Environment Canada Quarterly Financial Report

Statement outlining results, risks and significant changes in operations, personnel and programs
For the quarter ended September 30, 2013

Introduction

This second quarterly 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 Secretariat (TBS).  This quarterly report should be read in conjunction with the Main Estimates, Supplementary Estimates and the previous Quarterly Financial Reports.

A summary description of the Environment Canada Raison d’être and program activities can be found in Part II of the Main Estimates.

This quarterly report has not been subject to an external audit or review.

Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting (modified cash accounting).  The accompanying Statement of Authorities includes Environment Canada’s spending authorities granted by Parliament and those used by the Department, consistent with the Main Estimates for the 2013-2014 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 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 Department 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.

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, after the tabling of the Main Estimates on February 28, 2012.  As a result the measures announced in the Budget 2012 could not be reflected in the 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 the 2013-2014 Main Estimates tabled in Parliament.

Highlights of fiscal quarter and fiscal year to date (YTD) results

Statement of Authorities

This quarterly report, ending September 30, 2013, reflects the authorities that were approved for this period. The funding available for use includes the 2013-2014 Main Estimates only . Authorities for Supplementary Estimates “B” and “C” will follow later this fiscal year. Environment Canada’s authorities “Total available for use for the year ending March 31, 2014” is lower by approximately $88.6M ($959.3M - $1,047.9M)1 when compared to the same quarter of the previous year. This difference is explained by decreases in Vote 1 – Operating of $52.6M ($701.3M - $753.9M)1, in Vote 5 – Capital of $8.2M ($51.9M - $60.1M)1 and in Vote 10 – Grants and Contributions of $27.9M ($117.3M - $145.2M)1 offset by an increase in Budgetary statutory authorities for the Employee Benefit Plan of $0.1M ($88.8M - $88.7M)1.

The $52.6M net decrease in the Operating authorities is mainly due to the following:

  • $35.0M decrease in funding due to the timing in the receipt of the Operating budget carry-forward from TBS subsequent to September 30, 2013;
  • $26.2M decrease for savings measures identified as part of Budget 2012;
  • $6.8M decrease in funding for the Clean Air Regulatory Agenda primarily due to reduction in regulation activities;
  • $3.1M decrease in funding due to an internal reallocation of resources for the contribution costs associated with the United Nations Environment Programme;
  • $7.8M increase in funding for the renewal of the Species at Risk Act which was approved subsequent to September 30, 2012;
  • $7.0M increase for funding received tied to collective agreements or approved wage increases;
  • $3.9M increase in funding available for the Departmental Financial Management System renewal; and,
  • $0.8M increase for the renewal of the Lake Winnipeg program as well as year over year changes in funding for the Action Plan on Clean Water initiative.

The $8.2M net decrease in the Capital authorities is mainly due to the following:

  • $8.4M decrease in funding due to the timing in the receipt of the Capital budget carry-forward from TBS subsequent to September 30, 2013;
  • $2.4M increase in funding to improve Canada’s weather services by ensuring the integrity of Government of Canada’s weather and environmental monitoring;
  • $0.8M decrease in funding for the Great Lakes Nutrient Initiative;
  • $0.8M decrease in funding for the Clean Air Regulatory Agenda; and,
  • $0.6M decrease in funding for the 2015 Pan American Games.

The $27.9M net decrease in the Grants and Contributions authorities is mainly due to the following:

  • $24.9M decrease in funding for Canada’s Fast Start Financing commitment under the Copenhagen Accord which support climate change adaptation and mitigation in developing countries;
  • $12.5M decrease in funding available for Sustainable Development Technology Canada (SDTC) for the Next Generation Biofuels Fund;
  • $2.5M decrease for savings measures identified as part of Budget 2012;
  • $4.0M increase in funding for the renewal of the Species at Risk Act which was approved subsequent to September 30, 2012;
  • $3.5M increase for the renewal of the Lake Winnipeg program as well as year over year changes in funding for the Action Plan on Clean Water initiative;
  • $3.1M increase in funding due to an internal reallocation of resources for the contribution costs associated with the United Nations Environment Programme; and,
  • $1.6M increase in funding due to a transfer from the Canadian International Development Agency to support Phase V of the China Council for International Cooperation on Environment and Development.

Expenditure Analysis

In the second quarter of 2013-2014, total budgetary expenditures was $224.9M compared to $196.0M reported for the same period in 2012-2013, resulting in an increase of 14.8% between the two years.

Vote 1 – Operating authorities used during the second quarter of 2013-2014 increased by $15.4M compared to the same quarter last year. This is mainly attributable to a combination of increases in payments in lieu of severance pay and professional services expenditures.

Vote 5 – Capital authorities used during the second quarter of 2013-2014 increased by $2.2M compared to the same quarter last year and mainly due to the improvement and modernization of Canada’s weather services and to the site preparation work for the Eureka project. 

Vote 10 – Grants and Contributions authorities used increased by $3.8M compared to the same quarter last year.  This is mainly due to earlier payments resulting from the improvements to the departmental Grants and Contributions approval process and to earlier payments made to Environment Canada’s contributions for the Science Horizons Youth Internship and the International Environmental Youth Corp programs as well as the contribution to the World Meteorological Organization, which are normally paid later during the fiscal year.

Statement of Departmental Expenditures by Standard Object

Compared to the previous year, the year to date expenditures in the second quarter are higher by $34.5M (9.3%).  This difference is explained by increases in Operating of $15.2M (4.8%), Capital of $3.0M (38.8%), Grants and Contributions of $8.5M (63.4%) and Statutory of $7.8M (21.1%).

Total net expenditures for the second quarter, ending September 30th, 2013, are higher by $28.9M (14.8%) mainly explained by increases in operating and statutory expenditures.

Personnel expenditures have increased by $13.5M (9.1%) in the second quarter as a result of increased payments in lieu of severance pay and retroactive salaries and wages for the renewal of collective agreements as well as earlier payments tied to Employee Benefit Plan.  Year to date expenditures have increased by $18.2M (6.1%).

The increase in Professional and Special Services expenditures of $4.9M (25.4%) when compared to the same quarter last year is explained by additional expenses in legal services, information technology consultants and other scientific services.  As a result of expenditure initiation occurring earlier in the year, year to date expenditures have increased by $8.0M (28.4%).

Rental expenditures have increased by $2.8M (77.0%) compared to the second quarter last year.  This is mainly due to equipment and transportation related to the Oil Sands Monitoring and to an earlier payment made for the rental of the National Wildlife Research Centre at the Carleton University.  Year to date expenditures are $3.1M (23.5%) higher than last year at the same quarter.

Transfer Payments expenditures have increased by $3.8M (38.3%) in the second quarter. This is mainly attributable to earlier payments resulting from improvements to the departmental Grants and Contributions approval process.  Year to date expenditures have increased by $8.5M (63.4%).

Revenues have decreased by $2.3M (16.7%) compared to the second quarter last year which is explained by the timing of the collection for various programs.  However, year to date revenues have increased by $7.1M (24.5%) which is mainly attributable to the Oil Sands Monitoring.

Risks and Uncertainties

Environment Canada is primarily funded through voted parliamentary spending authorities and statutory authorities for operating expenditures, capital expenditures and transfer payments. The Department is also partially funded through vote-netted revenue. Environment Canada's planned spending reflects approved funding by Treasury Board to support the departmental Strategic Outcomes and Programs. In 2013-2014 and beyond, Environment Canada will continue to contribute to the Government of Canada's plan to return to fiscal balance.

Environment Canada’s objectives and strategic outcomes are influenced by various internal and external factors and corresponding risks such as increasing Canadian and international expectations concerning the environment, and the pace of advances in science and technology.

Environment Canada proactively manages risks through ongoing monitoring, with adjustments made to departmental resources or program objectives to ensure appropriate controls and mitigation measures are applied as required. These include:

  • Implementing plans and identifying core activities to deliver on its mandate: departmental planning, prioritizing, forecasting, and reporting processes have been adapted to ensure alignment of core activities with key priorities. The Department developed and implemented a number of responses aimed at maintaining services while adopting new service models.
  • Maintaining the evergreen Business Continuity Plan, negotiating service-level agreements with stakeholders and partners, continuing to develop professional staff, safeguarding key systems and data and enhancing business arrangements with Shared Services Canada to mitigate against service disruptions.
  • Engaging in ongoing strategic operational planning to address and maintain key competencies and expertise in the fields of meteorology, science and technology, and to maintain operational effectiveness of the services offered both now and into the future in all areas of the Department.

Environment Canada is engaged in an exercise to update its Corporate Risk Profile. The Department will continue to advance risk management practices through strengthened processes to integrate risk management into departmental planning, and by better linking risk and performance management.

Significant changes in relation to operations, personnel and programs

On July 15, 2013, the Right Honourable Stephen Harper, Prime Minister of Canada, appointed the Honourable Leona Aglukkaq as the Minister of the Environment. 

Budget 2012 Implementation

This section provides an overview of the savings measures announced in Budget 2012 that will be implemented in order to refocus government and programs; and modernize and reduce inefficiencies.

Budget 2012 announced that the Government will return to balanced budgets in the medium term. Like other departments and agencies, Environment Canada is contributing its share to achieve this goal. In total, Environment Canada’s planned savings amount to $13.3M for 2012-2013, $31.5M for 2013-2014 and $53.8M for 2014-2015 and ongoing. Approximately 70% of these savings are being realized through streamlining departmental operations through better management and by working with partners. Examples of Environment Canada administrative efficiencies to achieve these savings include:

  • Domestic travel between major cities will be reduced and replaced, when possible, using communications technology such as videoconferencing, telepresence and webinars;
  • Achieving operational efficiencies monitoring and enforcement activities through enhancing partnering with Parks Canada; and
  • Reducing the overall size of Environment Canada’s vehicle fleet and the better management of vehicles through their whole life-cycle.

The remainder are being realized by eliminating or reducing programs that do not contribute to the Department's core mandate. Examples of reductions to non-core activities in 2013-14 include:

  • Reducing involvement in promoting and compiling information about water use as provincial and municipal governments are responsible for water treatment and use; and,
  • Similarly, duplication in the area of wastewater research will be eliminated where other levels of government and the academic sector have demonstrated capacity.

There was no incremental funding provided to Environment Canada to complete the work related to the implementation of its Budget 2012 savings measures.

To achieve operational savings from Budget 2012, expenditures are monitored on a regular basis and operational savings are all expected to be fulfilled.

There are no significant financial risks or uncertainties related to the implementation of its Budget 2012 savings measures. The Department has developed detailed roll-out plans for each of its savings measures and progress against these plans is monitored by departmental senior management on a quarterly basis.

1See Statement of Authorities.


Approved by:

(the original version was signed by)
November 19, 2013


Bob Hamilton, Deputy Minister
Gatineau, Canada
Date

 

(the original version was signed by)
November 08, 2013


Carol Najm, Chief Financial Officer
Gatineau, Canada
Date

Environment Canada
For the quarter ended September 30, 2013
Statement of Authorities (unaudited)
 Fiscal year 2013-2014Fiscal year 2012-2013
(In thousands of dollars)
Total available for use for the year ending March 31, 20142
Used during the quarter ended September 30, 2013
Year to date used at quarter end
Total available for use for the year ending March 31, 2013
Used during the quarter ended
September 30 , 2012
Year to date used at quarter end
Vote 1 - Net Operating expenditures
701,255
180,553
329,315
753,943
165,109
314,112
Vote 5 - Capital expenditures
51,922
7,603
10,539
60,067
5,359
7,595
Vote 10 - Grants and contributions
117,353
14,339
22,006
145,222
10,524
13,464
Statutory - Employee Benefits Plan
88,750
22,188
44,375
88,599
14,766
36,916
Statutory - Minister’s Car Allowance
79
19
39
78
20
39
Statutory - Refund of previous years revenue
0
0
379
0
0
0
Statutory - Spending of proceeds from the disposal of surplus Crown assets
0
220
220
0
219
219
Total Budgetary authorities
959,359
224,922
406,873
1,047,909
195,997
372,345
Non-Budgetary authorities
-
-
-
-
-
-
Total authorities
959,359
224,922
406,873
1,047,909
195,997
372,345
Environment Canada
For the quarter ended September 30, 2013
Departmental budgetary expenditures by Standard Object (unaudited)
 Fiscal year 2013-2014Fiscal year 2012-2013
(In thousands of dollars)
Planned expenditures for the year ending March 31, 2014

Expended during the quarter ended September 30, 2013

Year to date used at quarter end
Planned expenditures for the year ending March 31, 2013
Expended during the quarter ended September 30, 2012
Year to date used at quarter end
Expenditures:
 
Personnel
598,885
161,717
319,194
594,519
148,246
300,968
Transportation and communications
44,183
8,617
14,593
58,689
8,927
14,072
Information
2,588
585
793
3,344
570
848
Professional and special services
119,353
24,232
36,314
152,761
19,317
28,281
Rentals
20,967
6,348
16,499
23,324
3,587
13,356
Repair and maintenance
21,666
3,569
6,602
21,633
3,257
5,515
Utilities, materials and supplies
33,076
8,932
15,496
38,041
9,163
14,547
Acquisition of land, buildings and works
1,904
240
263
1,607
172
181
Acquisition of machinery and equipment
60,975
4,480
7,521
70,861
3,628
7,376
Transfer payments
117,354
14,339
22,006
145,222
10,365
13,464
Other subsidies and payments
3,957
3,340
3,665
5,738
2,545
2,722
Total gross budgetary expenditures
1,024,908
236,399
442,946
1,115,739
209,777
401,330
Less Revenues netted against expenditures:
 
Revenues
65,549
11,477
36,073
67,830
13,780
28,985
Total revenues netted against expenditures
65,549
11,477
36,073
67,830
13,780
28,985
Total net budgetary expenditures
959,359
224,922
406,873
1,047,909
195,997
372,345

2Includes only Authorities available for use and granted by Parliament at quarter-end.

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