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October - December 2014

I. Statement outlining results, risks and significant changes in operations, personnel and program for the quarter ended December 31, 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 and Supplementary 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 December 31, 2014, total authorities available for the year have decreased by $69 million compared to the previous year, from $3,668 million to $3,599 million. This decrease is the result of a $50 million decrease in Vote 5, Grants and contributions, a decrease of $15 million in Vote 1, Operating expenditures and a decrease of $4 million 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. The Department continues to see an increase in the number of Canadian Armed Forces Veterans and their families benefiting from VAC programs. At the same time, the number of War Service Veterans is declining with surviving spouses becoming a larger segment of the population being served.

As at December 31, 2014, total authorities used during the third quarter of 2014-15 decreased by almost $76 million (8.4%) when compared to the same three-month period of 2013-14, from $904 million to $829 million. A breakdown in the spending for the third quarter of 2014-15 indicates that Grants and Contributions expenditures decreased by $62.1 million, Operating expenditures decreased by $12.7 million and Statutory expenditures decreased by $1 million. This is attributed primarily to the demand driven nature of Veterans Affairs Canada’s programs which cause 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 third quarter were generally consistent with prior-year spending trends. The three largest variances include:

  • A decrease of $62.1 million in Transfer Payments (i.e. Grants and contributions) mainly attributed to a decrease in the number of War Service Veterans and spouses receiving benefits and support. This is partially offset by an increase in the number of Canadian Armed Forces Veterans and their families benefiting from VAC programs.
  • A decrease of $13.7 million in the Personnel category mainly attributed to workforce reduction measures implemented to meet Budget 2012 savings commitments.
  • A decrease of $4.9 million in the Utilities, Materials and Supplies category mainly relating to a decrease in demand for Treatment Benefits (e.g. medical supplies and services) as the number of War Service Veterans declines.

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.

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 corporate 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

The third quarter saw significant changes at the senior management level. Walter J. Natynczyk, General (Retired) was appointed Deputy Minister and Sue Foster was appointed Assistant Deputy Minister, Policy, Communications and Commemoration. Both of these appointments were effective November 3, 2014.

Remembrance Activities:

  • As part of the November 11, 2014 rededication ceremony in Ottawa at the National War Memorial, the inscription In Service to Canada / Au service du Canada was unveiled to formally recognize all Canadians who served in the past, who serve today and who will serve in the future.
  • During the rededication ceremony, attended by Her Royal Highness The Princess Royal, Governor General David Johnston and Prime Minister Stephen Harper, the inscriptions of the dates of the Canadian mission in Afghanistan and the South African War were also unveiled, alongside the dates of the two World Wars and the Korean War. The memorial now bears the dates of the five most costly Canadian military engagements in terms of lives lost.
  • To support educators in engaging youth in remembrance activities, notably during Veterans’ Week from November 5 to 11, 2014, a suite of learning resources was distributed to schools and other organizations across Canada.
  • As part of the 75th anniversary of Canada’s engagement in the Second World War, the Department continues to deliver a special initiative whereby living Canadian Veterans of the Second World War can receive a limited-edition commemorative lapel pin and a personalized certificate of recognition.
  • From November 24 to 28, 2014, the Minister of Veterans Affairs, along with a Government of Canada delegation, including Canadian Veterans, participated in ceremonies marking the 70th anniversary of the Italian Campaign. Ceremonies honouring the Canadians who sacrificed their lives to liberate Italy took place at the Cassino War Cemetery, the Moro River Canadian War Cemetery and the Villanova Canadian War Cemetery in Italy.

House of Commons Standing Committee on Veterans Affairs (ACVA) Report:

On October 1, 2014 the Minister of Veterans Affairs tabled the Government’s formal Response to ACVA’s Report “New Veterans Charter: Moving Forward” in which the Government will strengthen support for Veterans and their families through the following new initiatives:

  • Continue to ensure that injured Veterans only leave the military when rehabilitation professionals are identified by Veterans Affairs Canada to support them and they have medically stabilized from their injuries;
  • Enhance transition services for all Canadian Armed Forces personnel who medically released;
  • Ensure rehabilitation professionals are in place to provide service post-release;
  • Increase the number of psychological counselling sessions for families of Veterans;
  • Develop an online training module for caregivers of Veterans with operational stress injuries;
  • Undertake measures to combine payments and benefits into one monthly recurring payment, where possible; and
  • Amend existing legislation to reinforce government’s commitment to support Veterans and their families.

