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The introduction of future-oriented financial statements is a Parliamentary direction for departments to provide enhanced financial information to external users. As this is the first year Health Canada has prepared future-oriented financial statements, only the Statement of Operations and the accompanying Notes to the Statement of Operations have been compiled to forecast future-oriented results for the 2009-2010 fiscal year. Responsibility for the compilation, content and presentation of the Statement of Operations for the year ended March 31, 2010 and all information contained in this statement rests with Health Canada's management. This future-oriented information has been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector. The future-oriented Statement of Operations and the accompanying notes are submitted for Part III of the Estimates (Report on Plans and Priorities), and will be used in the Health Canada's Departmental Performance Report to compare with actual results.
Management is responsible for the integrity and objectivity of the information contained in the future-oriented financial information and for the process of developing forecasts and future projections. These forecasts and future projections are based upon information available and known to management at the time of development. They reflect current business and economic conditions and assume a continuation of current governmental priorities and consistency in Health Canada's mandate and strategic objectives. Much of the future-oriented financial information uses best estimates, assumptions and judgment to derive these forecasts and future projections and gives due consideration to materiality. At the time of preparation of this information, management believes these best estimates and assumptions to be reasonable. However, as with any use of best estimates and assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.
The actual results achieved for the fiscal years covered in the accompanying future-oriented Statement of Operations will vary from the information presented and these variations may be material.
Chief Financial Officer
|Expenses||Accessible and Sustainable Health System Responsive to the Health Needs of Canadians||Access to Safe and Effective Health Products and Food and Information for Healthy Choices||Reduced Health and Environmental Risks from Products and Substances, and Healthy, Sustainable Living and Working Environments||Better Health Outcomes and Reduction of Health Inequalities Between First Nations and Inuit and Other Canadians||Internal Services||Total|
|Salaries and wages||33,593.3||216,387.3||211,043.1||189,286.3||217,449.7||867,759.7|
|Utilities, materials and supplies||430.5||7,288.0||25,780.1||438,981.1||9,904.2||482,383.9|
|Professional and special services||8,517.4||20,008.4||83,198.2||320,148.5||31,798.0||463,670.5|
|Travel non-insured health patient||-||-||-||92,911.3||-||92,911.3|
|Travel and relocation||3,048.4||2,704.4||13,835.5||23,810.2||4,043.2||47,441.7|
|Purchased repair and maintenance||3.9||1,090.7||4,433.4||2,029.2||19,806.9||27,364.1|
|Sales of goods and services|
|Services of a non-regulatory nature||-||4,128.5||18,068.0||7,750.0||682.0||30,628.5|
|Services of a regulatory nature||-||25,541.8||3,504.0||-||-||29,045.8|
|Rights and privileges||-||14,925.7||3,925.0||-||-||18,850.7|
|Net cost of operations||319,979.9||226,896.6||401,836.2||2,158,309.2||323,899.3||3,430,921.2|
The accompanying notes are an integral part of the future-oriented statement of operations
The Department of Health was established effective July 12, 1996 under the Department of Health Act to participate in the promotion and preservation of the health of the people of Canada. It is named in Schedule I of the Financial Administration Act and reports through the Minister of Health. Priorities and reporting are aligned under the following strategic outcomes and related program activities:
Canadian Health System
This program activity provides strategic policy advice on health care issues such as improved access, quality and integration of health care services to better meet the health needs of Canadians wherever they live or whatever their financial circumstances. The objective is pursued mindful of long-term equity, sustainability and affordability considerations and in close collaboration with provinces and territories, health professionals, administrators, other key stakeholders and citizens.
Improved access, quality and integration of health services administration is achieved through investments in the health system and in health system renewal, for instance by reducing wait times for essential services, by working with provinces and territories to ensure that the principles of the Canada Health Act are respected, by developing health information and health measures for Canadians, by meeting the health and health access needs of specific groups such as women and official language minority communities, and by ensuring the implementation of agreements between federal/provincial/territorial Ministers of Health.
Canadian Assisted Human Reproduction
This program activity implements the Assisted Human Reproduction (AHR) Act, whose objective is to protect and promote human health, safety, dignity and human rights in the use of AHR technologies. It develops policies and regulations in the area of assisted human reproduction. The science of AHR evolves rapidly and, as a result, the program activity engages stakeholders on an ongoing basis to find a balance between the needs of patients who use these technologies to help them build their families, the children born from these technologies and the providers of these services with health and safety as the overriding factors. The goal of the policies and regulations is developing a responsive regulatory regime which is a leader both domestically and in the international AHR community, and reflects the objectives put forward in the AHR Act. The program activity gathers input from stakeholders, including the provinces, to ensure a pan-Canadian approach.
International Health Affairs
Health Canada works internationally through leadership, partnerships and collaboration to fulfill its federal mandate of striving to make Canada's population among the healthiest in the world. International Affairs serves as the department's focal point to initiate, coordinate, and monitor departmental policies, strategies and activities that help promote Canadian priorities and values on the international health agenda. International collaboration on global health issues is important given that the health of Canadians is influenced significantly by public health risks originating from other countries. Global issues such as pandemic influenza preparedness, HIV/AIDS strategies and global health security are critical initiatives that are discussed with key external health partners such as the World Health Organization (WHO) and the Pan American Health Organization (PAHO).
Countries and international organizations want to connect quickly to information about Canada's health care system and initiatives. The international affairs program activity strives to share Canada's best policies and practices with other countries, and assists in the development of bilateral agreements with numerous countries on important health issues. This program activity delivers strategic policy advice on international health issues to the Minister of Health, senior management and the Health Portfolio, including appropriate representation at international fora concerning the health portfolio. It also manages grants to non-profit organizations for projects in the domain of international health that are aligned with Canada's priorities in global health.
The Health Products program activity is responsible for a broad range of health protection and promotion activities that affect the everyday lives of Canadians. As the federal authority responsible for the regulation of health products, the program activity evaluates and monitors the safety, quality and effectiveness of drugs (human and animal), biologics, medical devices, and natural health products, under the authority of the Food and Drugs Act and Regulations, as well as the Department of Health Act. The program activity also provides timely, evidence-based and authoritative information to key stakeholders (including but not limited to: health care professionals such as physicians, pharmacists and practitioners such as herbalists, naturopathic doctors, Traditional Chinese Medicine (TCM) practitioners) and members of the public to enable them to make informed decisions and healthy choices.
Food and Nutrition
The Food and Nutrition program activity establishes policies, regulations and standards related to the safety and nutritional quality of food. Food safety standards-quality are enforced by the Canadian Food Inspection Agency (CFIA). The legislative framework for food is found in the Food and Drugs Act and Regulations, the Canadian Food Inspection Agency Act and the Department of Health Act. The program activity also promotes the nutritional health and well-being of Canadians by collaboratively defining, promoting and implementing evidence-based nutrition policies and standards. As the focal point and authoritative source for nutrition and healthy eating policy and promotion, the program activity disseminates timely, evidence-based and authoritative information to Canadians and stakeholders to enable them to make informed decisions and healthy choices.
Sustainable Environmental Health
The environment continues to be a key determinant of health for all Canadians. This program activity promotes and protects the health of Canadians by identifying, assessing and managing health risks posed by environmental factors in living, working and recreational environments. The scope of activities includes: research on drinking water quality, air quality, contaminated sites, toxicology and climate change; clean air programming and regulatory activities; risk assessment and management of: chemical substances, environmental noise, environmental electromagnetic frequencies, products of biotechnology and products of other new and emerging technologies (including nanotechnology); solar ultraviolet radiation; preparedness for nuclear and environmental disasters as well as working with the passenger conveyance industry to protect the travelling public.
Under the Chemical Management Plan, Health Canada assesses and regulates chemicals used in industrial and consumer products. Other activities include: implementing a national bio-monitoring system; developing risk management performance agreements with industry sectors; and, strengthening the assessment and management of risks to human health posed by pharmaceuticals, personal care and consumer products, cosmetics and food. Finally, enhanced communications and outreach activities allow Canadians to make better informed decisions about limiting their exposure to potential environmental hazards. Relevant Act includes the Canadian Environmental Protection Act.
Health Canada identifies, assesses, manages and communicates to Canadians the health and safety risks associated with consumer products (including domestic, industrial and clinical use products), cosmetics and radiation emitting devices. This is achieved through research, risk assessments and the development of risk management strategies to minimize the exposure of Canadians to potentially hazardous products. Also included are regulatory monitoring and compliance activities as well as information, education and guidance aimed at both industry and the public. Relevant acts include: consumer products (Hazardous Products Act), cosmetics (Food and Drugs Act) and radiation emitting devices (Radiation Emitting Devices Act).
This program activity provides services to protect the health and safety of the federal public sector, visiting dignitaries, and others. Specific programs include: the provision of occupational health services to federal employees; delivery of the Employee Assistance Program; emergency health services to Internationally Protected Persons; dosimetry services (the measurement of personal, occupational exposure to radiation through the reading of "dosimeters" or plaques enclosed in special holders worn by the user for specified periods); and, Workplace Hazardous Materials Information System (WHMIS) a national hazard communication standard, including worker education, inspector training, and standards for cautionary labels.
Substance Use and Abuse
Through regulatory, programming and educational activities, Health Canada seeks to improve health outcomes by reducing and preventing tobacco consumption and combating alcohol and drug abuse. Through the Tobacco Act and its regulations, Health Canada regulates aspects of the manufacture and sale of tobacco. It also leads the Federal Tobacco Control Strategy - the goals of which are to: further reduce the prevalence of smoking; decrease the number of cigarettes sold; increase compliance with sales-to-youth laws; reduce exposure to second hand smoke; and, continue to explore ways to regulate the product.
Health Canada administers the Controlled Drugs and Substances Act (CDSA) and its regulations. Through four regional labs, Health Canada provides expert scientific advice and drug analysis services to law enforcement agencies. The Marihuana Medical Access Regulations and related programs control the authorization for use and cultivation of marihuana by those suffering from grave and debilitating illnesses. Health Canada is a partner in the government's anti-drug strategy which includes: prevention programming aimed at youth; facilitating access to treatment programs; compliance and enforcement activities related to controlled substances and precursor chemicals; and, increased resources to Drug Analysis Services commensurate with the increase in law enforcement resources.
To help prevent unacceptable risks to people and the environment, and facilitate access to sustainable pest management tools, Health Canada, through the Pest Management Regulatory Agency, regulates the importation, sale and use of pesticides under the federal authority of the Pest Control Products Act (PCPA) and Regulations.
First Nations and Inuit Health Programming and Services
The provision of health programs and services by Health Canada to First Nations and Inuit is rooted in the Federal Indian Health Policy. The Department provides health programs and services to First Nations and Inuit as a matter of policy, using the annual Appropriations Act to obtain Parliamentary approval. Together with First Nations and Inuit and other health partners, the First Nations and Inuit Health Branch through it's regional offices, delivers public health and community health programs on-reserve, these include environmental health and communicable and non-communicable disease prevention, and provision of primary health care services through nursing stations and community health centres in remote and/or isolated communities to supplement and support the services that provincial, territorial and regional health authorities provide. We also support targeted health promotion programs for Aboriginal people, regardless of residency (e.g. Aboriginal Diabetes Initiative) as well as counselling, addictions and mental wellness services. The Non-Insured Health Benefits coverage of drug, dental care, vision care, medical supplies and equipment, short-term crisis intervention mental health services, and medical transportation is available to all registered Indians and recognized Inuit in Canada, regardless of residency.
Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These groups are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Materiel Services; Acquisition Services; and Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.
The Department is responsible for the administration and enforcement of the following statutes and/or regulations, for which the Minister of Health is responsible for the Department and remains accountable to Parliament: Canada Health Act, Canadian Centre on Substance Abuse Act, Canadian Environmental Protection Act, Controlled Drugs and Substance Act, Department of Health Act, Fitness and Amateur Sport Act, Food and Drugs Act, Hazardous Materials Information Review Act, Hazardous Products Act, Patent Act, Pest Control Products Act, Pesticide Residue Compensation Act, Quarantine Act, Queen Elizabeth II Canadian Research Fund Act, Radiation Emitting Devices Act, Tobacco Act, and the Human Assisted Reproduction Act.
The future-oriented Statement of Operations has been prepared on the basis of government policies, priorities and the external environment as at January 21, 2009. The statement has been prepared according to the requirements of Treasury Board Accounting Policies which are based on Canadian generally accepted accounting principles for the public sector. It has been prepared on the assumption that the resources provided will enable Health Canada to deliver the expected results specified in the Report on Plans and Priorities. The forecasting of future results was compiled on the basis of historical costs and trends.
While every attempt has been made to accurately forecast final results for fiscal 2009-2010, actual results achieved are likely to vary from the forecast information presented and this variation could be material.
Once the Report on Plans and Priorities is presented, Health Canada will not be updating the forecast for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.
The future-oriented Statement of Operations has been prepared in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.
Significant accounting policies are as follows:
(a) Parliamentary Appropriations
Health Canada is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to the department do not parallel financial reporting according to generally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and the Statement of Financial Position are not necessarily the same as those provided through appropriations from Parliament. Note 5 provides a high-level reconciliation between the two bases of reporting.
