Quarterly Financial Report for the quarter ended September 30th, 2016 – Revised
Date: December 19, 2016
Location: Statement of Authorities (unaudited)
Vote 1 Operating expenditures; Authority; (483,498) replaced by (483,499), Qtr; (238,651) replaced by (238,652), YTD; (350,490) replaced by (350,489)
Vote 5 Capital expenditures; YTD; (4,112) replaced by (4,111)
(S) Minister of Indigenous and Northern Affairs –Salary and motor car allowance; Authority; 1 replaced by 2
(S) Indian Annuities Treaty payments; Qtr; 96 replaced by 95, YTD; 384 replaced by 385
(S) Contributions in connection with First Nations infrastructure; Authority; 1,337 replaced by 1,336
Total Budgetary Authorities; Year to date used at quarter-end 2016-2017; 3,867,663 replaced by 3,867,665, Year to date used at quarter-end 2015-2016; 3,803,090 replaced by 3,803,088, YTD; 64,573 replaced by 64,577
Total Non-budgetary Authorities; Qtr; 5,183 replaced by 5,182
Total Authorities; Year to date used at quarter-end 2016-2017; 3,884,487 replaced by 3,884,489, Used during the quarter ended September 30, 2015; 1,944,788 replaced by 1,944,789, Year to date used at quarter-end 2015-2016; 3,817,064 replaced by 3,817,062, Qtr; 2,219 replaced by 2,218, YTD; 67,423 replaced by 67,427
Location: Departmental budgetary Expenditures by Standard Object (unaudited)
1 Personnel; Planned; (15,410) replaced by (15,409)
2 Transportation and communications; Planned; 28,155 replaced by 28,156
5 Rentals; Planned; 17,251 replaced by 17,250, YTD; 1,752 replaced by 1,751
7 Utilities, materials and supplies; Qtr; (4) replaced by (3)
9 Acquisition of machinery and equipment; Qtr; 322 replaced by 321
10 Transfer payments; Year to date used at quarter-end 2015-2016; 3,012,025 replaced by 3,012,024, Planned; 602,765 replaced by 602,764, YTD; 425,407 replaced by 425,408
12 Other subsidies and payments; Expended during the quarter ended September 30, 2015; 354,471 replaced by 354,470, Year to date used at quarter-end 2015-2016; 488,960 replaced by 488,958, Qtr; (294,449) replaced by (294,448), YTD; (403,001) replaced by (402,999)
Total gross budgetary expenditures; Year to date used at quarter-end 2016-2017; 3,868,180 replaced by 3,868,181, Year to date used at quarter-end 2015-2016; 3,803,090 replaced by 3,803,088, Qtr; (2,447) replaced by (2,448), YTD; 65,089 replaced by 65,093
Total net budgetary expenditures; Year to date used at quarter-end 2016-2017; 3,867,663 replaced by 3,867,665, Year to date used at quarter-end 2015-2016; 3,803,090 replaced by 3,803,088, YTD; 64,573 replaced by 64,577
Rationale for the revisions: Rounding error
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 the Main Estimates 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 $892.4 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, $67.2 million of Infrastructure funds (8%) and $57.1 million of comprehensive and specific claims (7%)
- Capital represents approximately $55.0 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 September 30th, 2016. Changes under 5% would have minimal impact on interpretation of results and therefore are not included in the explanation of variances.
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 September 30th, 2016. Total year-to-date authorities available for use in the second quarter of 2016-17 were $8,797.9 million compared to $8,690.6 million for the same quarter of the prior year, representing a net increase in Departmental authorities of $107.3 million. This increase over 2015-2016 can be explained as follows;
|Programs||Changes in Authorities Available For Use ($ millions) - Quarter 1 & 2 2015-16 versus Quarter 1 & 2 2016-17|
|Vote 1 Operating||Vote 5 Capital||Vote 10 Grants and Contributions||Statutory - Operating||Statutory – Grants and Contributions|
|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 an 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|
|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|
|1st Qtr||Sub total net increase to Departmental Authorities||-484.3||14.3||589.0||0.2||13.1||-14.0||118.2|
|n||Other various initiatives (net) **||0.7||0.0||0.7|
|o||Budget carry forward***||-5.5||-1.7||-7.1|
|p||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||6.3||-10.8||-4.6|
|2nd Qtr||Sub total net increase to Departmental Authorities||0.8||-12.5||0.7||0.0||0.0||0.0||-10.9|
|Total Qtr 1 and Qtr 2||Total net increase to Departmental Authorities||-483.5||1.8||589.7||0.2||13.1||-14.0||107.3|
|**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|
|***Department are permitted to carry forward up to 5% of Main Estimates Operating Budget and 20% of Capital Budgets|
|Note: Figures may not add due to rounding|
- As shown in the table above, the $107.3 million increase in total authorities is primarily attributed to the net effect of the increase of $589.7 million in Grants and Contributions authority, the decrease of $481.7 million in Operating and Capital and $0.7 million for Statutory and Non-Budgetary Items.
- The net increase of $589.7 million in Grants and Contributions authority is primarily due to an increase in funding for Infrastructure ($506.2M), the funding of First Nations Water and Wastewater ($147.0M), the funding of an 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 ($11.5M). 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), 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 net decrease of $481.7 million in Operating and Capital authority (Vote 1 and 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) and for the Operating and Capital Budget Carry forward ($7.1M). This is offset by the increase of Infrastructure ($25.9M), the funding for the assessment, management and remediation of federal contaminated sites ($27.0M), the funding of First Nations Water and Wastewater ($10.0M) and other initiatives ($8.2M).
- The $0.7 million decrease in Statutory and Non budgetary items consists of a net effect of the decrease for the negotiation, implementation of specific, comprehensive and land claims ($2.3M) and the increase of miscellaneous items ($1.6M).
2.2 Statement of Departmental Budgetary Expenditures by Standard Object (Table 2)
Highlights of Fiscal Quarter ended September 30th, 2016
The Department is estimating budgetary expenditures of $8.7 billion in 2016-2017. In the second quarter, budgetary authorities were $121.3 million higher and departmental expenditures were $64.6 million higher than the same period in 2015-2016. 44% of total available budgetary authorities were expended which is equivalent to previous year second quarter.
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 September 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, Supplementary Estimates A and items from the Allotment listings such as the Operating and Capital budget carry forward as of September 30th, 2016. Authorities for 2015-16 are $8,620.3 million and $8,741.6 million for 2016-17. The net difference is an increase of $121.3 million.
Expenditures for 2015-16 Q2 are $1,934.2 million and $1,931.2 million for 2016-17. At the end of Q2, total expenditures are at $3,803.1 million in 2015-16 compared to $3,867.7 million in 2016-17. The result is a net increase of $64.6 million.
In table 2, the net increase of $64.6 million in expenditures is mainly due to Transfer payments ($425.4M) (Standard Object 10) and Professional and special services ($50.8M) (Standard Object 4) which are offset mainly by the decrease of Other subsidies and payments ($403.0M) (Standard Object 12), Personnel ($5.4M) (Standard Object 1) and Acquisition of machinery and equipment ($3.7M) (Standard Object 8).
The increase in Transfer payments is mainly due to the timing of payment for specific, special and land claims. The increase in Professional and special services is due to the timing of the payment of Legal fees. The decrease in other subsidies and payment is mainly due to the payment in 2015-16 of out of court and claimant award settlements. The winding down of Residential Schools and the turnover of employees in some sectors of our Department have contributed to the slight diminution of our Personnel. Finally, the decrease in Acquisition of machinery and equipment is due to the decrease in spending for the Canadian High Arctic Research Center.
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 in excess of $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.
Budget 2016 announced $8.4 billion over five years to improve the socio-economic conditions of Indigenous peoples and their communities. In 2016-17 INAC will receive $1.2 billion, and a large portion of these funds, $706 million, are for infrastructure programming and represents a 62 % percent increase in the infrastructure budget. In order to strengthen controls in this area, a review of the management control framework for the Capital Facilities and Maintenance Program (CFMP) was conducted and improvements made such as the introduction of a new due diligence checklist which focuses management's attention on key management controls and the development of an infrastructure-focused project audit regime. Findings resulting from ongoing departmental audits, evaluations and reviews, are being identified as actions within the infrastructure compliance framework.
