Departmental Quarterly Financial Report (October - December 2024)

I. Statement outlining results, risks and significant changes in operations, personnel and program for the quarter ended 31 December 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.

We build our annual budget to respond to Veterans in need of benefits and services. A key part of this process is forecasting, which helps ensure there is enough funding for all eligible Veterans who are likely to need help in a given year.

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 and Supplementary 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 31 December 2024.

The following tables provide a comparison of the authorities available for use and the expenditures for the quarters ending 31 December 2023 and 31 December 2024 for the Department.

2.1 Statement of authorities

2.1.1 Changes in fiscal year-to-date authorities available

As at 31 December 2024, total authorities available (i.e. budget) at quarter end were $1,643M more (27% increase) when compared to amounts available at the same quarter-end the previous year, from $6,072M in 2023-24 to $7,716M 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. This class action sought damages as a result of alleged miscalculation of the annual adjustment of basic pension under the Pension Act from 2003 to present, resulting in underpayment to class members. 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 $1,351M more (30% increase) when compared to the same timeframe in 2023-24. This increase can be explained by variances detailed below.

Vote 1 - Operating expenditures – increase of $550M

• The majority of this increase can be attributed to payments made in regards to the Manuge class action settlement agreement.
• Fiscal year-to-date expenditures saw an increase in the number of clients accessing Treatment Benefits compared to the same period last year. Variations from quarter to quarter are the result of billing cycles and processes relating to certain programs and services. Year-to-date expenditures are in line with current forecasts.

Vote 5 - Grant and contribution - increase of $803M

• 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 the cumulative increase in clients accessing our programs that have a lifelong benefit, 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. Year-to-date expenditures are in line with current forecasts.

Budgetary statutory authorities – decrease of $1.4M

• Expenditures are being recorded based on initial budgets. They will be updated at the end of the fiscal year to reflect the actual salary costs.

Fiscal Quarter

2.1.3 Changes in Expenditures – Quarter to Quarter Comparison

In-quarter expenditures for Veterans Affairs Canada are $643M more (41% increase) when compared to the same timeframe in 2023-24. This increase as compared to the third quarter in 2023-24 can be explained by variances detailed below.

Vote 1 – Operating Expenditures – increase of $456M

• The majority of this increase can be attributed to payments made in regards to the Manuge class action settlement agreement.
• This quarter saw an increase in the number of clients accessing Treatment Benefits compared to the same quarter last year. Variations from quarter to quarter are the result of billing cycles and processes relating to certain programs and services. Year-to-date expenditures are in line with current forecasts.

Vote 5 – Grant and Contribution – increase of $188M

• Increase for the period are attributed to an increase in spending for certain programs due to the cumulative increase in clients accessing our programs that have a lifelong benefit, combined with increased production capacity.

Budgetary statutory authorities – decrease of $739K

• Expenditures are being recorded based on initial budgets. They will be updated at the end of the fiscal year to reflect the actual salary costs.

3. Risks and uncertainties

VAC is committed to enhancing the health and well-being of Veterans and their families. The Department recognizes that its ability to fulfill this mandate is closely tied to the effective management of risk. Strong risk management practices allow VAC to respond proactively to change and uncertainty, using risk-based information to support informed decision-making, optimize resource allocation, and ultimately deliver better outcomes for Canadians.

More information on the risks facing the Department and the mitigation strategies in place can be found on VAC's website.

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

Mandate/budget commitments

The Department continues to experience growing demand for many programs and services. We remain focused on reducing the existing backlog, improving wait times for disability benefits, enhancing service and program delivery for Veterans and their families, and ensuring the delivery of high-quality services.

Personnel

On 20 December 2024, Darren Fisher was named the Minister of Veterans Affairs and Associate Minister of National Defence.

Commemorative activities

During the third 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

• Marked Veterans’ Week with events and programming across the country, including hosting the signature Candlelight Tribute at the Canadian War Museum, special learning days and open mic events at various locations, and supporting dozens of ceremonies marking both Indigenous Veterans Day on November 8, and Remembrance Day on November 11.

International Ceremonies and Events

• Planned and delivered the overseas event to commemorate the 60^th anniversary of the Canadian Peacekeeping Operation in Cyprus during Veterans’ Week.
• Organized and hosted commemorative ceremonies and events for Remembrance Day at both National Historic sites, as well as participated in several French ceremonies.
• Supported commemorative events in partnership with the Memorial Museum Passchendaele 1917 and No Stone Left Alone during Veterans' Week.

During the quarter, efforts to develop Visitor Experience Strategies continued, aiming to enhance the visitor experience at both National Historic Sites. As part of the ongoing reforestation initiative, over 3,000 trees were planted at the Vimy and Beaumont-Hamel memorial sites. Additionally, the repointing of retaining walls at the Hill 62 Canadian Memorial in Belgium was successfully completed.

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.