(b) Net Cash Provided by Government
The department operates within the Consolidated Revenue Fund (CRF). The CRF is administered by the Receiver General for Canada. All cash received by the department is deposited to the CRF and all cash disbursements made by the department are paid from the CRF. Net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the Federal Government.
(c) Forecasted Revenues
Revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues. Types of revenues collected include medical devices, radiation dosimetry, drug submission evaluation, veterinary drugs, pest management regulation, product safety, hospital revenues resulting from payments for services provided to First Nations and Inuit Health hospitals, which are covered under provincial or territorial plans, and for the sale of drugs and health services for First Nations communities.
Revenues that have been received but not yet earned are disclosed as deferred revenues.
(d) Forecasted Expenses
Expenses are recorded on the accrual basis:
(e) Employee future benefits
Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer plan administered by the Government of Canada. The department's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Current legislation does not require the department to make contributions for any actuarial deficiencies of the Plan.
f) Measurement uncertainty
The preparation of the future-oriented financial information requires management to make estimates and assumptions that affect the reported amounts of all the assets, liabilities, revenues and expenses reported in the future-oriented financial statements. Assumptions are based on information available and known to management at the time of development, reflect current business and economic conditions, and assume a continuation of current governmental priorities and consistency in departmental mandate and strategic objectives. At the time of preparation of the future-oriented statement of operations and accompanying notes, management believes the estimates and assumptions to be reasonable. Nonetheless, as with all such estimates and assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.
Health Canada receives most of its funding through annual Parliamentary appropriations. Items recognized in the statement of operations and the statement of financial position in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, the department has a different net cost of operations for the year on a government funding basis than on an accrual accounting basis. The differences between net cost of operations and appropriations are reconciled in the following tables.
|(a) Reconciliation of net cost of operations to current year appropriations:
(in thousands of dollars)
|Net cost of operations||3,430,921|
|Adjustments for items affecting net cost of operations but not affecting appropriations:|
|Services provided without charge by other government departments||(102,218)|
|Employee severance benefits||(7,423)|
|Refund/adjustment of previous year's expenditures||25,351|
|Revenue not available for spending||11,181|
|Allowance for bad debt||(1,513)|
|Vacation pay and compensatory leave||(869)|
|Adjustments for items not affecting net cost of operations but affecting appropriations:|
|Acquisitions of tangible capital assets||40,795|
|Net change to accountable advances||16|
|Appropriations available for use (forecast)||3,368,657|
(b) Appropriations available for use (forecast):
|(b) Appropriations available for use (forecast):
(in thousands of dollars)
|Operating expenditures - Vote 1||1,788,379|
|Capital expenditures - Vote 5||40,795|
|Grants and Contributions - Vote 10||1,422,740|
|Appropriations available for use (forecast)||3,368,657|
The department's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plans benefits and are indexed to inflation.
Both the employees and the department contribute to the cost of the Plan. The expenses for 2009-2010, which represents approximately 2.6 times the contributions by employees, amount to:
|Both the employees and the department contribute to the cost of the Plan. The expenses for 2009-2010, which represents approximately 2.6 times the contributions by employees, amount to:
(in thousands of dollars)
|Expense for the year||84,232|
Health Canada is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The department enters into transactions with these entities in the normal course of business and on normal trade terms. Also, during the year, the department will have received services obtained without charge from other Government departments as presented below.
Services provided without charge:
During the year the department is forecasted to receive without charge from other departments, accommodation, worker's compensation, legal fees and the employer's contribution to the health and dental insurance plans. These services without charge have been recognized in the department's Statement of Operations as follows:
|Services provided without charge:
(in thousands of dollars)
|Employer's contribution to the health and dental insurance plans||58,387|
|Worker's compensation costs||553|
Since this is the first year Health Canada has prepared future-oriented financial statements only the Statement of Operations and the accompanying Notes to the Statement of Operations have been compiled to forecast future-oriented results for the 2009-2010 fiscal year. Comparative figures have not been compiled as a result.
Comprising over 30% of the Department's staff, Health Canada's regional offices (British Columbia, Alberta, Manitoba/Saskatchewan, Ontario, Quebec, Atlantic, and Northern) play a key role in ensuring that Health Canada's programs and policies are appropriately tailored to meet the health needs of each region's diversity, particularly in the areas of First Nations and Inuit health, inspection and surveillance activities, controlled drugs and substances, reduction of tobacco use, pesticides, safe environments and consumer, health and food products.
In 2009-2010 each Region will work with partners and stakeholders to strengthen its commitment to excellence in service delivery and ensure better results for the people of Canada through the following key activities: