Quarterly Financial Report

For the period ended June 30, 2016

Table of contents

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

1. Introduction

This quarterly report for the period ending June 30, 2016 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 2016-17. 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.

Global Affairs Canada (GAC) 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. Only authorities available for use and granted by Parliament as at June 30, 2016 are included.

Table 1: Significant changes to Authorities (In thousands of dollars)
AuthoritiesFiscal Year
2016-2017
Fiscal Year
2015-2016
Variance
Total available for use for the year ending March 31, 2017Total available for use for the year ending March 31, 2016$%
Operating Expenditures1,497,1231,451,33545,7883%
Capital Expenditures124,444103,54620,89820%
Grants and Contributions3,529,6773,573,410(43,733)-1%
Locally engaged staff pensions, insurance and social security50,77950,779-0%
Budgetary statutory authorities
Contributions to employee benefit plans108,939102,2496,6907%
Ministers' salary and motor car allowance25124831%
Payments under the Diplomatic Service (Special) Superannuation Act250250-0%
Debt forgiveness to Pakistan124,640124,640-0%
Spending of proceeds from the disposal of surplus Crown assets2,8355912,243380%
Refunds of amounts credited to revenues in previous years-12(12)-100%
Payments to International Financial Institutions Direct Payments245,000245,000-0%
Total Budgetary authorities5,683,9385,652,06031,8781%
Non-budgetary authorities25,08668,119(43,033)-63%
Total Authorities5,709,0245,720,179(11,155)0%
i. Budgetary Authorities

Operating Expenditures authorities have increased by $45.8 million. This is mostly related to funding received through Supplementary Estimates (A) in the first quarter of 2016-17 to support the management of the Canada-U.S. Softwood Lumber initiative, the resettling of 10,000 additional government-assisted Syrian Refugees as well as for the Canadian Technology Accelerator initiative. Also contributing to this increase, was funding received for currency exchange fluctuations on operating expenditures and locally engaged staff salaries which was offset by sunsetting funding for the Stabilization and Reconstruction Task Force and the Global Peace and Security Fund (funding for the continuation and expansion of the program was announced in Budget 2016) and the closure of the Investment Cooperation Program (Budget 2015).

Capital Expenditures authorities have increased by $20.9 million. This is attributable to the funding received for the relocation of the chancery for the combined missions to the European Union and Belgium (Brussels).

Grants and Contributions authorities have decreased by $43.7 million. This is for the most part caused by the funding for the Stabilization and Reconstruction Task Force and the Global Peace and Security Fund received in 2015-16 and the closure of the Investment Cooperation Program (Budget 2015). These reductions were offset by funding received for assessed contributions costs related to currency fluctuations, CanExport funding for Small and Medium-sized Enterprises and the expansion of the Trade Commissioner Service to support Canadian companies in emerging markets (Budget 2015), as well as funding to support Canada’s Migrant Smuggling Prevention Strategy.

ii. Budgetary Statutory Authorities

Contributions to employee benefits plans (EBP) statutory authorities have increased by $6.7 million. This can be explained by the salary component of the funding received for currency exchange fluctuations on operating expenditures and locally engaged staff salaries; the Softwood Lumber Agreement; the resettlement of 10,000 Syrian refugees as well as the CanExport program for Small and Medium-sized Enterprises and to expand the Trade Commissioner Service to support Canadian companies in emerging markets.

Debt forgiveness to Pakistan of $124.6 million represents the available balance from previous years. For 2015-16, the opening balance was $172.2 million and no amount 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.

iii. Non-budgetary Authorities

The Department’s non-budgetary authorities have decreased by $43 million. This is attributable to 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 quarter and their comparison with the same period last year.

Table 2: Significant changes to budgetary expenditures by standard object (in thousands of dollars)
Standard objectApril to June
2016-17
April to June
2015-16
Variance
$%
Operating Expenditures
Salaries and employee benefits266,589283,213(16,624)(6%)
Transportation and communications20,59424,492(3,898)(16%)
Information1,1671,439(272)(19%)
Professional and special services36,27832,7763,50211%
Rentals55,61756,355(738)(1%)
Repair and maintenance3,4383,347913%
Utilities, materials and supplies6,3836,852(469)(7%)
Other2,4124,551(2,139)(47%)
Total Operating Expenditures392,478413,025(20,547)(5%)
Acquisition Expenditures
Acquisition of land, buildings and works17,9892,88815,101523%
Acquisition of machinery and equipment3,3933,542(149)(4%)
Total Acquisition Expenditures21,3826,43014,952233%
Transfer payments687,265498,125189,14038%
Total gross budgetary expenditures1,101,125917,580183,54520%
Less revenues netted against expenditures
Revenue Credited to the Vote16,7022,14914,553677%
Total Net Budgetary Expenditures1,084,423915,431168,99218%
i. Operating Expenditures

Salaries and employee benefits – The decrease is mainly due to a timing difference in receiving pay file information from the pay system.

Transportation and communications – The decrease of $3.9 million is caused by timing differences in the recovery of mission mobile device costs from Shared Services Canada.

Information – The decrease of $0.3 million is mainly due to a timing difference in payments for a subscription to an electronic publication.

Professional and special services – The increase of $3.5 million is primarily explained by the timing of billing for mission security services by another government department and legal services by Justice Canada.

Utilities, materials and supplies – The decrease of $0.5 million is due to lower spending on gas and fuel at missions this year. In addition, the department incurred lower office supply expenses compared to last year.

Other – The decrease of $2.1 million is mostly related to a foreign exchange gain adjustment entry recorded in the previous fiscal year. This decrease was offset by higher foreign exchange gains recorded this year due to a stronger Canadian currency.

ii. Capital Expenditures

Acquisition of land, building and works –The increase of $15.1 million is primarily attributed to lease extension costs of the High Commission in London and the acquisition of an Official Residence in Abuja.

iii. Transfer Payments

The increase of $189.1 million in transfer payments is, for the most part, a result of differences in the period of disbursements made under the Consolidated Appeals Process, to the Micronutrient Initiative, the UNICEF United Nations Children’s fund and the Office for the Coordination of Humanitarian Affairs.  Humanitarian assistance to the Syrian crisis also contributed to this increase.

iv. Revenues

The increase of $14.6 million in revenues originates from a timing difference in the recovery by GAC of shared costs from other organizations co-located at missions abroad.

3. Risks and Uncertainties

Given GAC’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

Approval by Senior Officials

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

Ian Shugart
Deputy Minister of Foreign Affairs

T. Christine Hogan
Deputy Minister of International Trade

Peter M. Boehm
Deputy Minister of International Development

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

Ottawa, Ontario
Date: August 29, 2016

Table 3: Statement of Authorities (Unaudited)
This table includes authorities available for use and granted by Parliament as at June 30, 2016 (In thousands of dollars)
AuthoritiesFiscal Year
2016-2017
Fiscal Year
2015-2016
Total available for use for the year ending March 31, 2017Expended during the quarter ended June 30, 2016Year to date used at quarter endTotal available for use for the year ending March 31, 2016Expended during the quarter ended June 30, 2015Year to date used at quarter end
Operating Expenditures1,497,123333,888333,8881,451,335370,366370,366
Capital Expenditures124,44425,57525,575103,54611,71811,718
Grants and Contributions3,529,677476,344476,3443,573,410287,157287,157
Locally engaged staff pensions, insurance and social security50,77910,62310,62350,7799,3579,357
Budgetary statutory authorities
Contributions to employee benefit plans108,93927,04627,046102,24925,81125,811
Ministers' salary and motor car allowance25121212484242
Payments under the Diplomatic Service (Special) Superannuation Act2508686250133133
Debt forgiveness to Pakistan124,640--124,640--
Spending of proceeds from the disposal of surplus Crown assets2,835--591--
Refunds of amounts credited to revenues in previous years-55121212
Payments to International Financial Institutions
Direct Payments
245,000210,835210,835245,000210,835210,835
Total Budgetary authorities5,683,9381,084,423 1,084,4235,652,060915,431915,431
Non-budgetary authorities25,0868,5308,53068,1194,3754,375
Total Authorities5,709,0241,092,9531,092,9535,720,179 919,806919,806
Table 4: Departmental budgetary expenditures by Standard Object (unaudited)
This table includes authorities available for use and granted by Parliament as at June 30, 2016 (In thousands of dollars)
Standard ObjectFiscal Year
2016-2017
Fiscal Year
2015-2016
Planned expenditures for the year ending March 31, 2017Expended during the quarter ended June 30, 2016Year to date used at quarter endPlanned expenditures for the year ending March 31, 2016Expended during the quarter ended June 30, 2015Year to date used at quarter end
Expenditures
Salaries and employee benefits1,037,801266,589266,5891,008,143283,213283,213
Transportation and communications15,37420,59420,59474,67424,49224,492
Information14,0031,1671,16710,4601,4391,439
Professional and special services292,32436,27836,278272,01132,77632,776
Rentals233,30855,61755,617193,92256,35556,355
Repair and maintenance48,4393,4383,43836,5063,3473,347
Utilities, materials and supplies61,4966,3836,38351,5816,8526,852
Acquisition of land, buildings and works99,28517,98917,98960,3332,8882,888
Acquisition of machinery and equipment27,3543,3933,39343,8163,5423,542
Transfer payments3,774,927687,265687,2653,818,660498,125498,125
Other127,8522,4122,412129,1794,5514,551
Total gross budgetary expenditures5,732,1631,101,1251,101,1255,699,285917,580917,580
Less revenues netted against expenditures
Revenue Credited to the Vote48,22516,70216,70247,2252,1492,149
Total revenues netted against expenditures48,22516,70216,70247,2252,1492,149
Total Net Budgetary Expenditures5,683,9381,084,4231,084,4235,652,060915,431915,431
Date Modified: