Quarterly Financial Report for the quarter ended June 30th, 2016 - Revised

Table of contents

Date: February 15, 2017
Location: Statement of Authorities (unaudited)
Revision:
Vote 5 Capital expenditures; Authority; 14,251 replaced by 14,250
(S) Minister of Indigenous and Northern Affairs –Salary and motor car allowance; Authority; 1 replaced by 2
(S) Indian Annuities Treaty payments; Used during the quarter end June 30, 2016; 2,762 replaced by 2,761, Year to date used at quarter-end 2016-2017; 2,762 replaced by 2,761, Qtr; 289 replaced by 288, YTD; 289 replaced by 288
(S) Contributions in connection with First Nations infrastructure; Authority; 1,337 replaced by 1,336
(S) Loan to Native claimants; Qtr; (2,332) replaced by (2,333), YTD; (2,332) replaced by (2,333)
Total non-budgetary authorities; Qtr; (2,332) replaced by (2,333), YTD; (2,332) replaced by (2,333)
Total Authorities; Qtr; 65,205 replaced by 65,204, YTD; 65,205  replaced by 65,204
Location: Departmental budgetary Expenditures by Standard Object (unaudited)
Revision:
1 Personnel;  Qtr; (3,812) replaced by (3,811), YTD; (3,812) replaced by (3,811)
6 Purchased repair and maintenance; Qtr; (65) replaced by (66), YTD; (65) replaced by (66)
7 Utilities, materials and supplies; Qtr; 2 replaced by 1, YTD; 2 replaced by 1
10 Transfer payments; Qtr; 181,862 replaced by 181,861, YTD; 181,862 replaced by 181,861
Rationale for the revisions: Rounding error

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 2016-2017. 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

Indigenous and Northern Affairs Canada (INAC) supports Indigenous people (First Nations, Inuit and Métis) and Northerners in their efforts to:

  • Improve social well-being and economic prosperity;
  • Develop healthier, more sustainable communities; and
  • Participate more fully in Canada's political, social and economic development – to the benefit of all Canadians.

Further details on INAC's authority, mandate and program activities can be found in Part II of the Main Estimates and the Report on Plan 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 INAC's spending authorities granted by Parliament and those used by the Department consistent with the Main Estimates and Supplementary Estimates (A) for fiscal year 2016-2017.

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.

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 INAC's (Indigenous and Northern Affairs Canada) Financial Structure

The parliamentary vote structure of INAC is made up of $8.7 billion in budgetary authorities of which $8.6 billion requires approval by Parliament; referred to as voted amounts. The remaining $159.6 million represents statutory authorities that do not require additional approval and are provided for information purposes.

Voted amounts totaling $8.6 billion are split between Operating Expenditures, Capital Expenditures and Grants and Contributions as follows:

  • Operating Expenditures represents approximately $863 million (10%), this includes $165.5 million (19% of Operating Expenditures) for the Settlement Allotment (Independent Assessment Process and Alternative Dispute Resolution), $140.8 million (16% of Operating Expenditures) for the assessment, management and remediation of federal contaminated sites and $57.1 million of comprehensive and specific claims (7%)
  • Capital represents approximately $54.7 million (1%)
  • Grants and Contributions represent approximately $7.6 billion (89%)

More detailed information about INAC's financial structure, including information about the fiscal cycle, cost drivers, expenditure trends, etc. can be found online on the Financial information web page.

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 30th, 2016. The explanation of variances considers that changes under 5% would have minimal impact on interpretation of results.

2.1 Statement of Authorities (Table 1a and Table 1b)

The Quarterly Financial Report reflects the year over year change in authorities for the period April 1st to June 30th, 2016. Total year-to-date authorities available for use in the first quarter of 2016-17 were $8,768.2 million compared to $8,649.9 million for the same quarter of the prior year, representing an increase in Departmental authorities of $118.2 million. The total 2016-2017 year-to-date authority increase of $118.2 million over 2015-2016 can be explained as follows:

Table 1a: Statement of Authorities
Programs Changes in Authorities Available For Use ($ millions) - Quarter 1 2015-16 versus Quarter 1 2016-17
Budgetary Non-
Budgetary
Total
Vote 1
Operating
Vote 5
Capital
Vote 10
Grants and Contributions
Statutory -
Operating
Statutory –
Grants and Contributions
**e.g. (example). Other - Includes funding for Indspire to support post-secondary education for First Nations and Inuit students, funding for the expansion of the First Nations Land Management Regime and funding from the new Building Canada Fund to support investments through the First Nations Infrastructure Fund
Figures may not add due to rounding
Increase;
a. Funding to support the First Nation Student Success Program and the Education Partnerships Program and the repair and construction of on-reserve schools, affordable housing and social infrastructure projects, communities in the construction of public infrastructure on reserve, First Nartions Enhances Education Infrastructure fund and Waste Management Infrastructure 25.9 506.2 2.0 534.1
b. Funding for the First Nations Water and Wastewater 10.0 147.0 0.5 157.4
c. Funding to meet increased demand for ongoing Indian and Inuit programs which reflects a 2% allowance for inflation and population growth and provides access to basic services such as education, housing, community infrastructure (water and sewage systems), and social support services 0.3 106.7 107.0
d. Funding for the assessment, management and remediation of federal contaminated sites 27.0 41.8 0.4 69.1
e. Funding to renew the Urban Aboriginal Strategy 23.7 23.7
f. Funding for the pro-active reconciliation and management of Métis Aboriginal rights and the management of Métis and non-status Indian litigation 5.0 11.0 0.1 16.1
g. Funding for the construction of the Canadian High Arctic Research Station and the implementation of the associated Science and Technology Program and transfer to Polar Knowledge Canada -5.8 14.2 -2.1 -0.5 5.7
h. Other various initiatives (net) ** -0.1 0.0 13.0 3.2 1.3 17.4
Sub-total Increase 62.2 14.3 847.2 5.6 1.3 0 930.6
Decrease;
i. Cash flow for the negotiation, settlement and implementation of specific, comprehensive and land claims -249.7 -180.3 -0.1 11.7 -14.0 -432.4
j. Funding for the Indian Residential Schools Settlement Agreement including funding for awards to claimants resulting from the Independent Assessment Process and Alternative Dispute Resolution, funding for the administration and research required to support the federal government’s obligations under the agreement as well as funding related to the Indian Residential Schools Truth and Reconciliation Commission -296.0 -5.2 -301.2
k. Funding for Operation Return Home Manitoba Interlake Flood -40.6 -40.6
l. Transfer Canadian Heritage – To transfer the control and supervision of Aboriginal Friendship Centres, Cultural Connections for Aboriginal Youth, and Young Canada Works for Urban Aboriginal Youth as a result of government restructuring -0.8 -22.7 -0.2 -23.7
m. Nutrition North Canada -14.6 -14.6
Sub-total Decrease -546.5 0.0 -258.2 -5.4 11.7 -14.0 -812.4
1st Qtr: Total net increase to Departmental Authorities -484.3 14.3 589.0 0.2 13.1 -14.0 118.2
  • As shown in the table above, the $118.2 million increase in total authorities is primarily attributed to the net effect of the increase of $589.0 million in Grants and Contributions authority and the decrease of $470.0 million in Operating and Capital and $.8M for Statutory and Non-Budgetary Items.
  • The year over year net increase of $589.0 million in Grants and Contributions authority is primarily due to an increase in funding for Infrastructure projects ($506.2M), the funding of First Nations Water and Wastewater ($147.0M), the funding of 2% allowance for inflation and population growth ($106.7M), the funding for the assessment, management and remediation of federal contaminated sites ($41.8M), the funding of Urban Aboriginal Strategy ($23.7M), for Métis Aboriginal Rights ($11.0M) and other various initiatives ($10.8M). This is offset by the decrease of the cash flow for the negotiation, settlement and implementation of specific and comprehensive claims ($180.3M), the funding for the Operation Return Home Manitoba Interlake Flood ($40.6M) and the transfer of funding for Aboriginal Friendship Centers, Cultural Connections for Aboriginal Youth, and Young Canada Works for Urban Aboriginal Youth ($22.7M) and Nutrition North Canada ($14.6M).
  • The year over year net decrease of $470 million in Operating authority (Operating Vote 1 and Capital Vote 5) is primarily due to the decrease of funding for cash flow for the negotiation, settlement and implementation of specific, comprehensive and land claims ($249.7M), the decrease in funding for the Indian Residential Schools Settlement Agreement and related funding for the Indian Residential Schools Truth and Reconciliation Commission ($296.0M). This is offset by the increase of Infrastructure projects ($25.9M), the funding for the assessment, management and remediation of federal contaminated sites ($27.0M), Canadian High Arctic Research Station ($14.2M), and other initiatives ($8.6M).
  • The $.8M decrease in Statutory and Non budgetary items consists of a net effect of the decrease of $2.3M for the negotiation, implementation of specific, comprehensive and land claims and the increase of $1.5M for miscellaneous items.

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

Highlights of Fiscal Quarter ended June 30th, 2016

The Department is estimating budgetary expenditures of $8.7 billion in 2016-2017. In the first quarter, budgetary authorities were $132.2 million higher and departmental expenditures were $67.5 million higher than the same period in 2015-2016. 22% of total available budgetary authorities were expended which is equivalent to previous year first quarter. As indicated in Table 1b, the increase is mainly due to the increase of Grants and Contributions and Budgetary statutory transfer payments (totaling $181.3M) offset by the decrease in Operating expenditures ($111.8M). In table 2, the increase is mainly due to Transfer payments ($181.9M) (Standard object 10) and offset by the decrease of Other subsidies and payments ($108.6M) (Standard object 12). The increase in Transfer payments is mainly due to the timing of payment for specific, special and land claims. The decrease in Other subsidies and payment is due to two main factors: A payment ($64.5M) for an out-of-court settlement was done in Q1 2015-2016. There is a decrease in the number of decisions issued by adjudicators as the majority of Independent Assessment Process claims have been resolved in previous year resulting in a reduction of payments ($28.0M).

Year-to-Date Comparison of Budgetary Authorities and Expenditures
($ millions)
Text description of the above chart

This image is of a bar graph of the year-to-date comparison of budgetary authorities and expenditures as of the end of June 30th, 2016. The graph plots the authorities and expenditures by quarter arriving at a year to date total for the fiscal years 2015-16 and 2016-17.

Authorities include the Main Estimates and the Supplementary Estimates A authorities as of June 30th, 2016. Authorities for 2015-16 Q1 total $8,580 million and 2016-17 Q1 total $8,712 million. The net difference is an increase of $132.2 million.

Expenditures for the Q1 in 2015-16 is $1,869 million compared to $1,936 million in 2016-17 Q1. The result in a net increase of $67.5 million.

3. Risks and Uncertainties

3.1 Risks and Uncertainties

Risk management and risk-based decision-making have become a critical component in the way the Department prioritizes and conducts its business. Resource allocation decisions are informed by risk and the Department's key corporate risks are discussed systematically by the senior management committee, which contributes to the better allocation of resources and ultimately better results.

The Department continues to monitor its risk exposure and take action as needed to mitigate the risk of not achieving anticipated outcomes or to deal with emerging pressures. Achievement of INAC's strategic outcomes and delivery of programs is dependent on timely access to appropriate authorities and funding levels.

In terms of transfer payment program and transfer payment recipient risk, the Department transfers approximately $7 billion dollars to recipients each year, while balancing program and recipient risks to deliver on its mandate. The Department undertakes risk assessments on new, existing and reformed programs as well as an annual General Assessment of each recipient to identify certain areas at risk as history has substantiated a link between risk level and default prevention.

3.2 Risk Mitigating Strategies

Corporate and financial risk mitigation activities, reflected in the Department's Corporate Risk Profile, are monitored by senior management on a semi-annual basis and modified as required. 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.

The Department is managing its budget by aligning resources to needs and through rigorous monitoring against both financial and human resource targets. Management proactively and systematically manages and responds to risks to minimize adverse impacts and capitalize on opportunities. Budget and expenditure trends are monitored regularly, including a review and challenge function, through the Financial Status Report.

Following an assessment of fraud risk conducted in 2014, the Department is implementing a fraud risk mitigation plan to address the identified risks.

In order to ensure effective controls, transparency and accountability, a risk-based approach is used to confirm that recipients have met planned program outcomes and results; that they are in compliance with funding agreements; and, that the funds were used to the intended purposes. In addition, the ability to conduct audits of recipients, under the terms of their funding agreements; provide a further opportunity to ensure that First Nations have appropriate management, financial and administrative controls in place.

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 2016-2017 include:

5. Approval by Senior Officials

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

Original signed by

_______________________
Hélène Laurendeau
Deputy Minister

Date: August 24, 2016

City: Gatineau (Canada)

Original signed by

_______________________
Paul J. Thoppil, CPA, CA
Chief Financial Officer

Date: August 11, 2016

City: Gatineau (Canada)

Table 1b: Statement of Authorities (unaudited)
(thousands of dollars)
  Fiscal year 2016-2017 Fiscal year 2015-2016 Variances
Vote   Total available for use for the year ending March 31, 2017 * Used during the quarter ended June 30, 2016 Year to date used at quarter-end 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 Authority Qtr YTD
* Including only Authorities available for use and granted by Parliament at quarter-end.
1 Operating expenditures 863,000 137,159 137,159 1,347,282 248,997 248,997 (484,282) (111,838) (111,838)
5 Capital expenditures 54,698 2,590 2,590 40,448 2,917 2,917 14,250 (327) (327)
10 Grants and contributions 7,634,597 1,758,386 1,758,386 7,045,614 1,588,451 1,588,451 588,983 169,935 169,935
(S) Budgetary statutory authorities - Operating Expenditures:
  Contributions to employee benefit plans 59,151 13,182 13,182 58,826 14,678 14,678 325 (1,496) (1,496)
  Minister of Indigenous and Northern Affairs – Salary and motor car allowance 84 7 7 82 21 21 2 (14) (14)
  Payments to comprehensive claim beneficiaries in compensation for resource royalties 2,544 0 0 2,638 0 0 (94) 0 0
  Liabilities in respect of loan guarantees made to Indians for Housing and Economic Development 2,000 0 0 2,000 0 0 0 0 0
  Grassy Narrows and Islington Bands Mercury Disability Board 15 0 0 15 0 0 0 0 0
  Other 0 728 728 0 1,377 1,377 0 (649) (649)
(S) Budgetary statutory authorities - Transfer Payments:
  Grants to Aboriginal organizations designated to receive claim settlement payments pursuant to Comprehensive Land Claim Settlement Acts 66,317 21,051 21,051 54,589 9,691 9,691 11,728 11,360 11,360
  Grant to the Nunatsiavut Government for the implementation of the Labrador Inuit Land Claims Agreement pursuant to the Labrador Inuit Land Claims Agreement Act 0 0 0 0 0 0 0 0 0
  Indian Annuities Treaty payments 1,400 2,761 2,761 1,400 2,473 2,473 0 288 288
  Contributions in connection with First Nations infrastructure 28,067 579 579 26,731 301 301 1,336 278 278
  Total Budgetary Authorities 8,711,873 1,936,443 1,936,443 8,579,625 1,868,906 1,868,906 132,248 67,537 67,537
  Non-Budgetary Authorities:
  Loans to native claimants 25,903 1,037 1,037 39,903 3,370 3,370 (14,000) (2,333) (2,333)
  Loans to First Nations in British Columbia 30,400 0 0 30,400 0 0 0 0 0
  Total Non-Budgetary Authorities 56,303 1,037 1,037 70,303 3,370 3,370 (14,000) (2,333) (2,333)
  Total Authorities 8,768,176 1,937,480 1,937,480 8,649,928 1,872,276 1,872,276 118,248 65,204 65,204
Table 2: Departmental Budgetary Expenditures by Standard Object (unaudited)
(thousands of dollars)
  Fiscal year 2016-2017 Fiscal year 2015-2016 Variances
Expenditures: Planned expenditures for the year ending March 31, 2017 Expended during the quarter ended June 30, 2016 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2016 Expended during the quarter ended June 30, 2015 Year to date used at quarter-end Planned Qtr YTD
1 Personnel 397,908 103,025 103,025 415,454 106,836 106,836 (17,546) (3,811) (3,811)
2 Transportation and communications 53,232 4,154 4,154 27,032 4,040 4,040 26,200 114 114
3 Information 23,729 576 576 13,365 1,124 1,124 10,364 (548) (548)
4 Professional and special services 230,137 14,759 14,759 296,601 17,370 17,370 (66,464) (2,611) (2,611)
5 Rentals 29,447 2,300 2,300 13,420 845 845 16,027 1,455 1,455
6 Purchased repair and maintenance 6,602 71 71 2,526 137 137 4,076 (66) (66)
7 Utilities, materials and supplies 7,959 370 370 5,408 369 369 2,551 1 1
8 Acquisition of land, buildings and works 51,307 2,168 2,168 36,830 2,628 2,628 14,477 (460) (460)
9 Acquisition of machinery and equipment 2,577 306 306 2,533 152 152 44 154 154
10 Transfer payments 7,730,381 1,782,777 1,782,777 7,128,334 1,600,916 1,600,916 602,047 181,861 181,861
11 Public debt charges 0 0 0 0 0 0 0 0 0
12 Other subsidies and payments 179,304 25,937 25,937 638,832 134,489 134,489 (459,528) (108,552) (108,552)
Total gross budgetary expenditures 8,712,583 1,936,443 1,936,443 8,580,335 1,868,906 1,868,906 132,248 67,537 67,537
Less: Revenues netted against expenditures
Internal Services (710) 0 0 (710) 0 0 0 0 0
Total Revenues netted against expenditures (710) 0 0 (710) 0 0 0 0 0
Total net budgetary expenditures 8,711,873 1,936,443 1,936,443 8,579,625 1,868,906 1,868,906 132,248 67,537 67,537
Date modified: