692,966 thousands of dollars.
3 The Department had one revolving fund, Passport Canada, which was included up to July 1, 2013. The Passport revolving fund has been transferred to Citizenship and Immigration Canada effective July 2, 2013.
4 Planned expenditures for the year ending March 31, 2015 have been updated to reflect an amount of $172,252 million ($262,184 in 2014), a statutory budgetary item transferred from previous years.
Expenditures
Salaries and employee benefits946,760261,306531,8291,110,646305,780572,905
Transportation and communications96,71630,10947,532133,59537,31363,614
Information13,3802,2213,49218,7951,4063,903
Professional and special services279,08753,37684,061279,76262,214104,586
Rentals220,60055,101106,775283,10558,160110,115
Repair and maintenance34,7606,94110,32143,2347,95611,853
Utilities, materials and supplies55,24910,22817,07275,02716,67532,396
Acquisition of land, buildings and works207,71740,45155,32276,67711,34617,900
Acquisition of machinery and equipment111,8295,5259,78689,6126,75810,801
Transfer payments3,688,111484,096938,1433,059,725612,565618,326
Other4174,24458922,359266,6421,1351,708
Total gross budgetary expenditures5,828,453949,9431,826,6925,436,8201,121,3081,548,107
Less revenues netted against expenditures
PPT Respendable Revenue---285,359147,072218,008
Revenue Credited to the Vote49,33719,78929,20960,3254,55031,135
Total revenues netted against expenditures49,33719,78929,209345,684151,622249,143
Total Net Budgetary Expenditures5,779,116930,1541,797,4835,091,136969,6861,298,964
Date Modified: