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Departmental Quarterly Financial Report

April - June 2022

I. Statement outlining results, risks and significant changes in operations, personnel and program for the quarter ended 30 June 2022

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 2022-23 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 June 2022.

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.

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 135,450 as of 31 March 2022, to 143,800 as of 31 March 2023) and a decrease in the number of War Service Veterans and survivors (forecast to decrease from 36,321 as of 31 March 2022, to 31,300 as of 31 March 2023).

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 June 2021 and 30 June 2022 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 2023
(in thousands of dollars):
Authorities (available at quarter-end) 2022-23 2021-22 Variance ($) Variance (%)
Vote 1 – Operating expenditures 1,248,089 1,302,127 (54,038) (4.1)%
Vote 5 – Grants and contributions 4,220,895 4,944,823 (723,928) (14.6)%
Budgetary statutory authorities 38,476 44,022 (5,546) (12.6)%
Total authorities $5,507,460 $6,290,972 ($783,512) (12.5)%

As at 30 June 2022, total authorities available (i.e. budget) at quarter end were $784M (12.5%) less when compared to amounts available at the same quarter-end the previous year, from $6,291M in 2021-22 to $5,507M in 2022-23.

Much of this decrease in total authorities can be attributed to the conclusion of temporary funding to address the disability application backlog, as we are forecasting less spending as operational capacity returns to our base level. Total Authorities as of Quarter 1 however, do not include funding announced in Budget 2022 which brought with it, two years of funding to continue efforts to reduce the disability application backlog. The Department’s budget will be adjusted through the estimates process in future supply periods to reflect this new funding, and to align with the latest forecast of client demand and expenditures.

2.1.2 Changes in year-to-date expenditures
Table 2: Changes in year-to-date Expenditures used as of 30 June 2021 and 30 June 2022 (in thousands of dollars)
Expenditures (year-to-date as at quarter end) 2022-23 2021-22 Variance ($) Variance (%)
Vote 1 – Operating expenditures 245,590 249,396 (3,806) (1.5)%
Vote 5 – Grants and contributions 1,080,236 1,079,178 1,058 0.1%
Budgetary statutory authorities 9,570 10,956 (1,386) (12.7)%
Total expenditures $1,335,396 $1,339,530 ($4,134) (0.3)%

Year-to-date expenditures for Veterans Affairs Canada are $4M less (0.3% decrease) when compared to the same timeframe in 2021-22. This decrease over the first quarter of 2021-22 can be explained by variances detailed below.

Vote 1 – Operating expenditures – decrease of $3.8M

  • Much of the decrease is attributed to payments made during the first quarter of 2021-22 to fulfill the Department’s legal obligations as prescribed in the Solkin Class Action Final Settlement Agreement.

Vote 5 – Grant and contribution – increase of $1.1M

  • Expenditures are in line with previous year’s quarter one.

Budgetary statutory authorities – decrease of $1.4M

  • Expenditures are being accrued based on opening authorities, which are lower than the previous year. Expenditures will be adjusted at fiscal year-end based on actual salary costs.

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

Reducing processing times for disability benefit applications remains Veterans Affairs Canada’s top priority. Through funding committed in previous budgets, the Department has and continues to reduce processing times for Veterans and their families through increased capacity, integration, innovation and digital solutions.

Mental Health Benefit

Veterans Affairs Canada is committed to ensuring eligible Veterans and their families have access to the mental health support they need, when they need it. Budget 2021 announced funding to enable the Department to enhance existing mental health supports for Veterans. The Department launched a Mental Health Benefit on 1 April 2022, which allows eligible Veterans to access coverage for mental health treatment and supports immediately upon application for Disability Benefits for an eligible mental health condition. Coverage under the Mental Health Benefits will continue until a decision is made with respect to the application for disability benefits, or for a period of two years.

Commemorative activities

The first quarter of 2022-23 fiscal year, saw a return to in-person events and ceremonies following two years of restrictions due to the global pandemic. The Government of Canada remains committed to remembering and honouring the sacrifices and achievements of all those who served for liberation and freedom. Although most COVID-19 restrictions were lifted, VAC worked to promote and organize ceremonies with a continued focus on health and safety. These ceremonies included:

  • Wreath laying ceremonies to commemorate the anniversary of D-Day, the Battle of Normandy and the Korean War Armistice.
  • Ceremonies to mark the 100th anniversary of the Battle of Vimy Ridge.
  • Wreath laying ceremonies to mark the Anniversary for VE Day.
  • Wreath laying ceremony to mark the anniversary of Canada’s peacekeeping mission to Rwanda.

The first quarter of 2022-23 saw the return of normal operations at our two Visitor Centres located at the Canadian National Vimy and Beaumont-Hamel Newfoundland memorial sites. The sites were closed or reduced capacity over the last two years because of COVID-19 restrictions. For the first time since March 2020, there was a full Student Guide contingent with 16 young Canadians arriving in May for the summer session.

5. Approvals by senior officials

Original signed by:

__________________________________

Paul Ledwell
Deputy Minister
Charlottetown, PE
17 August 2022

__________________________________

Sara Lantz
Chief Financial Officer (Acting)
Charlottetown, PE
16 August 2022


II. Financial statements

Veterans Affairs Canada

Quarterly financial report for the quarter ended 30 June 2021

Statement of authorities (unaudited)

Fiscal year 2021-22

(in thousands of dollars) Total available for use for the year ended 31 March 2022* Used during the quarter ended 30 June 2021 Year-to-date used at quarter-end
Vote 1 – Net operating expenditures 1,302,127 249,396 249,396
Vote 5 – Grants and contributions 4,944,823 1,079,178 1,079,178
Statutory authority – Minister's salary and motor car allowance 90 23 23
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 10,933 10,933
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 10,956
Total budgetary authorities 6,290,972 1,339,530 1,339,530
Non-budgetary authorities 0 0 0
Total authorities 6,290,972 1,339,530 1,339,530

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


Veterans Affairs Canada

Quarterly financial report for the quarter ended 30 June 2022

Statement of authorities (unaudited)

Fiscal year 2022-23

(in thousands of dollars) Total available for use for the year ending 31 March 2023* Used during the quarter ended 30 June 2022 Year-to-date used at quarter-end
Vote 1 – Net operating expenditures 1,248,089 245,590 245,590
Vote 5 – Grants and contributions 4,220,895 1,080,236 1,080,236
Statutory authority – Minister's salary and motor car allowance 93 23 23
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 38,187 9,547 9,547
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 statutory 38,476 9,570 9,570
Total budgetary authorities 5,507,460 1,335,396 1,335,396
Non-budgetary authorities 0 0 0
Total authorities 5,507,460 1,335,396 1,335,396

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


Veterans Affairs Canada

Quarterly financial report for the quarter ended 30 June 2021

Departmental budgetary expenditures by standard object (unaudited)

Fiscal year 2021-22

Expenditures
(in thousands of dollars)
Planned expenditures for the year ended 31 March 2022* Expended during the quarter ended 30 June 2021 Year-to-date used at quarter-end
01 Personnel 339,330 89,916 89,916
02 Transportation and communications 54,538 3,866 3,866
03 Information 1,098 11 11
04 Professional and special services 610,629 83,188 83,188
05 Rentals 9,286 2,101 2,101
06 Repair and maintenance 12,301 4,814 4,814
07 Utilities, materials and supplies 309,183 59,048 59,048
08 Acquisition of land, buildings and works 1,736 0 0
09 Acquisition of machinery and equipment 6,693 165 165
10 Transfer payments 4,945,020 1,079,178 1,079,178
11 Public debt charges 0 0 0
12 Other subsidies and payments 1,158 17,243 17,243
Total gross budgetary expenditures 6,290,972 1,339,530 1,339,530
Less revenues netted against expenditures 0 0 0
Total revenues netted against expenditures: 0 0 0
Total net budgetary expenditures 6,290,972 1,339,530 1,339,530

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


Veterans Affairs Canada

Quarterly financial report for the quarter ended 30 June 2022

Departmental budgetary expenditures by standard object (unaudited)

Fiscal year 2022-23

Expenditures
(in thousands of dollars)
Planned expenditures for the year ending 31 March 2023* Expended during the quarter ended 30 June 2022 Year-to-date used at quarter-end
01 Personnel 292,856 80,780 80,780
02 Transportation and communications 25,262 5,231 5,231
03 Information 839 22 22
04 Professional and special services 581,191 146,925 146,925
05 Rentals 9,663 1,888 1,888
06 Repair and maintenance 12,286 565 565
07 Utilities, materials and supplies 358,958 14,138 14,138
08 Acquisition of land, buildings and works 24 0 0
09 Acquisition of machinery and equipment 5,194 1,354 1,354
10 Transfer payments 4,221,092 1,080,236 1,080,236
11 Public debt charges 0 0 0
12 Other subsidies and payments 95 4,257 4,257
Total gross budgetary expenditures 5,507,460 1,335,396 1,335,396
Less revenues netted against expenditures 0 0 0
Total revenues netted against expenditures: 0 0 0
Total net budgetary expenditures 5,507,460 1,335,396 1,335,396

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

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