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Departmental Quarterly Financial Reports
April - June 2014

I. Statement outlining results, risks and significant changes in operations, personnel and program for the quarter ended June 30, 2014

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 and Supplementary Estimates as well as Canada's Economic Action Plan 2012 (Budget 2012) and Economic Action Plan 2013 and 2014 (Budget 2013 and Budget 2014).

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 2014-15 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.

The quarterly report has not been subject to an external audit but has been reviewed by the Departmental Audit Committee.

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

Statement of Authorities

As at June 30, 2014, total authorities available for the year have decreased by $61 million (approximately 2%) compared to the previous year, from $3,638 million to $3,577 million. This decrease is the result of a $41 million decrease in Vote 5, Grants and Contributions, a $16 million decrease in Vote 1, Operating expenditures and a $4 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 June 30, 2014, total authorities used during the first quarter of 2014-15 are $7 million (1.6%) less when compared to the same three-month period of 2013-14, from $864 million to $857 million. A breakdown in the spending for the first quarter of 2014-15 indicates that Grants and Contributions spending increased by $2 million and Operating expenditures decreased by $9 million.

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 four largest variances include:

  • A decrease of $8 million in the Personnel category mainly attributed to workforce reduction measures implemented to meet Budget 2012 savings commitments.
  • A $7 million increase in “Other Subsidies and Payments” (Standard Object 12) due to a one-time transition payment for implementing salary payments in arrears by the Government of Canada.
  • A total decrease of $8 million in the standard objects 02 to 09 attributable to a $1 million decrease in regular operating and maintenance expenditures due to a reduced workforce and a $7 million decrease in Other Health Purchased Services due to a reduction in the number of traditional Veterans accessing health-care benefits.
  • An increase of $2 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.

VACs 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 the currently approved Corporate Risk Profile are primarily linked to savings commitments identified in the Transformation Agenda and Budget 2012. Regular and detailed monitoring of the Department's finances by senior management is one of the ways this risk is 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

There were no significant changes in senior personnel during the quarter.

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 make a meaningful improvement in the way the Department delivers services to Veterans.

Improving Services to Veterans:

The Transformation Agenda is made up of 33 inter-related projects that support the overall Transformation vision of improving the services offered to Veterans and their families and delivering the services faster in more convenient and modern ways.

In the last quarter, the Department continued to measurably improve services by capitalizing on information technology and improved business processes. With 21 of the 33 projects (approximately 64%) managed within Transformation now complete, the benefits of multichannel service points and improved processes are evident. VAC continues to place an emphasis on the people-side of Transformation and steps have been taken this quarter to strengthen internal change-management capacity and better engage employees in changes already underway.

VAC's progress is in line with the Blueprint 2020 vision—“having the best people working together with citizens, making smart use of new technologies and achieving the best possible outcomes with efficient, interconnected and nimble processes.” Work to date on enabling technologies will also serve the Department well in its response to the Office of the Auditor General's (OAG) Chapter 2 Online Access to Services Fall 2013 report.

Examples of progress that was made this quarter include:

  • VDI–Virtual Desktop Infrastructure: the Virtual Desktop Infrastructure (VDI) project, in conjunction with Shared Services Canada, has successfully migrated eight of 29 VAC offices to the new VDI technology. This represents 22% of field operations users, including the migration of 27% of Case Managers to the enhanced Mobile Technology allowing them broader accessibility to the systems needed. VAC's work to date is on target for full implementation by November 2014.
  • Implemented electronic transfer of health records to VAC: the project is now fully operational with a total of 33 Canadian Armed Forces bases transferring electronic records to VAC.
  • Developed two pilots to strengthen the Department's approach to internal communications and departmental capacity for change management:
    • The VAC Management Two-Way Communications pilot to create a formal communications system that brings information from the most senior levels of the organization to employees and provides a mechanism for employee feedback.
    • The Change Management/Project Management Integration pilot to strengthen departmental capacity for change management and to integrate project management and change management by building stakeholder feedback into project plans.

Transformation is on schedule. VAC will continue to closely monitor the post-implementation performance of the 21 completed projects as well as successfully complete the remaining 12 Transformation projects which are all on track.

Canada Remembers Program:

One of VAC's key on-going priorities is to honour those who serve Canada. This is accomplished in part by leading and supporting commemoration activities which engage Canadians in remembering and demonstrating their recognition of all who served in Canada's efforts during war, military conflict and peace. Funding for this program increased $4 million over last year's Main Estimates as the result of the $4 million authorized through the central advertising fund for the annual Remembrance Vignette campaign.

The 2014 calendar year marks the beginning of a heightened remembrance period (2014–20) which will see Canadians mark the 100th and 75th anniversaries of the First and Second World Wars. In the first quarter:

  • VAC led and supported ceremonies and events in Canada and abroad to recognize and honour Canada's war dead and Veterans. This included the 70th anniversary of D-Day in France, as well as the end of the Canadian mission in Afghanistan.
  • VAC received approval to expand its Funeral and Burial Program to ensure that all modern-day Veterans of modest means at the time of death are provided with financial assistance toward funeral and burial costs. This change was effective April 1, 2014.
  • VAC received approval and funding authority to proceed with the design and construction of a new permanent Visitor Centre at the Canadian National Vimy Memorial in France.

