ARCHIVED - Aboriginal Affairs and Northern Development Canada Quarterly Financial Report - For the quarter ended June 30, 2013

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1. Introduction

This quarterly financial 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. It should be read in conjunction with the Main Estimates and Supplementary Estimates (A) for fiscal year 2013-14 as well as Canada’s Economic Action Plan 2013 (Budget 2013). For purposes of both the Main and Supplementary Estimates, the Department is referred to as Indian Affairs and Northern Development.

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

1.1 Authority, Mandate and Program Activities

Aboriginal Affairs and Northern Development Canada (AANDC) supports Aboriginal people (First Nations, Inuit and Métis) and Northerners in their efforts to:

Further details on AANDC’s authority, mandate and program activities can be found in Part II of the Main Estimates and the Report on Plans and Priorities.

1.2 Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting and a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities. The accompanying Statement of Authorities includes AANDC’s spending authorities granted by Parliament and those used by the Department consistent with the Main Estimates and Supplementary Estimates (A) for the 2013-2014 fiscal year.

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 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 2012-13 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.

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.

1.3 AANDC’s Financial Structure

The parliamentary vote structure of AANDC is made up of $8.1 billion in budgetary authorities of which $7.9 billion requires approval by Parliament; referred to as voted amounts. The remaining $159.2 million represents statutory authorities that do not require additional approval and are provided for information purposes.

Voted amounts totalling $7.9 billion are split between Operating Expenditures, Capital Expenditures and Grants and Contributions as follows:

More detailed information about AANDC's financial structure, including information about the fiscal cycle, cost drivers, expenditure trends, etc..

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

This section highlights the significant items that contributed to the net increase or decrease in resources available for the year and actual expenditures for the quarter ended June 30, 2013. The explanation of variances considers that changes under 5% would have minimal impact on interpretation of results.

2.1 Statement of Authorities (Table 1)

As displayed in Table 1, the total year-to-date authorities available for use in the first quarter of 2013-14 were $8,141.1 million compared to $7,995.7 million for the same quarter of the prior year, representing a total increase in Departmental authorities of $145.4 million. The total 2013-14 year-to-date authority increase of $145.4 million over 2012-13 can be explained by the following major items:

  Program Increase / (Decrease) in Authorities Available
For Use ($ millions)
Operating * Capital Grants and
Contributions *
Non-Budgetary Total
* Includes statutory authorities

** e.g. Decrease in funding for a new approach to K-12 education for First Nations, Bill C-3 - Gender Equity in Indian Registration Act, Education Information System, Cumulative Impact Monitoring Program, Employee Benefit Plan Adjustment, Consolidation of Pay Services projects in New Brunswick, Mi’kmaq Education, and increase in funding for collective bargaining and Diamond Valuations & Mining Royalty Activities.

Note: Figures may not add due to rounding
a. Funding for the Indian Residential Schools Settlement Agreement including funding for awards to claimants resulting from the Independent Assessment Process and Alternative Dispute Resolution as well as funding for the administration and research required to support the federal government’s obligations under the agreement 234.8   (10.3)   224.5
b. Funding to continue to support the implementation of the First Nations Water and Wastewater Action Plan 10.3   127.1   137.4
c. Funding for the development of systems and supports to ensure readiness for First Nation education legislation and to support the construction and/or renovation of schools on reserves     115.0   115.0
d. Funding to meet increased demand for ongoing Indian and Inuit programs providing access to basic services such as education and social support services 0.3   100.6   100.8
e. Funding for the assessment, management and remediation of federal contaminated sites 58.0   (2.1)   55.9
f. Net decrease in the cash flow for the negotiation, settlement and implementation of specific and comprehensive claims (primarily for the settlement of the Coldwater-Narrows Specific Claim and Justice at Last – Canada’s Action Plan on Accelerating the Resolution of Specific Claims) (15.6) (9.9) (290.4) (8.3) (324.1)
g. Savings identified as part of the Budget 2012 Spending Review (31.1)   (24.0)   (55.1)
h. Sunset of funding for First Nations Infrastructure Fund     (53.8)   (53.8)
i. Decrease reflecting the reform and refocusing of the Income Assistance Program through active measures to increase labour market participation     (40.4)   (40.4)
j. Other various initiatives (net) ** (6.9) 1.6 (9.4)   (14.8)
1st Qtr Total increase / (decrease) to Departmental Authorities 249.8 (8.3) (87.8) (8.3) 145.4

2.2 Statement of Departmental Budgetary Expenditures by Standard Object (Table 2)

Highlights of Fiscal Quarter ended June 30, 2013

Departmental spending in the first quarter of 2013-14 was $51.5 million lower than the same period in 2012-13. This net decrease of 2.6% can be attributed mainly to a decrease of $51 million in transfer payments (standard object 10) attributed to a difference in the dollar amount of specific claims settlements. In 2012-13 there was a specific claim settlement for the Cote Specific Claim in the amount of $131 million and in 2013-14 there were 4 specific claims settlements totalling $60 million. This represents a decrease of $70 million, in standard object 10, for specific claims settlements which was offset by increases in the following transfer payments: $6 million for emergency management assistance for activities on reserve, $5 million for Urban Aboriginal Strategy, $3 million to beneficiaries and various implementation bodies for implementation of comprehensive land claim agreements, $3 million in payments to Yukon First Nations pursuant to individual self-government agreements and $2 million for the Federal Interlocutor’s contribution program.

Year-to-Date Comparison of Budgetary Authorities and
Expenditures as of the end of June 2013
($ millions)

3. Risks and Uncertainties

3.1 Risks and Uncertainties

Risk management and risk-based decision-making have become a critical component in the way Department prioritizes and conducts its business. Resource allocation decisions are informed by risk and the Department’s key corporate risks are discussed systematically in a senior management committee.

The process to update the Department’s Corporate Risk Profile (CRP) was launched Q1 with Department-wide consultations held throughout June 2013. The consultations were based on risk information compiled from existing risk documentation at the sector, region and program level and the risk activities that are monitored through the Departmental Quarterly Reporting exercise. The sessions were prioritized based on the rankings from 2012 (Aboriginal Relationship Risk was VERY HIGH; the Human Resource Capacity and Capabilities, Information for Decision-making, Environmental, and Legal Risks were HIGH; the Implementation, Government Partnership, External Partnership and Resource Alignment Risks were MODERATE). Further work on the CRP will continue in Q2, including assessing the corporate risks for impact and likelihood. In addition to corporate risk profiling, individual risk assessments are being conducted at the program level in order to mitigate each program’s residual risks.

3.2 Risk Mitigating Strategies

Corporate and financial risk mitigation activities are reflected in the Corporate Business Plan and are monitored by senior management on a quarterly basis and modified as required. Cost containment measures are monitored monthly and a review and challenge function is done monthly through the Financial Status Report. A number of practices and internal controls help to manage risk departmentally, including senior management governance and oversight as established through committees, existing policies and procedures that ensure an appropriate level of monitoring, review and reporting.

4. Significant changes in relation to Operations, Personnel and Programs

Significant changes in relation to Operations, Personnel and Programs during the first quarter of fiscal year 2013-14 include:

5. Budget 2012 Implementation

This section provides an update of the savings measures announced in Budget 2012 that are being implemented in order to refocus government and programs; make it easier for Canadians and business to deal with their government; and, modernize and reduce the back office.

Aboriginal Affairs and Northern Development Canada achieved savings of $24.4 million in the first year (2012-13). Savings increased to $55.1 million in 2013-14 and will result in ongoing savings of $160.6 million by 2014-15.

For the quarter ending June 30, 2013, Budget 2012 impacts on the Department's authorities as approved in the Main Estimates and Supplementary Estimates (A) resulted in a reduction of $55.1 million.

There are no significant financial risks or uncertainties related to Budget 2012 savings for this quarterly financial report. AANDC continues to manage the implementation of Budget 2012 savings through its financial management and monitoring processes.

In the first quarter, the Department continued to focus on decreasing the costs of internal operations. Several internal operational changes continued to be implemented in order to deliver efficient, effective and accountable programs for Aboriginal people and Northerners.

AANDC's Implementation Committee, chaired by the Associate Deputy Minister and comprising the Assistant Deputy Ministers and direct reports to the Deputy Minister, continued to provide overall direction, coordination and oversight to all departmental deficit reduction savings implementation activities. The Workforce Management Board also continued to provide oversight on workforce management mechanisms and to ensure consistency and fairness in human resource decisions across the department.

6. Approval by Senior Officials

Approved, as required by the Treasury Board Policy on Financial Resource Management, Information and Reporting:

__________________________
Michael Wernick
Deputy Minister
__________________________
Pamela D’Eon
A/Chief Financial Officer

Statement of Authorities (unaudited)
Table 1

  Fiscal year 2013-2014 Fiscal year 2012-2013
Vote (thousands of dollars) Total available for use for the year ending March 31, 2014 * Expended during the quarter ended June 30, 2013 Year to date used at quarter-end Total available for use for the year ending March 31, 2013 ** Expended during the quarter ended June 30, 2012 Year to date used at quarter-end
* Including only Authorities available for use and granted by Parliament at quarter-end.

** Including only Authorities available for use and granted by Parliament at quarter-end. Total available for use does not reflect measures announced in Budget 2012.
   
1 Operating expenditures 1,414,328 209,814 209,814 1,169,832 209,484 209,484
5 Capital expenditures 13,683 417 417 21,953 426 426
10 Grants and contributions 6,483,588 1,568,474 1,568,474 6,560,595 1,619,327 1,619,327
   
(S) Budgetary statutory authorities - Operating Expenditures:    
Contributions to employee benefit plans 70,304 17,576 17,576 65,049 16,262 16,262
Minister of Aboriginal Affairs and Northern Development – Salary and motor car allowance 79 17 17 78 19 19
Payments to comprehensive claim beneficiaries in compensation for resource royalties 2,606 674 674 2,591 2,250 2,250
Liabilities in respect of loan guarantees made to Indians for Housing and Economic Development 2,000 0 0 2,000 6 6
Grassy Narrows and Islington Bands Mercury Disability Board 15 0 0 15 0 0
Other   300 300   569 569
   
(S) Budgetary statutory authorities - Transfer Payments:    
Grants to Aboriginal organizations designated to receive claim settlement payments pursuant to Comprehensive Land Claim Settlement Acts 73,762 32,074 32,074 75,576 32,536 32,536
Grant to the Nunatsiavut Government for the implementation of the Labrador Inuit Land Claims Agreement pursuant to the Labrador Inuit Land Claims Agreement Act 8 ,994 0 0 17,987 0 0
Indian Annuities Treaty payments 1,400 2,122 2,122 1,400 2,186 2,186
   
  Total Budgetary Authorities 8,070,760 1,831,468 1,831,468 7,917,075 1,883,065 1,883,065
   
  Non-Budgetary Authorities:    
Loans to native claimants 39,903 680 680 47,403 0 0
Loans to First Nations in British Columbia for the purpose of supporting their participation in the British Columbia Treaty Commission Process 30,400 825 825 31,200 2,278 2,278
   
  Total Non-Budgetary Authorities 70,303 1,505 1,505 78,603 2,278 2,278
   
  Total Authorities 8,141,063 1,832,973 1,832,973 7,995,678 1,885,343 1,885,343
   


Departmental Budgetary Expenditures by Standard Object (unaudited)
Table 2

  Fiscal year 2013-2014 Fiscal year 2012-2013
#
Expenditures:
(thousands of dollars) Planned expenditures for the year ending March 31, 2014 Expended during the quarter ended June 30, 2013 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2013 * Expended during the quarter ended June 30, 2012 Year to date used at quarter-end
* Planned expenditures do not reflect measures announced in Budget 2012.
   
1 Personnel 474,431 122,399 122,399 436,074 120,461 120,461
2 Transportation and communications 40,699 3,590 3,590 43,839 4,021 4,021
3 Information 17,728 825 825 10,175 1,814 1,814
4 Professional and special services 344,669 16,180 16,180 256,118 14,489 14,489
5 Rentals 10,460 1,149 1,149 9,683 992 992
6 Purchased repair and maintenance 3,521 57 57 5,322 99 99
7 Utilities, materials and supplies 7,309 391 391 8,173 681 681
8 Acquisition of land, buidlings and works 6,639 0 0 16,094 0 0
9 Acquisition of machinery and equipment 20,000 179 179 20,000 345 345
10 Transfer payments 6,567,744 1,602,670 1,602,670 6,655,559 1,654,050 1,654,050
12 Other subsidies and payments 578,311 84,028 84,028 456,040 86,114 86,114
   
  Total gross budgetary expenditures 8,071,510 1,831,468 1,831,468 7,917,075 1,883,065 1,883,065
   
Less: Revenues netted against expenditures: (750)    
   
  Total Revenues netted against expenditures: (750)          
   
Total net budgetary expenditures 8,070,760 1,831,468 1,831,468 7,917,075 1,883,065 1,883,065
   
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