Canadian Food Inspection Agency - Quarterly Financial Report for the quarter ended June 30, 2012
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 2012-13 Main Estimates, the 2012-13 Supplementary Estimates (A), as well as Canadas Economic Action Plan 2012.
A summary description of the CFIAs program activities can be found in Part II of the Main Estimates at the following website: http://www.tbs-sct.gc.ca/est-pre/20112012/p2-eng.asp
The quarterly report has not been subject to an external audit or review.
CFIA Mandate
The Minister of Agriculture and Agri-Food is responsible for and has the overall direction of the Agency. The CFIA is headed by a President, who has the rank and all the powers of a Deputy Head of a Department. The President is also the Chief Executive Officer. The responsibilities of these roles are outlined in the Canadian Food Inspection Act 1997, c.6.
The CFIA is responsible for administering and enforcing 13 federal statutes and 38 sets of regulations, for regulating the safety and quality of food sold in Canada, and for supporting a sustainable plant and animal resource base. The CFIA shares many of its core responsibilities with other federal departments and agencies, with provincial, territorial and municipal authorities and with other stakeholders.
In a complex operating environment, the CFIA works with its partners to implement food safety measures; manage food, animal and plant risks and emergencies; and promote the development of food safety and disease control systems to maintain the safety of Canadas high-quality agriculture, agri-food, aquaculture and fisheries products. The Agencys activities include verifying the compliance of imported products; registering and inspecting establishments; testing food, animals, plants and their related products; and approving the use of many agricultural inputs. The Agency also provides scientific advice, and conducts regulatory research.
At the CFIA, informed decision making is based on high quality, timely, relevant science. Science informs policy development and program design and delivery through foresight, advice, risk assessment, the influence of international standards, research and development, and testing.
Basis of Presentation
This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Agencys spending authorities granted by Parliament and those used by the Agency, consistent with the Main Estimates and Supplementary Estimates (A) for the 2012-13 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 moneys 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 purpose 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 Agency 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.
As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year. Budget 2012 was tabled in Parliament on March 29, after the tabling of the Main Estimates on February 28, 2012. As a result, the measures announced in the Budget 2012 could not be reflected in the 2012-13 Main Estimates.
In fiscal year 2012-13, frozen allotments will be established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012. In future years, the changes to departmental authorities will be implemented through the Annual Reference Level Update, as approved by Treasury Board, and reflected in the subsequent Main Estimates tabled by parliament.
For further information on the Budget 2012 Implementation, please see the Budget 2012 Implementation section below.
Highlights of fiscal quarter and fiscal year to date (YTD)
The section below highlights the significant items that contributed to the decrease in the resources available for use from 2011-12 to 2012-13 and the increase in actual expenditures as at June 30, 2011 and June 30, 2012.
Significant Changes on the Statement of Authorities table
In line with previously reported variances in the Departmental Performance Report, the CFIA determined that the greater of $5.0 million and 10% change in budget and expenditures from one year to the next are deemed to be significant. In these situations, further analysis is provided.
Under the "Total available for use for the years ending March 31, 2013 and March 31, 2012" (Annex A), the CFIA's authorities decreased by $10.9 million, when compared to the previous year. This change includes a decrease of $15.3 million in Vote 20 - Operating expenditures and contributions, an increase of $5.3 million in Vote 25 - Capital expenditures, a decrease of $1.9 million in statutory employee benefit plans and an increase of $1.0 in statutory spending of revenues.
The primary reasons for the decrease in Vote 20 - Operating Expenditures and Contributions (Annex A) are: the transfer of $10.9 million to Shared Services Canada; the sunsetting of $15.5 million for Listeriosis; and the sunsetting of $10.8 million in resources to support increased frequency of food inspections in meat processing plants. Funding for the two sunsetting items was extended as part of Budget 2012 and will be added to the Agency's budget later in the year, subject to Treasury Board and Parliamentary approval, through Supplementary Estimates. These decreases are offset by the following increases: $9.4 million additional resources for the Food Safety Action Plan which received TB approval in 2008-09; resources of $9.2 million announced in Budget 2011 for Food Safety Modernization; resources of $2.3 million announced in Budget 2011 for the Plum Pox Monitoring and Management Program; transfer of $4.8 million from Agriculture and Agri-Food Canada to support programs that address food safety, biosecurity and traceability (Canadian Integrated Food Safety Initiative).
