Quarterly Financial Report
For the quarter ended September 30, 2011
Table of contents
- Statement outlining results, risks and significant changes in operations, personnel and program
- 1. Introduction
- 2. Highlights of fiscal quarter and fiscal year to date (YTD) results
- 3. Risks and Uncertainties
- 4. Significant changes in relation to operations, personnel and programs
- 5. Approval by Senior Officials
- 6. Statement of Authorities (unaudited)
- 7. Departmental budgetary expenditures by Standard Object (unaudited)
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. This authority was increased, effective April 1, 2011, from $4 million to $131 million. This increase is mainly attributable to the ePassport initiative.
The Department's net budgetary expenditures for Quarter 2 are $575 million compared to $650 million during the same quarter of the previous fiscal year. As of September 30, 2011, the actual net budgetary expenditures were $947 million compared to $1,051 million as of September 30, 2010, representing 36% of the total budgetary authorities available for use for year ending March 31, 2012; 37% was used at the same date last year. The Department has therefore been consistent in its spending in the first two quarters versus its authorities provided, compared to the same period of the previous fiscal year.
Operating expenditures (Vote 1) are at 45% of the annual budget, while Capital expenditures (Vote 5) and Grants and Contributions (Vote 10) are significantly lower, at 17% and 26% respectively. Capital expenditures are normally quite low in the first two quarters 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.
As at September 30, 2011, total authorities available for use by the Department have decreased by $122 million compared to the same period in the prior year. This net decrease is attributable to a decrease in Vote 1 of $115 million, and a decrease in Vote 10 of $77 million, partly offset by an increase in statutory authorities of $53 million, and increase in vote 5 of $31 million. Non-budgetary authorities decreased by $14 million. Budgetary variances are shown in the table below and explained in the next section.
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 $167 million decrease in available authorities.
|Vote 1 - Operating Expenditures||1,450,678||1,565,829||(115,151)|
|Vote 5 - Capital Expenditures||253,713||223,065||30,648|
|Vote 10 - Grants and Contributions||879,830||956,586||(76,756)|
|Budgetary statutory authorities||140,709||88,162||52,547|
|Non Budgetary authorities||27,892||41,605||(13,713)|
|Total authorities (excluding EDC)||2,752,822||2,875,247||(122,425)|
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.
i. Budgetary Authorities
Vote 1 - Operating expenditure authorities decreased by $115 million mainly due to the discontinuation of funding that occurred in 2010-11 for 4 different items, which represent $212 million of the decrease:
- hosting of the G8 and G20 Summits,
- settling the AbitibiBowater claim,
- responding to the Haiti earthquake, and
- programming in Afghanistan.
This was offset by increased funding of $43 million to strengthen security at missions abroad and to strengthen Canada's network of missions abroad and an operating budget carry forward of $49 million. The Operating budget carry forward was received in Q2 this year as opposed to Q3 last year.
Vote 5 - Capital expenditure authorities increased by $31 million. In 2011-12, the department received $44 million in new funding, including $34 million for strengthening security at missions abroad. Additionally, a $42 million carry forward was received in Q2 this year as opposed to Q3 last year. This new funding is primarily offset by the cessation of one time funding received in 2010-11 relating to:
- transfers from partner departments,
- reinvestment of revenues from the sale of real property abroad,
- response to the Haiti earthquake, and
- construction of an Emergency Watch and Response Centre in the National Capital Region.
Vote 10 - Grants and Contributions authorities decreased by $77 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.
ii. Budgetary Statutory Authorities
The total available for use as at September 30, 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.
iii. Non Budgetary Authorities
The Department's non budgetary authorities decreased by $14 million as at September 30, 2011 compared to the same quarter in the previous year. This decrease was attributable to a decrease of $1 million in the Working Capital Advances for loans and advances to personnel working or engaged abroad and a decrease of $13 million in Working Capital Advances for advances made to posts abroad.
For all Standard Objects except Salaries and employee benefits, Other and Repair and maintenance, the expenditures incurred for the second quarter were at, or below, 25% of the related planned expenditures. Salary and employee benefit expenditures were slightly over the expected 25% level in Q2 of this year (27%) compared to a 25% for the same period last year. The difference is mainly due to the cash-out of severance benefits this year. Repair and maintenance and other expenditures are incurred on a need basis and are not expected to be in line with the passage of time. Transfer payment expenditures are at 20% compared to a ratio of 26% for the same quarter last year.
Total gross budgetary expenditures year to date are at 36% compared to 38% last year. The difference in the ratio is partly attributed to the G8-G20 Summits spending in the previous year. On a standard object basis, salary expenditures are presently at 52% compared to 50% last year. The remaining standard objects show an overall ratio of actual to planned expenditures of 28% as of September 30, 2011, compared to a ratio of 32% in the same period last year. Delays in specific projects and programs implementation have resulted in less expenditure for this year when compared to last year. In addition, due to GG warrants, only the funding urgently required for the public good was requested in the first quarter of this year, which resulted in some projects being postponed to later in the fiscal year. Transfer payment expenditures represent 26% of the budget as of September 30, 2011, compared to 33% for the same period last year. The difference is mainly explained by some delays in the implementation of the DFAIT Inc. program. This program is to encourage private sector investment in developing countries. 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 ($334 million) compared to last year ($333 million), there was a larger increase in the actual revenue collected in the first two quarters of this year, of $14 million. This was mainly due to the change in the business process for co-locators abroad. Monies were collected earlier than in the previous year resulting in a $13 million increase in co-locator revenue in the first quarter as compared to the previous year's first quarter. Overall, 50% of the 2011-12 planned revenues were collected as of September 30, 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.
As a result of the announcement by the Minister of Finance in the Budget 2010 that the operating budgets of departments, as appropriated by Parliament, would be frozen at their 2010-11 levels for 2011-12 and 2012-13, the Department has taken several concrete actions to manage the financial resources within these levels. The Resource Management Committee is chaired by the Deputy Minister of Trade and is responsible for:
- addressing strategic financial management and resource allocation matters,
- overseeing capacity building on financial management and implementation of the Chief Financial Officer Model, and
- providing advice and guidance on initial resource allocations each financial year, meeting in-year resource pressures and re-allocations among resources centres.
In addition, the Committee on Headquarters Operation's mandate is to ensure that financial, human and accommodation resources at headquarters are aligned and stay within the Department's reference levels.
i. Key Senior Personnel Change
Effective July 4, 2011, Nadir Patel became the Assistant Deputy Minister of Corporate Finance and Operations and Chief Financial Officer of the Department.
ii. Governor General Warrants
As a result of the election period, the Department received funding through the Governor General Special Warrants for the period April 1 to June 29, 2011. During this period, only the funding urgently required for the public good was requested which resulted in some projects being postponed to later in the fiscal year. This may have an impact on the final results of the Department at year-end.
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: November 29, 2011
|(In thousands of dollars)||Fiscal year 2011-2012||Fiscal year 2010-2011|
|Total available for use for the year ending March 31, 20121||Expended during the quarter ended September 30, 2011||Year to date used at quarter end||Total available for use for the year ending March 31, 20111||Expended during the quarter ended September 30, 2010||Year to date used at quarter end|
|1 Includes only Authorities available for use and granted by Parliament at quarter-end.|
|Vote 1 - Operating Expenditures||1,450,678||335,300||618,340||1,565,829||347,251||639,166|
|Vote 5 - Capital Expenditures||253,713||23,412||34,964||223,065||28,315||43,210|
|Vote 10 - Grants and Contributions||879,830||178,271||227,549||956,586||247,529||318,305|
|Budgetary statutory authorities||140,709||38,350||66,062||88,162||25,979||48,403|
|Budgetary authorities (excluding Export Development Canada)||2,724,930||575,333||946,915||2,833,642||649,074||1,049,084|
|Export Development Canada||-||-||-||500||1,067||1,630|
|Total budgetary authorities||2,724,930||575,333||946,915||2,834,142||650,141||1,050,714|
|Non Budgetary authorities||27,892||(2,590)||10,151||41,605||(1,822)||22,246|
|Export Development Canada||-||-||-||166,500||(159,771)||(959,826)|
|(In thousands of dollars)||Fiscal year 2011-2012||Fiscal year 2010-2011|
|Planned expenditures for the year ending March 31, 20122||Expended during the quarter ended September 30, 2011||Year to date used at quarter end||Planned expenditures for the year ending March 31, 20112||Expended during the quarter ended September 30, 2010||Year to date used at quarter end|
|2 Includes only Authorities available for use and granted by Parliament at quarter-end.|
|Salaries and employee benefits||1,039,555||280,338||543,321||1,016,292||256,855||506,217|
|Transportation and communications||195,571||44,008||79,277||186,858||45,011||80,158|
|Professional and special services||275,756||48,563||77,622||351,285||54,452||89,274|
|Repair and maintenance||35,252||13,020||18,404||42,759||10,223||14,922|
|Utilities, materials and supplies||88,626||14,700||26,065||95,119||15,576||29,365|
|Acquisition of land, buildings and works||128,379||5,561||9,199||136,010||9,210||15,113|
|Acquisition of machinery and equipment||147,058||11,498||16,387||100,604||12,965||18,362|
|Export Development Canada|
|Professional and special services||-||-||-||-||112||130|
|Total gross budgetary expenditures||3,059,117||652,825||1,114,733||3,166,834||728,837||1,204,628|
|Less revenues netted against expenditures|
|Total revenues netted against expenditures||334,187||77,492||167,818||332,692||78,696||153,914|
|Total net budgetary expenditures||2,724,930||575,333||946,915||2,834,142||650,141||1,050,714|
- Date Modified: