Departmental Quarterly Financial Reports
July - September 2015

I. Statement outlining results, risks and significant changes in operations, personnel and program for the quarter ended September 30, 2015

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 Economic Action Plan 2014 and 2015 (Budget 2014 and Budget 2015).

A summary description of Veterans Affairs Canada’s (sometimes referred to in this Report as "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 2015–16 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 of September 30, 2015, total authorities available for the year have decreased by $31.7 million (approximately 1%) compared to September 30, 2014 ($3,588 million to $3,556 million). This decrease is the result of a $30.8 million decrease in Vote 5, Grants and Contributions, $1.7 million increase in statutory authorities and a $2.5 million decrease in Operating Expenditures.

As of September 30, 2015, total authorities used during the second quarter of 2015-16 are $66.3 million (8.0%) more when compared to the same three-month period of 2014-15, from $798.3 million to $864.6 million. A breakdown in the spending for the 2015-16 indicates that Grants and Contributions spending increased by $75.7 million, Operating expenditures decreased by $7.4M and the statutory authorities decreased by $2 million.

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 and survivors (forecast to increase from 92,748 in 2014–15 to 98,393 in 2015–16) accessing programs under the New Veterans Charter and a decrease in the number of War Service Veterans and survivors (forecast to decrease from 94,585 in 2014–15 to 87,231 in 2015–16) accessing the Department's traditional programs.

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 four largest variances include:

• An increase of $75.7 million in transfer payments (i.e. Grants and Contributions) mostly attributed to an increase in Disability Award expenditures ($60.8 million) due to increased staffing and business process improvements in order to improve the timeliness of service delivery i.e. render decisions and process payments faster.
• A decrease of $ 9.9 million in the Personnel category mainly attributed to the July 1, 2015 pay being posted at the end of previous month (due to the statutory holiday).
• A decrease of $14.6 million in the Utilities, Materials and Supplies category, partially offset by an increase of $13.8 million within the Professional and special services category. This is mainly attributed to a timing issue which will be reconciled after an appropriate re-allocation of expenditures.

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 pro-actively.

The corporate risks in VAC's Corporate Risk Profile, which consider impacts to the Department’s financial plan, are identified and assessed semi-annually with senior management and key staff from across the Department. Risks and supporting information from various departmental resources such as the Departmental Project Management Committee and Privacy Impact Assessments are collected and monitored. The review of the Department's risks also aligns with the quarterly financial reporting cycle.

Regular and detailed monitoring of the Department’s finances by senior management and the Chief Financial Officer attestation role help to ensure that corporate risks are being managed and mitigated. This integrated risk management process ultimately supports the Department in meeting its financial objectives.

Further information regarding the Department’s Risk Analysis can be found in the 2015–16 Report on Plans and Priorities.

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

The second quarter saw significant changes at the senior management level. In August, VAC’s Associate Deputy Minister, Anne Marie Smart, left VAC to become the Chief Human Resource Officer for the Government of Canada. Karen Ellis was appointed to the Associate Deputy Minister position effective August 10th, 2015. In addition and as a result of internal restructuring, Sue Foster was appointed Assistant Deputy Minister of the Governance and Communications Branch, while Bernard Butler was appointed Assistant Deputy Minister responsible for the Strategic Policy and Commemoration Branch. These changes took effect July 6^th, 2015.

Service Excellence for Veterans:

• New hirings were announced at various locations across the country in order to support the disability application and case management processes. These new hires will reduce VAC’s case manager ratio to no more than 30 individuals for every case manager; improve support to Veterans; and allow VAC to expedite disability benefit decisions and payments. This means Veterans will also have faster access to health care funding and mental health treatment.
• VAC replaced the Veterans Independence Program Annual Follow-Up form with a telephone call eliminating 425,000 pages of paperwork per year for all Veterans.

Mental Health:

• VAC, in participation with Nova Scotia Health Authority approved the establishment of a new operational stress injury clinic in the Halifax area. The new OSI clinic will be part of a network of clinics across Canada which provides full assessment, diagnosis and treatment services for Military Veterans, members of the Canadian Armed Forces (CAF), current and former members of the RCMP, and their families, living with operational stress injuries.
• VAC will fund two new research studies on the effectiveness of equine therapy for Veterans with mental health conditions. The Canadian Institute of Military and Veteran Health Research (CIMVHR) will receive $250,000 to conduct an Equine Assisted Intervention Study. As well, Can Praxis will receive $25,000 to continue its equine research. Can Praxis’ new research study will build on its own 2013 equine therapy pilot study. Both studies will assist in establishing an evidence base on the use of equine therapy for Veterans with mental health conditions.

Remembrance Activities:

• In early July 2015, the Government of Canada marked the 99^th anniversary of the Battles of the Somme and Beaumont-Hamel. Commemorative wreath-laying ceremonies to mark the anniversary were held in St. John’s, Newfoundland, Beaumont-Hamel, France, and next to the Tomb of the Unknown Soldier at the National War Memorial in Ottawa, Ontario.
• VAC also marked the Korean War Veterans Day and 62^nd anniversary of the signing of the Armistice in Brampton, Ontario.

Funding associated with these initiatives is sought through the Estimates process or absorbed internally by the Department.

Original signed by:

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II. Financial Statements

Statement of Authorities (unaudited)

Veterans Affairs Canada
Quarterly Financial Report for the Quarter Ended September 30, 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 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	3,587,779	798,252	1,655,467
Non-Budgetary Authorities	0	0	0
Total Authorities	3,587,779	798,252	1,655,467

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

Veterans Affairs Canada
Quarterly Financial Report for the Quarter Ended September 30, 2015
Statement of Authorities
Fiscal year 2015–16

(in thousands of dollars)	Total available for use for the year ended March 31, 2016*	Used during the quarter ended September 30, 2015	Year to date used at quarter-end
Vote 1  - Net Operating expenditures	863,733	187,222	371,888
Vote 5 - Grants and Contributions	2,655,148	670,529	1,320,044
Statutory Authority - Minister's Salary and Motor Car Allowance	82	21	41
Statutory Authority – Court Award – Crown Liability and Proceeding Act	0	10	10
Statutory Authority – Refunds of Previous Years Revenue	0	0	17
Statutory Authority – Spending of Amounts Equivalent to Proceeds from Disposal of Surplus Moveable Crown Assets	0	15	15
Statutory Authority – Contributions to Employee Benefit Plans – Program	36,942	6,762	13,524
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	3,556,102	864,559	1,705,539
Non-Budgetary Authorities	0	0	0
Total Authorities	3,556,102	864,559	1,705,539

* 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, 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 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

Veterans Affairs Canada
Quarterly Financial Report for the Quarter Ended September 30, 2015
Departmental budgetary expenditures by Standard Object (unaudited)
Fiscal year 2015–16

Expenditures (in thousands of dollars)	Planned expenditures for the year ending March 31, 2016	Expended during the quarter ended September 30, 2015	Year to date used at quarter-end
01 Personnel	252,163	56,041	122,917
02 Transportation and communications	28,557	6,268	10,995
03 Information	5,495	188	249
04 Professional and special services	401,821	99,697	179,929
05 Rentals	7,112	1,121	2,129
06 Repair and maintenance	7,758	442	1,166
07 Utilities, materials and supplies	187,507	24,848	60,241
08 Acquisition of land, buildings and works	1,939	0	0
09 Acquisition of machinery and equipment	3,233	756	793
10 Transfer payments	2,655,345	670,529	1,320,044
11 Public debt charges	0	0	0
12 Other subsidies and payments	5,172	4,669	7,076
Total gross budgetary expenditures	3,556,102	864,559	1,705,539
Less revenues netted against expenditures	0	0	0
Total revenues netted against expenditures	0	0	0
Total net budgetary expenditures	3,556,102	864,559	1,705,539