Mental Health Announcement:

On November 23, 2014, Minister Fantino and the Minister of National Defence announced new and expanded mental health initiatives for Veterans, serving military members, and their families. Initiatives include the establishment of a major new operational stress injury clinic in Halifax and additional satellite clinics opening in St. John’s, Chicoutimi, Pembroke, Brockville, Kelowna, Victoria and Montréal to speed access to mental health services for those with mental health injuries, as well as new investments in research to better understand transition from military to civilian life, suicide prevention measures, improvements in the recognition, diagnosis and treatment of mental illness in Veterans, the creation of a mental health first aid training initiative, a pilot project to give medically-releasing Veterans and their families access to seven Military Family Resource Centres, enhancement of the Operational Stress Injury Social Support program, and supporting the development of national standards and a certification process for psychiatric service dogs.

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.

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.

Original signed by:

_________________________________
W.J. Natynczyk
General (Ret’d)
Deputy Minister
Ottawa, ON
February 25, 2015

__________________________________
Maureen Sinnott
Acting Chief Financial Officer
Charlottetown, PE
February 18, 2015

II. Financial Statements

Statement of Authorities (unaudited)

Veterans Affairs Canada
Quarterly Financial Report for the Quarter Ended December 31, 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 December 31, 2013 Year to date used at quarter-end
Vote 1 - Net Operating expenditures 890,734 211,495 602,870
Vote 5 - Grants and Contributions 2,738,141 683,015 2,009,062
Statutory Authority - Minister's Salary and Motor Car Allowance 79 20 59
Statutory Authority - Court Award – Crown Liability and Proceeding Act 0 0 9
Statutory Authority - Refunds of Previous Years Revenue 0 1 118
Statutory Authority - Contributions to Employee Benefit Plans – Program 39,395 9,849 29,547
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 3,668,546 904,380 2,641,665
Non-budgetary authorities 0 0 0
Total Authorities 3,668,546 904,380 2,641,665

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

Veterans Affairs Canada
Quarterly Financial Report for the Quarter Ended December 31, 2014
STATEMENT OF AUTHORITIES (unaudited)
Fiscal Year 2014-15
(in thousands of dollars) Total available for use for the year ending March 31, 2015* Used during the quarter ended December 31, 2014 Year to date used at quarter-end
Vote 1 - Net Operating expenditures 875,252 198,798 576,421
Vote 5 - Grants and Contributions 2,688,404 620,896 1,881,026
Statutory Authority - Minister's Salary and Motor Car Allowance 80 20 60
Statutory Authority - Court Award – Crown Liability and Proceeding Act 0 0 1
Statutory Authority - Refunds of Previous Years Revenue 0 1 44
Disposal of Surplus Moveable Crown Assets 0 15 15
Statutory Authority - Contributions to Employee Benefit Plans – Program 35,261 8,815 26,445
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 3,599,194 828,545 2,484,012
Non-budgetary authorities 0 0 0
Total Authorities 3,599,194 828,545 2,484,012

* 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 December 31, 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 December 31, 2013 Year to date used at quarter-end
01 Personnel 266,428 78,711 224,799
02 Transportation and communications 30,527 6,671 18,082
03 Information 8,455 1,827 2,733
04 Professional and special services 383,193 90,028 253,037
05 Rentals 7,860 1,198 4,046
06 Repair and maintenance 8,515 1,040 3,052
07 Utilities, materials and supplies 206,889 41,517 121,375
08 Acquisition of land, buildings and works 3,275 44 502
09 Acquisition of machinery and equipment 6,550 456 1,081
10 Transfer payments 2,738,339 683,015 2,009,062
11 Public debt charges 0 0 0
12 Other subsidies and payments 8,515 (127) 3,896
Total gross budgetary expenditures 3,668,546 904,380 2,641,665
Less Revenues netted against expenditures - - -
Total Revenues netted against expenditures 0 0 0
Total net budgetary expenditures 3,668,546 904,380 2,641,665
Quarterly Financial Report for the Quarter Ended December 31, 2014
Departmental budgetary expenditures by Standard Object (unaudited)
Fiscal year 2014-15
Expenditures
(in thousands of dollars)
Planned expenditures for the year ending March 31, 2015 Expended during the quarter ended December 31, 2014 Year to date used at quarter-end
01 Personnel 249,525 64,968 194,356
02 Transportation and communications 29,451 5,873 17,158
03 Information 11,218 3,848 6,360
04 Professional and special services 383,363 88,722 251,640
05 Rentals 8,343 990 3,237
06 Repair and maintenance 9,626 829 2,682
07 Utilities, materials and supplies 198,739 36,594 111,491
08 Acquisition of land, buildings and works 4,492 78 86
09 Acquisition of machinery and equipment 6,418 310 594
10 Transfer payments 2,688,601 620,896 1,881,026
11 Public debt charges 0 0 0
12 Other subsidies and payments 9,418 5,437 15,382
Total gross budgetary expenditures 3,599,194 828,545 2,484,012
Less Revenues netted against expenditures 0 0 0
Total Revenues netted against expenditures 0 0 0
Total net budgetary expenditures 3,599,194 828,545 2,484,012
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