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Foreign Affairs, Trade and Development Canada
Quarterly Financial Report

For the period ended September 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 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 expenditures1,504,1071,449,57654,5314%
Capital Expenditures155,070320,300(165,230)-52%
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 assets1,2331,291(58)-4%
Refunds of amounts credited to revenues in previous years18-18100%
Payment to the World Bank for the Advance Market -
Commitment for Pneumococcal Vaccines
-10,916  (10,916) -100% 
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 authorities5,757,004 5,779,116 (22,112)0%
Non-budgetary authorities68,11979,632(11,513)-14%
Total Authorities5,825,123 5,858,748 (33,625)-1%
1 Includes only authorities available for use and granted by Parliament at quarter-end.
i. Budgetary Authorities

Operating expenditures authorities have increased by $54.5 million. This is due to the impact of currency exchange and inflation on Operating expenditures and Locally Engaged Staff salaries. In addition, funding received for the operations of the Stabilization and Reconstruction Task Force and the Global Peace and Security Fund also contributed to this increase.

Capital expenditures authorities have decreased by $165.2 million. This is attributable to funding received in 2014-15 for the consolidation of the Canadian High Commission at Trafalgar Square, London. Changes in the funding profile related to the Moscow Chancery Relocation Project also contributed to this decrease.

Grants and contributions authorities have increased by $141.5 million. This variance is explained by funding received for the Stabilization and Reconstruction Task Force and the Global Peace and Security Fund. This increase can also be linked to new funding received to support the Global Fund to Fight AIDS, Tuberculosis and Malaria.

ii. Budgetary Statutory Authorities

Contributions to employee benefits plans (EBP) statutory authorities have increased by $5.7 million. This is mainly due to the salary components of the funding received for the Stabilization and Reconstruction Task Force and the Global Peace and Security Fund, currency exchange fluctuations on Locally Engaged Staff salaries and compensation for collective bargaining agreements.

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. In 2006-2007, the Government of Canada, as represented by the Department, entered into an agreement with the Government of Pakistan to forgive its outstanding $447.5 million loan. In order to expire its debt obligation, the Government of Pakistan is required to make corresponding investments in their education sector.

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

iii. Non-budgetary Authorities

The Department’s non-budgetary authorities have decreased by $11.5 million. This is largely caused by a reduction in the Working Capital Advances for loans and advances to personnel and posts abroad. In addition, there was a decrease in the anticipated payments to International Financial Institutions for capital subscriptions.

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 the first two quarters and their comparison with the same period last year.

Table 2: Significant changes to budgetary expenditures by standard object
(In thousands of dollars)April to September
2015-16
April to September
2014-15
Variance
$%
Expenditures
Salaries and employee benefits536,024531,8294,1951%
Transportation and communications46,03247,532(1,500)(3%)
Information3,2903,492(202)(6%)
Professional and special services90,71184,0616,6508%
Rentals114,896106,7758,1218%
Repair and maintenance11,60810,3211,28712%
Utilities, materials and supplies17,56717,0724953%
Other6,53622,359(15,823)(71%)
Total Operating826,664823,4413,2230%
Acquisition of land, buildings and works16,12455,322(39,198)(71%)
Acquisition of machinery and equipment10,6379,7868519%
Total Acquisition26,76165,108(38,347)(59%)
Transfer payments1,230,704938,143292,56131%
Total gross budgetary expenditures2,084,1291,826,692257,43714%
Less revenues netted against expenditures
Revenue Credited to the Vote8,38929,209(20,820)(71%)
Total Net Budgetary Expenditures2,075,7401,797,483278,25715%
i. Operating expenditures

Professional and special services – The increase of $6.7 million is primarily explained by higher security costs incurred this fiscal year at some missions abroad as well as the use of IT consultants to support the upgrade of a Canadian Import and Export system application.

Rentals – The variance of $8.1 million in rental costs is mainly related to regular rent increases in office and residential buildings.

Repair and maintenance – The increase of $1.3 million is mostly attributable to a rise in repairs made to residential buildings (staff quarters) abroad this fiscal year.

Other – The decrease of $15.8 million is mostly due to the implementation of the salary payment in arrears by the Government of Canada in 2014-2015. This process required a one-time transition payment which caused this variance.

ii. Capital expenditures

Acquisition of land, building and works – The decrease of $39.2 million is mainly explained by the major renovation costs incurred in 2014-15 for the Canada House revitalization project in London.

iii. Grants and Contributions

The increase of $292.6 million in transfer payments is, for the most part, a result of timing differences in disbursements made to the World Bank and the United Nations Development Program in 2015-16.

iv. Revenues

The decrease of $20.8 million in revenue originates from a timing difference in the recovery by DFATD of shared costs from other organizations co-located in missions. In comparison with last year, these revenues have not been collected by the end of the second quarter. It is expected that the majority of the 2015-16 revenue will be received and recorded in the third quarter of the current fiscal year.

3. Risks and Uncertainties

Given DFATD’s mandate, the department must operate in a constantly changing environment that is influenced by many external factors (political, global economic, export and import controls, social contexts) including shifting of global trends. In addition, the department must operate in a time of fiscal restraint as a result of the operating budget freeze that was announced for all government departments and agencies in Budget 2014.

In recognition of this environment, a new integrated business planning process was implemented to support risk management through enhanced monitoring of risk and mitigation strategies.  The department has also improved financial forecasting and continues to find ways to absorb or fund activities within existing spending authorities without compromising program results.

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

As part of the departmental senior management staffing strategy, the following senior appointments took place during the quarter, as follows:  

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

Peter M. Boehm
A/Deputy Minister of International Development

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

Ottawa, Ontario
Date: November 27, 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 September 30, 2015Year to date used at quarter endTotal available for use for the year ending March 31, 20151Expended during the quarter ended September 30, 2014Year to date used at quarter end
1 Includes only authorities available for use and granted by Parliament at quarter-end.
Operating expenditures1,504,107359,800730,1661,449,576350,579710,423
Capital expenditures155,07028,50740,225320,30051,69477,617
Grants and contributions3,573,410715,8201,002,9773,431,945456,415727,918
Locally engaged staff pensions, insurance and social security50,77913,46022,81750,77911,36822,370
Budgetary statutory authorities
Contributions to employee benefit plans102,24925,87551,68696,56432,35548,807
Ministers' salary and motor car allowance2488212424361121
Payments under the Diplomatic Service (Special) Superannuation Act250541872506168
Debt forgiveness to Pakistan124,640--172,252--
Spending of proceeds from the disposal of surplus Crown assets1,233--1,291--
Refunds of amounts credited to revenues in previous years18618---
Payment to the World Bank for the Advance Market Commitment for Pneumococcal Vaccines---10,91610,91610,916
Payments to International Financial Institutions - Encashment of notes---245,00016,705199,243
Payments to International Financial Institutions - Direct Payments245,00016,705227,540---
Total Budgetary authorities5,757,004 1,160,309 2,075,740 5,779,116 930,154 1,797,483
Non-budgetary authorities68,119(4,856)(481)79,632(2,300)8,088
Total Authorities5,825,123 1,155,453 2,075,259 5,858,748 927,854 1,805,571
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 September 30, 2015Year to date used at quarter endPlanned expenditures for the year ending March 31, 20151Expended during the quarter ended September 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 benefits1,008,143252,811536,024946,760261,306531,829
Transportation and communications80,84021,54046,03296,71630,10947,532
Information11,3231,8513,29013,3802,2213,492
Professional and special services294,47057,93590,711279,08753,37684,061
Rentals209,93358,541114,896220,60055,101106,775
Repair and maintenance39,5208,26111,60834,7606,94110,321
Utilities, materials and supplies55,84010,71517,56755,24910,22817,072
Acquisition of land, buildings and works89,61013,23616,124207,71740,45155,322
Acquisition of machinery and equipment66,7117,09510,637111,8295,5259,786
Transfer payments3,818,660732,5791,230,7043,688,111484,096938,143
Other129,1791,9856,536174,24458922,359
Total gross budgetary expenditures5,804,229 1,166,549 2,084,129 5,828,453 949,943 1,826,692
Less revenues netted against expenditures
Revenue Credited to the Vote47,2256,2408,38949,33719,78929,209
Total revenues netted against expenditures47,2256,240 8,389 49,337 19,789 29,209
Total Net Budgetary Expenditures5,757,004 1,160,309 2,075,740 5,779,116 930,154 1,797,483
Date Modified: