Quarterly Financial Report for the quarter ended September 30, 2024
Table of contents
- Statement outlining results, risks and significant changes in operations, personnel and programs
- Highlights of fiscal quarter results
- Significant changes to authorities
- Significant changes to cumulative budgetary expenditures by standard object and by authorities
- Significant changes to quarterly budgetary expenditures by standard object and by authorities
- Risks and uncertainties
- Significant changes in operations, personnel and programs
Statement outlining results, risks and significant changes in operations, personnel and programs
Introduction
This report for the quarter ended September 30, 2024 has been prepared as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. The report has not been subject to an external audit or review and should be read in conjunction with GAC’s Main Estimates and Supplementary Estimates for the current fiscal year.
Basis of presentation
This quarterly report has been prepared using an expenditure basis of accounting. 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.
The accompanying Statement of Authorities includes GAC's spending authorities granted by Parliament, and those used by GAC, consistent with the Main Estimates and Supplementary Estimates (as applicable) for the current 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.
GAC uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament are on an expenditure basis.
Highlights of fiscal quarter results
1. Significant changes to authorities
The following table shows the total budget available for use by GAC, which includes authorities available for use and granted by Parliament as at September 30.
(in thousands of dollars) | Total available for use for the year ending | Total available for use for the year ending | Variance | |
|---|---|---|---|---|
$ | % | |||
Authorities | ||||
Vote 1 - Operating expenditures | 2,336,499 | 2,004,370 | 332,129 | 17% |
Vote 5 - Capital expenditures | 206,644 | 212,348 | (5,704) | (3%) |
Vote 10 - Grants and contributions | 5,884,107 | 4,946,750 | 937,357 | 19% |
Vote 15 - Payments of pension, insurance and social security programs for locally-engaged staff | 112,971 | 102,536 | 10,435 | 10% |
Statutory authorities | ||||
Payments to international financial institutions | 249,405 | 241,075 | 8,330 | 3% |
Contributions to employee benefit plans | 135,554 | 126,899 | 8,655 | 7% |
Debt forgiveness to Pakistan | 22,187 | 22,187 | - | 0% |
Other statutory authorities | 3,319 | 3,980 | (661) | (17%) |
Total budgetary authorities | 8,950,686 | 7,660,145 | 1,290,541 | 17% |
i. Authorities for operating expenditures
Authorities for operating expenditures increased by $332 million or 17%, which is mainly explained by:
- Increase of $70 million for salary increases embedded in newly signed collective agreements;
- Increase of $50 million in the operating budget, as approval was obtained from Treasury Board during the quarter, for GAC to use eligible lapsed funds from previous fiscal year in the current fiscal year;
- Increase of $49 million due to multiple compensation adjustments for locally-engaged staff (LES);
- Increase of $41 million related to inflation on overseas operations and foreign service allowance;
- Increase of $40 million to implement Canada's Indo-Pacific Strategy;
- Increase of $24 million in transfers received from other government departments to provide support to departmental staff located at missions abroad;
- Increase of $23 million in the funding for the management of the Canada-U.S. Softwood Lumber File;
- Increase of $18 million to extend Canada’s Middle East Strategy; and
- Increase of $17 million related to strengthen Canada's sanctions capacity and leadership.
ii. Authorities for grants and contributions
Authorities for grants and contributions haven’t change since last quarter; therefore, the increase of $937 million or 19% is still mainly explained by:
- Increase of $464 million to help developing countries address the impact of climate change;
- Increase of $221 million for Canada's International Biodiversity Program;
- Increase of $114 million to support Canada’s Feminist International Assistance Policy;
- Increase of $80 million to implement Canada's Indo-Pacific Strategy;
- Increase of $57 million related to the Strategic Priority Funds; and
- Remaining increase of $1 million is due to increases of lesser value.
2. Significant changes to cumulative budgetary expenditures by standard object and by authorities
The following table shows the net budgetary expenditures and authorities used for the first six months of the fiscal year and their comparison for the same period last fiscal year.
(in thousands of dollars) | April to September | April to September | Variance | |
|---|---|---|---|---|
$ | % | |||
Expenditures | ||||
Salaries and employee benefits | 816,694 | 746,267 | 70,427 | 9% |
Professional and special services | 144,129 | 136,385 | 7,744 | 6% |
Rentals | 129,141 | 126,795 | 2,346 | 2% |
Transportation and communications | 84,822 | 59,284 | 25,538 | 43% |
Information | 7,613 | 8,223 | (610) | (7%) |
Repairs and maintenance | 10,832 | 11,760 | (928) | (8%) |
Utilities, materials and supplies | 17,716 | 18,635 | (919) | (5%) |
Acquisition of land, buildings and works | 15,236 | 3,512 | 11,724 | 334% |
Acquisition of machinery and equipment | 18,008 | 12,915 | 5,093 | 39% |
Other | 6,922 | 1,940 | 4,982 | 257% |
Total operating and acquisition | 1,251,113 | 1,125,716 | 125,397 | 11% |
Transfer payments | 1,876,700 | 1,693,193 | 183,507 | 11% |
Total gross budgetary expenditures | 3,127,813 | 2,818,909 | 308,904 | 11% |
Less revenues netted against expenditures | ||||
Revenue credited to the vote | 51,178 | 53,800 | (2,622) | (5%) |
Total net budgetary expenditures | 3,076,635 | 2,765,109 | 311,526 | 11% |
Authorities | ||||
Vote 1 - Operating expenditures | 1,031,779 | 939,643 | 92,136 | 10% |
Vote 5 - Capital expenditures | 62,104 | 31,500 | 30,604 | 97% |
Vote 10 - Grants and contributions | 1,633,698 | 1,498,053 | 135,645 | 9% |
Vote 15 - Payments of pension, insurance and social security programs for locally-engaged staff | 37,247 | 36,207 | 1,040 | 3% |
Statutory authorities | ||||
Payments to international financial institutions | 242,783 | 194,850 | 47,933 | 25% |
Contributions to employee benefit plans | 68,656 | 64,431 | 4,225 | 7% |
Other statutory authorities | 368 | 425 | (57) | (13%) |
Total budgetary authorities | 3,076,635 | 2,765,109 | 311,526 | 11% |
i. Operating and acquisition expenditures
Operating and acquisition expenditures increased by $125 million or 11%, which is mainly explained by:
- Increase of $70 million in salaries and employee benefits due to:
- Renewal of multiple collective agreements, resulting in increases to Canadian-based staff regular pay, only became effective in the second and third quarters of the previous year; therefore, such increases were not reflected in the same quarters of last year; and
- Regular increase in LES salaries and related benefits paid at missions abroad.
- Increase of $26 million in transportation and communications due to an increase of charter flights paid for the evacuation of Canadians abroad due to overseas conflicts and political instability.
- Increase of $12 million in acquisition of land, buildings and works due to:
- Acquisition of a new chancery;
- Acquisition of a new residential unit and storage space.
- Increase of $5 million in acquisition of machinery and equipment due to:
- Acquisitions of video communication equipment at headquarters and missions abroad;
- Acquisitions of security control equipment at missions abroad; and
- Acquisitions of computers and equipment.
- Increase of $5 million in other expenditures, which is mainly due to
- Settlements for damages and other claims against the Crown; and
- Expenses related to pending transactions with acquisition cards.
- Remaining increase of $7 million is due to increases of lesser value.
ii. Transfer payments
Transfer payments increased by $184 million or 11%, which is mainly explained by:
- Increase of $178 million in payments to organizations for new development assistance programs and projects. More specifically, a contribution of $150 million was made for a new project for the Global Biodiversity Framework Fund;
- Increase of $48 million of payments to international financial institutions due to timing differences. More specifically, a significant payment was made to an international financial institution in the current quarter compared to the third quarter of the previous year;
- Decrease of $65 million in payments to the United Nations and related organizations for international development assistance due to timing differences in the payments; and
- Remaining increase of $23 million is due to increases of lesser value.
3. Significant changes to quarterly budgetary expenditures by standard object and by authorities
The following table shows the net budgetary expenditures and authorities used for the quarter ended September 30, 2024 and the comparison for the same period last fiscal year.
(in thousands of dollars) | July to September | July to September | Variance | |
|---|---|---|---|---|
$ | % | |||
Expenditures | ||||
Salaries and employee benefits | 420,023 | 413,200 | 6,823 | 2% |
Professional and special services | 96,048 | 83,654 | 12,394 | 15% |
Rentals | 58,430 | 59,441 | (1,011) | (2%) |
Transportation and communications | 52,361 | 31,758 | 20,603 | 65% |
Information | 4,063 | 5,285 | (1,222) | (23%) |
Repair and maintenance | 7,338 | 8,542 | (1,204) | (14%) |
Utilities, materials and supplies | 10,663 | 10,847 | (184) | (2%) |
Acquisition of land, buildings and works | 419 | 3,244 | (2,825) | (87%) |
Acquisition of machinery and equipment | 14,896 | 9,157 | 5,739 | 63% |
Other | 5,040 | 1,672 | 3,368 | 201% |
Total Operating and Acquisition | 669,281 | 626,800 | 42,481 | 7% |
Transfer payments | 1,066,047 | 985,347 | 80,700 | 8% |
Total Gross Budgetary Expenditures | 1,735,328 | 1,612,147 | 123,181 | 8% |
Less revenues netted against expenditures | ||||
Revenue credited to the vote | 35,725 | 32,804 | 2,921 | 9% |
Total net budgetary expenditures | 1,699,603 | 1,579,343 | 120,260 | 8% |
Authorities | ||||
Vote 1 - Operating expenditures | 544,785 | 522,274 | 22,511 | 4% |
Vote 5 - Capital expenditures | 34,596 | 23,141 | 11,455 | 50% |
Vote 10 - Grants and contributions | 1,012,707 | 862,024 | 150,683 | 17% |
Vote 15 - Payments of pension, insurance and social security programs for locally-engaged staff | 19,835 | 16,332 | 3,503 | 21% |
Statutory authorities | ||||
Payments to international financial institutions | 53,234 | 123,169 | (69,935) | (57%) |
Contributions to employee benefit plans | 34,265 | 32,139 | 2,126 | 7% |
Other statutory authorities | 181 | 264 | (83) | (31%) |
Total budgetary authorities | 1,699,603 | 1,579,343 | 120,260 | 8% |
i. Operating and acquisition expenditures
Operating and acquisition expenditures increased by $42 million or 7%, which is mainly explained by:
- Increase of $21 million in transportation and communications due to an increase of charter flights paid for the evacuation of Canadians abroad due to overseas conflicts and political instability.
- Increase of $12 million in professional and special services due to:
- Increase of expenditures for legal services because of recent settlements of damages and other claims against the Crown;
- Increase of engineering and architectural services for renovations completed in certain missions abroad; and
- Increase of expenditures for protection services at missions abroad.
- Increase of $6 million in acquisition of machinery and equipment due to:
- Acquisitions of video communication equipment at headquarters and missions abroad;
- Acquisitions of security control equipment at missions abroad; and
- Acquisitions of computers and equipment.
- Increase of $3 million in other expenditures, which is mainly due to
- Settlements for damages and other claims against the Crown; and
- Expenses related to pending transactions with acquisition cards.
ii. Transfer payments
Transfer payments increased by $81 million or 8%, which is mainly explained by:
- Increase of $118 million in payments to the United Nations and related organizations for international development assistance due to timing differences in the payments;
- Increase of $36 million due to the signature of a new unconditionally repayable contribution; and
- Decrease of $70 million in payments to international financial institutions due to timing differences. More specifically, a significant payment was made to an international financial institution in the first quarter this current year compared to the second quarter of the previous year; and
- Remaining decrease of $3 million is due to decreases of lesser value.
4. Risks and uncertainties
As a federal department delivering a complex mandate in a rapidly changing international environment, GAC is influenced by many factors. These factors include the political and security conditions, economic controls, global inflation, social contexts and shifting global trends, including geopolitical dynamics and climate risks.
At any time, the aforementioned factors could affect GAC’s operations, whether domestically or abroad, with the potential for significant impacts including on the safety and security of its personnel at missions. As such, effective risk management is critical to GAC’s ability to deliver results for Canadians. On the operational level, GAC regularly undertakes reviews to examine operational risks and assess the progress and effectiveness of ongoing responses. Risks are managed diligently by program leads, and an agile approach is used to avoid undue risk to program integrity. On the strategic front, the top risks facing GAC are established bi-annually in the Enterprise Risk Profile. In intervening years, a supplemental assessment of emerging risks facing GAC is conducted through global trend analysis. GAC also reviews the implementation of responses to the top strategic risks on a semi-annual basis by having risk leads assess progress and report to senior management.
The GAC Enterprise Risk Management Strategy guides departmental officials in managing risks that affect strategic plans and priorities. With this approach, GAC’s Strategic Risk Landscape and the Enterprise Risk Profile serve to identify unique pressures associated with GAC’s operating environment. The current key strategic risks that are tracked closely by senior management and receive extra support for their mitigation are around: constant change and high workloads; ability to allocate and prioritise resources in the context of increasing financial pressure; staffing, performance management, and training; the evolving cyber security landscape; IT infrastructure at mission and HQ; and the maintenance and recapitalisation of our real property assets. Work on these risks is also incorporated into GAC’s governance committee agendas to ensure senior-level and department-wide engagement on key corporate priorities in support of a more agile and responsive department.
GAC continues to be pragmatic and versatile in its management of risks and uncertainties associated with resources. GAC has a five-year investment and procurement plan, which includes a comprehensive strategy for how risks will be managed throughout the timeframe. GAC is also implementing strategies to manage the financial pressures related to non-discretionary activities and absorb budget reductions announced in the budget 2023, which have an impact on the current year and the coming years.
GAC has applied a range of measures to manage risks associated with fraud, such as training on awareness and detection. The risk of fraud is considered in audit and advisory engagements, and three audits of missions are planned during this fiscal year. GAC continues to assess, on a risk basis, its internal controls over financial reporting at headquarters and at missions and will be reporting on its internal controls over financial management, as per the requirements of the Treasury Board Policy on financial management. On the transfer payment programming side, GAC considers fraud risk as part of its recipient audit planning and continues to strengthen the fraud management capacity of recipient organizations via a dedicated team.
5. Significant changes in operations, personnel and programs
During the quarter, changes occurred in relation to the following positions:
- Appointment of a new Assistant Deputy Minister of the Americas branch.
- Appointment of a new Assistant Deputy Minister of the International Assistance Partnerships and Programming branch.
Approved, as required by the TB Policy on Financial Management:
David Morrison
Deputy Minister of Foreign Affairs
Shirley Carruthers
Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology
Ottawa, Ontario
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