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
On August 29, 2016, Paul Thoppil became interim Senior Assistant Deputy Minister of Policy and Strategic Direction and Chief Financial Officer.
5. Approval by Senior Officials
Approved, as required by the Treasury Board Policy on Financial Resource Management, Information and Reporting:
Original signed by
Date: November 22, 2016
City: Gatineau (Canada)
Original signed by
Paul J. Thoppil, CPA, CA
Chief Financial Officer
Date: November 18, 2016
City: Gatineau (Canada)
|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 September 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 September 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.|
|10||Grants and contributions||7,634,597||1,629,761||3,388,147||7,044,897||1,384,684||2,973,135||589,700||245,077||415,012|
|(S)||Budgetary statutory authorities - Operating Expenditures:|
|Contributions to employee benefit plans||59,151||13,182||26,364||58,826||14,678||29,356||325||(1,496)||(2,992)|
|Minister of Indigenous and Northern Affairs – Salary and motor car allowance||84||14||21||82||21||41||2||(7)||(20)|
|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||2,156||2,156||0||(2,156)||(2,156)|
|Grassy Narrows and Islington Bands Mercury Disability Board||15||0||0||15||0||0||0||0||0|
|(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||23,339||44,390||54,589||21,960||31,651||11,728||1,379||12,739|
|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||(339)||2,423||1,400||(434)||2,038||0||95||385|
|Contributions in connection with First Nations infrastructure||28,067||1,893||2,472||26,731||4,899||5,200||1,336||(3,006)||(2,728)|
|Total Budgetary Authorities||8,741,559||1,931,220||3,867,665||8,620,290||1,934,184||3,803,088||121,269||(2,964)||64,577|
|Loans to native claimants||25,903||8,240||9,277||39,903||4,116||7,485||(14,000)||4,124||1,792|
|Loans to First Nations in British Columbia||30,400||7,547||7,547||30,400||6,489||6,489||0||1,058||1,058|
|Total Non-Budgetary Authorities||56,303||15,787||16,824||70,303||10,605||13,974||(14,000)||5,182||2,850|
|Fiscal year 2016-2017||Fiscal year 2015-2016||Variances|
|Expenditures:||Planned expenditures for the year ending March 31, 2017||Expended during the quarter ended September 30, 2016||Year to date used at quarter-end||Planned expenditures for the year ending March 31, 2016||Expended during the quarter ended September 30, 2015||Year to date used at quarter-end||Planned||Qtr||YTD|
|2 Transportation and communications||57,683||4,809||8,963||29,527||5,868||9,908||28,156||(1,059)||(945)|
|4 Professional and special services||249,380||92,057||106,816||323,982||38,600||55,970||(74,602)||53,457||50,846|
|6 Purchased repair and maintenance||7,154||346||418||2,759||192||329||4,395||154||89|
|7 Utilities, materials and supplies||8,625||675||1,045||5,907||678||1,047||2,718||(3)||(2)|
|8 Acquisition of land, buildings and works||51,307||11,804||13,972||47,649||15,004||17,632||3,658||(3,200)||(3,660)|
|9 Acquisition of machinery and equipment||2,905||593||900||399||272||424||2,506||321||476|
|10 Transfer payments||7,730,381||1,654,654||3,437,432||7,127,617||1,411,109||3,012,024||602,764||243,545||425,408|
|11 Public debt charges||0||0||0||0||0||0||0||0||0|
|12 Other subsidies and payments||179,304||60,022||85,959||640,586||354,470||488,958||(461,282)||(294,448)||(402,999)|
|Total gross budgetary expenditures||8,742,269||1,931,736||3,868,181||8,621,000||1,934,184||3,803,088||121,269||(2,448)||65,093|
|Less: Revenues netted against expenditures|
|Total Revenues netted against expenditures||(710)||(516)||(516)||(710)||0||0||0||(516)||(516)|
|Total net budgetary expenditures||8,741,559||1,931,220||3,867,665||8,620,290||1,934,184||3,803,088||121,269||(2,964)||64,577|
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