Language selection

Search

Canadian Food Inspection Agency (CFIA) - Quarterly Financial Report (QFR) for the Quarter ended June 30, 2018

Introduction

This quarterly report has been prepared by management as required by section 65.1 of the Financial Administration Actand in the form and manner prescribed by the Treasury Board. This quarterly report should be read in conjunction with the 2018-19 Main Estimates. Main Estimates documents can be found on the Government of Canada's Planned government spending webpage.

A summary description of the program activities of the CFIA can be found in the CFIA's 2018-19 Departmental Plan.

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

CFIA Mandate

The Minister of Health is responsible for the CFIA and for the overall direction of the Agency. In addition, the Minister of Agriculture and Agri-Food is responsible for oversight of the Agency's non-food safety agricultural activities, including economic and trade issues, as well as important animal health and plant protection work.

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 Agency Act 1997, c.6.

The CFIA administers and enforces 14 federal statutes and 36 sets of regulations. These statutes and regulations regulate the safety and quality of food sold in Canada and support a sustainable animal and plant resource base. It shares many of its core responsibilities with other federal departments and agencies, with provincial, territorial and municipal authorities, with private industry, and with other stakeholders.

The CFIA works with its partners to: implement food safety measures; manage food, animal and plant risks, incidents and emergencies; and promote the development of food safety and disease control systems to maintain the safety of Canada's high-quality agriculture, agri-food, aquaculture and fishery products. The Agency's 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.

Additionally, the Agency actively participates in international fora for the development of international science-based rules, standards, guidelines and policies. It also participates in the management of sanitary and phytosanitary committees, established under international agreements, and actively promotes the Canadian science-based regulatory system among foreign trading partners. The CFIA negotiates to resolve scientific and technical issues, contributing to market access for Canadian goods. It also provides scientific advice, develops new technologies, provides testing services, and conducts regulatory research.

At the CFIA, decisions are 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 (Annex A) includes the Agency's spending authorities granted by Parliament and those used by the Agency, consistent with the 2018-19 Main Estimates. 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 funding can be spent by the Government. Approvals are given through annual appropriation acts or legislation which provides statutory spending authority for specific purposes.

When Parliament is dissolved for the purpose 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 Agency uses the full accrual method of accounting to prepare and present its annual Agency financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

Highlights of fiscal quarter and fiscal year-to-date (YTD)

In line with previously reported variances in the Departmental Results Report and Quarterly Financial Reports, the CFIA determined that variances which are greater than $5.0 million and represent more than a 10 per cent change, in budget or expenditures from one year to the next, are deemed significant. When both of these criteria are met, further analysis is always provided. Further analysis is also provided when the dollar value is deemed significant.

Significant Changes in the Statement of Authorities (Annex A at end of document)

Authorities Available for Use

At the end of the first quarter, June 30, 2018 (Q1), the CFIA had $719.3 million of authorities available for use, as detailed in Table 1. This is a decrease of $21.2 million (2.9 per cent) compared to the end of the same quarter in 2017-18. Below is a breakdown of this variance.

Table 1: Authorities Available for Use for the Year Ending March 31, 2019 and March 31, 2018
(in thousands of dollars)
Authorities 2018-19 2017-18 Variances %
Vote 1 - Operating Expenditures and Contributions 553,561 556,603 (3,042) (0.5)
Vote 5 - Capital Expenditures 25,608 49,791 (24,183) (48.6)
Budgetary Statutory Authorities
Employee benefit plans 74,423 77,400 (2,977) (3.8)
Compensation payments 12,500 3,500 9,000 257.1
Spending of revenues / Other 53,161 53,161 0 0.0
Total Authorities 719,253 740,455 (21,202) (2.9)

Numbers may not add due to rounding.

The $24.2 million (48.6 per cent) decrease in Vote 5 – Capital expenditures authorities is primarily due to the reduction in temporary funding for the Federal Infrastructure Initiative (FII) - Budget 2015 and Budget 2016, and for the Electronic Service Delivery Platform (ESDP) project. Further reductions to Capital expenditures authorities in 2018-19 include the sunsetting of funds for Improving Food Safety and the timing of the receipt of funds for the Canadian Food Safety Information Network project initiative.

With respect to initiatives with funding sunsetting in 2018-19, the Agency will assess initiatives and seek renewal, as required, to maintain and continuously improve Canada's strong food safety system, safe and accessible food supply, and plant and animal resource base.

The $9.0 million (257.1 per cent) increase in Statutory Compensation Payments Authorities is due to an increase in Main Estimates authorities to more closely match the anticipated compensation expenditures representing previous years' spending. The CFIA provides statutory compensation payments in accordance with regulations under the Health of Animals Act and the Plant Protection Act to compensate Canadians for plants or animals ordered destroyed for the purpose of disease control. Given their statutory nature, year-end authorities are automatically adjusted to cover actual requirements for the year.

Year-to-Date Expenditures

At the end of the 2018-19 first quarter, the CFIA had expenditures of $161.7 million as outlined in Table 2. This represents an overall increase of $1.6 million (1.0 per cent) compared to the end of the same quarter in 2017-18. Below is a breakdown of the variance.

Table 2: Year-to-Date Expenditures Used as of June 30, 2018 and June 30, 2017
(in thousands of dollars)
Expenditures 2018-19 2017-18 Variances %
Vote 1 - Operating Expenditures and Contributions 131,160 127,753 3,407 2.7
Vote 5 - Capital Expenditures 3,950 4,777 (827) (17.3)
Budgetary Statutory Authorities
Employee benefit plans 18,008 18,247 (239) (1.3)
Compensation payments 524 2,615 (2,091) (79.9)
Spending of revenues/Other 8,036 6,726 1,310 19.5
Total Expenditures 161,678 160,118 1,560 1.0

Numbers may not add due to rounding.

Overall the Agency's expenditures by vote as at June 30, 2018 were relatively stable compared to the same period in 2017-18. The minor variances did not meet the criteria to warrant further explanation.

Significant Changes in the Departmental Budgetary Expenditures by Standard Object (Annex B at end of document)

Planned Expenditures (Equivalent to Authorities) by Standard Object

When compared to the previous year, the 2018-19 planned expenditures (i.e. authorities) for professional and special services and utilities, materials and supplies have decreased by $20.3 million (23.6 per cent), and $12.4 million (42.3 per cent) respectively, primarily due to the decrease in temporary funding received for implementation of FII and ESDP projects.

The $9.7 million (223.4 per cent) increase in Transfer Payment Authorities is largely due to an increase in Main Estimates Statutory Compensation authorities to more closely match the anticipated compensation expenditures representing previous years' spending. The CFIA provides statutory compensation payments in accordance with regulations under the Health of Animals Act and the Plant Protection Act to compensate Canadians for plants or animals ordered destroyed for the purpose of disease control. Given their statutory nature, year-end authorities are automatically adjusted to cover actual requirements for the year.

Expended During the Quarter Ended June 30, 2018 by Standard Object

Overall the Agency's expenditures by standard object as at June 30, 2018 were relatively stable compared to the same period in 2017-18. The minor variances did not meet the criteria to warrant further explanation.

Risks and Uncertainties

This quarterly financial report reflects the results of the current fiscal period in relation to the Main Estimates. The Agency anticipates receiving further 2018-19 funding from the Supplementary Estimates (A), (B) and Treasury Board Central Votes. In addition to managing the delivery of Agency programs based on anticipated total spending authorities, the Agency faces other financial and non-financial risks and uncertainties.

Emergencies

The CFIA operates in an uncertain environment and must be prepared to respond on an urgent basis to food safety emergencies and unplanned events related to animal and plant health (e.g. 2016 bovine tuberculosis and 2014 avian influenza outbreaks). As the lead authority for safeguarding the food supply in Canada and for monitoring, controlling and eradicating animal and plant diseases, the Agency must respond with prompt action above and beyond normal business activities when these temporary situations arise in order to safeguard Canadians and maintain access to export markets.

The Agency has established a dedicated emergency reserve, to manage the incremental response costs associated with emergencies, which is reviewed every year as part of the Agency's planning process and is subject to ongoing monitoring. While the CFIA is confident that its emergency reserve is generally sufficient to cover the incremental costs related to emergency management on a yearly basis, it is recognized that, in some years, exceptional circumstances could drive costs above the funding set aside.

Collective Bargaining

The majority of the CFIA's collective agreements have expired and are in renegotiation. In accordance with 2013 Speech from the Throne and Fall Update, as collective agreement settlements are negotiated, retroactive and ongoing salary increases applicable to the 2014-15 and 2015-16 fiscal years will have to be absorbed by the Agency. The exact cost is not yet confirmed; however, based on recent federal government collective bargaining negotiations the Agency is working to mitigate the estimated financial risks for the current year, as well as future years.

The PSAC Collective Agreement was ratified by the Union in February 2018 and received Governor in Council (GIC) approval in May 2018. The final agreement is being prepared for signature of the union and the employer.

The CFIA has also reached a tentative agreement with the Professional Institute of the Public Service of Canada (PIPSC) for the Veterinary Medicine (VM) and Information (IN) groups. Their respective agreements were ratified in April 2018 and they are currently seeking GIC approval.

The PIPSC Scientific and Analytical (S&A) Group continues to negotiate with the employer, while the unrepresented rates of pay for the Inspection Management (IM), Organization and Methods (OM) and Professional Administration (PE) groups have been approved by the President and Treasury Board of Canada Secretariat. The Agency is working with Public Services and Procurement Canada (PSPC) to implement these pay rate increases.

Sunsetting Resources

Funding for three of the Agency's established programs will sunset in 2018-19; Bovine Spongiform Encephalopathy, daily shift inspection presence in federally registered meat processing establishments, and the Canadian Food Information Network program. The Agency will assess the level of resources required for each of these programs and will seek renewal as required in order to maintain and continuously improve Canada's strong food safety system, safe and accessible food supply and animal and plant resource base.

Federal Infrastructure Initiative (FII)

As part of the Budget 2015 for FII, the Agency received a total of $65.7 million over two years (2015-16 and 2016-17) in capital funds to accelerate the renewal and upgrade of critical infrastructure at the CFIA laboratories. To date, 17 of the 21 FII projects have been completed with one project being cancelled. Three projects were extended into 2018-19 and are forecasted to reach substantial completion this fiscal year.

The extension into 2017-18 and beyond is due to the overall complexity of these projects. Custom fabrication, delivery of equipment, seasonal constraints and on-site coordination of multiple projects are difficult to estimate and can result in schedule slippage and cost variances from initial plans. The Agency reprofiled $16.0 million of the total $65.7 million into 2017-18 and $8.5 million into 2018-19 in order to complete the remaining projects.

Electronic Service Delivery Platform (ESDP)

ESDP is the digital tool that will make it possible for the CFIA to offer improved electronic services to its clients. Through ESDP, the Agency provides clients access to more efficient, online services, while Agency staff are equipped with modern technology to enable electronic interactions with clients and improve case management related to service delivery. ESDP allows clients access to improved services, CFIA staff access to better information, and the Agency a better understanding of the dynamic risk environment in which it operates. It also enables more effective sharing of trade-related information with trading partners.

The seven-year ESDP project was completed on March 31, 2018 and, with formal Agency Governance approval on April 24, 2018 it was officially closed. Completion of the ESDP project was a pivotal milestone in advancing the Agency's Digital-First Tools and Services strategic priority. Now known as the Digital Services Delivery Platform (DSDP), future projects will continue to build on the platform and digital tools created through the ESDP project.

The CFIA recognizes that this project is a significant implementation in scale, complexity, and impact, since it will significantly change the way CFIA employees and clients operate and interact. The management of the ESDP project and related risks followed an established Enterprise Project Management Framework (ePMF) with a dedicated governance structure, which is aligned with industry and government best practices to successfully manage projects.

As the Agency launches future digital tools onto the DSDP platform, it will also keep open the traditional paper-based service delivery channel for an appropriate time period while the digital tools are adequately tested and phased-in. The delivery of these parallel systems will create flexibility to address and mitigate project risks as clients and stakeholders adapt to the digital system.

Program Risk

The CFIA is responsible for identifying and managing risks to the food supply and the animal and plant resource base which contribute to and are crucial for a safe food and a prosperous economy. Across the Agency, integrated risk management is an integral part of policy, program design, priority setting, planning, delivery, review and reporting activities.

Integrated risk management is at the core of the CFIA's modernization initiatives. The Agency operates in a dynamic and complex risk environment that continues to change rapidly. The sectors that the CFIA regulates are constantly changing their business models and technologies; industry is always developing new and innovative products, and new pathways for risk are emerging.

The CFIA has explored improving its capabilities to manage risk and use resources more effectively by experimenting with new risk intelligence tools. The Agency integrates risk information in its planning and operations in order to reduce risk in delivering its mandate, and to improve how it mobilizes resources in response to new threats. Information on key risks and response strategies are outlined in the CFIA's 2018-19 Departmental Plan.

Significant Changes in Relation to Operations, Personnel and Programs

Regulatory Framework

The Canadian Food Inspection Agency is committed to strengthening Canada's world-class food safety system. In June 2018 the CFIA met a major milestone with the publication of the Safe Food for Canadians Regulations (SFCR) in the Canada Gazette, Part II.

The SFCR will be replacing 14 sets of existing regulations with one. The SFCR have been many years in the making and the result of careful, informed policy development supported by extensive consultations with CFIA staff and Canadians across the country.

While the Agency celebrates the excellent work which has led to the publication of the SFCR, there is still work to do for the coming into force of the new regulations. As part of the transition to the new regulations training for the inspectors on new risk management principles will be required along with the adoption of a single inspection approach, and the rolling out of digital tools.

Operations

On September 21, 2016, the U.S. Department of Agriculture (USDA) informed the CFIA of a positive bovine tuberculosis (TB) result associated with a five-year-old bovine from Alberta, Canada. The CFIA moved quickly to mobilize resources from across the Agency to support the response to this bovine TB outbreak. The CFIA's Western Area Emergency Operations Centre (EOC) and the National Emergency Operations Centre (NEOC) were activated.

The CFIA initiated an investigation into the case, working diligently with industry, producers and other government partners, which involved a significant number of premises, tracing of the movement of animals, and testing. No additional herds were identified with bovine TB and a source of the infection was not identified. The outbreak investigation is complete and a summary report has been posted online.

Personnel

On May 22, 2018 Darlène de Gravina joined the Canadian Food Inspection Agency as the new Vice-President of the Human Resources Branch.

Original signed by:

France Pégeot
Acting President, CFIA

Dominique Osterrath
Acting Vice President,
Corporate Management Branch and
Chief Financial Officer, CFIA

Ottawa, Ontario
Date: August 27, 2018

Ottawa, Ontario
Date: August 14, 2018

Annex A

Statement of Authorities (unaudited)
For the quarter ended June 30, 2018
(in thousands of dollars)
Fiscal year 2018-19 Fiscal year 2017-18
Total available for use for the year ending March 31, 2019 Table Note 1 Expended during the quarter ended June 30, 2018 Year to date used at quarter-end Total available for use for the year ending March 31, 2018 Table Note 1 Used during the quarter ended June 30, 2017 Year to date used at quarter-end
Vote 1 - Operating expenditures and contributions 553,561 131,160 131,160 556,603 127,753 127,753
Vote 5 - Capital expenditures 25,608 3,950 3,950 49,791 4,777 4,777
Budgetary statutory authorities
Employee benefit plans 74,423 18,008 18,008 77,400 18,247 18,247
Compensation payments 12,500 524 524 3,500 2,615 2,615
Spending of revenues 53,161 8,026 8,026 53,161 6,722 6,722
Refunds of previous years revenue 0 10 10 0 4 4
Collection agency fees 0 0 0 0 0 0
Spending of proceeds from the disposal of surplus Crown assets 0 0 0 0 0 0
Total budgetary authorities 719,253 161,678 161,678 740,455 160,118 160,118

Numbers may not add due to rounding.

Table Note

Table note 1

Includes only authorities granted by Parliament at quarter-end.

Return to table note 1 referrer

Annex B

Departmental budgetary expenditures by Standard Object (unaudited)
For the quarter ended June 30, 2018
(in thousands of dollars)
Fiscal year 2018-19 Fiscal year 2017-18
Planned expenditures for the year ending March 31, 2019 Table Note 2 Expended during the quarter ended June 30, 2018 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2018 Table Note 2 Expended during the quarter ended June 30, 2017 Year to date used at quarter-end
Expenditures:
Personnel 560,371 140,226 140,226 564,349 139,512 139,512
Transportation and communications 18,863 2,645 2,645 14,057 2,665 2,665
Information 2,576 312 312 1,576 146 146
Professional and special services 65,856 9,931 9,931 86,165 8,361 8,361
Rentals 14,587 490 490 14,395 232 232
Repair and maintenance 11,396 3,105 3,105 12,316 2,422 2,422
Utilities, materials and supplies 16,941 2,160 2,160 29,365 2,574 2,574
Acquisition of land, buildings and works 0 0 0 0 0 0
Acquisition of machinery and equipment 12,445 1,402 1,402 11,708 1,509 1,509
Transfer payments 13,969 524 524 4,319 2,615 2,615
Other subsidies and payments 2,249 883 883 2,205 82 82
Total gross budgetary expenditures 719,253 161,678 161,678 740,455 160,118 160,118

Numbers may not add due to rounding.

Table Note

Table note 2

Includes only authorities granted by Parliament at quarter-end.

Return to table note 2 referrer

Date modified: