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Quarterly Financial Report
For the period ended September 30, 2016
Table of contents
- Statement outlining results, risks and significant changes in operations, personnel and programs
- Approval by Senior Officials
Statement outlining results, risks and significant changes in operations, personnel and programs
1. Introduction
This quarterly report for the period ending September 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 September 30, 2016 are included.
| Authorities | Fiscal Year 2016-2017 | Fiscal Year 2015-2016 | Variance | |
|---|---|---|---|---|
| Total available for use for the year ending March 31, 2017 | Total available for use for the year ending March 31, 2016 | $ | % | |
| Operating Expenditures | 1,544,389 | 1,504,107 | 40,282 | 3% |
| Capital Expenditures | 159,985 | 155,070 | 4,915 | 3% |
| Grants and Contributions | 3,529,677 | 3,573,410 | (43,733) | -1% |
| Locally engaged staff pensions, insurance and social security | 50,779 | 50,779 | - | 0% |
| Budgetary statutory authorities | ||||
| Contributions to employee benefit plans | 108,939 | 102,249 | 6,690 | 7% |
| Ministers' salary and motor car allowance | 251 | 248 | 3 | 1% |
| Payments under the Diplomatic Service (Special) Superannuation Act | 250 | 250 | - | 0% |
| Debt forgiveness to Pakistan | 124,640 | 124,640 | - | 0% |
| Spending of proceeds from the disposal of surplus Crown assets | 3,160 | 1,233 | 1,927 | 156% |
| Refunds of amounts credited to revenues in previous years | 13 | 18 | (5) | -28% |
| Payments to International Financial Institutions Direct Payments | 245,000 | 245,000 | - | 0% |
| Total Budgetary authorities | 5,767,083 | 5,757,004 | 10,079 | 0% |
| Non-budgetary authorities | 25,086 | 68,119 | (43,033) | -63% |
| Total Authorities | 5,792,169 | 5,825,123 | (32,954) | -1% |
i. Budgetary Authorities
Operating Expenditures authorities have increased by $40.3 million. This is mainly attributable 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 and inflation fluctuations on operating expenditures in our international network and Locally Engaged Staff salaries. These increases were partly offset by sunsetting funding for the Stabilization and Reconstruction Task Force and the Global Peace and Security Fund, the closure of the Investment Cooperation Program (Budget 2015) and a decrease in the Operating Budget Carry-Forward amount received in 2016-17 compared to 2015-16. It should be noted that a decrease in the GPSF will be offset by funds of $209 million requested for its renewal in Supps B.
Capital Expenditures authorities have increased by $4.9 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) which was offset by a decrease of the Capital Budget Carry-Forward amount received in 2016-17 compared to 2015-16.
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. These reductions were partly 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 is mainly attributable to the salary component of the funding received for currency exchange fluctuations on operating 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 - In 2006-2007, the Government of Canada 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. As of April 1, 2016, an amount of $124.6 million was the balance available from previous years.
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 second quarter and their comparison with the same period last year.
| Standard object | April to September 2016-17 | April to September 2015-16 | Variance | |
|---|---|---|---|---|
| $ | % | |||
| Expenditures | ||||
| Salaries and employee benefits | 542,042 | 536,024 | 6,018 | 1% |
| Transportation and communications | 45,370 | 46,032 | (662) | (1%) |
| Information | 3,482 | 3,290 | 192 | 6% |
| Professional and special services | 88,982 | 90,711 | (1,729) | (2%) |
| Rentals | 111,311 | 114,896 | (3,585) | (3%) |
| Repair and maintenance | 9,553 | 11,608 | (2,055) | (18%) |
| Utilities, materials and supplies | 15,637 | 17,567 | (1,930) | (11%) |
| Other | 43,725 | 6,536 | 37,189 | 569% |
| Total Operating | 860,102 | 826,664 | 33,438 | 4% |
| Acquisition of land, buildings and works | 43,146 | 16,124 | 27,022 | 168% |
| Acquisition of machinery and equipment | 11,675 | 10,637 | 1,038 | 10% |
| Total Acquisition | 54,821 | 26,761 | 28,060 | 105% |
| Transfer payments | 1,281,508 | 1,230,704 | 50,804 | 4% |
| Total gross budgetary expenditures | 2,196,431 | 2,084,129 | 112,302 | 5% |
| Less revenues netted against expenditures | ||||
| Revenue Credited to the Vote | 29,403 | 8,389 | 21,014 | 250% |
| Total Net Budgetary Expenditures | 2,167,028 | 2,075,740 | 91,288 | 4% |
i. Operating Expenditures
Repair and maintenance- The decrease of $2.1 million is due to different repair and maintenance requirements during the life cycle schedules of machinery and equipment compared to last year. Less repair and maintenance expenditures on our buildings abroad were also a factor in the decrease.
Utilities, materials and supplies- The decrease of $1.9 million is in part due to lower spending on gas, fuel and electricity at missions abroad compared to last year. In addition, the department incurred lower office supply expenses in 2016-17.
Other- The increase of $37.2 million relates to the portion of debt from the Government of Pakistan being forgiven.
ii. Capital Expenditures
Acquisition of land, buildings and works-The increase of $27.0 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.
Acquisition of machinery and equipment-The variance was caused by an increase of equipment purchases at missions abroad compared to the previous year.
iii. Transfer Payments
A new scale of assessment was adopted in December 2015 by the United Nations which changed the schedule of payments, delaying some payments until 2016-2017. As a result, an increase of $50.8 million in transfer payments is related to higher spending on United Nations (UN) peacekeeping operations. Currency fluctuations also contributed to the increase.
iv. Revenues
The increase of $21.0 million in revenues originates from a timing difference in the recovery of costs from other organizations that share our space and services at missions abroad. Delays in revenue collection led to lower revenue reported in the first two 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
Subsequent to the end of the quarter, the following appointments were made:
- Roy Norton was appointed to the position of Chief of Protocol.
- Tamara Guttman was appointed to the position of Inspector General.
- Timothy Sargent was appointed to the position of Deputy Minister of International Trade.
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
Timothy Sargent
Deputy Minister for 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: November 29, 2016
| Authorities | Fiscal Year 2016-2017 | Fiscal Year2015-2016 | ||||
|---|---|---|---|---|---|---|
| Total available for use for the year ending March 31, 2017 | Expended during the quarter ended September 30, 2016 | Year to date used at quarter end | Total available for use for the year ending March 31, 2016 | Expended during the quarter ended September 30, 2015 | Year to date used at quarter end | |
| Operating Expenditures | 1,544,389 | 366,382 | 700,270 | 1,504,107 | 359,800 | 730,166 |
| Capital Expenditures | 159,985 | 38,264 | 63,839 | 155,070 | 28,507 | 40,225 |
| Grants and Contributions | 3,529,677 | 577,450 | 1,053,794 | 3,573,410 | 715,820 | 1,002,977 |
| Locally engaged staff pensions, insurance and social security | 50,779 | 14,597 | 25,220 | 50,779 | 13,460 | 22,817 |
| Budgetary statutory authorities | ||||||
| Contributions to employee benefit plans | 108,939 | 27,084 | 54,130 | 102,249 | 25,875 | 51,686 |
| Ministers' salary and motor car allowance | 251 | 80 | 101 | 248 | 82 | 124 |
| Payments under the Diplomatic Service (Special) Superannuation Act | 250 | 89 | 175 | 250 | 54 | 187 |
| Debt forgiveness to Pakistan | 124,640 | 39,946 | 39,946 | 124,640 | - | - |
| Spending of proceeds from the disposal of surplus Crown assets | 3,160 | 2,000 | 2,000 | 1,233 | - | - |
| Refunds of amounts credited to revenues in previous years | 13 | 8 | 13 | 18 | 6 | 18 |
| Payments to International Financial Institutions Direct Payments | 245,000 | 16,705 | 227,540 | 245,000 | 16,705 | 227,540 |
| Total Budgetary authorities | 5,767,083 | 1,082,605 | 2,167,028 | 5,757,004 | 1,160,309 | 2,075,740 |
| Non-budgetary authorities | 25,086 | 2,283 | 10,813 | 68,119 | (4,856) | (481) |
| Total Authorities | 5,792,169 | 1,084,888 | 2,177,841 | 5,825,123 | 1,155,453 | 2,075,259 |
| Standard Object | Fiscal Year 2016-2017 | Fiscal Year 2015-2016 | ||||
|---|---|---|---|---|---|---|
| Planned expenditures for the year ending March 31, 2017 | Expended during the quarter ended September 30, 2016 | Year to date used at quarter end | Planned expenditures for the year ending March 31, 2016 | Expended during the quarter ended September 30, 2015 | Year to date used at quarter end | |
| Expenditures | ||||||
| Salaries and employee benefits | 1,037,801 | 275,453 | 542,042 | 1,008,143 | 252,811 | 536,024 |
| Transportation and communications | 87,124 | 24,776 | 45,370 | 80,840 | 21,540 | 46,032 |
| Information | 13,795 | 2,315 | 3,482 | 11,323 | 1,851 | 3,290 |
| Professional and special services | 258,223 | 52,704 | 88,982 | 294,470 | 57,935 | 90,711 |
| Rentals | 244,823 | 55,694 | 111,311 | 209,933 | 58,541 | 114,896 |
| Repair and maintenance | 47,736 | 6,115 | 9,553 | 39,520 | 8,261 | 11,608 |
| Utilities, materials and supplies | 60,559 | 9,254 | 15,637 | 55,840 | 10,715 | 17,567 |
| Acquisition of land, buildings and works | 126,020 | 25,157 | 43,146 | 89,610 | 13,236 | 16,124 |
| Acquisition of machinery and equipment | 36,499 | 8,282 | 11,675 | 66,711 | 7,095 | 10,637 |
| Transfer payments | 3,774,926 | 594,243 | 1,281,508 | 3,818,660 | 732,579 | 1,230,704 |
| Other | 127,802 | 41,313 | 43,725 | 129,179 | 1,985 | 6,536 |
| Total gross budgetary expenditures | 5,815,308 | 1,095,306 | 2,196,431 | 5,804,229 | 1,166,549 | 2,084,129 |
| Less revenues netted against expenditures | ||||||
| Revenue Credited to the Vote | 48,225 | 12,701 | 29,403 | 47,225 | 6,240 | 8,389 |
| Total revenues netted against expenditures | 48,225 | 12,701 | 29,403 | 47,225 | 6,240 | 8,389 |
| Total Net Budgetary Expenditures | 5,767,083 | 1,082,605 | 2,167,028 | 5,757,004 | 1,160,309 | 2,075,740 |
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