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Environment Canada Quarterly Financial Report Statement Outlining Results, Risks and Significant Changes In Operations, Personnel and Programs for the Quarter Ended June 30, 2011

1. Introduction

Environment Canada has prepared this first quarterly report as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board Secretariat.  This quarterly report should be read in conjunction with the Main Estimates and Supplementary Estimates.

A summary description of the Environment Canada program activities can be found in Part II of the Main Estimates.

This quarterly report has not been subject to an external audit or review.

Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting (modified cash accounting).  The accompanying Statement of Authorities includes Environment Canada’s spending authorities granted by Parliament and those used by the Department, consistent with the Main Estimates for the 2011-2012 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 money 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 Actauthorizes 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 performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

2. Highlights of fiscal quarter and fiscal year to date (YTD) results

Statement of Authorities

Based on Environment Canada’s Main Estimates, Budget 2011 and other adjustments, the reference level for 2011-2012 is expected to be $1,081 million, subject to the approval of the Supplementary Estimates later this fiscal year.

This quarterly report, ending June 30th 2011, reflects the authorities that were approved for this period, which don’t include renewals. Budget 2011 funding will follow through Supplementary Estimates later in the year. Environment Canada’s authorities available for use decreased by approximately $226 million when compared to the same quarter of 2010-2011, of which $143.4 million is in Operating Vote, $12.2 million is in Capital Vote, $65.6 million is in grants and contributions Vote and $4.6 million is in statutory vote for the Employee Benefits Plan (EBP).

The decrease in the authorities is mainly due to the following:

A $145.5 million decrease in funding is related to the Clean Air Agenda (CAA). This funding was used primarily to deliver regulations that aim to reduce greenhouse gas emissions from the industrial, transportation, consumer and commercial products sectors. 

A $33.4 million decrease in funding is due to the sunsetting of Canada’s Chemical Management Plan (CMP) initiative.  The CMP aimed to accelerate the pace of the risk assessment to address the legacy of un-assessed substances under the Canadian Environmental Protection Act, 1999, by 2020.

A $19.5 million decrease in funding of the Contaminated Sites Action Plan initiative. The Federal Contaminated Sites Action Plan (FCSAP) was established in 2005 for the long-term management of federal contaminated sites. These investments were part of Canada’s Economic Action Plan.

A $12.5 million decrease in the funding of the grant for Sustainable Development Technology of Canada (SDTC). A $7.3 million decrease in funding due to the sunsetting of the Modernizing Federal Laboratories initiative. This funding was required in order to improve Environment Canada’s ability to provide quality scientific data to Canadians through Canada’s Economic Action Plan.

A $19.7 million decrease through Strategic Review from which $7.7M is already included in the sunsetting initiatives listed above ($4.2M for CMP and $3.5M for CAA). The remaining $12.0M directly reduces Environment Canada’s Main Estimates. This review has identified opportunities to focus on priorities and deliver Environment Canada suite of programs and services more efficiently, while ensuring the right balance between environmental stewardship and economic interests.

A $2.3 million decrease due to temporary funding for the Security and Prosperity Partnership Initiative. This funding was going toward dialogue between Canada and the United States with the purpose of providing greater cooperation on security and economic issues.

A $9.1 million decrease to the Freshwater program under the Action Plan on Clean Water Initiative. This long-term funding was established to preserve and protect the environment of Lake Simcoe, Lake Winnipeg, the St. Lawrence River and the Great Lakes. 

A $5.8 million decrease for the cost containment measure as first presented in the Budget 2010.

These decreases in the authorities are mainly offset by the following:

An increase of $8 million due to the renewal of the Great Lakes Action Plan initiative. The ongoing funding will be used to continue the environmental restoration of the areas of concern (AOC) identified under Canada-United States Great Lakes Water Quality Agreement (GLWQA) between Canada and the Unites States.

An increase of $7.2 million due to the renewal of the Canadian Environmental Sustainability Indicators (CESI) program.  The funding will be used to produce reports on environmental indicators that track the long-term trends for issues of key concern to Canadians.   

An increase of $6.4 million for the Meteorological / Navigational Areas initiative. The funding will be used to enable Environment Canada to provide meteorological services and navigational warning services for defined regions of the Arctic Ocean. Meteorological and navigational (MET/NAV) areas are delimited sea areas for which a designated country assumes responsibility for the dissemination of meteorological information and the broadcasting of navigational warnings under the Global Maritime Distress and Safety system.

Statement of Departmental Expenditures by Standard Object

Environment Canada was operating under Governor General Special Warrants until mid-June this year when the Department received approval of the 2011-2012 Main Estimates. Environment Canada’s spending decreased by approximately $17.5 million when compared to the same quarter of 2010-2011, which is mainly attributed to the election call this year. 

During the Warrants period, only priority payments to multi-year Transfer Payments agreements were authorized to be made with 2011-2012 funding.

3. Risks and Uncertainties

This section is oriented toward the financial risks related to the first period of the fiscal year. Please refer to the 2011-12 Report on Plans and Priorities for the departmental risk profile.

Environment Canada is primarily funded through voted parliamentary spending authorities and statutory authorities for operating expenditures, capital expenditures and transfer payments.  The Department is also partially funded through a vote-netted revenue votes.  Environment Canada authorities have decreased from 2010-2010 to 2011-2012 as per the Main Estimates. However, Budget 2011 has renewed several initiatives as well as provided new program investments to the Department. This funding will be included in the Supplementary Estimates to be tabled in Parliament later in the year.

The Department has to consider several external factors, such as economic climate, technological and scientific development, government priorities, and central agencies or government-wide initiatives, which may have an impact on its capacity to deliver on priorities. In addition to the domestic challenges, the fluctuating international economic climate might be a risk. Environment Canada is also a knowledge-based organization and as such, relies on its talented and committed workforce to continue delivering programs and services. 

Internally, some key risks are related to human resource, financial and information management as well as business continuity  that could affect the Department’s capacity to meet its priorities in subsequent years. For example, effective resource management can be expected to be challenged by the need for fiscal restraint, as a result of the Budget 2010 Cost Containment Measures. Budget 2010 announced that the operating budgets of departments would be frozen at their 2010-11 level for the fiscal year 2011-12 and 2012-13. Management is reviewing the impacts of the cost containment measures on departmental activities. Current mitigation activities involve enhancing departmental integrated planning, streamlining resource allocation processes and increasing performance measurement capacity.  In the context of managing risks related to resource management and information for decision-making, the Department continued to make progress toward provision of improved tools and processes through the Corporate Accountability and Administrative Renewal initiative.  With this initiative, the Department is seeking to streamline and standardize its system of internal controls, improve financial information through the implementation of tools such as standardized departmental financial reports to managers and the implementation of the Asset Lifecycle Management system. In addition, the Department is seeking to increase the efficiency of business processes.

In summary, in the face of identified risks, the Department has implemented strategies to foster strong relationships with partners, better manage resources, and enhance information management.  The Department will continue to advance risk management practices   through strengthened processes to integrate risk management into departmental planning, and by better linking risk and performance management.

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

On March 24, 2011, Parliament was dissolved for a general election before voting on Supply for Supplementary Estimates (C) for 2010-11 and Interim Supply for the 2011-12 Main Estimates. Through most of the first quarter of 2011-2012, Environment Canada operated under Governor General Special Warrants. Funding received during this period was $274 million. The Department managed through this period within available resources. Consequently, departmental spending activities were minimized.

Approved by:

Deputy Minister Paul Boothe
Date: August 26 2011
Acting Chief Financial Officer Carol Najm
Date: August 19 2011
Statement of authorities – Fiscal year 2011-2012 (in thousands of dollars)
VoteTotal available for use for the year ending March 31, 2012*Used during the quarter endedYear to date used at quarter end June 30, 2011
Vote 1 - Net operating expenditures
652,480161,152161,152
Vote 5 - Capital expenditures
41,662300300
Vote 10 - Grants and contributions
93,3981,8571,857
Budgetary statutory authorities
84,57421,14321,143
Total budgetary authorities
872,114184,452184,452
Total authorities
872,114184,452184,452

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

Statement of authorities – Fiscal year 2010-2011 (in thousands of dollars)
VoteTotal available for use for the year ending March 31, 2011*Used during the quarter endedYear to date used at quarter end June 30, 2010
Vote 1 - Net operating expenditures
795,858175,004175,004
Vote 5 - Capital expenditures
53,8661,5201,520
Vote 10 - Grants and contributions
159,00210,59310,593
Budgetary statutory authorities
89,19914,87314,873
Total budgetary authorities
1,097,925201,990201,990
Total authorities
1,097,925201,990201,990

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

Departmental budgetary expenditures by Standard Object (unaudited) - Fiscal Year 2011-2012 (in thousands of dollars)
ExpendituresPlanned expenditures for the year ending March 31, 2012Expended during the quarter ended June 30, 2011Year to date used at quarter end
Personnel
553,994157,563157,563
Transportation and communications
53,1277,1607,160
Information
3,208186186
Professional and special services
125,6428,8848,884
Rentals
24,62111,17811,178
Repair and maintenance
11,2862,2862,286
Utilities, materials and supplies
29,8724,4114,411
Acquisition of land, buildings and works
3,32922
Acquisition of machinery and equipment
38,3343,7103,710
Transfer payments
93,3981,8571,857
Other subsidies and payments
3,946247247
Total gross budgetary expenditures
940,757197,484197,484


Departmental budgetary expenditures by Standard Object (unaudited) - Fiscal Year 2010-2011 (in thousands of dollars)
ExpendituresPlanned expenditures for the year ending March 31, 2011Expended during the quarter ended June 30, 2010Year to date used at quarter end
Personnel
613,764154,640154,640
Transportation and communications
71,52310,58210,582
Information
4,242237237
Professional and special services
171,91213,09413,094
Rentals
37,49012,05412,054
Repair and maintenance
16,3391,6621,662
Utilities, materials and supplies
34,6245,7625,762
Acquisition of land, buildings and works
3,3676464
Acquisition of machinery and equipment
50,4984,7634,763
Transfer payments
159,00210,59310,593
Other subsidies and payments
5,285908908
Total gross budgetary expenditures
1,168,046214,359214,359


Departmental budgetary expenditures by Standard Object (unaudited) - Fiscal Year 2011-2012 (in thousands of dollars)
Less revenues netted against expendituresPlanned expenditures for the year ending March 31, 2012Expended during the quarter ended June 30, 2011Year to date used at quarter end
Revenues
68,64313,03213,032
Total revenues netted against expenditures
68,64313,03213,032
Total budgetary expenditures 
872,114184,452184,452


Departmental budgetary expenditures by Standard Object (unaudited) - Fiscal Year 2010-2011 (in thousands of dollars)
Less revenues netted against expendituresPlanned expenditures for the year ending March 31, 2011Expended during the quarter ended June 30, 2010Year to date used at quarter end
Revenues
70,12112,36912,369
Total revenues netted against expenditures
70,12112,36912,369
Total budgetary expenditures 
1,097,925201,990201,990
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