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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 program
- Approval by Senior Officials
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.
| 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 expenditures | 1,504,107 | 1,449,576 | 54,531 | 4% |
| Capital Expenditures | 155,070 | 320,300 | (165,230) | -52% |
| Grants and Contributions | 3,573,410 | 3,431,945 | 141,465 | 4% |
| Locally engaged staff pensions, insurance and social security | 50,779 | 50,779 | - | 0% |
| Budgetary statutory authorities | ||||
| Contributions to employee benefit plans | 102,249 | 96,564 | 5,685 | 6% |
| Ministers' salary and motor car allowance | 248 | 243 | 5 | 2% |
| Payments under the Diplomatic Service (Special) Superannuation Act | 250 | 250 | - | 0% |
| Debt forgiveness to Pakistan | 124,640 | 172,252 | (47,612) | -28% |
| Spending of proceeds from the disposal of surplus Crown assets | 1,233 | 1,291 | (58) | -4% |
| Refunds of amounts credited to revenues in previous years | 18 | - | 18 | 100% |
| 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 Payments | 245,000 | - | 245,000 | 100% |
| Total Budgetary authorities | 5,757,004 | 5,779,116 | (22,112) | 0% |
| Non-budgetary authorities | 68,119 | 79,632 | (11,513) | -14% |
| Total Authorities | 5,825,123 | 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.
| (In thousands of dollars) | April to September 2015-16 | April to September 2014-15 | Variance | |
|---|---|---|---|---|
| $ | % | |||
| Expenditures | ||||
| Salaries and employee benefits | 536,024 | 531,829 | 4,195 | 1% |
| Transportation and communications | 46,032 | 47,532 | (1,500) | (3%) |
| Information | 3,290 | 3,492 | (202) | (6%) |
| Professional and special services | 90,711 | 84,061 | 6,650 | 8% |
| Rentals | 114,896 | 106,775 | 8,121 | 8% |
| Repair and maintenance | 11,608 | 10,321 | 1,287 | 12% |
| Utilities, materials and supplies | 17,567 | 17,072 | 495 | 3% |
| Other | 6,536 | 22,359 | (15,823) | (71%) |
| Total Operating | 826,664 | 823,441 | 3,223 | 0% |
| Acquisition of land, buildings and works | 16,124 | 55,322 | (39,198) | (71%) |
| Acquisition of machinery and equipment | 10,637 | 9,786 | 851 | 9% |
| Total Acquisition | 26,761 | 65,108 | (38,347) | (59%) |
| Transfer payments | 1,230,704 | 938,143 | 292,561 | 31% |
| Total gross budgetary expenditures | 2,084,129 | 1,826,692 | 257,437 | 14% |
| Less revenues netted against expenditures | ||||
| Revenue Credited to the Vote | 8,389 | 29,209 | (20,820) | (71%) |
| Total Net Budgetary Expenditures | 2,075,740 | 1,797,483 | 278,257 | 15% |
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:
- Susan Bincoletto was appointed to the position of ADM, International Business Development and Chief Trade Commissioner;
- Kerry buck was appointed to the position of ADM, International Security and Political Affairs;
- Dan Danagher was appointed to the position of ADM, International Platform;
- Diane Jacovella was appointed to the position of ADM, Global Issues and Development;
- Arun Thangaraj was appointed to the position of ADM, Corporate Planning, Finance and IT/CFO and;
- Francis Trudel was appointed to the position of ADM, Human Resources;
- Kirsten Hillman was appointed to act as Assistant Deputy Minister, Trade Agreements and Negotiations;
- Anne Weldon-Lacroix was appointed to act as Chief Audit Executive.
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
| (In thousands of dollars) | Fiscal Year 2015-2016 | Fiscal Year 2014-2015 | ||||
|---|---|---|---|---|---|---|
| Total available for use for the year ending March 31, 20161 | Expended during the quarter ended September 30, 2015 | Year to date used at quarter end | Total available for use for the year ending March 31, 20151 | Expended during the quarter ended September 30, 2014 | Year to date used at quarter end | |
| 1 Includes only authorities available for use and granted by Parliament at quarter-end. | ||||||
| Operating expenditures | 1,504,107 | 359,800 | 730,166 | 1,449,576 | 350,579 | 710,423 |
| Capital expenditures | 155,070 | 28,507 | 40,225 | 320,300 | 51,694 | 77,617 |
| Grants and contributions | 3,573,410 | 715,820 | 1,002,977 | 3,431,945 | 456,415 | 727,918 |
| Locally engaged staff pensions, insurance and social security | 50,779 | 13,460 | 22,817 | 50,779 | 11,368 | 22,370 |
| Budgetary statutory authorities | ||||||
| Contributions to employee benefit plans | 102,249 | 25,875 | 51,686 | 96,564 | 32,355 | 48,807 |
| Ministers' salary and motor car allowance | 248 | 82 | 124 | 243 | 61 | 121 |
| Payments under the Diplomatic Service (Special) Superannuation Act | 250 | 54 | 187 | 250 | 61 | 68 |
| Debt forgiveness to Pakistan | 124,640 | - | - | 172,252 | - | - |
| Spending of proceeds from the disposal of surplus Crown assets | 1,233 | - | - | 1,291 | - | - |
| Refunds of amounts credited to revenues in previous years | 18 | 6 | 18 | - | - | - |
| Payment to the World Bank for the Advance Market Commitment for Pneumococcal Vaccines | - | - | - | 10,916 | 10,916 | 10,916 |
| Payments to International Financial Institutions - Encashment of notes | - | - | - | 245,000 | 16,705 | 199,243 |
| Payments to International Financial Institutions - Direct Payments | 245,000 | 16,705 | 227,540 | - | - | - |
| Total Budgetary authorities | 5,757,004 | 1,160,309 | 2,075,740 | 5,779,116 | 930,154 | 1,797,483 |
| Non-budgetary authorities | 68,119 | (4,856) | (481) | 79,632 | (2,300) | 8,088 |
| Total Authorities | 5,825,123 | 1,155,453 | 2,075,259 | 5,858,748 | 927,854 | 1,805,571 |
| (In thousands of dollars) | Fiscal Year 2015-2016 | Fiscal Year 2014-2015 | ||||
|---|---|---|---|---|---|---|
| Planned expenditures for the year ending March 31, 20161 | Expended during the quarter ended September 30, 2015 | Year to date used at quarter end | Planned expenditures for the year ending March 31, 20151 | Expended during the quarter ended September 30, 2014 | Year to date used at quarter end | |
| 1 Includes only authorities available for use and granted by Parliament at quarter-end. | ||||||
| Expenditures | ||||||
| Salaries and employee benefits | 1,008,143 | 252,811 | 536,024 | 946,760 | 261,306 | 531,829 |
| Transportation and communications | 80,840 | 21,540 | 46,032 | 96,716 | 30,109 | 47,532 |
| Information | 11,323 | 1,851 | 3,290 | 13,380 | 2,221 | 3,492 |
| Professional and special services | 294,470 | 57,935 | 90,711 | 279,087 | 53,376 | 84,061 |
| Rentals | 209,933 | 58,541 | 114,896 | 220,600 | 55,101 | 106,775 |
| Repair and maintenance | 39,520 | 8,261 | 11,608 | 34,760 | 6,941 | 10,321 |
| Utilities, materials and supplies | 55,840 | 10,715 | 17,567 | 55,249 | 10,228 | 17,072 |
| Acquisition of land, buildings and works | 89,610 | 13,236 | 16,124 | 207,717 | 40,451 | 55,322 |
| Acquisition of machinery and equipment | 66,711 | 7,095 | 10,637 | 111,829 | 5,525 | 9,786 |
| Transfer payments | 3,818,660 | 732,579 | 1,230,704 | 3,688,111 | 484,096 | 938,143 |
| Other | 129,179 | 1,985 | 6,536 | 174,244 | 589 | 22,359 |
| Total gross budgetary expenditures | 5,804,229 | 1,166,549 | 2,084,129 | 5,828,453 | 949,943 | 1,826,692 |
| Less revenues netted against expenditures | ||||||
| Revenue Credited to the Vote | 47,225 | 6,240 | 8,389 | 49,337 | 19,789 | 29,209 |
| Total revenues netted against expenditures | 47,225 | 6,240 | 8,389 | 49,337 | 19,789 | 29,209 |
| Total Net Budgetary Expenditures | 5,757,004 | 1,160,309 | 2,075,740 | 5,779,116 | 930,154 | 1,797,483 |
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