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Quarterly Financial Report

For the quarter ended June 30, 2015

Table of Contents

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.

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 2015-16. 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.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

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 by the Department.

Table 1: Significant changes to Authorities
Authorities (in thousands of dollars)Fiscal Year
2015-2016
Fiscal Year
2014-2015
Variance
Total available for use for the year ending March 31, 2016(1)Total available for use for the year ending March 31, 2015(1)$%
Operating expenditures1,451,3351,379,89371,4425%
Capital Expenditures103,546278,892(175,346)-63%
Grants and Contributions3,573,4103,431,945141,4654%
Locally engaged staff pensions, insurance and social security50,77950,779-0%
Budgetary statutory authorities
Contributions to employee benefit plans102,24996,5645,6856%
Ministers' salary and motor car allowance24824352%
Payments under the Diplomatic Service (Special) Superannuation Act250250-0%
Debt forgiveness to Pakistan124,640172,252(47,612)-28%
Spending of proceeds from the disposal of surplus Crown assets5911,291(700)-54%
Refunds of amounts credited to revenues in previous years12-12100%
Payments to International Financial Institutions - Encashment of notes-245,000(245,000)-100%
Payments to International Financial Institutions - Direct Payments245,000-245,000100%
Total Budgetary authorities5,652,0605,657,109(5,049)0%
Non-budgetary authorities68,11979,632(11,513)-14%
Total Authorities5,720,1795,736,741(16,562)0%
1 Includes only Authorities available for use and granted by Parliament at quarter-end.
i. Budgetary Authorities

Operating expenditures authorities have increased by $71 million this year. This is mainly due to currency exchange fluctuations on Operating expenditures and Locally Engaged Staff Salaries, inflation on Overseas Operating Costs, compensation for collective bargaining agreements and funding received for the operations of the Stabilization and Reconstruction Task Force and the Global Peace and Security Fund.

Capital expenditures authorities have decreased by $175 million this year. This is attributable to the funding for the consolidation of the Canadian High Commission at Trafalgar Square, London, received in 2014-15. Changes in the funding profile related to the Moscow Chancery Relocation Project also contributed to this decrease.

Grants and contributions authorities have increased by $141 million in 2015-16. This is mainly due to the funding received for the Stabilization and Reconstruction Task Force and the Global Peace and Security Fund. New funding to support the Global Fund to Fight AIDS, Tuberculosis and Malaria also contributed to this increase.

ii. Budgetary Statutory Authorities

Contributions to employee benefits plans (EBP) statutory authorities have increased by $6 million. This is related to additional funding received for salary items in the Operating budget.

Debt forgiveness to Pakistan of $124.6 million represents the available balance from previous years. For 2014-15 the opening balance was $172.2 million of which $47.6 million was used during the year.

Payments to International Financial Institutions (IFI) authorities were the same compared to last year. The authorities available in 2014-15 reflected the encashment of notes by IFI, whereas this year’s amounts reflect the departmental authority to make direct payments to IFI.

iii. Non-budgetary Authorities

The Department’s non-budgetary authorities have decreased by $12 million. This is mainly due to a reduction in the Working Capital Advances for loans and advances to personnel and posts abroad. In addition, there was a decrease in the capital subscription anticipated payments to International Financial Institutions.

B. Significant changes to budgetary expenditures by standard object

The following table shows the first quarter budgetary expenditures and revenues netted against expenditures of the Department and their comparison with the same quarter last year.

Table 2: Significant changes to budgetary expenditures by standard object
(in thousands of dollars)April to June
2015-16
April to June
2014-15
Variance
$%
Expenditures
Salaries and employee benefits283,213270,52312,6905%
Transportation and communications24,49217,4237,06941%
Information1,4391,27116813%
Professional and special services32,77630,6852,0917%
Rentals56,35551,6744,6819%
Repair and maintenance3,3473,380(33)(1%)
Utilities, materials and supplies6,8526,84480%
Other4,55121,770(17,219)(79%)
Total Operating413,025403,5709,4552%
Acquisition of land, buildings and works2,88814,871(11,983)(81%)
Acquisition of machinery and equipment3,5424,261(719)(17%)
Total Acquisition6,43019,132(12,702)(66%)
Transfer payments498,125454,04744,07810%
Total gross budgetary expenditures917,580876,74940,8315%
Less revenues netted against expenditures
Revenue Credited to the Vote2,1499,420(7,271)(77%)
Total Net Budgetary Expenditures915,431867,32948,1026%
i. Operating expenditures

Salaries and employee Benefits-The increase of $12.7 million is mainly explained by a timing difference in the Employee Benefit Plan monthly adjustments compared to last year. In addition, an increase in Locally Engaged Staff salaries due to annual salary revisions and currency fluctuations contributed to the variance. 

Transportation and communications- The increase of $7.1 million is mainly due to higher Public Servant travel costs this quarter compared to the first quarter of 2014-15. This is explained, in part, by the backlog in travel claims that occurred in fiscal year 2014-2015 as a result of the adoption of the new HRG travel management solution. Blackberry charges at missions have also temporally increased due to the late recovery of these expenditures from Shared Services Canada this year.  

Rentals – The increase of $4.7 million is due to higher regular rent and currency fluctuation costs in office and residential leases abroad.  Software licensing fees related to the maintenance of SAP financial system were also higher this year.

Other – The decrease of $17.2 million is mainly explained by the implementation of the salary payment in arrears by the Government of Canada in the first quarter of 2014-2015. This process caused a material one-time transition payment and variance.

ii. Capital expenditures

Acquisition of land, building and works –The decrease of $12 million is mainly explained by the costs incurred in 2014-15 related to the leasehold improvements to the Chancery in Hong Kong and renovations as part of the Canada House revitalization in London. These projects were substantially completed in 2014-2015.

iii. Grants and Contributions

The increase of $44.1 million in transfer payments is mainly due to timing differences in a disbursement to the United Nations Development Program. This transfer was paid earlier this year compared to fiscal year 2014-2015.

iv. Revenues

The decrease of $7.3 million in revenue is mainly due to a timing difference of the Co-Locators billing process. In comparison to last year, the Annual Co-Locator invoices were not submitted as of the end of the first quarter.

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 May 21, 2015 Arun Thangaraj was appointed to act as Assistant Deputy Minister, International Platform (ACM), with full signing authority.  

A new departmental Program Alignment Architecture has been in effect since April 1st, 2015.

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: August 28, 2015

Table 3: Statement of Authorities (Unaudited)
(in thousands of dollars)Fiscal Year
2015-2016
Fiscal Year
2014-2015
Total available for use for the year ending March 31, 20161Expended during the quarter ended June 30, 2015Year to date used at quarter endTotal available for use for the year ending March 31, 20151Expended during the quarter ended June 30, 2014Year to date used at quarter end
1 Includes only Authorities available for use and granted by Parliament at quarter-end.
Operating expenditures1,451,335370,366370,3661,379,893359,844359,844
Capital expenditures103,54611,71811,718278,89225,92325,923
Grants and contributions3,573,410287,157287,1573,431,945271,503271,503
Locally engaged staff pensions, insurance and social security50,7799,3579,35750,77911,00211,002
Budgetary statutory authorities
Contributions to employee benefit plans102,24925,81125,81196,56416,45216,452
Ministers' salary and motor car allowance24842422436060
Payments under the Diplomatic Service (Special) Superannuation Act25013313325077
Debt forgiveness to Pakistan124,640--172,252--
Spending of proceeds from the disposal of surplus Crown assets591--1,291--
Refunds of amounts credited to revenues in previous years121212-182,538182,538
Payments to International Financial Institutions - Encashment of notes-210,835210,835245,000--
Payments to International Financial Institutions - Direct Payments245,000-----
Total Budgetary authorities5,652,060915,431915,4315,657,109867,329867,329
Non-budgetary authorities68,1194,3754,37579,63210,38810,388
Total Authorities5,720,179919,806919,8065,736,741877,717877,717
Table 4: Departmental budgetary expenditures by Standard Object (unaudited)
(In thousands of dollars)Fiscal Year
2015-2016
Fiscal Year
2014-2015
Planned expenditures for the year ending March 31, 20161Expended during the quarter ended June 30, 2015Year to date used at quarter endPlanned expenditures for the year ending March 31, 20151Expended during the quarter ended June 30, 2014Year to date used at quarter end
1 Includes only Authorities available for use and granted by Parliament at quarter-end.
Expenditures
Salaries and employee benefits1,008,143283,213283,213946,760270,523270,523
Transportation and communications74,67424,49224,49286,47617,42317,423
Information10,4601,4391,43912,1321,2711,271
Professional and special services272,01132,77632,776250,34530,68530,685
Rentals193,92256,35556,355200,26951,67451,674
Repair and maintenance36,5063,3473,34731,1323,3803,380
Utilities, materials and supplies51,5816,8526,85250,0796,8446,844
Acquisition of land, buildings and works60,3332,8882,888166,31014,87114,871
Acquisition of machinery and equipment43,8163,5423,542111,7594,2614,261
Transfer payments3,818,660498,125498,1253,677,195454,047454,047
Other129,1794,5514,551173,98921,77021,770
Total gross budgetary expenditures5,699,285917,580917,5805,706,446876,749876,749
Less revenues netted against expenditures
PPT Respendable Revenue------
Revenue Credited to the Vote47,2252,1492,14949,3379,4209,420
Total revenues netted against expenditures47,2252,1492,14949,3379,4209,420
Total Net Budgetary Expenditures5,652,060915,431915,4315,657,109867,329867,329
Date Modified: