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Departmental Quarterly Financial Report

October - December 2021

I. Statement outlining results, risks and significant changes in operations, personnel and program for the quarter ended 31 December 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 and Supplementary 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 31 December 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 31 December 2020 and 31 December 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 1,316,841 1,259,184 57,657 4.6%
Vote 5 – Grants and contributions 4,950,223 4,044,622 905,601 22.4%
Budgetary statutory authorities 44,203 67,530 (23,327) (34.5%)
Total authorities $6,311,267 $5,371,336 $939,931 17.5%

As at December 31, 2021, total authorities available (i.e. budget) at quarter end were $940M (17.5%) more when compared to amounts available at the same quarter-end the previous year, from $5,371M in 2020-21 to $6,311M in 2021-22. The increase in budget is mainly attributed to the increased capacity in the department to address the disability application backlog and improve wait times which has resulted in increased forecasted demand for many of our programs and services. Additional funding for this demand is sought through the annual Quasi Statutory forecasting exercise and is based on client demand, eligibility and departmental productivity.

VAC was granted funding in 2020-21 relating to economic recovery in response to COVID-19. This one-time funding was used for Statutory payments to support Veterans’ Organizations and is attributing to the decrease in authorities for Budgetary Statutory authorities from 2020-21 to 2021-22.

2.1.2 Changes in year-to-date expenditures
Table 2: Changes in year-to-date Expenditures used as of 31 December 2020 and 31 December 2021 (in thousands of dollars)
Expenditures (year-to-date as at quarter end) 2021-22 2020-21 Variance ($) Variance (%)
Vote 1 – Operating expenditures 825,807 727,465 98,342 13.5%
Vote 5 – Grants and contributions 3,182,543 2,776,982 405,561 14.6%
Budgetary statutory authorities 32,869 62,923 (30,054) (47.8)%
Total expenditures $4,041,219 $3,568,370 $472,849 13.3%

Year-to-date expenditures for Veterans Affairs Canada are $473M more (13.3% 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 $98.3M

  • Much of the increase is due to increased spending in Personnel as the Department’s operational capacity has increased to address the disability application backlog and improve the delivery of services and programs to Veterans and their families.
  • The increase is also attributed to increased demand from clients for treatment benefits and health services.

Vote 5 - Grant and contribution - increase of $405.6M

  • This increase in spending is mainly due to the continued efforts to reduce the disability application backlog resulting in more spending in many of our programs.
  • 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 $30.1M

  • This decrease in spending is mostly due to payments made in 2020-21 to support Veterans’ Organizations relating to economic recovery in response to COVID-19.

Fiscal quarter

2.1.3 Changes in expenditures – quarter to quarter comparison

Table 3: Changes in expenditures used during
quarter 3 2021 (1 Oct – 31 Dec 2021) and Quarter 3 2020 (1 Oct – 31 Dec 2020)
(in thousands of dollars)
Expenditures (used during quarter 3) 2021-22 2020-21 Variance ($) Variance (%)
Vote 1 – Operating expenditures 326,750 283,022 43,728 15.5%
Vote 5 – Grants and contributions 1,074,052 977,422 96,630 9.9%
Budgetary statutory authorities 10,956 28,540 (17,584) (61.6)%
Total expenditures $1,411,758 $1,282,984 $128,774 10.0%

In-quarter expenditures for Veterans Affairs Canada are $128.8M more (10.0% increase) when compared to the same timeframe in 2020-21. This increase as compared to the third quarter in 2020-21 can be explained by variances detailed below.

Vote 1 - Operating expenditures – increase of $43.7M

  • Much of the increase is due to increased demand from clients for treatment benefits and health services.
  • This increase can also be attributed to spending in Personnel primarily attributed to the continued efforts to reduce the disability application backlog and improve the delivery of services and programs to Veterans and their families.

Vote 5 - Grant and contribution - increase of $96.6M

  • This increase in spending can be attributed to the continued increase in processing capacity as the department continues to reduce the disability application 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 $17.6M

  • This decrease in spending is mostly due to payments made in 2020-21 to support Veterans’ Organizations relating to economic recovery in response to COVID-19.

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 140,600 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 37,500 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 ensures 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 towards reducing disability benefit wait times for Veterans by investing in additional resources dedicated to disability application adjudication as well as resources to support innovation and automation in order to effectively enable faster decision making. This investment will also ensure case management services are there for Veterans who need this support.

Commemorative activities

The Government of Canada remains committed to remembering and honouring the sacrifices and achievements of all those who served for liberation and freedom. COVID-19 restrictions remained in place however, in some jurisdictions the restrictions were relaxed allowing for larger gatherings. Veterans Affairs Canada worked to promote and organize ceremonies in line with the restrictions of each jurisdiction across Canada.

On November 5, the Minister of Veterans Affairs launched Veterans Week with the unveiling of commemorative banners installed on light poles in front of the Jean Canfield Building in Charlottetown.

November 8 is recognized as Indigenous Veterans’ Day. Several events and ceremonies were held in communities across Canada. The Deputy Minister, Veterans Affairs Canada, attended the ceremony in Scotchfort, PE.

The Minister also attended a ceremony marking Canadian efforts during the Korean War (Turn to Busan).

November 11, Remembrance Day, the Minister joined the Prime Minister and the Governor General for the national Remembrance Day ceremony at the National War Memorial in Ottawa. Communities across Canada held their own ceremonies with dignitaries that included Members of Parliament, Senators, and government representatives including from VAC.

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 31 December 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 31 December 2020 Year-to-date used at quarter-end
Vote 1 - Net operating expenditures 1,259,184 283,022 727,465
Vote 5 - Grants and contributions 4,044,622 971,422 2,776,982
Statutory authority - Minister's salary and motor car allowance 89 22 67
Statutory authority - Court award - Crown Liability and Proceeding Act 0 1 1
Statutory authority - Refunds of previous years revenue 0 34 18,408
Statutory authority - Contributions to employee benefit plans - Program 47,244 8,483 25,447
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
Bill C2 – Veterans Organization Emergency Support Fund 20,000 20,000 20,000
Total statutory 67,530 28,540 62,923
Total budgetary authorities 5,371,336 1,282,984 3,568,370
Non-budgetary authorities 0 0 0
Total authorities 5,371,336 1,282,984 3,568,370

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


Veterans Affairs Canada

Quarterly financial report for the quarter ended 31 December 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 31 December 2021 Year-to-date used at quarter-end
Vote 1 - Net operating expenditures 1,316,841 326,750 825,807
Vote 5 - Grants and contributions 4,950,223 1,074,052 3,182,543
Statutory authority - Minister's salary and motor car allowance 90 23 68
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 43,916 10,933 32,801
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 44,203 10,956 32,869
Total budgetary authorities 6,311,267 1,411,758 4,041,219
Non-budgetary authorities 0 0 0
Total authorities 6,311,267 1,411,758 4,041,219

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


Veterans Affairs Canada

Quarterly financial report for the quarter ended 31 December 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 31 December 2020 Year-to-date used at quarter-end
01 Personnel 336,414 82,740 226,386
02 Transportation and communications 59,445 6,057 11,677
03 Information 5,334 496 806
04 Professional and special services 574,139 125,995 317,391
05 Rentals 11,859 1,426 4,577
06 Repair and maintenance 9,857 1,924 3,572
07 Utilities, materials and supplies 287,747 70,081 175,123
08 Acquisition of land, buildings and works 13 0 0
09 Acquisition of machinery and equipment 12,632 1,396 2,374
10 Transfer payments 4,064,819 991,421 2,796,982
11 Public debt charges 0 0 0
12 Other subsidies and payments 9,077 1,448 29,482
Total gross budgetary expenditures 5,371,336 1,282,984 3,568,370
Less revenues netted against expenditures 0 0 0
Total revenues netted against expenditures: 0 0 0
Total net budgetary expenditures 5,371,336 1,282,984 3,568,370

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


Veterans Affairs Canada

Quarterly financial report for the quarter ended 31 December 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 31 December 2021 Year-to-date used at quarter-end
01 Personnel 349,376 87,220 263,950
02 Transportation and communications 45,182 6,187 14,655
03 Information 1,103 470 1,915
04 Professional and special services 611,187 132,031 329,342
05 Rentals 9,293 8,693 14,101
06 Repair and maintenance 12,311 2,149 3,700
07 Utilities, materials and supplies 309,210 100,427 207,978
08 Acquisition of land, buildings and works 1,736 0 0
09 Acquisition of machinery and equipment 6,698 576 1,087
10 Transfer payments 4,950,420 1,074,051 3,182,543
11 Public debt charges 0 0 0
12 Other subsidies and payments 14,751 (46) 21,948
Total gross budgetary expenditures 6,311,267 1,411,758 4,041,219
Less revenues netted against expenditures 0 0 0
Total revenues netted against expenditures: 0 0 0
Total net budgetary expenditures 6,311,267 1,411,758 4,041,219

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

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