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 increased to $15.9 million in 2013-14 and rose to $34.8 million per year commencing this fiscal year (and on-going). These savings have been achieved through the introduction of new technologies to provide better and faster service to Veterans in more modern and convenient ways and through the elimination of layers of bureaucracy, which has resulted in workforce reductions, while enhancing front-line services to Veterans through increased access to services such as Occupational Stress Injury (OSI) Clinics and Integrated Personnel Support Centres (IPSCs). 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 $61 million in the Department's authorities between fiscal year 2013-14 and 2014-15. This is attributed primarily to the quasi-statutory nature of Veterans Affairs Canada's programs (a decrease of $44 million), as well as Transformation and Budget 2012 savings (a decrease of $21 million), offset by funding for the Remembrance Vignette (an increase of $4 million). 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.

There are no significant financial risks or uncertainties related to the Budget 2012 savings. 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.

Original signed by:

Anne Marie Smart, Acting Deputy Minister
Ottawa, ON
August 18, 2014

Maureen Sinnott, Acting Chief Financial Officer
Charlottetown, PE
August 13, 2014

II. Financial Statements

Statement of Authorities (unaudited)

Veterans Affairs Canada
Statement of Authorities
Quarterly Financial Report for the Quarter Ended June 30, 2013
Fiscal year 2013-2014
(in thousands of dollars) Total available for use for the year ending
 March 31, 2014*
Used during the quarter ended
June 30, 2013
Year to date used at
quarter-end
Vote 1  - Net Operating expenditures 871,510 190,642 190,642
Vote 5 - Grants and Contributions 2,726,718 663,544 663,544
Statutory Authority - Minister's Salary and Motor Car Allowance 79 19 19
Statutory Authority – Court Award – Crown Liability and Proceeding Act 0 9 9
Statutory Authority – Refunds of Previous Years Revenue 0 104 104
Statutory Authority – Contributions to Employee Benefit Plans – Program 39,395 9,849 9,849
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 3,637,899 864,167 864,167
Non-budgetary Authorities 0 0 0
Total Authorities 3,637,899 864,167 864,167

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

Veterans Affairs Canada
Statement of Authorities
Quarterly Financial Report for the Quarter Ended June 30, 2014
Fiscal year 2014-2015
(in thousands of dollars) Total available for use for the year ended
March 31, 2015*
Used during the quarter ended
June 30, 2014
Year to date used at
quarter-end
Vote 1  - Net Operating expenditures 855,454 183,011 183,011
Vote 5 - Grants and Contributions 2,685,987 665,340 665,340
Statutory Authority - Minister's Salary and Motor Car Allowance 80 20 20
Statutory Authority – Court Award – Crown Liability and Proceeding Act 0 0 0
Statutory Authority – Refunds of Previous Years Revenue 0 29 29
Statutory Authority – Contributions to Employee Benefit Plans – Program 35,261 8,815 8,815
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 576,979 857,215 857,215
Non-Budgetary Authorities 0 0 0
Total Authorities 3,576,979 857,215 857,215

* 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 June 30, 2013
Departmental budgetary expenditures by Standard Object

Fiscal year 2013-2014
Expenditures
(in thousands of dollars)
Planned expenditures for the year ending
March 31, 2014
Expended during the quarter ended
June 30, 2013
Year to date used at
quarter-end
01 Personnel 265,882 71,872 71,872
02 Transportation and communications 30,320 5,559 5,559
03 Information 4,516 101 101
04 Professional and special services 372,869 77,324 77,324
05 Rentals 7,741 1,254 1,254
06 Repair and maintenance 8,386 1,194 1,194
07 Utilities, materials and supplies 203,207 40,362 40,362
08 Acquisition of land, buildings and works 3,226 253 253
09 Acquisition of machinery and equipment 6,451 222 222
10 Transfer payments 2,726,915 663,544 663,544
11 Public debt charges 0 0 0
12 Other subsidies and payments 8,386 2,482 2,482
Total gross budgetary expenditures 3,637,899 864,167 864,167
Less Revenues netted against expenditures 0 0 0
Total Revenues netted against expenditures: 0 0 0
Total net budgetary expenditures 3,637,899 864,167 864,167
Veterans Affairs Canada
Quarterly Financial Report for the Quarter Ended June 30, 2014
Departmental budgetary expenditures by Standard Object (unaudited)
Fiscal year 2014-2015
Expenditures
(in thousands of dollars)
Planned expenditures for the year ending
 March 31, 2015
Expended during the quarter ended
June 30, 2014
Year to date used at
quarter-end
01 Personnel 249,040 63,400 63,400
02 Transportation and communications 28,879 4,911 4,911
03 Information 6,418 358 358
04 Professional and special services 378,635 77,042 77,042
05 Rentals 8,343 559 559
06 Repair and maintenance 9,626 706 706
07 Utilities, materials and supplies 192,526 35,452 35,452
08 Acquisition of land, buildings and works 4,492 1 1
09 Acquisition of machinery and equipment 6,418 189 189
10 Transfer payments 2,686,184 665,340 665,340
11 Public debt charges 0 0 0
12 Other subsidies and payments 6,418 9,257 9,257
Total gross budgetary expenditures 3,576,979 857,215 857,215
Less Revenues netted against expenditures 0 0 0
Total Revenues netted against expenditures 0 0 0
Total net budgetary expenditures 3,576,979 857,215 857,215
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