For the quarter ended December 31, 2011
This report has been prepared by management as required by section 65.1 of the Financial Administration Act in the form and manner prescribed by 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 DFAIT Quarterly Financial Report of the first quarter of Fiscal Year 2011-12.
This quarterly report has been prepared by management 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 for the 2011-12 fiscal year. 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 monies 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.
When Parliament is dissolved for the purpose 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 uses the full accrual method of accounting to prepare and present its annual consolidated departmental financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis and this report has been prepared on that basis.
The Department has one revolving fund, Passport Canada, which is included in the statutory authorities in the accompanying Statement of Authorities. Passport Canada (PPT) is expected to be financially viable, meaning that the full cost of its operations should be equal to its revenue. To support any deficit, PPT has a drawdown authority by which the aggregate of expenditures incurred within the fund may exceed the revenues.
The Department’s net budgetary expenditures for Quarter 3 are $582 million compared to $686 million during the same quarter of the previous fiscal year. As of December 31, 2011, the year to date actual net budgetary expenditures were $1,528 million compared to $1,724 million as of December 31, 2010, representing 54% of the total budgetary authorities available for use for year ending March 31, 2012; 58% was used at the same date last year. The Department has therefore been consistent in its spending in the first three quarters versus its authorities provided, compared to the same period of the previous fiscal year.
Operating expenditures (Vote 1) are at 66% of the annual budget, while Capital expenditures (Vote 5) and Grants and Contributions (Vote 10) are significantly lower, at 19% and 46% respectively. Capital expenditures are normally quite low because of the timing of projects. A significant portion of Grants and Contributions payments are for assessed contributions to international organizations which are not paid until the fourth quarter of each year. Also Vote 17 has been transferred from Treasury Board Secretariat (TBS) through the supplementary B. This vote is to fund the provision of pensions, insurance and social security for locally engaged staff. The actual expenses for the Fiscal Year 2012 have not yet been transferred.
As at December 31, 2011, total authorities available for use by the Department have decreased by $167 million compared to the same period in the prior year:
|Vote 1 - Operating Expenditures||1,460,235||1,680,288||(220,053)||(13%)|
|Vote 5 - Capital Expenditures||253,888||234,346||19,542||8%|
|Vote 10 - Grants and Contributions||888,409||963,886||(75,477)||(8%)|
|Vote 17 - Locally engaged staff pensions, insurance and social security||70,140||-||70,140|
|Budgetary statutory authorities||141,325||88,705||52,620||59%|
|Non Budgetary authorities||27,892||41,605||(13,713)||33%|
|TOTAL AUTHORITIES (excluding EDC)||2,841,889||3,008,830||(122,425)||6%|
As approved by Parliament, the Export Development Canada (EDC) Canada Account is no longer included within the Main Estimates of the Department. The removal of this entity accounts for the remaining $965 million increase in available authorities. The $965 million had been voted in the supplementary B in 2010-11. This supplementary request was a result of lower estimated disbursements and higher estimated repayments in connection with restructuring the Canadian portion of the North American automotive industry and support to a Canadian airline.
The total budgetary authority for 2010-11 included $266 million in mostly one-time funding received under the Supplementary Estimates (A) process. However, because of Parliament’s dissolution related to the general election, the Department did not request any funding in the Supplementary Estimates (A) process in 2011-12.
Vote 1 – Operating expenditure authorities decreased by $220 million mainly due to the discontinuation of funding that occurred in 2010-11 for 6 different items, which represent $361 million of the decrease:
This was offset by increased funding of $141 million throughout 4 different items:
Vote 5 – Capital expenditure authorities increased by $20 million. In 2011-12, the department received $40 million in new funding, including $34 million for strengthening security at missions abroad. Additionally, a $42 million carry forward was received this year as opposed to $4 million last year. This new funding is primarily offset by the cessation of one time funding received in 2010-11 of $57 million relating to:
Vote 10 – Grants and Contributions authorities decreased by $75 million mainly due to the strong Canadian dollar, which has reduced the need for authorities relating to assessed contributions to international organizations, as they are paid in foreign currencies. There was also the removal of the requirement for funding relating to Canada’s initial response to the Haiti earthquake and programming in Afghanistan.
Vote 17 – Locally engaged staff pensions, insurance and social security programs
Vote 17 has been transferred from Treasury Board Secretariat (TBS) through the supplementary B. This vote is to fund the provision of pensions, insurance and social security for locally engaged staff. This change is effective April 1st , 2011, therefore TBS will transfer the actual expenses from April 1st to December 31st to DFAIT during the fourth quarter.
The total available for use as at December 31, 2011 increased by $53 million, mainly due to a $45 million increase for Passport Canada. This amount represents the projected deficit for the Passport Canada Revolving Fund, and will first be funded by unused Accumulated Net Charge against the Fund’s Authority (ANCAFA) of $27 million, with the remaining deficit of $18 million to be funded through access to their continuing non-lapsing authority.
The Department’s non budgetary authorities decreased by $14 million as at December 31, 2011 compared to the same quarter in the previous year. This decrease was attributable to a decrease in the Working Capital Advances for loans and advances to personnel and posts abroad.
The overall consumption rate for year to date expenditures has decreased by 3% from 2010-11:
|Fiscal year 2011-2012||Fiscal year 2010-2011|
|Planned expenditures for the year ending March 31, 2012 1||Year to date used at quarter end||Cons. Rate||Planned expenditures for the year ending March 31, 2011 1||Year to date used at quarter end||Cons. Rate|
|Salaries and employee benefits||1,123,919||811,728||72%||1,023,549||763,418||75%|
|Transportation and communications||196,625||130,493||66%||190,805||133,708||70%|
|Professional and special services||279,365||141,957||51%||441,663||154,176||35%|
|Repair and maintenance||35,419||29,364||83%||43,724||25,415||58%|
|Utilities, materials and supplies||92,310||40,475||44%||99,319||42,624||43%|
|Total Other Operating (excluding salary & benefits)||868,068||502,063||58%||1,063,248||531,878||50%|
|Total Other Operating||1,997,880||1,320,885||66%||2,091,292||1,435,513||69%|
|Acquisition of land, buildings and works||122,837||19,987||16%||143,745||29,784||21%|
|Acquisition of machinery and equipment||146,718||30,630||21%||104,244||28,659||27%|
|Export Development Canada|
|Professional and special services||-||7,353|
|Total gross budgetary expenditures||3,156,094||1,777,456||56%||3,303,917||1,953,809||59%|
|Less revenues netted against expenditures|
|Total revenues netted against expenditures||342,097||248,738||73%||336,192||226,394||67%|
|TOTAL NET BUDGETARY EXPENDITURES||2,813,997||1,528,718||54%||2,967,725||1,727,415||58%|
1Includes only Authorities available for use and granted by Parliament at quarter-end.
Salaries and employee benefits - The lower consumption rate of 72% vs 75% last year, is due to the transfer of authorities for $70 million from TBS for the new Vote 17 – Locally engaged staff pensions, insurance and social security program. The authorities were transferred in the third quarter however the expenses will be transferred to DFAIT only in the fourth quarter.
Other operating expenditures - The consumption rate excluding “Other” after the third quarter is at 58%. It was 50% at the same date last year. The category “Other” is separate from the Operating expenditures because it includes the settlement to Abitibi Bowater for $130 million and it would distort the consumption rate.
Acquisition of land, building, works, machinery and equipment - Based on trends, capital expenditures tend to be reflected later in the year. Although the consumption rate is at only 16% and 21%, the Department is forecasting a surplus of $44.1 million on Capital.
Transfer payments - The majority of G&C payments, especially for assessed contributions, are reflected in the financial system in the last quarter.
Although there was only a slight increase in the planned revenue this year, $342 million compared to last year, $336 million, there was a larger increase in the actual revenue collected in at the end of the third quarter of 2011/2012 compared to last year at the same time ($22 million). This was mainly due to the change in the business process for co-locators abroad. Overall, 73% of the 2011-12 planned revenues were collected as of December 31, 2011.
This quarterly report reflects the results of the current fiscal period in relation to the Main Estimates for which full supply was released on June 27, 2011 and the Supplementary Estimates (B) approved on December 19, 2011.
The Department's 2011-12 priorities include bringing greater economic opportunity for Canada, building on a comprehensive strategy for relations with the Americas as well as a global strategy for relations with the United States, asserting Canadian leadership in emerging global governance, Arctic and transforming the department. These priorities are tied to its mandate to manage Canada's diplomatic and consular relations and to encourage the country's international trade. The Department's ability to deliver its programs and services is subject to various elements of risk such as the government priorities, and central agencies or government-wide initiatives.
Foreign Affairs and International Trade Canada is currently facing a number of pressures against its authorities irrespective of the future savings implications likely to result from the Deficit Reduction Action Plan (DRAP). The Budget 2010 Cost Containments Measures will require the Department to finance, on a permanent basis, the costs of wage increases resulting from current and future collective agreements negotiated between 2010-11 and 2012-13; whereas, the Administrative Services Review (ASR) may have future impacts on the organization and delivery of corporate services. The implementation of these efficiency measures is likely to have an impact on the Department's workforce. The ongoing impact of these measures coupled with the new request to reallocate funds out of its existing authorities to meet emerging priorities will likely put further pressure on the Department's envelope. This may limit the flexibility to reallocate funding to achieve the expected results.
In recognition of this tightening fiscal environment, DFAIT will continue to examine its entire departmental program spending, making reallocations against identified priorities. The Department will need to continue exploring actions to mitigate and manage the impact of these efficiencies measures in order to achieve the best results for Canadians.
There have been no significant changes in relation to operations, personnel and programs over the last quarter.
Pursuant to s. 31.1 of the Financial Administration Act and Order-in-Council P.C. 2011-1297 effective November 15, 2011, $25,199,673 is deemed to have been appropriated to Shared Services Canada for Operating expenditures and $4,188,235 is deemed to have been appropriated for Capital expenditures, which results in reductions for the same amounts in Department of Foreign Affairs and International Trade, Vote 1 (Operating expenditures) and Vote 5 (Capital expenditures), Appropriation Act No.1, 2011-2012. To date a total of$2.7 million expenditures have been incurred on behalf of Shared Services Canada by Foreign Affairs and International Trade, $2.3 million for Operating, $46.4 thousand for Capital and $371.5 thousand for Employee Benefit Plan.
Approved, as required by the Policy on Financial Resource Management, Information and Reporting :
Originally signed by:
Deputy Minister of International Trade
Deputy Minister of Foreign Affairs
Chief Financial Officers and Assistant Deputy Minister
Date: February 28, 2012
|Fiscal year 2011-2012||Fiscal year 2010-2011|
|Total available for use for the year ending March 31, 20122||Expended during the quarter ended December 31, 2011||Year to date used at quarter end||Total available for use for the year ending March 31, 20112||Expended during the quarter ended December 31, 2010||Year to date used at quarter end|
|Vote 1 - Operating Expenditures||1,460,235||349,778||968,118||1,680,288||482,516||1,112,299|
|Vote 5 - Capital Expenditures||253,888||30,892||65,856||234,346||34,117||77,327|
|Vote 10 - Grants and Contributions||888,409||178,347||405,896||963,886||138,202||456,507|
|Vote 17 - Locally engaged staff pensions, insurance and social security||70,140|
|Budgetary statutory authorities||141,325||22,786||88,848||88,705||25,979||77,982|
|Budgetary authorities (excluding Export |
|Export Development Canada||500||1,670||3,300|
|Total budgetary authorities||2,813,997||581,803||1,528,718||2,967,725||686,084||1,727,415|
|Non Budgetary authorities||27,892||(3,639)||6,512||41,605||5,309||25,341|
|Export Development Canada||(965,500)||(364,097)||(1,323,923)|
2Includes only Authorities available for use and granted by Parliament at quarter-end.
|Fiscal year 2011-2012||Fiscal year 2010-2011|
|Planned expenditures for the year ending March 31, 2012 3||Expended during the quarter ended December 31, 2011||Year to date used at quarter end||Planned expenditures for the year ending March 31, 2011 3||Expended during the quarter ended December 31, 2010||Year to date used at quarter end|
|Salaries and employee benefits||1,123,919||268,407||811,728||1,023,549||257,363||763,418|
|Transportation and communications||196,625||51,216||130,493||190,805||53,550||133,708|
|Professional and special services||279,365||64,334||141,957||441,663||65,443||154,176|
|Repair and maintenance||35,419||10,960||29,364||43,724||10,493||25,415|
|Utilities, materials and supplies||92,310||14,410||40,475||99,319||13,259||42,624|
|Acquisition of land, buildings and works||122,837||10,788||19,987||143,745||14,671||29,784|
|Acquisition of machinery and equipment||146,718||14,243||30,630||104,244||10,297||28,659|
|Export Development Canada|
|Professional and special services||-||7,223||7,353|
|Total gross budgetary expenditures||3,156,094||662,723||1,777,456||3,303,917||728,564||1,953,809|
|Less revenues netted against expenditures|
|Total revenues netted against expenditures||342,097||80,920||248,738||336,192||72,480||226,394|
|TOTAL NET BUDGETARY EXPENDITURES||2,813,997||581,803||1,528,718||2,967,725||686,084||1,727,415|
3Includes only Authorities available for use and granted by Parliament at quarter-end.
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