Quarterly Financial Report

For the period ended December 31, 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 December 31, 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.

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 December 31, 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 Expenditures1,616,6981,504,107112,5917%
Capital Expenditures241,958155,070 86,88856%
Grants and Contributions3,932,6603,573,410359,25010%
Locally engaged staff pensions, insurance and social security64,70660,8023,9046%
Budgetary statutory authorities
Contributions to employee benefit plans111,241102,2498,9929%
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 assets3,6531,7131,940113%
Refunds of amounts credited to revenues in previous years1518(3)-17%
Payments to International Financial Institutions Direct Payments245,000245,000-0%
Total Budgetary authorities6,341,0725,767,507573,56510%
Non-budgetary authorities25,08668,119(43,033)-63%
Total Authorities6,366,1585,835,626530,5329%
i. Budgetary Authorities

Operating Expenditures authorities have increased by $112.6 million compared to last year. This is mainly attributable to funding received through Supplementary Estimates for:

Also contributing to this increase was the funding received for currency exchange fluctuations on operating and Locally Engaged Staff salaries.

These increases were offset by:

Capital Expenditures authorities have increased by $86.9 million. This is mainly attributable to funding received through Supplementary Estimates (B) in the third quarter of 2016-17 for:

Also contributing to this increase was the funding for the selection and fit-up of the new chancery for the combined missions to the European Union and to Belgium.

These increases were partially offset by a decrease of the Capital Budget Carry-Forward amount received in 2016-17 compared to 2015-16.

Grants and Contributions authorities have increased by $359.3 million. This is for the most part caused by the funding received through Supplementary Estimates (B) in the third quarter of 2016-2017 for:

Also contributing to the increase was additional funding:

These increases were offset by:

ii. Budgetary Statutory Authorities

Contributions to employee benefits plans (EBP) statutory authorities have increased by $9.0 million. This is mainly attributable to the salary component of the following:

iii. Non-budgetary Authorities

The Department’s non-budgetary authorities have decreased by $43.0 million. This is mainly 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 period 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 December
2016-17
April to December
2015-16
Variance
$%
Expenditures
Salaries and employee benefits810,458800,5809,8781%
Transportation and communications71,38371,394(11)0%
Information6,3575,61374413%
Professional and special services148,877153,421(4,544)(3%)
Rentals150,718156,709(5,991)(4%)
Repair and maintenance14,95915,734(775)(5%)
Utilities, materials and supplies26,69327,323(630)(2%)
Other44,3487,71536,633475%
Total Operating1,273,7931,238,48935,3043%
Acquisition of land, buildings and works47,20027,74419,45670%
Acquisition of machinery and equipment21,44720,5928554%
Total Acquisition68,64748,33620,31142%
Transfer payments2,244,6661,989,200255,46613%
Total gross budgetary expenditures3,587,1063,276,025311,0819%
Less revenues netted against expenditures
Revenue Credited to the Vote31,09725,4805,61722%
Total Net Budgetary Expenditures3,556,0093,250,545305,4649%
i. Operating Expenditures

Salaries and employee benefits- The increase of $9.9 million is mainly explained by higher spending on locally engaged staff salaries. Also contributing to the variance are larger Employee Benefits Plan (EBP) employer contributions that are in line with the increase in the related departmental statutory authorities.

Professional and special services- The decrease of $4.5 million is mainly attributable to a reduction of spending on architectural services for projects in London and Riyadh that moved from the design phase in 2015-2016 to the construction phase in the current year and consultant fees for information technology projects. Also contributing to the decrease is a timing difference in payments related to employee relocations.

Rentals- The decrease of $6.0 million is primarily due to a timing difference related to the ICAO  headquarters rental fee payments.

Repair and maintenance- The decrease of $0.8 million is mainly explained by the timing of maintenance services carried out at missions.

Other- The increase of $36.6 million relates mostly to the portion of debt from the Government of Pakistan being forgiven by the Government of Canada.

ii. Capital Expenditures

Acquisition of land, buildings and works-The increase of $19.5 million is primarily attributed to lease extension costs of the Canada High Commission in London that were funded using the capital expenditure budget due to the long term nature of the lease. The purchase of staff quarters in London also contributed to the increase.

iii. Transfer Payments

The increase of $255.5 million is mainly explained by higher spending on United Nations (UN) peacekeeping operations and the new UN scale of assessment adopted in December 2015 which postponed some payments to 2016-2017. Also contributing to the increase are the payments for the Afghan National Defense and Security Forces program and the Maternal Newborn and Child Health (MNCH) program, launched in 2016. The payment for the Support to the Micronutrient Initiative program, made in 2016-2017, was also a factor in the increase as there was no equivalent payment made in the previous fiscal year (2015-2016).

iv. Revenues

The increase of $5.6 million in revenues originates from a timing difference in the recovery of costs from other organizations that share the department’s space and services at missions abroad (Co-locators). Delays in revenue collection led to lower revenue reported in the first three quarters of 2015-2016.

3. Risks and Uncertainties

As a federal department operating in a complex and rapidly changing environment that is influenced by many external factors, such as political, economic controls, social contexts and shifting global trends, Global  Affairs Canada (GAC) is exposed to a broad range of risks in Canada and abroad. In addition, the department faces funding pressures and must operate in a time of fiscal restraint. Effective risk management is, therefore, critical to the department’s ability to deliver results for Canadians.

GAC continues to be more pragmatic and versatile in its management of funds. The department has improved financial forecasting and continues to find ways to absorb or fund activities. To support senior management decisions to reallocate funds within existing spending authorities, the department undertakes activities to reassess the needs and demands of various program areas without compromising on the delivery of program results. This approach has reinforced the importance of linking funding to departmental priorities and the branch objectives which support them. Branches and program areas have also grown more attentive to the department’s financial limitations as they are identifying their pressures earlier, reviewing their activities and available funds more frequently, and are increasingly utilizing forward planning.

During the period of transition to centralized government pay services, the department is closely monitoring its salary expenditures.

To ensure effective control, transparency and accountability in the management of grants and contributions, the department adheres to Treasury Board (TB) Policy on Transfer Payments. The department also utilizes a Fiduciary Risk Evaluation Tool (FRET), which provides a consistent and systematic approach to evaluate, mitigate, monitor and manage fiduciary risk for the Department’s development assistance investments.

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

One change in senior management was made during the third quarter of 2016-2017. The position of Assistant Deputy Minister for Consular, Security and Legal branch was permanently staffed during the quarter.

There have been no other significant changes in relation to operations, personnel and programs during this quarter.

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

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

Ottawa, Ontario
Date: March 1, 2017

Table 3: Statement of Authorities (Unaudited)
This table includes authorities available for use and granted by Parliament as at December 31, 2016 (In thousands of dollars)
AuthoritiesFiscal Year 2016-2017Fiscal Year 2015-2016
Total available for use for the year ending March 31, 2017Expended during the quarter ended December 31, 2016Year to date used at quarter endTotal available for use for the year ending March 31, 2016Expended during the quarter ended December 31, 2015Year to date used at quarter end
Operating Expenditures1,616,698368,4531,068,7231,504,107350,1251,080,291
Capital Expenditures241,95817,96681,805155,07025,95266,177
Grants and Contributions3,932,660963,0822,016,8763,573,410745,9781,748,955
Locally engaged staff pensions, insurance and social security64,70612,40337,62360,80213,20636,023
Budgetary statutory authorities
Contributions to employee benefit plans111,24126,95981,089102,24925,75077,436
Ministers' salary and motor car allowance2514114224842167
Payments under the Diplomatic Service (Special) Superannuation Act2507525025018205
Debt forgiveness to Pakistan124,640-39,946124,640--
Spending of proceeds from the disposal of surplus Crown assets3,653-2,0001,7131,2331,233
Refunds of amounts credited to revenues in previous years1521518-18
Payments to International Financial Institutions Direct Payments245,000-227,540245,00012,500240,040
Total Budgetary authorities6,341,0721,388,981 3,556,0095,767,5071,174,8043,250,545
Non-budgetary authorities25,086-1,9358,87868,11930,38329,902
Total Authorities6,366,1581,387,0463,564,8875,835,6261,205,1873,280,447

 

Table 4: Departmental budgetary expenditures by Standard Object (unaudited)
This table includes authorities available for use and granted by Parliament as at December 31, 2016 (In thousands of dollars)
Standard ObjectFiscal Year 2016-2017Fiscal Year 2015-2016
Planned expenditures for the year ending March 31, 2017Expended during the quarter ended December 31, 2016Year to date used at quarter endPlanned expenditures for the year ending March 31, 2016Expended during the quarter ended December 31, 2015Year to date used at quarter end
Expenditures
Salaries and employee benefits1,065,435268,416810,4581,018,166264,556800,580
Transportation and communications89,82026,01371,38380,84025,36271,394
Information14,3972,8756,35711,3232,3235,613
Professional and special services296,13659,895148,877294,47062,710153,421
Rentals258,37639,407150,718209,93341,813156,709
Repair and maintenance50,0375,40614,95939,5214,12615,734
Utilities, materials and supplies64,39711,05626,69355,8409,75627,323
Acquisition of land, buildings and works208,2544,05447,20090,09011,62027,744
Acquisition of machinery and equipment36,7339,77221,44766,7119,95520,592
Transfer payments4,177,910963,1582,244,6663,818,660758,4961,989,200
Other127,80262344,348129,1781,1797,715
Total gross budgetary expenditures6,389,2971,390,6753,587,1065,814,7321,191,8963,276,025
Less revenues netted against expenditures
Revenue Credited to the Vote48,2251,69431,09747,22517,09225,480
Total revenues netted against expenditures48,2251,69431,09747,22517,09225,480
Total Net Budgetary Expenditures6,341,0721,388,9813,556,0095,767,5071,174,8043,250,545
Date Modified: