April - June 2016
Table of Contents
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I. Statement outlining results, risks and significant changes in operations, personnel and program for the quarter ended June 30, 2016
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II. Financial Statements
I. Statement outlining results, risks and significant changes in operations, personnel and program for the quarter ended June 30, 2016
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 and Supplementary Estimates as well as Economic Action Plan 2015 and 2016 (Budget 2015 and Budget 2016).
A summary description of Veterans Affairs Canada’s (sometimes referred to in this Report as "VAC") program activities can be found in Part II of the Main Estimates.
Basis of Presentation
This quarterly report has been prepared using an expenditure basis of accounting. The accompanying Statement of Authorities includes Veterans Affairs Canada’s spending authorities granted by Parliament and those used by the Department, consistent with the Main and Supplementary Estimates for the 2016–17 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.
As part of the departmental performance reporting process, Veterans Affairs Canada prepares its annual departmental financial statements on a full accrual basis in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector. 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
Statement of Authorities
Overall, Veterans Affairs Canada's authorities reflect the changing demographic profile and changing needs of the men, women, and families the Department serves. This is evidenced by an increase in the number of modern-day Veterans and survivors (forecast to increase from 97,558 in 2015-16 to 105,500 in 2016-17) accessing programs under the New Veterans Charter and a decrease in the number of War Service Veterans and survivors (forecast to decrease from 85,111 in 2015-16 to 76,100 in 2016-17) accessing the Department's traditional programs. Despite the slight decrease in overall Veterans and recipients of VAC benefits, recent program enhancements have increased the demand on New Veterans Charter programs and benefits.
As of June 30, 2016, total authorities available (i.e. budget) for the year have increased by $82.4 million (2.3%) compared to the same quarter of the previous year, from $3,545.9 million to $3,628.3 million. This increase is the result of a $70.4 million increase in Vote 5, Grants and Contributions, and a $17.0 million increase in Vote 1, Operating Expenditures. This is offset by a $5.0 million decrease in statutory authorities related to employee benefit costs.
Total authorities used (i.e. expenditures) during the first quarter of 2016-17 are $96.8 million (11.5%) more when compared to the same three-month period of 2015-16, from $841.0 million to $937.8 million. A breakdown in the spending for the first quarter of 2016-17 indicates that Vote 5, Grants and contributions spending increased by $70.6 million, Vote 1, Operating expenditures increased by $25.0 million and the statutory expenditures increased by $1.2 million.
Figure 1 - First Quarter Expenditures Compared to Budget
Figure 1 – Comparison of Net Budgetary Authorities and Expenditures for the Quarter Ended June 30, 2016 and June 30, 2015 (in millions of dollars) – Table
| 2015-2016 | 2016-2017 | |
|---|---|---|
| Net Budgetary Authorities | 3,546 | 3,628 |
| Expenditures for the Quarter ended June 30 | 841 | 938 |
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 come forward. In addition, the financial results in the current year in this quarterly report reflect enhancements made to Veterans programs introduced after the end of the first quarter in 2015-16. For example, three new grant programs: the Critical Injury Benefit, the Family Caregiver Relief Benefit and the Retirement Income Security Benefit were implemented during the second quarter of last year. Expenditures for other program enhancements stemming from Budget 2015 were also introduced after the end of the first quarter of 2015-16 (i.e. expanding Earning Loss and Supplementary Retirements benefits to part-time reservists and expanding eligibility for the Permanent Impairment Allowance). For this reason, expenditures associated with these initiatives are included in the first quarter of 2016-2017, but not the previous year, further contributing to the variance between these periods.
Statement of Departmental Budgetary Expenditures by Standard Object
When analyzed by Standard Object, expenditures in the first quarter were generally consistent with prior-year spending trends. The three largest variances include:
- An increase of $70.6 million in transfer payments (i.e. grants and contributions) related to an increase in the number of modern-day Veterans and individuals accessing programs under the New Veterans Charter as well as increased payments related to new and enhanced programs.
- An increase of $11.0 million in the Personnel category mainly attributed to Work Force Adjustment costs for former employees of Ste. Anne’s Hospital which transferred to the Province of Quebec; as well as on-going hiring of new staff in case management and adjudication to support recent program enhancements.
- An increase of $7.9 million in utilities, materials and supplies, which includes prescription drug coverage.
3. Risks and Uncertainties
Veterans Affairs 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.
Veterans Affairs 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.
Veterans Affairs continues to manage through effective engagement across the Department. As such, the Department’s executive-level committee (Senior Management Committee) recommends overall direction for financial management and control, and the Corporate Management Committee ensures alignment of investments with departmental strategies and other initiatives. Each branch is required to have an Integrated Business Plan that has been approved by the Senior Management Committee to confirm that it has a plan in place to address the financial requirements of the branch.
Additionally, the Deputy Minister’s Advisory Committee (DMAC) provides an advisory function for senior departmental officials as well as performing an important oversight role in ensuring that Budget 2015 and Budget 2016 commitments are met. DMAC was established, in the context of Budget 2015 decisions to improve service delivery, to support Veterans Affairs Canada (VAC) and the Department of National Defence (DND) in advancing a “Veteran-centric” approach to the protection and care of Veterans.
This integrated risk management process ultimately supports the Department in meeting its financial objectives. Further information on risks facing the Department and the steps taken to mitigate them can be found in the 2016-17 Report on Plans and Priorities.
4. Significant Changes in Relation to Operations, Personnel and Programs
There were no changes at the senior management level during the first Quarter of this fiscal year; however, Sue Foster, Assistant Deputy Minister Strategic Oversight and Communications Branch was appointed as the Department’s Chief Results Officer in response to the launch of a new Treasury Board policy on Results which takes effect July 1, 2016. In addition, prior to the beginning of the first quarter of this fiscal year, Elizabeth M. Stuart (Retired Rear Admiral) was appointed Assistant Deputy Minister, Chief Financial Officer Corporate Services Branch (as of February 23, 2016).
Ste. Anne’s Hospital, VAC’s last remaining Veterans Hospital located in Ste. Anne de Bellevue, Quebec, was officially transferred to the Centre intégré universitaire de L’Ouest-de-l’Île-de-Montréal (CIUSSS ODIM - the Quebec Health Authority) on April 1, 2016 through a transaction between the Government of Canada and the Province of Quebec. Although the transfer of the facility resulted in a decrease in VAC’s staff complement, payouts of salary and associated Work Force Adjustment and severance costs increased personnel expenditures within this reporting period.
Budget 2015 initiatives (Service Excellence, Financial Security & Mental Health):
- During the first quarter of 2016-17, new positions continued to be staffed in order to meet the commitment to enhance the delivery of Veterans’ services and benefits by increasing full-time equivalent staff complement in case management and disability benefits processing.
- A new permanent Operational Stress Injury (OSI) clinic located in Dartmouth, Nova Scotia marked its official opening in June. Although funded by Veterans Affairs Canada, the clinic is operated by the Nova Scotia Health Authority to provide assessment, diagnosis and treatment services for Veterans, members of the Canadian Armed Forces, current and former members of the RCMP and their families; living with operational stress injuries. Prior to a temporary clinic, initially established in November 2015, Veterans residing in Nova Scotia were served via tele-health or a satellite clinic.
Budget 2016 commitments:
- Changes to Disability Awards and Allowances (DA), Earnings Loss Benefit (ELB), and Permanent Impairment Allowance (PIA) were approved during this quarter, with changes taking effect April 1, 2017 for DA and PIA, while changes to ELB take effect October 1, 2016. Funds associated with these initiatives will support increased benefits through these program enhancements as well as contribute to ongoing improvements in service delivery.
Commemoration Initiatives:
In April 2016, the Department marked the 99th anniversary of the Battle of Vimy Ridge with separate events in France and within Canada at the Canadian War Museum in Ottawa. Commemoration also implemented changes to the Commemoration Partnership Program to provide funding for the building of new community war memorials, replacing the Community War Memorial Program which sunset at the end of last fiscal year.
5. Approvals by Senior Officials
Original signed by:
________________________________________
W.J. Natynczyk, General (Retired), Deputy Minister
Ottawa, ON
August 12, 2016
________________________________________
Maureen Sinnott, Acting Chief Financial Officer
Charlottetown, PE
August 11, 2016
II. Financial Statements
Statement of Authorities (unaudited)
| (in thousands of dollars) | Total available for use for the year ending March 31, 2016* |
Used during the quarter ended June 30, 2015 |
Year to date used at quarter-end |
|---|---|---|---|
| Vote 1 - Net Operating expenditures | 853,489 | 184,666 | 184,666 |
| Vote 5 - Grants and Contributions | 2,655,148 | 649,515 | 649,515 |
| Statutory Authority - Minister's Salary and Motor Car Allowance | 82 | 20 | 20 |
| Statutory Authority – Court Award – Crown Liability and Proceeding Act | 0 | 0 | 0 |
| Statutory Authority – Refunds of Previous Years Revenue | 0 | 17 | 17 |
| Statutory Authority - Contributions to Employee Benefit Plans - Program | 36,942 | 6,762 | 6,762 |
| Statutory Authority – Veterans Insurance Actuarial Liability Adjustment | 175 | 0 | 0 |
| Statutory Authority – Returned Soldiers Insurance Actuarial Liability Adjustment | 10 | 0 | 0 |
| Statutory Authority – Re-establishment credits under Section 8 of the War Services Grants Act | 2 | 0 | 0 |
| Statutory Authority – Repayments under Section 15 of the War Services Grants Act | 10 | 0 | 0 |
| Total Budgetary Authorities | 3,545,858 | 840,980 | 840,980 |
| Non-Budgetary Authorities | 0 | 0 | 0 |
| Total Authorities | 3,545,858 | 840,980 | 840,980 |
* Includes only Authorities available for use and granted by Parliament at quarter-end.
| (in thousands of dollars) | Total available for use for the year ended March 31, 2017* |
Used during the quarter ended June 30, 2016 |
Year to date used at quarter-end |
|---|---|---|---|
| Vote 1 - Net Operating expenditures | 870,518 | 209,661 | 209,661 |
| Vote 5 - Grants and Contributions | 2,725,592 | 720,101 | 720,101 |
| Statutory Authority - Minister's Salary and Motor Car Allowance | 84 | 7 | 7 |
| Statutory Authority – Court Award – Crown Liability and Proceeding Act | 0 | 0 | 0 |
| Statutory Authority – Refunds of Previous Years Revenue | 0 | 30 | 30 |
| Statutory Authority – Contributions to Employee Benefit Plans – Program | 31,891 | 7,973 | 7,973 |
| Statutory Authority – Veterans Insurance Actuarial Liability Adjustment | 175 | 0 | 0 |
| Statutory Authority – Returned Soldiers Insurance Actuarial Liability Adjustment | 10 | 0 | 0 |
| Statutory Authority – Re-establishment credits under Section 8 of the War Services Grants Act | 2 | 0 | 0 |
| Statutory Authority – Repayments under Section 15 of the War Services Grants Act | 10 | 0 | 0 |
| Total Budgetary Authorities | 3,628,282 | 937,772 | 937,772 |
| Non-Budgetary Authorities | 0 | 0 | 0 |
| Total Authorities | 3,628,282 | 937,772 | 937,772 |
* Includes only Authorities available for use and granted by Parliament at quarter-end.
Departmental Budgetary Expenditures by Standard Object (unaudited)
| Expenditures (in thousands of dollars) |
Planned expenditures for the year ending March 31, 2016* |
Expended during the quarter ended December 31, 2015 |
Year to date used at quarter-end |
|---|---|---|---|
| 01 Personnel | 238,016 | 66,876 | 66,876 |
| 02 Transportation and communications | 28,557 | 4,727 | 4,727 |
| 03 Information | 5,495 | 61 | 61 |
| 04 Professional and special services | 405,724 | 80,232 | 80,232 |
| 05 Rentals | 7,112 | 1,008 | 1,008 |
| 06 Repair and maintenance | 7,758 | 724 | 724 |
| 07 Utilities, materials and supplies | 187,507 | 35,393 | 35,393 |
| 08 Acquisition of land, buildings and works | 1,939 | 0 | 0 |
| 09 Acquisition of machinery and equipment | 3,233 | 37 | 37 |
| 10 Transfer payments | 2,655,345 | 649,515 | 649,515 |
| 11 Public debt charges | 0 | 0 | 0 |
| 12 Other subsidies and payments | 5,172 | 2,407 | 2,407 |
| Total gross budgetary expenditures | 3,545,858 | 840,980 | 840,980 |
| Less revenues netted against expenditures | 0 | 0 | 0 |
| Total revenues netted against expenditures | 0 | 0 | 0 |
| Total net budgetary expenditures | 3,545,858 | 840,980 | 840,980 |
* Includes only Authorities available for use and granted by Parliament at quarter-end.
| Expenditures (in thousands of dollars) |
Planned expenditures for the year ending March 31, 2017* |
Expended during the quarter ended June 30, 2016 |
Year to date used at quarter-end |
|---|---|---|---|
| 01 Personnel | 241,734 | 77,918 | 77,918 |
| 02 Transportation and communications | 29,073 | 5,742 | 5,742 |
| 03 Information | 5,617 | 63 | 63 |
| 04 Professional and special services | 411,322 | 81,296 | 81,296 |
| 05 Rentals | 7,268 | 1,079 | 1,079 |
| 06 Repair and maintenance | 6,608 | 3,513 | 3,513 |
| 07 Utilities, materials and supplies | 191,620 | 43,313 | 43,313 |
| 08 Acquisition of land, buildings and works | 1,652 | 0 | 0 |
| 09 Acquisition of machinery and equipment | 2,313 | 87 | 87 |
| 10 Transfer payments | 2,725,789 | 720,101 | 720,101 |
| 11 Public debt charges | 0 | 0 | 0 |
| 12 Other subsidies and payments | 5,286 | 4,660 | 4,660 |
| Total gross budgetary expenditures | 3,628,282 | 937,772 | 937,772 |
| Less revenues netted against expenditures | 0 | 0 | 0 |
| Total revenues netted against expenditures | 0 | 0 | 0 |
| Total net budgetary expenditures | 3,628,282 | 937,772 | 937,772 |
* Includes only Authorities available for use and granted by Parliament at quarter-end.