The primary reason for the increase in Vote 25 - Capital Expenditures (Annex A) is the transfer of $4.8 million from Agriculture and Agri-Food Canada for the development of a Traceability National Information Portal.
Under the "Year to date used at quarter-end" column (Annex A), there is a difference of $10.1 million under Statutory Compensation payments. This increase is as a result of payments made to owners of salmon that were ordered destroyed under the Health of Animals Act due to Infectious Salmon Anaemia. It is anticipated that this amount will increase before the end of the fiscal year. Statutory payments do not require parliamentary approval as they are not funded from the Agencys voted appropriations. They are funded directly from the consolidated revenue fund, in accordance with the applicable legislation (in this case the Health of Animals Act). The Agencys authorities will be adjusted at the end of the fiscal year to reflect these draws against the consolidated revenue fund.
Significant Changes on the Departmental budgetary expenditures by Standard Object table
Under "Planned expenditures for the year ending March 31, 2013 and March 31, 2012" (Annex B), Planned expenditures on Transportation and Communication decreased by $7.0 million and Planned expenditures on Professional and Special Services decreased by $15.4 million. The decrease in Transportation and Communication can be explained by the sunsetting of resources for Listeriosis and for the resources that supported increasing the frequency of food inspections in meat processing plants; as well as resources transferred to Shared Services Canada (Please see section on Shared Services Canada below). The decrease in Professional and Special Services can be explained by the sunsetting of the two initiatives mentioned above, as well as the transfer of resources to Shared Services Canada.
Under "Year-to-date used at quarter-end" column (Annex B) there is an increase in spending of approximately $10 million in Transfer payments. As indicated above, this increase is as a result of compensation payments made to owners of salmon that were ordered destroyed under the Health of Animals Act due to Infectious Salmon Anaemia. It is anticipated that this amount will increase before the end of the fiscal year
Risks and Uncertainties
This Departmental Quarterly Financial Report (QFR) reflects the results of the current fiscal period in relation to Main Estimates and Supplementary Estimates A for which full supply was released on June 29, 2012.
The Agency has adopted an integrated approach to corporate risk management. Integrated Risk Management (IRM) is a continuous, proactive and systematic process for assessing, managing and communicating risk from an organization-wide perspective. The CFIA Corporate Risk Profile (CRP), resulting from the IRM approach, supports strategic decision-making by ensuring that risk information is integrated within existing business processes such as planning and priority-setting. This, in turn, supports the achievement of the CFIAs strategic outcome - a safe and accessible food and plant and animal resource base.
Cost Containment Measures:
Budget 2010 announced that the operating budgets of departments would be frozen at their 2010-11 levels for the fiscal years 2011-12 and 2012-13. Again this year, the Agency is carefully monitoring expenditures and is currently on track to meet its budgetary target. As well, the Agency is working to identify opportunities to reduce duplication, standardize management and oversight, streamline and realign business processes, and develop better strategies for the acquisition of goods and services. Given the importance of our food safety mandate and the investments the Government has made in the last few years in this area, it is important to note that every effort is made to minimize the impact on front-line inspection capacity.
Significant Changes in relation to Operations, Personnel and Programs
Shared Services Canada:
As a result of the creation of Shared Services Canada (SSC) on August 4, 2011 and the subsequent passing of the Order-in-Council (OIC) on November 15, 2011, certain responsibilities across 43 departments and agencies, including the CFIA, were transferred to SSC. All unexpended authorities relating to responsibilities transferred to SSC were deemed to have been appropriated as of the OIC date resulting in reductions to transferring out organizations authorities available for use in 2011-12. All transactions related to SSC incurred by transferring out departments from the dates of the OIC were to be reported by SSC at year end.
As per TBAS 1.3, Departmental and Agency Quarterly Financial Reports must present comparative financial information for the preceding fiscal year. For the Q1 and Q2 Quarterly Financial Reports, the figures reported in 2011-12 remain the same as were reported in the 2011-12 Quarterly Financial Report. In both the Statement of Authorities (Annex A) and the Departmental budgetary expenditures by Standard Object table (Annex B), the "total" available for use for the year ending March 31, 2012 and the "Planned" expenditures for the year ending March 31, 2012 will include the amount deemed later to have been transferred to SSC. Expenditure information in 2011-12 for the quarter and year-to-date will include all transactions incurred up to quarter end related to responsibilities subsequently transferred to SSC. However, the transfer of resources to Shared Services Canada has already been removed from the Agencys 2012-13 "Total Available for Use for the year ending March 31, 2013" and the "Planned expenditures for the year ending March 31, 2013".
For the Q3 report, the Agency will exclude the amount deemed to have been transferred to SSC from the 2011-12 comparative information from the following two tables: the Statement of Authorities and the Departmental budgetary expenditures by Standard Object tables in the "Total available for use for the year ending March 31, 2012" column and the "Planned expenditure for the year ending March 31, 2012" column.
Changes to Senior Management Personnel
There have been no changes to Senior Management personnel to-date during the current fiscal year.
Budget 2012 Implementation
This section provides an overview of the savings measures announced in Budget 2012 that will be implemented in order to refocus government and programs; make it easier for Canadians and business to deal with their government; and, modernize and reduce the back office.
The Canadian Food Inspection Agency (CFIA) will achieve Budget 2012 savings of $55.8 million1 by 2014-15 by:- focusing on our core mandate of food safety, animal and plant health, and consumer protection / programs important to Canadians;
- modifying programs to reflect current scientific knowledge and consolidating scientific expertise in better equipped facilities;
- improving service and simplifying requirements for industry by building single window access to a number of CFIA services and program specialists and reducing regulatory burden; and
- increasing administrative efficiencies by streamlining administrative processes and consolidating some corporate services with AAFC.
The CFIA has an implementation plan which sees changes and adaptations to programs over the full three years. As a result, for the current fiscal year, reductions are focused on internal administrative activities with a Budget approved reduction of $2.0 million. These internal administrative activities are in various parts of the Agency rather than in one particular program, and will not result in a significant impact on the Agencys financial plan. Savings will increase to $10.0 million in 2013-14 and will result in ongoing savings of $55.8 million1 by 2014-15.
The Economic Action Plan 2012 also renewed funding for key food safety activities with $51 million over two years to be shared among the CFIA, the Public Health Agency of Canada, and Health Canada to enhance surveillance and early detection and improve response capabilities to food-borne illness emergencies.
The savings for the current fiscal year, 2012-13, from implementation of Budget 2012 will be reflected in subsequent quarterly reports, later in the fiscal year.
Approved by
Annex A
Statement of authorities (unaudited)
for the quarter ended June 30, 2012
Fiscal Year 2012-2013
| (in thousands of dollars) | Total available for use for the year ending March 31, 2013 * ** | Used during the quarter ended June 30, 2012 | Year to date used at quarter-end |
|---|---|---|---|
| Vote 20 - Operating Expenditures and Contributions | $547,697.00 | $131,962.00 | $131,962.00 |
| Vote 25 - Capital expenditures | $26,296.00 | $1,576.00 | $1,576.00 |
| Budgetary Statutory Authorities | |||
| Employee benefit plans | $79,424.00 | $19,856.00 | $19,856.00 |
| Compensation payments | $1,500.00 | $10,404.00 | $10,404.00 |
| Spending of revenues | $53,161.00 | $2,953.00 | $2,953.00 |
| Other | $0.00 | $0.00 | $0.00 |
| Total Budgetary authorities | $708,078.00 | $166,751.00 | $166,751.00 |
| Non-budgetary authorities | $0.00 | $0.00 | $0.00 |
| Total authorities | $708,078.00 | $166,751.00 | $166,751.00 |
* Includes only authorities available for use and granted by Parliament at quarter-end.
** Total available for use does not reflect measures announced in Budget 2012.
Fiscal Year 2011-2012
| (in thousands of dollars) | Total available for use for the year ending March 31, 2012 * | Used during the quarter ended June 30, 2011 | Year to date used at quarter-end |
|---|---|---|---|
| Vote 20 - Operating Expenditures and Contributions | $563,049.00 | $133,136.00 | $133,136.00 |
| Vote 25 - Capital expenditures | $20,956.00 | $441.00 | $441.00 |
| Budgetary Statutory Authorities | |||
| Employee benefit plans | $81,395.00 | $20,349.00 | $20,349.00 |
| Compensation payments | $1,500.00 | $249.00 | $249.00 |
| Spending of revenues | $52,158.00 | $3,356.00 | $3,356.00 |
| Other | $0.00 | $0.00 | $0.00 |
| Total Budgetary authorities | $719,058.00 | $157,531.00 | $157,531.00 |
| Non-budgetary authorities | $0.00 | $0.00 | $0.00 |
| Total authorities | $719,058.00 | $157,531.00 | $157,531.00 |
* Includes only authorities available for use and granted by Parliament at quarter-end.
Annex B
Departmental budgetary expenditures by Standard Object (unaudited)
for the quarter ended June 30, 2012
Fiscal Year 2012-2013
| (in thousands of dollars) | Total available for use for the year ending March 31, 2013 * | Used during the quarter ended June 30, 2012 | Year to date used at quarter-end |
|---|---|---|---|
| Expenditures : | |||
| Personnel | $536,599.00 | $141,692.00 | $141,692.00 |
| Transportation and communications | $29,717.00 | $2,977.00 | $2,977.00 |
| Information | $1,948.00 | $113.00 | $113.00 |
| Professional and special services | $63,585.00 | $5,968.00 | $5,968.00 |
| Rentals | $4,753.00 | $1,218.00 | $1,218.00 |
| Repair and maintenance | $20,471.00 | $1,357.00 | $1,357.00 |
| Utilities, materials and supplies | $20,815.00 | $2,330.00 | $2,330.00 |
| Acquisition of land, buildings and works | $0.00 | $0.00 | $0.00 |
| Acquisition of machinery and equipment | $26,296.00 | $541.00 | $541.00 |
| Transfer payments | $1,744.00 | $10,534.00 | $10,534.00 |
| Public debt charges | $0.00 | $0.00 | $0.00 |
| Other subsidies and payments | $2,151.00 | $21.00 | $21.00 |
| Total gross budgetary expenditures | $708,079.00 | $166,751.00 | $166,751.00 |
| Less Revenues netted against expenditures | $0.00 | $0.00 | $0.00 |
| Total net budgetary expenditures | $708,079.00 | $166,751.00 | $166,751.00 |
* Planned expenditures do not reflect measures announced in Budget 2012.
Fiscal Year 2011-2012
| (in thousands of dollars) | Total available for use for the year ending March 31, 2012 * | Used during the quarter ended June 30, 2011 | Year to date used at quarter-end |
|---|---|---|---|
| Expenditures : | |||
| Personnel | $533,589.00 | $141,680.00 | $141,680.00 |
| Transportation and communications | $36,748.00 | $4,511.00 | $4,511.00 |
| Information | $4,061.00 | $113.00 | $113.00 |
| Professional and special services | $79,007.00 | $5,732.00 | $5,732.00 |
| Rentals | $3,578.00 | $294.00 | $294.00 |
| Repair and maintenance | $16,465.00 | $1,709.00 | $1,709.00 |
| Utilities, materials and supplies | $20,501.00 | $2,555.00 | $2,555.00 |
| Acquisition of land, buildings and works | $0.00 | $0.00 | $0.00 |
| Acquisition of machinery and equipment | $19,003.00 | $698.00 | $698.00 |
| Transfer payments | $1,744.00 | $229.00 | $229.00 |
| Public debt charges | $0.00 | $0.00 | $0.00 |
| Other subsidies and payments | $4,362.00 | $10.00 | $10.00 |
| Total gross budgetary expenditures | $719,058.00 | $157,531.00 | $157,531.00 |
| Less Revenues netted against expenditures | $0.00 | $0.00 | $0.00 |
| Total net budgetary expenditures | $719,058.00 | $157,531.00 | $157,531.00 |
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