Treasury Board of Canada Secretariat’s Quarterly Financial Report for the Quarter Ended December 31, 2018

1.1 Basis of presentation

This report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Treasury Board of Canada Secretariat’s (TBS’s) spending authorities granted by Parliament and those used by TBS, consistent with the Main Estimates and Supplementary Estimates (A) for the fiscal year ending March 31, 2019. This 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.

TBS uses the full accrual method of accounting to prepare and present its annual departmental financial statements, which are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

1.2 Raison d’être

TBS is the central agency that acts as the administrative arm of the Treasury Board, a committee of Cabinet. TBS supports the Treasury Board in the following principal roles:

1.3 TBS’s financial structure

TBS manages both departmental and Treasury Board central votes. Its departmental operating expenditures and revenues are managed under Vote 1, Program expenditures.

TBS manages 8 different central votes:

• Vote 5, Government Contingencies, supplements other appropriations to provide federal departments and agencies with temporary advances for urgent or unforeseen departmental expenditures between Parliamentary supply periods.
• Vote 10, Government‑Wide Initiatives, supplements other appropriations to support the implementation of strategic management initiatives across the federal public service.
• Vote 15, Compensation Adjustments, supplements other appropriations to provide funding for adjustments made to terms and conditions of service or employment of the federal public administration as a result of collective bargaining.
• Vote 20, Public Service Insurance, provides the employer’s share of group benefit plan coverage costs as part of the Treasury Board’s role as the employer of the core public administration. These plans include the Public Service Health Care Plan, Public Service Dental Care Plan, Pensioners’ Dental Services Plan, Disability Insurance Plan, provincial payroll taxes (Manitoba, Newfoundland, Ontario and Quebec), Public Service Management Insurance Plan.
• Vote 25, Operating Budget Carry Forward, supplements other appropriations for the carry forward of unused operating funds from the previous fiscal year, up to 5% of the gross operating budget in an organization’s Main Estimates.
• Vote 30, Paylist Requirements, supplements other appropriations to meet legal requirements for the government as employer for items such as parental benefits and severance payments.
• Vote 35, Capital Budget Carry Forward, supplements other appropriations for the carry forward of unused capital funds from the previous fiscal year, up to 20% of an organization’s capital vote.
• Vote 40, Budget Implementation, a new central vote was added in 2018–19 for new measures approved in Budget 2018 to facilitate timely availability of supply for Budget 2018 activities being carried out this fiscal year. Funding provided through this vote is tied to a detailed table in Budget 2018 that shows the amount of funding required by each department to implement each budget initiative.

The funding in these votes is approved by Parliament. With the exception of Vote 20, funding in central votes is transferred from TBS to individual departments and agencies once specified criteria are met. Like any other department, TBS also receives its own share of appropriations transferred from these votes to its own Vote 1. Any unused balance from these votes is returned to the fiscal framework at the end of the year and is reported as TBS’s lapse.

Expenditures incurred against statutory authorities mainly reflect the government’s obligation to pay the employer’s share of the Public Service Pension Plan, the Canada Pension Plan and the Québec Pension Plan, Employment Insurance premiums and Public Service Death Benefits. TBS recovers from other government departments and agencies their share of the employer contributions under the Public Service Superannuation Act, and is subsequently charged by Public Services and Procurement Canada (PSPC) for actual expenditures in the same statutory vote. Adjustments are made at year‑end to individual departments’ statutory votes (including those of TBS) for the difference between periodic recoveries and actual expenditures.

This quarterly report highlights the financial results of:

• Vote 1, Program expenditures, related to the delivery of TBS’s mandate
• Vote 20, Public Service Insurance, related to the employer’s share of group benefit coverage to employees of the core public service under the various plans listed above
• statutory authorities that cover any residual amounts between the government’s contributions to the various plans and the distribution of these costs to departments

Transfer amounts from all other central votes mentioned above will be included in the financial reports of the individual recipient departments.

2.1 Statement of voted and statutory authorities

Total budgetary authorities available for use increased by $290.7 million (8.8%) from the previous fiscal year:

• Vote 1 authorities decreased by $10.9 million
• Vote 20 authorities increased by $301.1 million
• statutory authorities increased by $0.5 million

The following table provides a detailed explanation of these changes.

2.2 Statement of departmental budgetary expenditures by standard object

By the end of the fiscal quarter ended December 31, 2018, year-to-date budgetary expenditures had increased by $268.3 million (14.9%) compared with the same period in the previous year:

• Vote 1 expenditures increased by $7.4 million
• Vote 20 expenditures increased by $137.9 million
• statutory payments increased by $123.0 million

For the fiscal quarter ended December 31, 2018, budgetary expenditures had increased by $107.6 million (17.0%) compared with the same period in the previous year:

• Vote 1 expenditures increased by $9.5 million
• Vote 20 expenditures increased by $60.4 million
• statutory payments increased by $37.8 million

The following table provides a detailed explanation of these changes by standard object.

3.1 Delivery of results

TBS has been mandated to deliver many complex priority initiatives, and there is a risk that TBS may not have the necessary resources to generate results within the expected time frames.

In 2018–19, TBS will continue to accelerate delivery of priority initiatives. There continues to be an increased focus on the following in order to reallocate resources to emerging key priorities and to ensure that resources are being managed effectively to deliver results:

• reviewing core business on an ongoing basis
• eliminating unnecessary work

TBS has also established a deployable team of experts to help support the delivery of high‑priority initiatives.

3.2 Capacity for delivery of TBS‑led government-wide initiatives

TBS is playing an increasingly prominent role in delivering government-wide initiatives such as:

• back office transformation
• open government
• the modernization of the Access to Information Act
• NextGen and HR to Pay

Leading these initiatives is a challenge, particularly given the requirement to implement transformational changes in an organization as large and complex as the federal government.

In response, TBS will:

• strengthen the accountability and skills of its project managers
• update its investment plan

TBS will also improve its oversight of enterprise-wide initiatives to ensure that:

• the design, development and implementation of each initiative is phased in a manner that facilitates adjustments and course corrections along the way
• the results and benefits expected from each initiative can be achieved

3.3 Employee wellness

TBS continues to face workload pressures due to the number and complexity of priority initiatives discussed above. There is a risk that sustaining an increased level and pace of work could affect the well-being of employees and the wellness of the organization over time.

To address this risk, TBS is implementing a Wellness Action Plan that includes communications products, training and tools to support employee well-being.

3.4 Impact of Phoenix on TBS employees

Departments and individuals across government have been affected by the implementation of the new government-wide Pay Modernization Project (Phoenix).

TBS is addressing the impact of Phoenix pay errors on employees by:

• effectively monitoring and tracking salary expenditures
• following up on overpayments in a timely manner
• making appropriate adjustments at year-end

TBS approved a Management Action Plan in response to the Office of the Auditor General’s recommendations on payroll management. These activities will enable TBS to further assess the accuracy and completeness of payroll information that affects employees and departmental appropriations.

3.5 Information technology capacity

Some of TBS’ new priority initiatives will depend on information technology to achieve the desired results. Without enhancements to TBS’ departmental information technology infrastructure, the delivery of some key priorities may be delayed.

To address this risk, TBS, in collaboration with Shared Services Canada, continually reviews allocated server capacity and decommissions unused applications to ensure optimal efficiency and reduce costs. To ensure that its network and infrastructure are highly available, secure and fully managed, TBS is developing disaster recovery plans for business-critical systems. TBS will also increase its information technology capacity through the use of alternate sources such as:

• cloud services
• software as a service
• infrastructure as a service