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July - September 2013

Table of Contents

I. Statement outlining results, risks and significant changes in operations, personnel and program for the quarter ended September 30, 2013

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) and Economic Action Plan 2013 (Budget 2013).

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

Basis of Presentation

This quarterly report has been prepared 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 2013-14 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, 2012 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 2012-13, 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 2013-14, the changes to departmental authorities were reflected in the 2013-2014 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 September 30, 2013, total authorities available for the year have increased by $58 million (approximately 2%) compared to the same quarter of the previous year, from $3,580 million to $3,638 million. This net increase is the result of an $82 million increase in Vote 5, Grants and Contributions, offset by a $23 million decrease in Vote 1, Operating expenditures and a $1 million decrease in statutory authorities.

Overall, Veterans Affairs Canada’s authorities reflect the changing demographic profile and changing needs of the men, women, and families the Department serves. This is evidenced by an increase in the number of modern-day Veterans accessing programs under the New Veterans Charter and a decrease in the number of War Service Veterans accessing the Department’s traditional programs.

As at September 30, 2013, total authorities used during the second quarter of 2013-14 are $31 million (3.7%) more when compared to the same three-month period of 2012-13, from $842 million to $873 million. Spending for the second quarter of 2013-14 is in line with the changes to the Department’s authorities in that Grants and Contributions spending increased by $41 million and Operating expenditures decreased by $10 million.

Statement of Departmental Budgetary Expenditures by Standard Object

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

  • A decrease of $37 million in the Utilities, Materials and Supplies category partially offset by an increase of $31 million in the Professional and Special Services category stemming from health-related services provided to Veterans.
  • An increase of $41 million in transfer payments (i.e. Grants and Contributions) related to an increase in the number of modern-day Veterans and individuals accessing programs under the New Veterans Charter, offset by a decrease in the number of War Service Veterans and individuals accessing the Department's traditional programs.

3. Risks and Uncertainties

At VAC, integrated risk management is a key component of modern management. It ensures that risks are understood, managed, communicated and integrated into informed decision making and priority setting. Effective risk management enables decision makers to address challenges and uncertainties proactively.

VAC’s corporate risks, which consider impacts to the Department’s financial plan, are identified and assessed quarterly with senior management and key staff from across the Department. Risks and supporting information are collected, aggregated, prioritized and monitored for consideration in updating VAC’s Corporate Risk Profile, which aligns with the quarterly financial reporting cycle.

Financial impacts within this year’s quarter two Corporate Risk Profile update are primarily linked to Transformation initiatives and savings identified in Budget 2012. Regular and detailed monitoring of the Department’s finances by senior management is one of the ways these risks are being managed and mitigated. This integrated risk management process ultimately supports the Department in meeting its financial objectives.

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

As outlined in VAC’s former quarterly financial reports, Veterans Affairs Canada’s five-year Transformation Agenda or “Cutting Red Tape for Veterans” initiative continues to fundamentally change how the Department does business. The Department has completed 58% of the projects that make up the Transformation Agenda and continues to progress as planned on those that remain open.

Examples of progress that was made this quarter include:

  • Thirteen CAF Bases are now electronically transferring Service Health Records to the DND Records Disclosure Team in Ottawa who then forward to VAC in Charlottetown.
  • My VAC Account continues to undergo improvements and registered users can now view a summary of their personal Veterans Independence Program (VIP) benefits information on-line. Veterans are also able to upload supporting documents in relation to their applications for career transition services and disability benefits.
  • The enhanced My VAC Account now has over 6,000 registered users. To facilitate registration, VAC has included step-by-step instructions on the registration process on-line. In addition, Veterans calling the National Contact Centre Network (NCCN) receive a recorded message and step-by-step assistance from staff encouraging them to register for the self-serve tool. Information about My VAC Account was also provided to Reservists’ via their paystubs.

The Department continues to work with managers so that they are equipped to support their teams during change and understand the work that is needed to complete the Transformation Agenda.

VAC employees have also been engaged in the Blueprint 2020 initiative announced by the Clerk of the Privy Council during National Public Service Week. Blueprint 2020 involves members of the Public Service in a discussion about maintaining a high performing public service in an increasingly competitive and interconnected world.

During this quarter, VAC was engaged in making the legislative changes needed to discontinue the deduction of disability benefits payable under the Pension Act from the calculation of War Veterans Allowances (WVA) benefit on a go forward basis. This change will allow low-income Veterans and survivors who receive disability benefits under the Pension Act to receive greater assistance from Veterans Affairs Canada (VAC). Specifically, the change will: increase WVA payments for some recipients; allow some individuals who were previously ineligible to qualify for WVA and/or gain access to health care and other benefits and services; and reduce accommodation and meal rates for some Veterans in long-term care. Minor operational changes to policies, processes, applications/letters/forms and systems required to effect this change were also completed during the quarter. Staff also participated in training to enable them to process letters and explain the program change to recipients. These changes took much longer to effect than the changes to the Earnings Loss (EL) and Canadian Forces Income Support (CFIS) benefits as the legislative process to amend the War Veterans Allowance Act is much lengthier than making regulatory changes, as was the case for EL and CFIS. These changes come into force on October 1, 2013.

5. Budget 2012 Implementation

This section provides an overview 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.

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 the first year of implementation, the Department achieved savings of approximately $594 thousand. Savings increase to $15.9 million this fiscal year and will result in ongoing savings of $34.8 million by 2014-15. This will be achieved through eliminating unnecessary layers of bureaucracy and introducing new technologies to provide better and faster service to Veterans in more modern and convenient ways. Budget 2012 initiatives were implemented and have been operational since January 2013.

As indicated in Section Two of this report, there is a variance of $58 million in the Department’s authorities between fiscal year 2012-13 and 2013-14. This is attributed primarily to the quasi-statutory nature of Veterans Affairs Canada’s programs and in part to Budget 2012 initiatives. Although there were no cuts to benefits or services for Veterans, the demand-driven nature of Veterans Affairs Canada’s programs causes the Department’s funding requirements to fluctuate each year. Yearly budget adjustments ensure Veterans receive the benefits to which they are entitled.

The Department continues to use sound project and risk management techniques to integrate the planning, monitoring, and reporting of all projects for both its “Cutting Red Tape for Veterans” initiative and Budget 2012. This ensures that the impact of any dependencies, inter-relationships, and risks are identified, evaluated, and monitored regularly and continuously throughout the life-cycle of these projects. Veterans Affairs Canada is monitoring progress through project close-out and post-implementation reports which include performance measures and financial management information.

Approved by:

_________________________________
Mary Chaput, Deputy Minister
Ottawa, ON
November 22, 2013

__________________________________
Donna MacDonald, A/Chief Financial Officer
Charlottetown, PE
November 15, 2013

II. Financial Statements

Statement of Authorities (unaudited)

Veterans Affairs Canada
Quarterly Financial Report for the Quarter Ended September 30, 2012
STATEMENT OF AUTHORITIES (unaudited)
Fiscal Year 2012-13
(in thousands of dollars) Total available for use for the year ending March 31, 2013* Used during the quarter ended September 30, 2012 Year to date used at quarter-end
Vote 1 - Net Operating expenditures 894,544 211,073 402,877
Vote 5 - Grants and Contributions 2,644,593 621,384 1,269,314
Statutory Authority - Minister's Salary and Motor Car Allowance 77 19 38
Statutory Authority - Court Award – Crown Liability and Proceeding Act 0 5 5
Statutory Authority - Refunds of Previous Years Revenue 0 41 56
Statutory Authority - Contributions to Employee Benefit Plans – Program 40,387 10,097 20,194
Statutory Authority - Veterans Insurance Actuarial Liability Adjustment 175 0 0
Statutory Authority - Returned Soldiers Insurance Actuarial Liability Adjustment 10 0 0
Statutory Authority - Re-establishment credits under Section 8 of the War Services Grants Act 2 0 0
Statutory Authority - Repayments under Section 15 of the War Services Grants Act 10 0 0
Total Budgetary authorities 3,579,798 842,619 1,692,484
Non-budgetary authorities 0 0 0
Total Authorities 3,579,798 842,619 1,692,484

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

Quarterly Financial Report for the Quarter Ended September 30, 2013
STATEMENT OF AUTHORITIES (unaudited)
Fiscal Year 2013-14
(in thousands of dollars) Total available for use for the year ending March 31, 2014* Used during the quarter ended September 30, 2013 Year to date used at quarter-end
Vote 1 - Net Operating expenditures 871,214 200,733 391,375
Vote 5 - Grants and Contributions 2,726,718 662,503 1,326,047
Statutory Authority - Minister's Salary and Motor Car Allowance 79 20 39
Statutory Authority - Court Award – Crown Liability and Proceeding Act 0 0 9
Statutory Authority - Refunds of Previous Years Revenue 0 13 117
Statutory Authority - Contributions to Employee Benefit Plans – Program 39,395 9,849 19,698
Statutory Authority - Veterans Insurance Actuarial Liability Adjustment 175 0 0
Statutory Authority - Returned Soldiers Insurance Actuarial Liability Adjustment 10 0 0
Statutory Authority - Re-establishment credits under Section 8 of the War Services Grants Act 2 0 0
Statutory Authority - Repayments under Section 15 of the War Services Grants Act 10 0 0
Total Budgetary authorities 3,637,603 873,118 1,737,285
Non-budgetary authorities - 0 -
Total Authorities 3,637,603 873,118 1,737,285

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

Departmental Budgetary Expenditures by Standard Object (unaudited)

Veterans Affairs Canada
Quarterly Financial Report for the Quarter Ended September 30, 2012
Departmental budgetary expenditures by Standard Object (unaudited)
Fiscal year 2012-13
Expenditures
(in thousands of dollars)
Planned expenditures for the year ending March 31, 2013* Expended during the quarter ended September 30, 2012 Year to date used at quarter-end
01 Personnel 273,379 73,057 141,505
02 Transportation and communications 43,769 5,488 10,925
03 Information 5,448 472 540
04 Professional and special services 371,231 54,583 175,542
05 Rentals 8,885 3,025 3,146
06 Repair and maintenance 13,573 1,130 2,845
07 Utilities, materials and supplies 208,970 76,970 78,124
08 Acquisition of land, buildings and works 3,701 641 1,175
09 Acquisition of machinery and equipment 6,052 1,594 1,785
10 Transfer payments 2,644,790 621,384 1,269,314
11 Public debt charges - - 0
12 Other subsidies and payments 0 4,275 7,583
Total gross budgetary expenditures 3,579,798 842,619 1,692,484
Less Revenues netted against expenditures - - -
Total Revenues netted against expenditures 0 0 0
Total net budgetary expenditures 3,579,798 842,619 1,692,484

* Planned expenditures do not reflect measures announced in Budget 2012.

Quarterly Financial Report for the Quarter Ended September 30, 2013
Departmental budgetary expenditures by Standard Object (unaudited)
Fiscal year 2013-14
Expenditures
(in thousands of dollars)
Planned expenditures for the year ending March 31, 2014 Expended during the quarter ended September 30, 2013 Year to date used at quarter-end
01 Personnel 265,882 74,216 146,088
02 Transportation and communications 30,024 5,852 11,411
03 Information 4,516 805 906
04 Professional and special services 372,869 85,685 163,009
05 Rentals 7,741 1,594 2,848
06 Repair and maintenance 8,386 818 2,012
07 Utilities, materials and supplies 203,207 39,496 79,858
08 Acquisition of land, buildings and works 3,226 205 458
09 Acquisition of machinery and equipment 6,451 403 625
10 Transfer payments 2,726,915 662,503 1,326,047
11 Public debt charges 0 0 0
12 Other subsidies and payments 8,386 1,541 4,023
Total gross budgetary expenditures 3,637,603 873,118 1,737,285
Less Revenues netted against expenditures - - -
Total Revenues netted against expenditures 0 0 0
Total net budgetary expenditures 3,637,603 873,118 1,737,285
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