Public Health Agency of Canada Quarterly Financial Report – For the quarter ended December 31, 2013

  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. Budget 2012 Implementation
  6. Statement of Authorities (unaudited)
  7. Departmental budgetary expenditures by Standard Object (unaudited)

1. Introduction

This quarterly financial 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 (TB), and should be read in conjunction with the Main Estimates and Canada's Economic Action Plan 2012 (Budget 2012). This quarterly report has not been subject to an external audit or review.

1.1 Public Health Agency of Canada's Program Activities

In September 2004, the Public Health Agency of Canada (the Agency) was created within the federal Health Portfolio to deliver on the Government of Canada's commitment to increase its focus on public health in order to help protect and improve the health and safety of all Canadians and to contribute to strengthening the health care system.

The Agency has the responsibility to: contribute to the prevention of disease and injury, and to the promotion of health; enhance the quality and quantity of surveillance data and expand the knowledge of disease and injury in Canada; provide federal leadership and accountability in managing public health emergencies; serve as a central point for sharing Canada's expertise with the rest of the world and for applying international research and development to Canada's public health programs; and strengthen intergovernmental collaboration on public health and facilitate national approaches to public health policy and planning.

The Agency aims to achieve a strategic outcome of protecting Canadians and empowering them to improve their health as supported through its program activities of: Public Health Infrastructure, Health Promotion and Disease Prevention, Health Security, and Internal Services.

Informed by the Government of Canada priorities, the Agency's domestic and global operating environment, human and financial resource capacity, and existing or emerging corporate risks, the Agency established the following priorities for 2013-2014:

  • Strengthened public health capacity and science leadership;
  • Leadership on health promotion and disease prevention;
  • Enhanced public health security; and
  • Excellence and innovation in management.

Further details on the Agency's authority, mandate and program activities may be found at the following links: 2013-2014 Report on Plans and Priorities and 2013-2014 Parts I and II – Main Estimates.

1.2 Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Agency's spending authorities granted by Parliament and those used by the Agency, consistent with the 2013-2014 Main Estimates. 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 specific purposes.

As part of the parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year. Budget 2012 was tabled in Parliament on March 29, 2012, after the tabling of the Main Estimates on February 28, 2012. As a result, the measures announced in Budget 2012 could not be reflected in 2012-2013 Main Estimates.

In fiscal year 2012-2013, frozen allotments were established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012. In 2013-2014, the changes to departmental authorities were reflected in 2013-2014 Main Estimates tabled in Parliament.

Note that the Agency prepares its annual departmental financial statements on a full accrual basis in accordance with the Government's accounting policies, which are based on Canadian public sector accounting standards. However, the spending authorities voted by Parliament are prepared on an expenditure basis.

2. Highlights of Fiscal Quarter and Fiscal Year-to-Date (YTD) Results

This section highlights the significant items that contributed to the net increase in resources available for the year and actual expenditures for the quarter ended December 31, 2013.

The following graph provides a comparison of budgetary authorities and expenditures as of December 31, 2012, and December 31, 2013

Figure 1: Comparison of Budgetary Authorities and Expenditures as of December 31, 2012, and December 31, 2013

Comparison of Budgetary Authorities and Expenditures as of December 31, 2012, and December 31, 2013

The above graph outlines the net budgetary authorities available for use in fiscal years 2012–2013 and 2013–2014. As of December 31, 2013, the Agency had a total of $645.8 million in authorities available for spending compared to $638.9 million as of December 31, 2012. The Agency's year-to-date expenditures as of December 31, 2013, were $441.3 million compared to $386.7 million as of December 31, 2012. Both authorities and expenditures will change as the year progresses to reflect additional funding received throughout the year and increased expenditures.

2.1 Significant Changes to Authorities

When compared to the third quarter of the previous fiscal year, the authorities available for spending for the year have increased by $6.9 million, or 1%, from $638.9 million to $645.8 million. The increase is primarily attributable to increases in authorities relating to the grants and contributions vote and the spending of revenues pursuant to section 4.2 of the Department of Health Act, which is partially offset by a decrease in the operating and capital votes.

Operating Expenditures (authorities)

Operating authorities available for use in fiscal year 2013–2014 have decreased $10.1 million, or 3% from $384.9 million in fiscal year 2012–2013 to $374.8 million.

The significant changes to funding levels are as follows:

  • Decreases due to:
    • planned funding profile (no change to the total cost) for the short-term replenishment of the National Antiviral Stockpile; and
    • Budget 2012 implementation.
  • Increases due to:
    • funding to continue to enhance the ability to prevent, detect, and respond to food-borne illness outbreaks;
    • Operating Budget Carry Forward for 2013-2014 being larger than in 2012-2013;
    • reprofile of funding to 2013-2014 to support the installation of an influenza fill line to secure, protect and improve ongoing domestic vaccine capacity in Canada for seasonal and pandemic influenza;
    • transfer of the Travelling Public Program from Health Canada; and
    • collective bargaining agreements.

The above changes account for the majority of the variances in the standard object authorities compared to the previous fiscal year.

Capital Expenditures (authorities)

Capital authorities available for use in fiscal year 2013–2014 have decreased by $4.9 million, or 26%, from $18.8 million in fiscal year 2012–2013 to $13.9 million. This reduction in authorities is mostly related to the completion of construction at the JC Wilt Infectious Diseases Research Centre and is partially offset by increased funding to streamline government import regulations and border processes for commercial trade (Single Window Initiative) and an internal reallocation of resources to support the acquisition and replacement of critical laboratory equipment.

Grants and Contributions (authorities)

Grants and Contributions authorities available for use in fiscal year 2013–2014 have increased by $7.3 million, or 4%, from $202.4 million in fiscal year 2012–2013 to $209.7 million. This increase is primarily explained by the transfer of the International Health Program from Health Canada and additional funding for Automated External Defibrillators and Tobacco Control. It is partially offset by decreased funding for time-limited programming related to Injury Prevention, Lung and Neurological diseases, Budget 2012 implementation, and a transfer to Health Canada for the Northern Wellness Approach.

Spending of Revenues pursuant to section 4.2 of the Department of Health Act (authorities)

This statutory authority identifies the $14.0 million in services to be provided by the Agency and charged to Health Canada under the Shared Services Partnership Framework Agreement (see section 4). It was approved for use beginning in the fourth quarter of 2012-2013.

2.2 Significant Changes to Expenditures

When compared to the third quarter of the previous fiscal year, the expenditures increased by $18.3 million, or 13%, from $138.8 million to $157.1 million. The increase is primarily attributable to the operating expenditures, which is partially offset by a decrease to the grants and contributions expenditures.

Operating Expenditures

Operating expenditures in the third quarter of fiscal year 2013–2014 were $119.8 million, an increase of $50.9 million, or 74%, from $68.9 million in the same quarter of the previous year. This increase is primarily due to the Agency paying Health Canada for services provided under the Shared Services Partnership Framework Agreement (see section 4) this quarter versus the fourth quarter for fiscal year 2012-2013, as well as purchases for the National Emergency Stockpile System and the National Anti-viral Stockpile. It is partially offset by reduced expenditures in personnel related to the Agency's reduction of expenditures to achieve the savings identified in Budget 2012.

Capital Expenditures

Capital expenditures for the third quarter of fiscal year 2013–2014 were $0.9 million, a decrease of $0.7 million, or 46%, from $1.6 million in the same quarter of the previous year. The reduction in expenditures relates primarily to the completion of construction at the JC Wilt Infectious Diseases Research Centre.

Grants & Contributions

Grants & Contributions expenditures for the third quarter of fiscal year 2013–2014 were $19.7 million, a decrease of $40.5 million, or 67%, from $60.1 million over the same quarter in the previous year. In the previous quarters of fiscal year 2013-2014, the Agency had moved to a risk-based approach for the issuance of payments in response to the Blue Ribbon Panel and had provided funding to low risk recipients (primarily for the Children's programs) in a single payment for the balance of the fiscal year.

Spending of Revenues pursuant to section 4.2 of the Department of Health Act (expenditures)

The Agency has charged Health Canada $8.7M in the third quarter of fiscal year 2013-2014 (with the balance of the $14.0M in authorities still to be charged). The charges to date are reflected in the appropriate standard objects. In 2012-2013, the full amount was charged in the fourth quarter.

3. Risks and Uncertainties

The dominant financial risks faced by the Agency relate to the nature of its mandate and the need to respond to unforeseeable events such as an influenza pandemic. Significant surge capacity would need to be activated in these instances.

To manage this financial risk, the Agency continues to strengthen its preparation and responsiveness to public health emergencies and public health capacity. In an emergency situation, the Agency would first consider internal re-allocation of resources in order to address unforeseeable events. The federal government also has systems and processes in place for departments to access funds, should an emergency arise.

4. Significant Changes in Relation to Operations, Personnel and Programs

In June 2012, the Deputy Heads of Health Canada and the Public Health Agency of Canada signed a Shared Services Partnership Framework Agreement. Under this agreement, each organization retains responsibility for a different set of internal services and corporate functions. The creation of this new partnership was motivated by a joint desire to:

  • reduce the overhead costs of internal services by consolidating capacity from the two organizations into shared functions that will benefit from the strengths and perspectives of both parties;
  • bring a more "whole of portfolio" perspective to the work of both organizations;
  • enable both organizations to structure their operations in more cost effective ways; and
  • foster innovation in management and service delivery for the benefit of both organizations.

Health Canada provides the following internal services to the Agency: human resources, internal financial services, real property, communications, information management / information technology, and security. Planning highlights for these internal services can be found in Health Canada's Report on Plans and Priorities. Internal services provided to Health Canada by the Agency include emergency management, international affairs, internal audit services, and evaluation services.

As of April 1st, 2013, the Travelling Public Program Unit at Health Canada and some programs from the Office of Biohazard Containment and Safety at the Canadian Food Inspection Agency were transferred to the Agency. These transfers were identified as part of Budget 2012.

Budget 2013 did not identify any significant changes affecting the Agency. Please see below for the significant changes resulting from Budget 2012.

5. Budget 2012 Implementation

This section provides an overview of the savings measures announced in Budget 2012 that are being implemented in order to refocus government and programs; make it easier for Canadians and business to deal with their government; and, modernize and reduce the back office.

The Agency will achieve Budget 2012 savings of $68.0 million by fiscal year 2014-2015 through efficiency measures and program reductions that align resources to its core mandate, scaling back where there is a need; transforming how it works internally; and by consolidating and streamlining.

The Agency has achieved savings of $13.7 million in 2012-2013. The savings increase to $35.7 million in 2013-2014 and $68.0 million starting in 2014-2015.

In 2013-2014, the Agency's program activities will continue to implement Budget 2012 savings measures as follows:

  • Public Health Infrastructure - streamline surveillance activities and publications without affecting program delivery;
  • Health Promotion and Disease Prevention - reduce management and administration, travel and professional services, and streamline surveillance activities and publications. In addition, the Agency will improve the efficiency of grants and contributions administration by integrating efforts at the community level with those of other providers and by streamlining and consolidating programs with common risk factors or target populations; and
  • Health Security - reduce management and administration, travel and professional services, and partnerships with other departments to provide consolidated services for emergency management, border health services, and pathogen control.

There are no new significant financial risks and uncertainties related to the implementation of initiatives and savings measures from Budget 2012 for the current quarter.

More information on these savings measures can be found at the following link: Supplementary Data on Budget 2012 Implementation.

Approved by:

Krista Outhwaite
Acting Deputy Head
February 19, 2014

Carlo Beaudoin
Chief Financial Officer

Statement of Authorities (unaudited)
(in thousands of dollars)
  Fiscal year 2013-2014 Fiscal year 2012-2013
  Total available for use for the year ending March 31, 2014 Statement of Authorities (unaudited) - Footnote * Used during the quarter ended December 31, 2013 Year to date used at quarter-end Total available for use for the year ended March 31, 2013 Statement of Authorities (unaudited) - Footnote * Statement of Authorities (unaudited) - Footnote ** Used during the quarter ended December 31, 2012 Year to date used at quarter-end

* Includes only Authorities available for use and granted by Parliament at quarter end.

** Total available for use does not reflect measures announced in Budget 2012.

Vote 45 - Operating expenditures 374,823 119,829 241,115 384,871 68,924 200,145
Vote 50 - Capital expenditures 13,849 834 3,181 18,755 1,552 7,060
Vote 55 - Grants and contributions 209,742 19,669 164,172 202,435 60,122 154,824
(S) Contributions to employee benefit plans 33,341 8,030 24,091 32,838 8,209 24,628
(S) Spending of proceeds from the disposal of surplus Crown assets 59 4 46 24 4 22
(S) Spending of Revenues pursuant to section 4.2 of the Department of Health Act 14,027 8,703 8,703 0 0 0
(S) Refunds of amounts credited to revenues in previous years 0 0 0 3 0 3
(S) Collection agency fees 0 0 0 0 -1 0
 
Total authorities 645,841 157,069 441,308 638,926 138,810 386,682
Departmental budgetary expenditures by Standard Object (unaudited)
(in thousands of dollars)
  Fiscal year 2013-2014 Fiscal year 2012-2013
  Planned expenditures for the year ending March 31, 2014 Expended during the quarter ended December 31, 2013 Year to date used at quarter-end Planned expenditures for the year ended March 31, 2013 Departmental budgetary expenditures by Standard Object (unaudited) - Footnote * Expended during the quarter ended December 31, 2012 Year to date used at quarter-end

* Planned expenditures do not reflect measures announced in Budget 2012.

Expenditures:
Personnel 246,073 56,220 163,292 228,732 58,299 176,464
Transportation and communications 13,297 2,043 5,339 19,086 2,573 5,859
Information 9,034 9,796 10,608 6,916 618 1,463
Professional and special services 98,592 55,882 73,785 98,008 10,220 27,472
Rentals 10,159 -431 1,532 10,532 24 3,498
Repair and maintenance 13,245 280 1,491 24,614 801 3,701
Utilities, materials and supplies 26,034 13,263 17,625 32,178 2,946 9,013
Acquisition of lands, buildings and works 1,763 0 0 0 0 0
Acquisition of machinery and equipment 14,236 1,206 3,344 3,622 1,800 2,606
Transfer payments 209,742 19,669 164,172 202,435 60,122 154,824
Other subsidies and payments 4,240 -522 469 12,853 1,407 1,782
Total gross budgetary expenditures 646,415 157,406 441,657 638,976 138,810 386,682
Less Revenues netted against expenditures:
Services Non-Regulatory 574 337 349 50 0 0
Total Revenues netted against expenditures 574 337 349 50 0 0
Total net budgetary expenditures 645,841 157,069 441,308 638,926 138,810 386,682

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