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Departmental Quarterly Financial Reports
July - September 2014

I. Statement outlining results, risks and significant changes in operations, personnel and program for the quarter ended September 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 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 September 30, 2014, total authorities available for the year have decreased by $50 million compared to the previous year, from $3,638 million to $3,588 million. This decrease is the result of a $41 million decrease in Vote 5, Grants and Contributions, a $5 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 September 30, 2014, total authorities used during the second quarter of 2014-15 decreased by almost $75 million (8.6%) when compared to the same three-month period of 2013-14, from $873 million to $798 million. A breakdown in the spending for the second quarter of 2014-15 indicates that Grants and Contributions expenditures decreased by $67.7 million, Operating expenditures decreased by $6.1 million and Statutory expenditures decreased by $1 million. This is attributed primarily to the demand driven nature of Veterans Affairs Canada’s programs which causes expenditures to fluctuate from year to year, as well as efficiency measures stemming from Transformation and Budget 2012 savings initiatives.

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 with the exception of transfer payments and personnel expenditures. The three largest variances include:

  • A decrease of $67.7 million in Transfer Payments (i.e. Grants and Contributions) mainly attributed to decrease in the number of War Service Veterans and individuals accessing the Department's traditional programs, offset by an increase in the number of modern-day Veterans and individuals accessing programs under the New Veterans Charter.
  • A decrease of $8.2 million in the Personnel category mainly attributed to workforce reduction measures implemented to meet Budget 2012 savings commitments.
  • An increase of $1.3 million in the Information category mainly relating to expenses incurred for the Support and Services to Veterans campaign.

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 the currently approved Corporate Risk Profile are primarily linked to the ability to provide timely, accurate and compliant financial services and support. Regular and detailed monitoring of the Department's finances by senior management and a strengthened Chief Financial Officer attestation role are some 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

The second quarter saw significant changes at the senior management level. At the end of August, VAC’s Deputy Minister, Mary Chaput, retired from the Public Service. VAC’s Associate Deputy Minister, Anne-Marie Smart, assumed the role of Acting Deputy Minister on an interim basis. In addition, in mid-September, Lieutenant-General Walter Semianiw, who most recently was VAC’s Assistant Deputy Minister, Policy, Communications and Commemoration retired from the Canadian Armed Forces. He was replaced on an acting basis by Bernard Butler, Director General Program Policy.

Improving Services to Veterans:

In early June 2014, the House of Commons Standing Committee on Veterans Affairs (ACVA) released the conclusions of the statutory review it undertook in November 2013 of the Enhanced New Veterans Charter Act. At the request of the Minister of Veterans Affairs, this review was broadened to encompass all relevant aspects of the New Veterans Charter. The report entitled, “The New Veterans Charter: Moving Forward”, made 14 recommendations which were adopted unanimously by the Committee. VAC has been working throughout this quarter on a formal response to this Report to be tabled by the Minister of Veterans Affairs on October 1, 2014.

On July 3, 2014, Minister Julian Fantino announced a new partnership with Veterans Emergency Transition Services (VETS) Canada to better deliver assistance to Veterans in need 24 hours a day, 7 days a week. Through Veterans Affairs Canada's At-Risk Veterans Outreach Initiative, VETS Canada is providing assistance to at-risk and homeless Veterans to ensure help gets to those who need it. Services include immediate in-person, online, and telephone assistance to help Veterans in need find temporary shelter and access to Government of Canada programs and benefits. VETS Canada's team of volunteers includes still-serving and retired members of the Canadian Armed Forces and still-serving and retired members of the Royal Canadian Mounted Police. These individuals identify at-risk Veterans and accompany and/or refer them to VAC area offices, shelters, the Royal Canadian Legion, medical and substance abuse treatment programs, as well as provide peer support and coaching.

Remembrance Activities:

As noted in VAC’s last quarterly report, this year marks the beginning of a heightened remembrance period marking the 100th and 75th anniversaries of the First and Second World Wars. Between now and 2020, the Government of Canada will organize and support events and initiatives that pay homage to the many Canadians and Newfoundlanders who served during the World Wars and will recognize the enduring legacy of these historical events. On September 3, 2014, Minister Fantino announced a new national tribute to mark the 75th anniversary of Canada's engagement in the Second World War and the extraordinary role Canadians played in the Allied victory. Through this initiative, all living Canadian Veterans of the Second World War are eligible to receive a limited-edition commemorative lapel pin and a personalized certificate of recognition. It is estimated that approximately 80,000 Canadian Second World War Veterans are alive today.

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 $50 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 $10 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:

W.J. Natynczyk
General (Ret’d)
Deputy Minister
Ottawa, ON
November 24, 2014

Maureen Sinnott
Acting Chief Financial Officer
Charlottetown, PE
November 18, 2014

II. Financial Statements

Statement of Authorities (unaudited)

Veterans Affairs Canada
Statement of Authorities
Quarterly Financial Report for the Quarter Ended September 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
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 0 0
Total Authorities 3,637,603 873,118 1,737,285

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

Veterans Affairs Canada
Statement of Authorities(unaudited)
Quarterly Financial Report for the Quarter Ended September 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
September 30, 2014
Year to date used at
quarter-end
Vote 1  - Net Operating expenditures 866,274 194,612 377,623
Vote 5 - Grants and Contributions 2,685,987 594,790 1,260,130
Statutory Authority - Minister's Salary and Motor Car Allowance 80 20 40
Statutory Authority – Court Award – Crown Liability and Proceeding Act 0 1 1
Statutory Authority – Refunds of Previous Years Revenue 0 14 43
Statutory Authority – Contributions to Employee Benefit Plans – Program 35,261 8,815 17,630
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 3,587,799 798,252 1,655,467
Non-Budgetary Authorities 0 0 0
Total Authorities 3,587,799 798,252 1,655,467

* 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, 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
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 0 0 0
Total Revenues netted against expenditures: 0 0 0
Total net budgetary expenditures 3,637,603 873,118 1,737,285
Veterans Affairs Canada
Quarterly Financial Report for the Quarter Ended September 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
September 30, 2014
Year to date used at
quarter-end
01 Personnel 249,040 65,988 129,388
02 Transportation and communications 28,879 6,374 11,285
03 Information 6,418 2,154 2,512
04 Professional and special services 385,884 85,876 162,918
05 Rentals 8,343 1,688 2,247
06 Repair and maintenance 9,626 1,147 1,853
07 Utilities, materials and supplies 196,097 39,445 74,897
08 Acquisition of land, buildings and works 4,492 7 8
09 Acquisition of machinery and equipment 6,418 95 284
10 Transfer payments 2,686,184 594,790 1,260,130
11 Public debt charges 0 0 0
12 Other subsidies and payments 6,418 688 9,945
Total gross budgetary expenditures 3,587,799 798,252 1,655,467
Less Revenues netted against expenditures 0 0 0
Total Revenues netted against expenditures 0 0 0
Total net budgetary expenditures 3,587,799 798,252 1,655,467
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