Environment Canada Quarterly Financial Report
Statement outlining results, risks and significant changes in operations, personnel and programs
For the quarter ended December 31, 2011
This third 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. 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 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 2011-2012 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.
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 performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.
2. Highlights of fiscal quarter and fiscal year to date (YTD) results
Statement of Authorities
Based on Environment Canada’s Main Estimates, Budget 2011 and other adjustments, the gross reference level for 2011-2012 is expected to be $1,169,701, subject to the approval of the Supplementary Estimates later this fiscal year.
This quarterly report, ending December 31, 2011, reflects the authorities that were approved for this period. Budget 2011 funding includes Supplementary Estimates B and will follow through with Supplementary Estimates C later this year. Environment Canada’s authorities “total available for use for the year ending March 31, 2012” decreased by approximately $72.7 million when compared to the same quarter of 2010-2011, of which $1 million is in “Vote 1 – Net operating expenditures, $0.6 million is in Vote 5 – Capital expenditures, $66.5 million is in Vote 10 - Grants and Contributions and $4.6 million is in Budgetary statutory authorities for the Employee Benefits Plan (EBP).
Since the end of the second quarter on September 30, 2011, Environment Canada received an additional $153.4 million: $17.9 million to cover fees related to the employee benefits and $135.5 million in Supplementary Estimates B.
The decrease in the authorities is mainly due to the following:
A $41.3 million decrease in funding due to the termination of the National Vehicle Scrappage Program. This program was an incentive to Canadians to accelerate the retirement of their old vehicles. The primary goal was to reduce air pollutants by removing older, high polluting personal vehicles from the road. Secondary goals were to reduce greenhouse gas emissions by promoting alternative transportation alternatives, and to prevent the release of toxic substances.
A $12.5 million decrease in the funding of the grant for Sustainable Development Technology of Canada (SDTC).
A $9.4 million decrease in funding due to the termination of temporary funding for International Actions to support Canada's Clean Air Agenda (CAA) to be renewed as part of Environment Canada’s 2011-12 Supplementary Estimates C.
A $7.3 million decrease in funding due to the completion of the Modernizing Federal Laboratories Initiative. This funding was required in order to improve Environment Canada’s ability to provide quality scientific data to Canadians through Canada’s Economic Action Plan.
A $6 million additional decrease due to the Strategic Review of which $13.7M was already deducted in 2010-11 authorities. This review has identified opportunities to focus on priorities and deliver Environment Canada suite of programs and services more efficiently, while ensuring the right balance between environmental stewardship and economic interests.
A $5 million decrease in funding due to the incremental resources in 2010-11 of the International Assistance Envelope.
A $2.7 million decrease in funding due to the transfer of responsibility to the Minister of Indian Affairs and Northern Development for the Mackenzie Gas Project. This Project was an investment in the Northwest Territories to develop anchor gas, a gas gathering system and processing facility, and a 1,200 kilometer pipeline from Inuvik to northern Alberta.
These decreases in the authorities are mainly offset by the following increases:
A $10.3 million increase in funding to improve Canada’s weather services by ensuring the integrity of Government of Canada’s weather and environmental monitoring and supercomputing infrastructure.
The inclusion of the Capital Budget Carry Forward of $7.4 million, which represents an increase of $2.3 million in comparison with 2010-11.
The inclusion of the Operating Budget Carry Forward of $25 million, which represents an increase of $1.5 million in comparison with 2010-11.
A $1 million increase in funding for the Hydrometric Program which will help to adapt to the changing needs of water management in each part of the country by the construction of gauging stations, the purchases of fleet vehicles, boats, cableway equipment and the acquisition of other capital assets required to properly monitor water quantity levels.
Statement of Departmental Expenditures by Standard Object
Environment Canada was operating under Governor General Special Warrants from April 1st, 2011 until mid-June this year when the Department received approval of the 2011-2012 Main Estimates.
Expenditures in the third quarter, ending December 31, 2011, were $39.3M higher than in the previous quarter. This is mainly attributable to increases in professional and special services following increased contract awards and to increases in Transfer Payments. There was also a delay in posting EBP expenditures for the first and second quarters.
The “year to date used at quarter end” of 2011-12 compared to 2010-11 has decreased by about $80M (or 11%), and the “planned expenditures for the year ending March 31, 2012” is about 6% lower than the previous year. These two variances can be mainly explained by the Transfer Payments. On the budget side EC had to deal with a reduction of $66M due to reprofiling, sunsetting and renewal. As for the expenditures, at this time of the year last year the Payment to NCC was done but will be done in the fourth quarter this year. On top of the variance due to the Transfer Payments, a decrease in the “Transportation and communications” ($9.2M) and in the “professional and special services” ($9.2M) costs is attributable to restrictions imposed by EC following Budget 2010.
3. Risks and Uncertainties
This section covers the financial risks associated with the third period of the fiscal year. Please refer to the 2011-12 Report on Plans and Priorities for the departmental risk profile.
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 votes. Environment Canada authorities have decreased from 2010-2011 to 2011-2012 as per the Main Estimates. However, Budget 2011 has renewed several initiatives as well as provided new program investments to the Department. A part of this funding was received in the Supplementary Estimates B and others will be received in the Supplementary Estimates C to be tabled in Parliament later in the year.
The Department has to consider several external factors, such as economic climate, technological and scientific development, government priorities, and central agencies or government-wide initiatives, which may have an impact on its capacity to deliver on priorities. In addition to the domestic challenges, the fluctuating international economic climate might be a risk. Environment Canada is also a knowledge-based organization and as such, relies on its talented and committed workforce to continue delivering programs and services.
Internally, some key risks are related to human resource, financial and information management as well as business continuity that could affect the Department's operational capacity to meet its priorities in subsequent years. For example, effective resource management can be expected to be challenged by the need for fiscal restraint, as a result of the Budget 2010 Cost Containment Measures. Budget 2010 announced that the operating budgets of departments would be frozen at their 2010-11 level for fiscal years 2011-12 and 2012-13. Management is reviewing the impacts of the cost containment measures on departmental activities. Of the original 776 EC employees affected in the second quarter, 369 positions remained affected. In addition, as at December 31st, 2011, 71 have had their positions declared surplus. Others have been reallocated within Environment Canada or were either retirements or voluntary departures. Environment Canada has conducted extensive planning in order to carry out its core program and ensure its resources are aligned with its departmental priorities. Environment Canada's main objectives have not changed. The Department aims to provide Canadians with a clean, safe and sustainable environment. Other measures were also put in place such as enhancing departmental integrated planning, streamlining business processes and increasing performance measurement capacity. In the context of managing risks related to resource management and information for decision-making, the Department continued to make progress toward the provision of improved tools and processes through the Corporate Accountability and Administrative Renewal initiative.
In summary, in the face of identified risks, the Department has implemented strategies to foster strong relationships with partners, better manage resources, and enhance information management. 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.
4. Significant changes in relation to operations, personnel and programs
Supplementary Estimates B were allocated in the third quarter for a total of $135.5 million. The Department also received an additional $17.9 million through Vote 30 from Treasury Board to cover fees related to the employee benefits. The total available authorities on December 31, 2011 were $1,067.9 million.
Moreover, despite the Government of Canada’s budget reduction period, Budget 2011 indicates to Canadians through strategic, targeted investments, that the environment remains a priority.
Given what has been accomplished to date, Budget 2011 allows for significant investments according to strategic environmental priorities in initiatives that include:
- taking mitigation and adaptation measures relating to the effects of climate change;
- improving weather services provided to Canadians;
- cleaning up the Great Lakes;
- investing in environmental science to emphasize the Department's achievements and the government's steadfast commitment in this regard.
Environment Canada's main objectives have not changed. The Department aims to provide Canadians with a clean, safe and sustainable environment. However, we must also target spending and the use of our existing resources. We have reviewed our work methods and looked at what work to carry out in the future and we are adjusting our efforts as much as possible to be more effective and efficient.
Shared Services Canada
Effective August 4, 2011, the Department of Shared Services Canada (SSC) was created. SSC has a mandate to streamline and reduce duplication in the government's IT services by standardizing and consolidating information technology services in the federal government. Consequently, this will reduce costs, improve services, and leverage capacity in the public and private sectors through pooled resources and greater buying power.
On August 4, 2011, the first phase of the establishment of SSC took place with the transfer of IT resources from within Public Works and Government Services Canada. The second phase followed on November 15, 2011, as per Order in Council (OIC) P.C. 2011-1291 to P.C. 1297, with the transfer of the remaining 43 departments and agencies.
In order for SSC to be put in place and be a viable agency, all Federal Departments have to contribute a percentage of their 2011-2012 Main Estimates. Environment Canada will transfer funding to SSC for 2011-12, which will be reflected in the Annual Departmental Financial Statement and Public Accounts. During this transition period, Environment Canada's Quarterly Financial Report continues to reflect financial information related to these transferred services.
Deputy Minister Date
Chief Financial Officer Date
For the quarter ended December 31, 2011
Statement of Authorities (unaudited)
|Fiscal year 2011-2012||Fiscal year 2010-2011|
|(In thousands of dollars)||Total available for use for the year ending March 31, 2012*||Used during the quarter ended December 31, 2011||Year to date used at quarter end||Total available for use foe the year ending March 31, 2011||Used during the quarter ended December 31, 2010||Year to date used at quarter end|
|Vote 1 - Net operating expenditures||830,959||181,098||525,888||831,969||186,603||549,160|
|Vote 5 - Capital expenditures||56,550||7,474||10,215||57,176||7,839||14,095|
|Vote 10 - Grants and contributions||95,796||15,944||25,185||162,250||29,760||59,618|
|Budgetary statutory authorities||84,573||35,283||63,487||89,198||36,882||81,770|
* Includes only Authorities available for use and granted by Parliament at quarter-end.
Pursuant to s. 31.1 of the Financial Administration Act and Order-in-Council P.C. 2011-1297 effective November 15, 2011, $16.3M is deemed to have been appropriated to Shared Services Canada (vote 1), which will result in a reduction for the same amount in Environment Canada’s Vote 1, Appropriation Act No.1, 2011-2012. This is not reflected in this Quarterly Statement.
For the quarter ended December 31, 2011
Departmental budgetary expenditures by Standard Object (unaudited)
|Fiscal year 2011-2012||Fiscal year 2010-2011|
|(In thousands of dollars)||Planned expenditures for the year ending March 31, 2012||Expended during the quarter ended December 31, 2011||Year to date used at quarter end||Planned expenditures for the year ending March 31, 2011||Expended during the quarter ended December 31, 2010||Year to date used at quarter end|
|Transportation and communications||71,066||13,148||30,230||77,286||15,711||39,457|
|Professional and special services||168,068||28,547||57,982||185,591||27,801||67,091|
|Repair and maintenance||15,097||5,598||11,208||17,656||3,801||9,364|
|Utilities, materials and supplies||39,958||7,554||18,698||37,607||6,823||20,870|
|Acquisition of land, buildings and works||4,519||146||194||3,760||288||416|
|Acquisition of machinery and equipement||52,032||5,850||13,335||53,416||7,108||18,591|
|Other subsidies and payments||4,880||507||3,561||5,340||307||2,939|
|TOTAL GROSS BUDGETARY EXPENDITURES||1,136,521||254,959||664,775||1,210,714||273,725||744,769|
|Less revenues netted against expenditures:|
|Total revenues netted against expenditures||68,643||15,159||39,999||70,121||12,641||40,129|
|TOTAL BUDGETARY EXPENDITURES||1,067,878||239,800||624,776||1,140,593||261,084||704,642|
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