Language selection


Search veterans.gc.ca

April - June 2012

I. Statement outlining results, risks and significant changes in operations, personnel and program for the quarter ended June 30, 2012

1. Introduction

This 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. This quarterly report should be read in conjunction with the Main Estimates as well as Canada’s Economic Action Plan 2012 (Budget 2012).

A summary description of Veterans Affairs Canada’s program activities can be found in Part II of the Main Estimates.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes Veterans Affairs Canada’s spending authorities granted by Parliament and those used by the Department, consistent with the Main Estimates for the 2012-13 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 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.

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.

As part of the departmental performance reporting process, Veterans Affairs Canada prepares its annual departmental financial statements on a full accrual basis in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector. However, the spending authorities voted by Parliament remain on an expenditure basis.

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 will be established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012. In future years, the changes to departmental authorities will be implemented through the Annual Reference Level Update, as approved by Treasury Board, and reflected in the subsequent Main Estimates tabled in Parliament.

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

2. Highlights of Fiscal Quarter and Fiscal Year to-Date (YTD) Results

Statement of Authorities

As at June 30, 2012, total authorities available for the year have increased by $44.8 million (1.3%) compared to the same quarter of the previous year, from $3,523 million to $3,568 million. This net increase is the result of an $88.4 million increase in Vote 5, Grants and contributions, a $42.1 million decrease in Vote 1, Operating expenditures, and a $1.5 million decrease in statutory authorities.

Overall, Veterans Affairs Canada’s authorities reflect the changing demographic profile and changing needs of the men and women and families the Department serves. Authorities used during the first quarter of 2012-13 are $23.8 million (2.7%) less when comparing the same three-month period of 2011-12, from $873.7 million to $849.9 million as per the table of Departmental Budgetary Expenditures by Standard Object. Compared with the previous year, this represents 23.8% of total expenditures compared to 24.8% expenditures recorded for the same quarter in 2011-12. As a result of the Government expenditure management cycle, there are often fluctuations by quarter and between fiscal years when comparing authorities received and actual expenditures. This is a result of the quasi-statutory nature of the Department’s programs, which are demand-driven and based on need and entitlement. In other words, a Veteran who is entitled to a benefit is paid that benefit, whether 10 Veterans come forward, or 10,000.

Statement of Departmental Budgetary Expenditures by Standard Object

When analyzed by Standard Object, expenditures in the first quarter were generally consistent with prior year spending trends. The three largest variances include:

  • An increase of $25.9 million within the Professional and special services category which is offset by a decrease of $33.7 million in the Utilities, materials and supplies category as a result of the decreasing need for long term care and health-related benefits due to a reduction in the number of War Service Veterans and clients accessing the Department’s traditional programs. The $25.9 million increase in the Professional and Special services category will be reconciled after an appropriate re-allocation of expenditures.
  • A decrease of $7.7 million in the Other Subsidies and Payments category attributed to the sun setting of ex gratia payments, as of December 30, 2011, related to the historical use of Agent Orange at CFB Gagetown.
  • A decrease of $5.5 million in the Personnel category attributed to:
    • a decrease in salary from the transfer of personnel to Shared Services Canada;
    • a decrease in Ste. Anne’s Hospital salary expenditures;
    • a decrease in severance benefits; and
    • a reduction in the total number of Veterans Affairs Canada employees.

3. Risks and Uncertainties

At Veterans Affairs Canada, risk management is a fundamental underpinning of good management and decision making. The Department’s approach to risk management is designed to address risk in any area or level within the Department in order to provide reasonable assurance that corporate objectives and desired outcomes will be achieved.

The following risks have been identified in the Department’s Report on Plans and Priorities 2012-13 as having the potential to impact the Department’s ability to achieve its strategic outcomes.

Managing Change
There is a risk that the magnitude and pace of change occurring within VAC over the coming years could have an impact on the Department’s ability to meet the needs of Veterans and other individuals during the transition period and that is why VAC is working to mitigate this risk.

By continuing to strengthen its governance structures, senior management is able to provide the oversight necessary to support transformation with sound decision-making. In addition, VAC is fostering a culture of change throughout the Department through the implementation of a change management framework aimed at supporting employees through the transition to a new working environment.

The Department is realigning organizational resources to better support its evolving model and footprint while ensuring that employees are provided with appropriate training and skill development opportunities. VAC is working to improve and increase communications in order to ensure clarity, consistency and quality in transformation-related messaging.

Programs and Service Delivery
There is a risk that large-scale, government-wide strategic changes may impact the Department’s ability to deliver its programs and services while maintaining strong partnerships and stakeholder relations.

In order to mitigate this risk, VAC is conducting a review of its business processes and procedures to improve efficiency in program delivery. The Department is continuing to implement an outreach plan to strengthen relations with Veterans, stakeholders and Canadian Forces members. This will increase opportunities to provide them with accurate and relevant information about VAC’s benefits and services and gain insights into how programs can better meet their needs.

VAC is also working with Veterans’ organizations to better understand how best to honour and serve Veterans and their families. The Department will continue to train employees and introduce new technology to assist with knowledge transfer and performance management.

Ste. Anne’s Hospital
The risks associated with the transfer of the Ste. Anne’s Hospital to the Government of Quebec are complex in nature given the scope of the project. Mitigation strategies have been put in place to ensure ongoing monitoring and the provision of flexibility for adjustment when necessary. Mitigation strategies include, but are not limited to, a detailed and comprehensive project plan; regular communication/consultation updates with various stakeholders including employees, unions, Veterans and their families; as well as a commitment to ensure Veterans continue to receive priority access to high level of care.

From a financial perspective, the demand-driven nature of VAC’s client programs causes the Department’s funding requirements to fluctuate from year to year. This creates a risk that funding levels will not be sufficient to meet program demand. To mitigate this risk, VAC prepares an annual submission during the second quarter to have its program reference level adjusted (in-year and for the next fiscal year, in line with the government’s planning cycle). The required authority for these adjustments will be granted by Parliament later in the fiscal year. This process mitigates any risk of insufficient funds to meet program demand. Planned spending levels beyond next fiscal year, as shown in the Department’s 2012-13 Report on Plans and Priorities, are based in part on base reference levels established in 2007 which generally understate planned spending and are not reflective of the changing demographic profile and needs of VAC clients. These planned spending figures are corrected each year, as noted above, through the “estimates” process. Based on the flexibility of this process, benefits for Veterans, their families and other clients are not affected.

4. Significant Changes in Relation to Operations, Personnel and Programs

Veterans Affairs Canada’s five-year Transformation Agenda to fundamentally change how the Department does business will result in profound changes unlike anything in its history. Transformation is an "invest-to-save" initiative. The upfront investment is being used to expand VAC’s service delivery network capacity, fund communications initiatives, as well as to enhance VAC’s existing information management and information technology infrastructure. Savings will be made possible through business and technological improvements, strengthened partnerships and a realignment and reduction in the size of the organization.

The Department is now in Year Two of this plan. Although the majority of initiatives for transformation are both multi-year and multi-phased, the Department did implement further significant changes this quarter including the following two initiatives:

On April 3, 2012, the Minister of Veterans Affairs announced measures as part of the “Cutting Red Tape for Veterans” initiative to improve service to Veterans, Canadian Forces members and their families. With the new changes, Veterans will receive up-front payments for grounds maintenance and housekeeping services offered under the Veterans Independence Program. Veterans will no longer have to submit receipts for these two popular services. This eliminates cumbersome paperwork for Veterans and puts money into their hands faster, so they can remain independent in their own homes.

On June 11, 2012, the Minister of Veterans Affairs announced another component of the “Cutting Red Tape for Veterans” initiative. Veterans no longer have to submit receipts to receive the financial support they need to cover travel expenses incurred for medical appointments. In fiscal year 2011-2012, the Department paid approximately $18 million to Veterans for health-related travel expenses. Under the old system, Veterans had to mail or drop off their receipts for the cost of travelling for treatment or medical assessments.

The above initiatives are linked to Budget 2012, though they also align with the Department’s broader Transformation Agenda.

5. Budget 2012 Implementation

This section provides an overview of the savings measures announced in Budget 2012 that will be 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.

For Veterans Affairs Canada, Budget 2012 re-confirmed the Government of Canada’s support to Veterans by maintaining the level of benefits, while recognizing the need to modernize the Department and transform the way it does business. In addition to savings to be realized through its Transformation Agenda, the Department will achieve Budget 2012 savings of $36.9 million on an ongoing basis starting in 2015-16 by cutting cumbersome red tape and introducing new technologies which will also allow Veterans Affairs Canada to provide better and faster service to Veterans in more modern and convenient ways.

Budget 2012 also notes that changes will be made to eliminate duplication and overlap between Veterans Affairs Canada and the Department of National Defence to better serve Veterans and Canadian Forces members. As of June 30, the Department’s authorities had not yet been adjusted to reflect Budget 2012 savings. This will occur later in the fiscal year.

The Department is using sound project management techniques to integrate the planning, monitoring and reporting of all projects for both Transformation and Budget 2012. This ensures that the impact of any dependencies, inter-relations and risks are identified, evaluated and monitored regularly and continuously throughout the life-cycle of these projects.

Approved by:

Mary Chaput, Deputy Minister
Charlottetown, PE
August 28, 2012

Heather Parry, Chief Financial Officer
Charlottetown, PE
August 28, 2012

II. Financial Statements

Statement of Authorities (unaudited)

Statement of Authorities - Quarterly Financial Report for the Quarter Ended June 30, 2011
Fiscal year 2011-2012
(in thousands of dollars) Total available for use for the year ending
 March 31, 2012*
Used during the quarter ended
June 30, 2011
Year to date used at quarter-end
Vote 1  - Net Operating expenditures 924,832 217,102 217,102
Vote 5 - Grants and Contributions 2,556,168 646,065 646,065
Budgetary statutory authorities 42,195 10,503 10,503
Total Budgetary authorities 3,523,195 873,670 873,670
Non-budgetary authorities - (1) (1)
Total Authorities 3,523,195 873,669 873,669

* Includes only Authorities available for use and granted by Parliament at quarter-end.

Statement of Authorities - Quarterly Financial Report for the Quarter Ended June 30, 2012
Fiscal year 2012-2013
(in thousands of dollars) Total available for use for the year ended
March 31, 2013**
Used during the quarter ended
June 30, 2012
Year to date used at quarter-end
Vote 1  - Net Operating expenditures 882,761 191,804 191,804
Vote 5 - Grants and Contributions 2,644,593 647,930 647,930
Budgetary statutory authorities 40,661 10,131 10,131
Total Budgetary authorities 3,568,015 849,865 849,865
Non-budgetary authorities - 0 -
Total Authorities 3,568,015 849,865 849,865

* Includes only Authorities available for use and granted by Parliament at quarter-end.

** Total available for use does not reflect measures announced in Budget 2012. Includes only Authorities available for use and granted by Parliament at quarter-end.

Departmental Budgetary Expenditures by Standard Object (unaudited)

Quarterly Financial Report for the Quarter Ended June 30, 2011 by Standard Object
Fiscal year 2011-2012
Expenditures
(in thousands of dollars)
Planned expenditures for the year ending
March 31, 2012
Expended during the quarter ended
June 30, 2011
Year to date used at quarter-end
01 Personnel 274,886 73,956 73,956
02 Transportation and communications 39,309 6,325 6,325
03 Information   50 50
04 Professional and special services 376,102 95,066 95,066
05 Rentals   1,290 1,290
06 Repair and maintenance 12,040 3,823 3,823
07 Utilities, materials and supplies 234,621 34,824 34,824
08 Acquisition of land, buildings and works   865 865
09 Acquisition of machinery and equipment   356 356
10 Transfer payments 2,556,365 646,065 646,065
11 Public debt charges 0
12 Other subsidies and payments 29,872 11,050 11,050
Total gross budgetary expenditures 3,523,195 873,670 873,670
Less Revenues netted against expenditures
Total Revenues netted against expenditures: 0 0 0
Total net budgetary expenditures 3,523,195 873,670 873,670
Quarterly Financial Report for the Quarter Ended June 30, 2012 by Standard Object
Fiscal year 2012-2013
Expenditures
(in thousands of dollars)
Planned expenditures for the year ending
 March 31, 2013*
Expended during the quarter ended
June 30, 2012
Year to date used at quarter-end
01 Personnel 269,934 68,448 68,448
02 Transportation and communications 43,217 5,437 5,437
03 Information 5,379 68 68
04 Professional and special services 366,553 120,959 120,959
05 Rentals 8,773 121 121
06 Repair and maintenance 13,402 1,715 1,715
07 Utilities, materials and supplies 206,337 1,154 1,154
08 Acquisition of land, buildings and works 3,654 534 534
09 Acquisition of machinery and equipment 5,976 191 191
10 Transfer payments 2,644,790 647,930 647,930
11 Public debt charges
12 Other subsidies and payments 0 3,308 3,308
Total gross budgetary expenditures 3,568,015 849,865 849,865
Less Revenues netted against expenditures
Total Revenues netted against expenditures:
Total net budgetary expenditures 3,568,015 849,865 849,865

* Planned expenditures do not reflect measures announced in Budget 2012

Date modified: