Quarterly Financial Report for the period ended December 31, 2023
Table of contents
- Statement outlining results, risks and significant changes in operations, personnel and programs
- Highlights of fiscal quarter and fiscal year to date results
- Significant changes to authorities
- Significant changes to cumulative budgetary expenditures by standard object and by authorities
- Significant changes to quarterly budgetary expenditures by standard object and by authorities
- Risks and uncertainties
- Significant changes in operations, personnel and programs
Statement outlining results, risks and significant changes in operations, personnel and programs
Introduction
This report for the quarter ended December 31, 2023 has been prepared 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 GAC’s Main Estimates and Supplementary Estimates for the fiscal year 2023-2024.
A summary description of Global Affairs Canada's (GAC) 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 authority of Parliament is required before money 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 specific purposes.
The accompanying Statement of Authorities includes GAC's spending authorities granted by Parliament, and those used by GAC, consistent with the Main Estimates and Supplementary Estimates (as applicable) for the fiscal year 2023-2024. 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.
GAC uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament are on an expenditure basis.
Highlights of fiscal quarter and fiscal year to date results
1. Significant changes to authorities
The following table shows the total budget available for use by GAC, which includes authorities available for use and granted by Parliament as at December 31.
| - | Total available for use for the year ending March 31, 2024 | Total available for use for the year ending March 31, 2023 | Variance | |
|---|---|---|---|---|
| $ | % | |||
| Authorities | ||||
| Vote 1 - Operating expenditures | 2,179,151 | 2,065,827 | 113,324 | 5% |
| Vote 5 - Capital expenditures | 219,903 | 231,000 | (11,097) | (5%) |
| Vote 10 - Grants and contributions | 5,661,915 | 6,076,036 | (414,121) | (7%) |
| Vote 15 - Payments of pension, insurance and social security programs for locally-engaged staff | 102,536 | 91,817 | 10,719 | 12% |
| Vote 35 - Debt write-off | - | 67 | (67) | (100%) |
| Statutory authorities | ||||
| Payments to international financial institutions | 241,075 | 335,602 | (94,527) | (28%) |
| Contributions to employee benefit plans | 133,939 | 126,448 | 7,491 | 6% |
| Debt forgiveness to Pakistan | 22,187 | 22,187 | - | 0% |
| Other statutory authorities | 4,189 | 4,214 | (25) | (1%) |
| Total budgetary authorities | 8,564,895 | 8,953,198 | (388,303) | (4%) |
i. Authorities for operating expenditures
Authorities for operating expenditures increased by $113 million or 5%, which is mainly explained by:
- Increase of $75 million related to the renewal of collective agreements;
- Increase of $23 million due to inflation affecting the cost of foreign operations;
- Increase of $20 million to implement Canada’s Indo-Pacific strategy;
- Increase of $20 million in transfers received from other government departments to provide support to departmental staff located at missions abroad;
- Increase of $18 million to extend Canada’s Middle East engagement strategy;
- Decrease of $44 million in the operating budget carry forward amount received in 2023-24 compared to prior year; and
- Remaining increase of $1 million is due to increases of lesser value.
ii. Authorities for grants and contributions
Authorities for grants and contributions decreased by $414 million or 7%, which is mainly explained by:
- Decrease of $732 million to support access by developing countries to vaccines, therapeutics and diagnostics to fight COVID-19;
- Decrease of $250 million to support Canada’s response to the global food and nutrition crisis, with a focus in Sub-Saharan Africa;
- Decrease of $152 million in the funding for Canada’s response to advance Ukrainian resilience and early recovery;
- Increase of $453 million in the funding to help developing countries to address the impact of climate change;
- Increase of $258 million to support Canada’s Feminist International Assistance Policy; and
- Remaining increase of $9 million is due to increases of lesser value.
iii. Statutory authorities
Payments to international financial institutions decreased by $95 million or 28%, which is mainly explained by a significant payment of $78 million made in the same quarter last year, which did not take place in the current quarter.
2. Significant changes to cumulative budgetary expenditures by standard object and by authorities
The following table shows the net budgetary expenditures and authorities used for the first nine months of the fiscal year and their comparison for the same period last fiscal year.
| - | April to December 2023-24 | April to December 2022-23 | Variance | |
|---|---|---|---|---|
| $ | % | |||
| Expenditures | ||||
| Salaries and employee benefits | 1,191,400 | 1,004,917 | 186,483 | 19% |
| Professional and special services | 235,618 | 205,882 | 29,736 | 14% |
| Rentals | 184,636 | 175,870 | 8,766 | 5% |
| Transportation and communications | 94,332 | 86,233 | 8,099 | 9% |
| Information | 12,628 | 13,360 | (732) | (5%) |
| Repair and maintenance | 16,736 | 17,016 | (280) | (2%) |
| Utilities, materials and supplies | 29,937 | 26,899 | 3,038 | 11% |
| Acquisition of land, buildings and works | 12,103 | 8,869 | 3,234 | 36% |
| Acquisition of machinery and equipment | 21,864 | 29,201 | (7,337) | (25%) |
| Other | 3,136 | 4,211 | (1,075) | (26%) |
| Total Operating and Acquisition | 1,802,390 | 1,572,458 | 229,932 | 15% |
| Transfer payments | 3,074,870 | 3,596,568 | (521,698) | (15%) |
| Total Gross Budgetary Expenditures | 4,877,260 | 5,169,026 | (291,766) | (6%) |
| Less revenues netted against expenditures | ||||
| Revenue credited to the vote | 56,125 | 51,233 | 4,892 | 10% |
| Total net budgetary expenditures | 4,821,135 | 5,117,793 | (296,658) | (6%) |
| Authorities | ||||
| Vote 1 - Operating expenditures | 1,521,772 | 1,328,046 | 193,726 | 15% |
| Vote 5 - Capital expenditures | 74,459 | 44,728 | 29,731 | 66% |
| Vote 10 - Grants and contributions | 2,859,224 | 3,364,581 | (505,357) | (15%) |
| Vote 15 - Payments of pension, insurance and social security programs for locally-engaged staff | 53,462 | 53,583 | (121) | (0%) |
| Statutory authorities | ||||
| Payments to international financial institutions | 215,203 | 231,720 | (16,517) | (7%) |
| Contributions to employee benefit plans | 96,357 | 93,038 | 3,319 | 4% |
| Other statutory authorities | 658 | 2,097 | (1,439) | (69%) |
| Total budgetary authorities | 4,821,135 | 5,117,793 | (296,658) | (6%) |
i. Operating and acquisition expenditures
Operating and acquisition expenditures increased by $230 million or 15%, which is mainly explained by:
- Increase of $186 million in salaries and employee benefits due to:
- Renewal of multiple collective agreements, which resulted in increases to Canadian based staff (CBS) regular pay, retroactive salary payments as well as paid benefits;
- Regular increase in locally engaged staff (LES) salaries and related benefits paid at missions abroad;
- Increase in allowances paid regarding Foreign Service Directives.
- Increase of $30 million in professional and special services due to:
- Increase in engineering and architectural services due to renovations completed in certain missions abroad and at headquarters;
- Increase in expenditures related to computer systems management and office systems management;
- Increase in expenditures for protection services at missions abroad; and
- Increase in expenditures for legal services.
- Remaining increase of $14 million is due to increases of lesser value.
ii. Transfer payments
Transfer payments decreased by $522 million or 15%, which is mainly explained by:
- Decrease in payments to the United Nations and related organizations for international development assistance, more particularly, payments of grants related to multilateral programming:
- Decrease in COVID-19 funding;
- Decrease in financial payments to the World Food Programme, which is explained by a general decrease in funding, as no payments were made to date in the current fiscal year; and
- Timing difference regarding payments for International Bank for Reconstruction and Development and the International Development Association, paid in December 2022 for 2022-2023, but has not been completed yet for 2023-2024.
3. Significant changes to quarterly budgetary expenditures by standard object and by authorities
The following table shows the net budgetary expenditures and authorities used for the quarter ended December 31, 2023, and the comparison for the same period last fiscal year.
| - | October to December 2023-24 | October to December 2022-23 | Variance | |
|---|---|---|---|---|
| $ | % | |||
| Expenditures | ||||
| Salaries and employee benefits | 445,133 | 308,803 | 136,330 | 44% |
| Professional and special services | 99,233 | 89,307 | 9,926 | 11% |
| Rentals | 57,841 | 57,227 | 614 | 1% |
| Transportation and communications | 35,048 | 35,732 | (684) | (2%) |
| Information | 4,405 | 6,345 | (1,940) | (31%) |
| Repair and maintenance | 4,976 | 6,883 | (1,907) | (28%) |
| Utilities, materials and supplies | 11,302 | 10,172 | 1,130 | 11% |
| Acquisition of land, buildings and works | 8,591 | 5,856 | 2,735 | 47% |
| Acquisition of machinery and equipment | 8,949 | 17,069 | (8,120) | (48%) |
| Other | 1,196 | 2,214 | (1,018) | (46%) |
| Total Operating and Acquisition | 676,674 | 539,608 | 137,066 | 25% |
| Transfer payments | 1,381,677 | 1,797,808 | (416,131) | (23%) |
| Total Gross Budgetary Expenditures | 2,058,351 | 2,337,416 | (279,065) | (12%) |
| Less revenues netted against expenditures | ||||
| Revenue credited to the vote | 2,325 | 5,196 | (2,871) | (55%) |
| Total net budgetary expenditures | 2,056,026 | 2,332,220 | (276,194) | (12%) |
| Authorities | ||||
| Vote 1 - Operating expenditures | 582,129 | 465,044 | 117,085 | 25% |
| Vote 5 - Capital expenditures | 42,959 | 21,041 | 21,918 | 104% |
| Vote 10 - Grants and contributions | 1,361,171 | 1,757,764 | (396,593) | (23%) |
| Vote 15 - Payments of pension, insurance and social security programs for locally-engaged staff | 17,255 | 15,750 | 1,505 | 10% |
| Statutory authorities | ||||
| Payments to international financial institutions | 20,353 | 39,994 | (19,641) | (49%) |
| Contributions to employee benefit plans | 31,926 | 30,886 | 1,040 | 3% |
| Other statutory authorities | 233 | 1,741 | (1,508) | (87%) |
| Total budgetary authorities | 2,056,026 | 2,332,220 | (276,194) | (12%) |
i. Operating and acquisition expenditures
Operating and acquisition expenditures increased by $137 million or 25%, which is mainly explained by:
- Increase of $136 million in salaries and employee benefits due to:
- Renewal of multiple collective agreements, which resulted in increases to CBS regular pay;
- Allocation of lump sum payments to CBS following the renewal of multiple collective agreements; and
- Retroactive salary payments to multiple groups of CBS following renewal of multiple collective agreements.
- Increase of $10 million in professional and special services due to:
- Increase in engineering and architectural services due to renovations completed in certain missions abroad and at headquarters; and
- Increase in expenditures for legal services, especially for those related to softwood lumber industry.
- Net decrease of $5 million in acquisitions of capital assets due to:
- Decrease in acquisitions for data communication equipment and office furniture;
- Decrease in acquisitions of motor vehicles; and
- These decreases are partly offset by an increase of acquisition of land, buildings and works through Public Services and Procurement Canada.
- Remaining decrease of $4 million is due to decreases of lesser value.
ii. Transfer payments
Transfer payments decreased by $416 million or 23%, which is mainly explained by:
- Decrease in payments to the United Nations and related organizations for international development assistance, more particularly, payments of grants related to multilateral programming:
- Decrease in COVID-19 funding;
- Decrease in financial payments to the World Food Programme, which is explained by a general decrease in funding, as no payments were made to date in the current fiscal year; and
- Timing difference regarding payments for International Bank for Reconstruction and Development and the International Development Association, which were paid in December 2022 for 2022-2023, but has not been completed yet for 2023-2024.
4. Risks and uncertainties
As a federal department delivering a complex mandate in a rapidly changing international environment, GAC is influenced by many factors. These factors include the political and security conditions, economic controls, global inflation, social contexts and shifting global trends, including geopolitical dynamics and climate risks.
At any time, the aforementioned factors could affect GAC’s operations, whether domestically or abroad, with the potential for significant impacts including on the safety and security of its personnel at mission. As such, effective risk management is critical to GAC’s ability to deliver results for Canadians. On the operational level, GAC regularly undertakes reviews to examine operational risks and assess the progress and effectiveness of ongoing responses. Risks are managed diligently by program leads, and an agile approach is used to avoid undue risk to program integrity. On the strategic front, the top risks facing GAC are established bi-annually in the Enterprise Risk Profile. In intervening years, a supplemental assessment of emerging risks facing GAC is conducted through global trend analysis. GAC also reviews the implementation of responses to the top strategic risks on a semi-annual basis by having risk leads assess progress and report to senior management.
The GAC Enterprise Risk Management Strategy guides departmental officials in managing risks that affect strategic plans and priorities. With this approach, GAC’s Strategic Risk Landscape and the Enterprise Risk Profile serve to identify unique pressures associated with GAC’s operating environment. The current key strategic risks that are being tracked closely by senior management and receiving extra support for their mitigation are related to: health, safety and well-being of the workforce, health and safety at mission, IT infrastructure, cyber/digital security and resilience and the management and security of real property and assets. Work on these risks is also incorporated into GAC’s governance committee agendas to ensure senior-level and department-wide engagement on key corporate priorities in support of a more agile and responsive department.
GAC continues to be pragmatic and versatile in its management of risks and uncertainties associated with resources. GAC has recently approved its five-year investment and procurement plan, which includes a comprehensive strategy for how risks will be managed throughout the timeframe. GAC is also implementing strategies to manage the financial pressures related to non-discretionary activities and absorb the recent budget reductions announced in the budget 2023 which have an impact on the current year and the coming years.
GAC has applied a range of measures to manage risks associated with fraud, such as training on awareness and detection. The risk of fraud is considered in audit and advisory engagements and two audits of missions are planned during this fiscal year. Further, an Audit of Procurement of Consulting Services was presented to the Departmental Audit Committee in December 2023. GAC continues to assess, on a risk basis, its internal controls over financial reporting at headquarters and at missions and will be reporting on its internal controls over financial management, as per the requirements of the Treasury Board Policy on financial management. On the transfer payment programming side, GAC considers fraud risk as part of its recipient audit and continues to strengthen the fraud management capacity of recipient organizations via dedicated team.
5. Significant changes in operations, personnel and programs
During the quarter, there have been no significant changes in relation to operations, personnel and programs.
Approved, as required by the TB Policy on Financial Management:
David Morrison
Deputy Minister of Foreign Affairs
Shirley Carruthers
Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology
Ottawa, Ontario
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