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Departmental Quarterly Financial Report

July - September 2021

I. Statement outlining results, risks and significant changes in operations, personnel and program for the quarter ended 30 September 2021

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 and Supplementary estimates.

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 VAC’s spending authorities granted by Parliament and those used by the Department, consistent with the Main estimates for the 2021-22 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.

The Department uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. 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

This section highlights the significant elements that contributed to the changes in Authorities available (i.e. budget) for the fiscal year, as well as the year-to-date expenditures for the quarter ended 30 September 2021. 

As a result of the Government’s expenditure management cycle, there are often fluctuations by quarter and between fiscal years when comparing budgets and expenditures. This is primarily a result of the quasi-statutory nature of the Department’s programs, which are demand-driven and based on need and entitlement. In other words, Veterans who meet the eligibility criteria for VAC’s programs, are paid as they apply for benefits. Consistent with previous fiscal years, current departmental forecasts are predicting higher program payment expenditures by the end of 2021-22 as compared to last fiscal year.

In the midst of a global pandemic, VAC maintained its commitment to meeting the needs of all Veterans and providing the benefits and services our clients so rightly deserve. Despite the impact COVID-19 has had on the current environment, the Department continued to deliver benefits and services to our Veterans and their families.  

The following tables provide a comparison of the authorities available for use and the expenditures for the quarters ending 30 September 2020 and 30 September 2021 for the Department. 

2.1 Statement of authorities

2.1.1 Changes in fiscal year-to-date authorities available
Table 1: Changes in year-to-date authorities available for the year ending 31 March 2022
(in thousands of dollars):
Authorities (available at quarter-end) 2021-22 2020-21 Variance ($) Variance (%)
Vote 1 – Operating expenditures 1,300,061 956,070 343,991 36%
Vote 5 – Grants and contributions 4,944,723 3,033,467 1,911,256 63%
Budgetary statutory authorities 44,022 47,530 (3,508) (7.4%)
Total authorities $6,288,806 $4,037,067 $2,251,739 55.8%

As at September 30, 2021, total authorities available (i.e. budget) at quarter end were $2,252M (55.8%) more when compared to amounts available at the same quarter-end the previous year, from $4,037M in 2020-21 to $6,289M in 2021-22. Much of this increase can be attributed to the fact that full supply of Main Estimates in 2020-21 was not received until December. Full supply is normally received by the end of the first quarter, however, due to the COVID-19 pandemic and limited sessions in the spring for Parliament to study supply, the Standing Orders of the House of Commons were amended to extend the supply period into the Winter.

2.1.2 Changes in year-to-date expenditures
Table 2: Changes in year-to-date expenditures used as of 30 September 2020 and 30 September 2021
(in thousands of dollars)
Expenditures (year-to-date as at quarter end) 2021-22 2020-21 Variance ($) Variance (%)
Vote 1 – Operating expenditures 499,057 444,443 54,614 12.3%
Vote 5 – Grants and contributions 2,108,491 1,805,561 302,930 16.8%
Budgetary statutory authorities 21,912 35,383 (13,471) (38.1)%
Total expenditures $2,629,460 $2,285,387 $344,073 15.1%

Year-to-date expenditures for Veterans Affairs Canada are $344M more (15.1% increase) when compared to the same timeframe in 2020-21. This increase can be explained by variances detailed below.

Vote 1 - Operating expenditures – increase of $54.6M

  • Much of the increase is due to increased spending in Personnel primarily attributed to the continued efforts to reduce the backlog and improve the delivery of services and programs to Veterans and their families.
  • The increase is also attributed to increase usage from clients for health services as COVID-19 restrictions are lifted.

Vote 5 - Grant and contribution - increase of $302.9M

  • This increase in spending can be contributed to the continued increase in processing capacity as the department continues to reduce the backlog and improve the delivery of services and programs to Veterans and their families.
  • This increase in spending is also due to the cumulative increase in monthly clients who are accessing benefits, specifically those relating to the Pension for Life (PFL) suite of programs. 

Budgetary statutory expenditures – decrease of $13.5M

  • This decrease in spending is due to a one-time processing of accounting entries made in 2020-21 for prior years accounts receivable.

Fiscal quarter

2.1.3 Changes in expenditures – quarter to quarter comparison

Table 3: Changes in expenditures used during
quarter 2 2021 (1 July – 30 Sept 2021) and quarter 2 2020 (1 July – 30 Sept 2020)
(in thousands of dollars)
Expenditures (used during quarter 2) 2021-22 2020-21 Variance ($) Variance (%)
Vote 1 – Operating expenditures 249,661 239,135 10,526 4.4
Vote 5 – Grants and contributions 1,029,313 875,167 154,146 17.6
Budgetary statutory authorities 10,956 13,590 (2,634) (19.4)
Total expenditures $1,289,930 $1,127,892 $162,038 14.4%

In-quarter expenditures for Veterans Affairs Canada are $162M more (14.4% increase) when compared to the same timeframe in 2020-21.  This increase as compared to the second quarter in 2020-21 can be explained by variances detailed below.  

Vote 1 - Operating expenditures – increase of $10.5M

  • Much of the increase is due to increased spending in Personnel primarily attributed to the continued efforts to reduce the backlog and improve the delivery of services and programs to Veterans and their families.

Vote 5 - Grant and contribution - increase of $154.1M

  • This increase in spending can be contributed to the continued increase in processing capacity as the department continues to reduce the backlog and improve the delivery of services and programs to Veterans and their families.
  • This increase in spending is also due to the cumulative increase in monthly clients who are accessing benefits, specifically those relating to the Pension for Life (PFL) suite of programs. 

Overall, VAC’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 127,981 as of 31 March 2021, to 140,557 as of 31 March 2022) and a decrease in the number of War Service Veterans and survivors (forecast to decrease from 42,424 as of 31 March 2021, to 37,501 as of 31 March 2022).

3. Risks and uncertainties

VAC is dedicated to enhancing the health and well-being of Veterans and their families and recognizes that its success in fulfilling this mandate is directly related to the effective management of risk. Sound risk management equips the Department to respond proactively to change and uncertainty by using risk-based information to support effective decision-making, resource allocation, and ultimately better results for Canadians. Additionally, it can lead to effective service delivery, better project management and an increase in value for money.

VAC operates in a dynamic and complex environment characterized by internal and external drivers of change. The Department employs integrated risk management tools to proactively and systematically recognize, understand, accommodate and capitalize on new challenges and opportunities, with a focus on results. In addition, the Department has effective internal control systems in place, proportionate to the risks being managed.

As such, the Department’s executive-level committees, the Assistant Deputy Minister level Senior Management Committee and the Director General level Corporate Policy and Planning Management Committee serve as forums where the Deputy Head ensures that Senior Department Managers are aware of their financial management responsibilities, have the tools to enable these responsibilities, and manage the financial performance within their areas of responsibilities. In addition, these committees recommend and prioritize the department’s investment opportunities, based on Integrated Business Plans (IBPs), to ensure their alignment with departmental and Government of Canada expected results.

Key risks currently being managed by the Department include:

  1. Maintaining core services: To avoid the risk of not providing timely, high quality core services and benefits to Veterans and their families while simultaneously implementing several new initiatives and programs from multiple federal budgets, Veterans Affairs is:
    1. Refining internal processes to improve efficiency;
    2. Increasing the use of automation;
    3. Recruiting, training, motivating and retaining employees; and
    4. Maintaining a reasonable case manager to client ratio.
  2. Fulfilling mandate letter commitments: To prevent the risk of not fully implementing remaining mandate commitments, given the volume and complexity of commitments made to Veterans, Veterans Affairs Canada is:
    1. Reporting progress internally and through canada.ca;
    2. Increasing the use of automation; and
    3. Recruiting, training, motivating and retaining employees.
  3. Achieving and demonstrating results: To avert the risk of not fully meeting planned targets, given that responsibility for Veterans' well-being is shared with multiple jurisdictions, other government departments, and individual Veterans, Veterans Affairs Canada is:
    1. Working closely with partners to ensure efforts are well aligned; and
    2. Exploring additional opportunities for sound research and data to inform direction.
  4. Maintaining core services during the COVID-19 global pandemic: To reduce risks associated with maintaining operations during the pandemic, Veterans Affairs Canada is:
    1. Continuing to prepare and be vigilant in order to ensure the effective delivery of programs and services.
    2. Continuing to enable remote working for all employees and maintain a flexible approach to work hours during COVID-19.

The Department monitors these risks through the Departmental Results Framework and internal performance reports. Tracking performance in these areas enables timely adjustments and ensure risks are being effectively mitigated.

In response to the global pandemic (COVID-19), the Government of Canada is also monitoring risks in various areas, including: Governance, Business Continuity Planning and Emergency Preparedness, IT Systems and Security, Information Management and Privacy, Finance and Workforce Health. VAC is also monitoring additional risks resulting from the pandemic which could impact our ability to meet Veterans expectations, manage workforce capacity and create delays in hiring/onboarding staff.

Additionally, the Departmental Audit Committee provides an important advisory function as part of the Department’s governance structure for risk. It provides objective advice and recommendations to the Deputy Head regarding the sufficiency, quality and adequacy of the Department's risk management process.

This integrated risk management process ultimately supports the Department in meeting its objectives. Further information on risks facing the Department and the steps taken to mitigate them can be found on VAC's website.

4. Significant changes in relation to operations, personnel and programs

Mandate/budget commitments

Service excellence

Veterans Affairs Canada received funding to enable the Department to deliver on its service excellence proposal.  This funding enables the Department to continue our efforts to reducing disability benefit wait times for Veterans.  This funding enables faster decisions, reduce wait times for disability benefits, and ensure case management services for Veterans who need this support.  This funding covers new teams focused solely on reducing the existing backlog and improving wait times for disability benefits. 

Commemorative activities

The second quarter of 2021/22 fiscal year, saw little change regarding the global pandemic and its effects on Commemorative events in Canada and abroad. The Government of Canada remained committed to remembering and honouring the sacrifices and achievements of all those who served for liberation and freedom. Pandemic restrictions remained in place however, and Veterans Affairs Canada worked to promote and organize smaller ceremonies across Canada.

On July 1 Veterans Affairs commemorated the 105th anniversary of the Battles of the Somme and Beaumont Hamel with small events being held in Ottawa, St. John’s & Beaumont Hamel France. Later in the month, to mark the 68th Anniversary of the Korean War Armistice on July 27, ceremonies were held in various cities across Canada.

August 8 marked National Peacekeepers’ Day. The Minister of Veterans Affairs was present in Ottawa, where he participated in the National Peacekeepers’ Day Ceremony of Remembrance and Floral Tribute at the Peacekeeping Monument. Other small events were held in municipalities across the country as well.

On September 22, the Governor General attended a small ceremony, organized by Aboriginal Veterans Autochtones, held to mark the 20th Anniversary of the National Aboriginal Veterans Monument in Ottawa.

5. Approvals by senior officials

Original signed by:

__________________________________

Paul Ledwell
Deputy Minister
Charlottetown, PE

__________________________________

Sara Lantz
Chief Financial Officer (Acting)
Charlottetown, PE


II. Financial statements

Veterans Affairs Canada

Quarterly financial report for the quarter ended 30 September 2020

Statement of authorities (unaudited)

Fiscal year 2020-21

(in thousands of dollars) Total available for use for the year ended 31 March 2021* Used during the quarter ended 30 September 2020 Year-to-date used at quarter-end
Vote 1 - Net operating expenditures 956,070 239,135 444,443
Vote 5 - Grants and contributions 3,033,467 875,167 1,805,561
Statutory authority - Minister's salary and motor car allowance 89 22 44
Statutory authority - Court award - Crown Liability and Proceeding Act 0 0 0
Statutory authority - Refunds of previous years revenue 0 5,085 18,374
Statutory authority - Contributions to employee benefit plans - Program 47,244 8,483 16,965
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 statutory 47,530 13,590 35,383
Total budgetary authorities 4,037,067 1,127,892 2,285,387
Non-budgetary authorities 0 0 0
Total authorities 4,037,067 1,127,892 2,285,387

* Includes only authorities available for use and granted by Parliament at quarter-end. Due to the COVID-19 pandemic and limited sessions in the spring for Parliament to study supply, the Standing Orders of the House of Commons were amended to extend the supply period in to the Fall. Veterans Affairs Canada received full supply for the 2020-21 Main Estimates in December 2020.


Veterans Affairs Canada

Quarterly financial report for the quarter ended 30 September 2021

Statement of authorities (unaudited)

Fiscal year 2021-22

(in thousands of dollars) Total available for use for the year ending 31 March 2022* Used during the quarter ended 30 September 2021 Year-to-date used at quarter-end
Vote 1 - Net operating expenditures 1,300,061 249,661 499,057
Vote 5 - Grants and contributions 4,944,723 1,029,313 2,108,491
Statutory authority - Minister's salary and motor car allowance 90 22 45
Statutory authority - Court award - Crown Liability and Proceeding Act 0 0 0
Statutory authority - Refunds of previous years revenue 0 0 0
Statutory authority - Contributions to employee benefit plans - Program 43,735 10,934 21,867
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 statutory 44,022 10,956 21,912
Total budgetary authorities 6,288,806 1,289,930 2,629,460
Non-budgetary authorities 0 0 0
Total authorities 6,288,806 1,289,930 2,629,460

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


Veterans Affairs Canada

Quarterly financial report for the quarter ended 30 September 2020

Departmental budgetary expenditures by standard object (unaudited)

Fiscal year 2020-21

Expenditures
(in thousands of dollars)
Planned expenditures for the year ended 31 March 2021* Expended during the quarter ended 30 September 2020 Year-to-date used at quarter-end
01 Personnel 279,094 72,499 143,646
02 Transportation and communications 47,129 3,109 5,620
03 Information 891 277 310
04 Professional and special services 432,651 117,483 191,396
05 Rentals 8,937 2,131 3,151
06 Repair and maintenance 7,469 1,144 1,648
07 Utilities, materials and supplies 216,146 51,419 105,043
08 Acquisition of land, buildings and works 10 0 0
09 Acquisition of machinery and equipment 11,038 280 978
10 Transfer payments 3,033,663 875,167 1,805,561
11 Public debt charges 0 0 0
12 Other subsidies and payments 39 4,383 28,034
Total gross budgetary expenditures 4,037,067 1,127,892 2,285,387
Less revenues netted against expenditures 0 0 0
Total revenues netted against expenditures: 0 0 0
Total net budgetary expenditures 4,037,067 1,127,892 2,285,387

* Includes only Authorities available for use and granted by Parliament at quarter-end. Due to the COVID-19 pandemic and limited sessions in the spring for Parliament to study supply, the Standing Orders of the House of Commons were amended to extend the supply period in to the Fall.  Veterans Affairs Canada received full supply for the 2020-21 Main Estimates in December 2020.


Veterans Affairs Canada

Quarterly financial report for the quarter ended 30 September 2021

Departmental budgetary expenditures by standard object (unaudited)

Fiscal year 2021-22

Expenditures
(in thousands of dollars)
Planned expenditures for the year ending 31 March 2022* Expended during the quarter ended 30 September 2021 Year-to-date used at quarter-end
01 Personnel 345,460 86,814 176,730
02 Transportation and communications 45,382 4,602 8,468
03 Information 1,103 1,435 1,446
04 Professional and special services 611,142 114,123 197,311
05 Rentals 9,293 3,306 5,407
06 Repair and maintenance 12,311 (3,262) 1,552
07 Utilities, materials and supplies 309,410 48,503 107,551
08 Acquisition of land, buildings and works 1,736 0 0
09 Acquisition of machinery and equipment 6,698 346 511
10 Transfer payments 4,945,020 1,029,313 2,108,491
11 Public debt charges 0 0 0
12 Other subsidies and payments 1,251 4,750 21,993
Total gross budgetary expenditures 6,288,806 1,289,930 2,629,460
Less revenues netted against expenditures 0 0 0
Total revenues netted against expenditures: 0 0 0
Total net budgetary expenditures 6,288,806 1,289,930 2,629,460

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

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