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Foreign Affairs, Trade and Development Canada Quarterly Financial Report

For the quarter ended December 31, 2014 Revised

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

Erratum

Date: March 16, 2015

Location 1: Statement of Authorities (Unaudited), Expended during the quarter ended December 31, 2013, Operating expenditures.
Revision: “Operating expenditures $354,574 thousands” replaces ““Operating expenditures $345,574 thousands”.

Location 2: Statement of Authorities (Unaudited), Expended during the quarter ended December 31, 2014, Grants and Contributions.
Revision: “Grants and Contributions $662,728 thousands” replaces ““Grants and Contributions $662,278 thousands”.

Location 3: Statement of Authorities (Unaudited), Total available for use for the year ending March 31, 2014, Grants and Contributions.
Revision: “Grants and Contributions $3,256,390 thousands” replaces ““Grants and Contributions $3,256,290 thousands”.

Rationale for the revisions: Original amounts reported were not correct.

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 fiscal year 2014-15. 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 special purposes.

The Department of Foreign Affairs, Trade and Development (DFATD) 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.

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 only, the 2013-14 figures include the amounts reported by the former 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
2014-2015
Fiscal Year
2013-2014
Variance
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
March 31, 20141
$%
Operating expenditures1,482,6431,488,82838,2221,527,050(44,407)-3%
Capital Expenditures320,929229,268-229,26891,66140%
Grants and Contributions3,431,5653,256,390404,0443,660,434(228,869)-6%
Locally engaged staff pensions, insurance and social security50,77965,380-65,380(14,601)-22%
Budgetary statutory authorities
Contributions to employee benefit plans97,838101,9205,720107,640(9,802)-9%
Ministers' salary and motor car allowance2432192023942%
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 assets2,9082,31922,32158725%
Refunds of amounts credited to revenues in previous years1650-50(34)-68%
Payment to the World Bank for the Advance Market Commitment for Pneumococcal Vaccines10,91617,000-17,000(6,084)-36%
Payments to International Financial Institutions - Encashment of notes211,80030,744215,256246,000(34,200)-14%
Payments to International Financial Institutions - Direct Payments33,200---33,2000%
Losses on foreign exchange--29,20229,202(29,202)-100%
Total Budgetary authorities5,815,3395,454,552692,4666,147,018(331,679)-5%
Non-budgetary authorities79,63281,28629,291110,577(30,945)-28%
Total Authorities5,894,9715,535,838721,7576,257,595(362,624)-6%
1Reflects the total available for use at the date of the amalgamation.
i. Budgetary Authorities

Operating expenditures authorities have decreased by $44 million. The decrease is mainly due to a reduction in the departmental authorities related to Budget 2012 cost containment measures ($52 million). This was offset by additional funding received for collective bargaining ($8 million).

Capital expenditures authorities increased by $92 million, mainly due to an additional funding of $134 million received for the consolidation of the Canadian High Commission at Trafalgar Square, London, which is offset by reductions related to the Capital Budget Carry Forward in comparison with last year.

Grants and contributions authorities decreased by $229 million, mainly due to additional funding of $246 million received in 2013-14 for a quick response to major international disasters and crises, and for the Global Peace and Security Fund and the Stabilization and Reconstruction Task Force. This is offset by an increase of $17 million due to funding requirements for the assessed contributions in 2014-15.

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 authorities decreased by $10 million mainly due to a 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.

Payment to the World Bank for the Advance Market Commitment for Pneumococcal Vaccines statutory authorities decreased by $6 million in 2014-15 due to lower funding requirements.

Losses on foreign exchange statutory authorities decreased by $29 million, compared to the previous year. This decrease is attributable to a timing difference resulting from the transfer of authorities from former CIDA at the date of amalgamation.

ii. Non-budgetary Authorities

The Department’s non-budgetary authorities decreased by $31 million compared to last year due to a reduction of capital subscription 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 only, 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 Dec. 2014-15April to Dec. 2013-14Variance
DFATDDFATD
(a)
CIDA Q1
(b)
Passport
(c)
Total
(a)+(b)-(c)
$%
Expenditures
Salaries and employee benefits796,662788,96940,24048,795780,41416,2482%
Transportation and communications74,61380,6081,2598,51773,3501,2632%
Information6,0756,08351,8314,2571,81843%
Professional and special services140,467152,4211,5389,333144,626(4,159)(3%)
Rentals150,359146,3775225,315141,5848,7756%
Repair and maintenance17,36219,56832633919,555(2,193)(11%)
Utilities, Materials and supplies27,91136,479539,88326,6491,2625%
Other22,2453,02829,20817032,066(9,821)(31%)
Total Operating1,235,6941,233,53373,15184,1831,222,50113,1931%
Acquisition of land, buildings and works95,36325,940--25,94069,423268%
Acquisition of machinery and equipment19,46919,0111538018,6468234%
Total Acquisition114,83244,9511538044,58670,246158%
Transfer payments1,613,4221,316,005619,300-1,935,305(321,883)(17%)
Total gross budgetary expenditures2,963,9482,594,489692,46684,5633,202,392(238,444)(7%)
Less revenues netted against expenditures
Passport Respendable Revenue-70,985-70,985---
Revenue Credited to the Vote31,20043,766--43,766(12,566)(29%)
Total net budgetary expenditures2,932,7482,479,738692,46613,5783,158,626(225,878)(7%)
i. Operating expenditures

Salaries and employee benefits – The increase of $16 million is due to several factors, of which most are non-recurring.

The increase is mainly due to the following factors:

Rentals – The increase of $9 million in rental costs is mainly due to regular rent increases in office and residential building as well as timing differences on lease payments between the two fiscal years.

Other – The decrease of $10 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 $20 million for implementing salary payment in arrears by the Government of Canada.

ii. Capital expenditures

Acquisition of land, building and works – The increase of $69 million is explained by the major construction costs incurred for the Canada House revitalization project in London in addition to leasehold improvements done to the Chancery in Hong Kong.

iii. Grants and Contributions

The decrease of $322 million in transfer payments is mainly due to timing differences in disbursements, decreased payments to International Financial Institutions and agreements ending in 2014.

iv. Revenues

The decrease of $13 million in revenue is mainly due to the transfer of the International Youth Exchange Program to Citizenship and Immigration Canada (CIC), the amalgamation of the two departments (transactions with former CIDA, shown as revenue prior to the amalgamation, are not recorded as such after the amalgamation), and a one-time payment received in 2013-14 related to co-location revenues.

3. Risks and Uncertainties

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

On October 10, 2014, Foreign Affairs Minister John Baird and International Trade Minister Ed Fast announced the appointment of Nadir Patel, former Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology as Canada’s new high commissioner in the Republic of India.

Following Nadir Patel’s appointment as Canada’s high commissioner in the Republic of India, Arun Thangaraj has been acting as Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology.

Effective December 22, 2014, Lise Filiatrault has been appointed to the position of Assistant Deputy Minister (ADM), Africa.

A new departmental Program Alignment Architecture has been approved by Treasury Board on November 4, 2014 and is effective starting in Fiscal year 2015-16.

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 million by fiscal year 2014-15. The Department achieved cumulative savings of $240 million in 2012-13 and $336 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 TB Policy on Financial Resource Management, Information and Reporting:

Daniel Jean
Deputy Minister of Foreign Affairs

T. Christine Hogan
Deputy Minister of International Trade

Malcolm Brown
Deputy Minister of International Development

Arun Thangaraj
Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology

Ottawa, Ontario
Date: February 27, 2016

Table 3: Statement of Authorities (Unaudited)
(in thousands of dollars)Fiscal Year
2014-2015
Fiscal Year
2013-2014
Total available for use for the year ending March 31, 20151Expended during the quarter ended December 31, 2014Year to date used at quarter endTotal available for use for the year ending March 31, 20141 3Expended during the quarter ended December 31, 2014Year 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.
Operating expenditures1,482,643365,2701,075,6931,488,828354,574975,832
Capital expenditures320,92958,236135,853229,26825,40664,304
Grants and contributions3,431,565662,7281,390,6463,256,390697,6471,282,228
Locally engaged staff pensions, insurance and social security50,77912,16334,53365,38011,91434,941
Budgetary statutory authorities
Contributions to employee benefit plans97,83824,24173,048101,92026,25773,316
Ministers' salary and motor car allowance2436118221953139
Payments under the Diplomatic Service (Special) Superannuation Act250501182503272
Debt forgiveness to Pakistan4172,252--262,184--
Spending of proceeds from the disposal of surplus Crown assets2,908--2,3191,5731,573
Refunds of amounts credited to revenues in previous years161616502550
Payment to the World Bank for the Advance Market Commitment for Pneumococcal Vaccines10,916-10,91617,000-17,000
Payments to International Financial Institutions - Encashment of notes211,80012,500211,74330,744-16,705
Payments to International Financial Institutions - Direct Payments33,200-----
Passport Office Revolving Fund-----13,578
Total Budgetary authorities5,815,3391,135,2652,932,7485,454,5521,117,4812,479,738
Non-budgetary authorities79,632(3,690)4,39881,286(10)474
Total Authorities5,894,9711,131,5752,937,1465,535,8381,117,4712,480,212
Table 4: Departmental budgetary expenditures by Standard Object (unaudited)
(in thousands of dollars)Fiscal Year
2014-2015
Fiscal Year
2013-2014
Planned expenditures for the year ending March 31, 20151Expended during the quarter ended December 31, 2014Year to date used at quarter endPlanned expenditures for the year ending March 31, 20141 3Expended during the quarter ended December 31, 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 benefits962,831264,833796,6621,000,864263,918788,969
Transportation and communications98,83927,08174,613106,82126,32580,608
Information13,5802,5836,07515,8112,3176,083
Professional and special services286,51056,406140,467261,07860,567152,421
Rentals226,78143,584150,359239,07942,529146,377
Repair and maintenance35,3387,04117,36236,2007,95719,568
Utilities, materials and supplies56,97210,83927,91154,58910,48336,479
Acquisition of land, buildings and works209,72540,04195,363105,6408,04025,940
Acquisition of machinery and equipment112,0839,68319,469124,4629,01019,011
Transfer payments3,687,730675,2791,613,4223,304,384697,6791,316,005
Other4174,287(114)22,245265,9491,2873,028
Total gross budgetary expenditures5,864,6761,137,2562,963,9485,514,8771,130,1122,594,489
Less revenues netted against expenditures
PPT Respendable Revenue-----70,985
Revenue Credited to the Vote49,3371,99131,20060,32512,63143,766
Total revenues netted against expenditures49,3371,99131,20060,32512,631114,751
Total Net Budgetary Expenditures5,815,3391,135,2652,932,7485,454,5521,117,4812,479,738
Date Modified: