Departmental Quarterly Financial Report (April - June 2024)

April - June 2024

I. Statement outlining results, risks and significant changes in operations, personnel and program for the quarter ended 30 June 2024

1. Introduction

This 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. This quarterly report should be read in conjunction with the Main estimates and Supplementary estimates.

A summary description of Veterans Affairs Canada’s (VAC) program activities can be found in Part II of the Main estimates.

As a result of the Government’s expenditure management cycle, there are often fluctuations by quarter and between fiscal years when comparing budgets and expenditures. This is primarily a result of the quasi-statutory nature of the Department’s programs, which are demand-driven and based on need and entitlement. In other words, Veterans who meet the eligibility criteria for VAC’s programs, are paid as they apply for benefits.

Basis of presentation

This quarterly report has been prepared using an expenditure basis of accounting. The accompanying Statement of Authorities includes VAC’s spending authorities granted by Parliament and those used by the Department, consistent with the Main estimates for the 2024-25 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 purposes 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 departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

The quarterly report has not been subject to an external audit but has been reviewed by the Departmental Audit Committee.

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

This section highlights the significant elements that contributed to the changes in Authorities available (i.e. budget) for the fiscal year, as well as the year-to-date expenditures for the quarter ended 30 June 2024.

The following tables provide a comparison of the authorities available for use and the expenditures for the quarters ending 30 June 2023 and 30 June 2024 for the Department.

2.1 Statement of authorities

2.1.1 Changes in fiscal year-to-date authorities available

As at 30 June 2024, total authorities available (i.e. budget) at quarter end were $759M (12.7%) more when compared to amounts available at the same quarter-end the previous year, from $5,984M in 2023-24 to $6,743M in 2024-25.

Much of this increase in total authorities can be attributed to temporary funding received in the first quarter 2024-25 for the Manuge class action settlement agreement. Budget has also increased in comparison to the previous year due to increase in client demand for many of our benefits and services.

2.1.2 Changes in year-to-date expenditures

Year-to-date expenditures for Veterans Affairs Canada are $704M more (52% increase) when compared to the same timeframe in 2023-24. This increase over the first quarter of 2023-24 can be explained by variances detailed below.

Vote 1 – Operating expenditures – increase of $71M

• Variations from quarter to quarter are the result of billing cycles and processes relating to certain program and services. Year-to-date expenditures are in line with current forecasts.

Vote 5 – Grant and contribution – increase of $633M

• VAC’s expenditures fluctuate each year due to the demand-driven nature of its programs which are based on Veterans’ needs and entitlements. In other words, a Veteran who is entitled to a benefit is paid that benefit, whether 10 Veterans come forward or 10,000.
• Increases for this period are attributed to an increase in demand of clients accessing our programs and services combined with the Department's efforts to align production capacity with this increased demand. This has resulted in more benefits being paid to Veterans and their families, in a timely manner.

Budgetary statutory authorities – decrease of $334K

• Expenditures are being accrued based on opening authorities. Expenditures will be adjusted at fiscal year-end based on actual salary costs.

3. Risks and uncertainties

VAC is dedicated to enhancing the health and well-being of Veterans and their families and recognizes that its success in fulfilling this mandate is directly related to the effective management of risk. Sound risk management equips the Department to respond proactively to change and uncertainty by using risk-based information to support effective decision-making, resource allocation, and ultimately better results for Canadians. Additionally, it can lead to effective service delivery, better project management and an increase in value for money.

VAC operates in a dynamic and complex environment characterized by internal and external drivers of change. The Department employs integrated risk management tools to proactively and systematically recognize, understand, accommodate and capitalize on new challenges and opportunities, with a focus on results. In addition, the Department has effective internal control systems in place, proportionate to the risks being managed.

As such, the Department’s executive-level committees, and the Assistant Deputy Minister level Senior Management Committee are aware of their financial management responsibilities, have the tools to enable these responsibilities, and manage the financial performance within their areas of responsibilities. In addition, these committees recommend and prioritize the department’s investment opportunities, based on Operational Plans, to ensure their alignment with departmental and Government of Canada expected results.

Key risks currently being managed by the Department include:

1. Maintaining core services: To avoid the risk of not providing timely, high quality core services and benefits to Veterans and their families while simultaneously implementing several new initiatives and programs from multiple federal budgets, Veterans Affairs is:
   1. Refining internal processes to improve efficiency;
   2. Increasing the use of automation;
   3. Recruiting, training, motivating and retaining employees; and
   4. Maintaining a reasonable case manager to client ratio.
2. Fulfilling mandate letter commitments: To prevent the risk of not fully implementing remaining mandate commitments, given the volume and complexity of commitments made to Veterans, Veterans Affairs Canada is:
   1. Reporting progress internally and through canada.ca;
   2. Increasing the use of automation; and
   3. Recruiting, training, motivating and retaining employees.
3. Achieving and demonstrating results: To avert the risk of not fully meeting planned targets, given that responsibility for Veterans' well-being is shared with multiple jurisdictions, other government departments, and individual Veterans, Veterans Affairs Canada is:
   1. Working closely with partners to ensure efforts are well aligned; and
   2. Exploring additional opportunities for sound research and data to inform direction.

The Department monitors these risks through the Departmental Results Framework and internal performance reports. Tracking performance in these areas enables timely adjustments and ensures risks are being effectively mitigated.

Additionally, the Departmental Audit Committee provides an important advisory function as part of the Department’s governance structure for risk. It provides objective advice and recommendations to the Deputy Head regarding the sufficiency, quality and adequacy of the Department's risk management process.

This integrated risk management process ultimately supports the Department in meeting its objectives. Further information on risks facing the Department and the steps taken to mitigate them can be found on VAC's website.

4. Significant changes in relation to operations, personnel and programs

Personnel

During the first quarter, Christine McDowell was appointed Associate Deputy Minister of Veterans Affairs, effective May 27, 2024.

Mandate/budget commitments

Juno Beach Centre

Veterans Affairs Canada is committed to continuing to support the work of the Juno Beach Centre Association by contribution to the long-term preservation of this iconic Canadian landmark. Through Budget 2024, funding of $3.8 million was announced to recognize the legacy of all Canadians who served during the Second World War, including those who fought during D-Day and the Battle of Normandy.

Support the well-being of Veterans and their families

The Veteran and Family Well-being Fund offers financial support to a wide range of innovative projects that contribute to improving quality of life for Veterans and their families. Through Budget 2024, the Government proposes to invest $6 million in additional funding to the programs budget to support organizations serving Veterans and their families across the country. A portion of these funds will be allocated to organizations and initiatives that support Veterans’ health and employment, as well as women, Indigenous, and 2SLGBTQI+ Veterans.

Commemorative activities

During the first quarter of the 2024-25 fiscal year, Commemoration observed a number of key milestones and anniversaries with both domestic and international programming. Activities included the following:

Domestic

• Ceremonies and events to mark the 80^th anniversary of D-Day and the Battle of Normandy held in Moncton NB and other communities across Canada.
• Supported International Operations in the repatriation of the Unknown Newfoundland soldier from France, and supported in Canada delegation with events and ceremonies marking the unveiling of the Tomb.
• Supported events/exhibits to mark the 100^th anniversary of the Royal Canadian Air Force (RCAF).

International

• Commemorative activities to mark the 100^th anniversary of the Royal Canadian Air Force (RCAF). This included lighting the Vimy memorial blue and a temporary exhibit at the Vimy Education Centre.
• Instrumental in organizing and delivering the Rainbow Veterans of Canada Commemorative Program in Belgium and France to commemorate the First World War.
• Ceremonies and activities to mark the 107^th anniversary of the Battle of Vimy Ridge. These included Family Day, a Lego installation and candlelight walk.
• Ceremonies and events to honour the repatriation of the unknown Newfoundland First World War Soldier and all Newfoundlanders and Labradorians who served in uniform.
• International ceremonies and activities to mark the 80^th anniversary of D-Day and Battle of Normandy in France. This included international overseas events and a temporary exhibit.

Work also continued to address maintenance and modernization needs with restoration work on the Vimy and Beaumont-Hamel monuments and completion of the signage renewal program. Visitor Experience Strategies are in development to enhance the visitor experience at both National Historic Sites

5. Approvals by senior officials

Original signed by:

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II. Financial statements

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

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

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

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