2024-2025 Health Canada Future-Oriented Statement of Operations

Health Canada
Future-Oriented Statement of Operations (unaudited)
for the year ending March 31

(in thousands of dollars)	Forecast results 2023-24	Planned results 2024-25
Expenses
Health Care Systems	$ 6,189,532	$ 7,556,342
Health Protection and Promotion	1,216,531	1,106,927
Internal Services	513,519	374,626
Expenses incurred on behalf of government	(139)	(126)
Total expenses	7,919,443	9,037,769
Revenues
Sales of goods and services
Services of a regulatory nature	107,467	105,642
Rights and privileges	167,560	168,315
Services of a non-regulatory nature	107,709	108,920
Lease and use of public property	52	53
Revenues from fines	570	580
Interest	1,531	1,023
Other	927	939
Revenues earned on behalf of government	(94,717)	(94,523)
Total revenues	291,099	290,949
Net cost of operations before government funding and transfers	$ 7,628,344	$ 8,746,820
The accompanying notes form an integral part of the Future-Oriented Statement of Operations.

Notes to the Future-Oriented Statement of Operations (unaudited)

1. Methodology and significant assumptions

The Future-Oriented Statement of Operations has been prepared based on government priorities and departmental plans as described in the Departmental Plan.

The information in the forecast results for fiscal year 2023-24 is based on actual results as at December 31, 2023 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for fiscal year 2024-25.

The main assumptions underlying the forecasts are as follows:

• The Department's activities will remain substantially the same as in the previous year.
• Expenses and revenues, including the determination of amounts internal and external to the government, are based on experience. The general historical pattern is expected to continue.

These assumptions are made as at December 31, 2023.

2. Variations and changes to the forecast financial information

Although every attempt has been made to forecast final results for the remainder of 2023-24 and for 2024-25, actual results achieved for both years are likely to differ from the forecast information presented, and this variation could be material.

In preparing this Future-Oriented Statement of Operations, Health Canada has made estimates and assumptions about the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, and are continually evaluated.

Factors that could lead to material differences between the Future-Oriented Statement of Operations and the historical statement of operations include:

• the timing and the amount of acquisitions and disposals of property, plant and equipment, which may affect gains, losses and amortization expense;
• the implementation of new collective agreements;
• economic conditions, which may affect the amount of revenue earned; and,
• other changes to the operating budget, such as new initiatives or technical adjustments later in the fiscal year.

After the Departmental Plan is tabled in Parliament, Health Canada will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Results Report.

3. Summary of significant accounting policies

The Future-Oriented Statement of Operations has been prepared using the Government of Canada's accounting policies in effect for fiscal year 2023-24 and is based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

a. Expenses

Transfer payments are recorded as an expense in the year the transfer is authorized, and all eligibility criteria have been met by the recipient.

Other expenses are generally recorded when goods are received or services are rendered and include expenses related to personnel, professional and special services, repair and maintenance, utilities, materials and supplies, as well as amortization of tangible capital assets. Provisions to reflect changes in the value of assets or liabilities, such as provisions for bad debts and advances and inventory obsolescence, as well as utilization of inventories and prepaid expenses, and other are also included in other expenses.

b. Revenues

Revenues from regulatory fees without performance obligations are recognized when there is authority to claim inflows of economic resources and the past transaction or event has occurred.

Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in which the related expenses are incurred.

Deferred revenue consists of amounts received prior to the provision of goods or services that will be recognized as revenue in a subsequent fiscal year as the performance obligations are met.

Other revenues are recognized in the period the event giving rise to the revenues occurred and future economic benefits are expected to be received.

Revenues that are non-respendable are not available to discharge the Department's liabilities. Although the deputy head is expected to maintain accounting control, he has no authority over the disposition of non-respendable revenues. As a result, non-respendable revenues are earned on behalf of the Government of Canada and are therefore presented as a reduction of the Department's gross revenues.

4. Parliamentary authorities

The Department is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the Department differs from financial reporting according to generally accepted accounting principles because authorities are based mainly on cash flow requirements. Items recognized in the Future-Oriented Statement of Operations in one year may be funded through parliamentary authorities 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 are reconciled in the following tables:

a. Reconciliation of net cost of operations to requested authorities

(in thousands of dollars)	Forecast results 2023-24	Planned results 2024-25
Net cost of operations before government funding and transfers	$ 7,628,344	$ 8,746,820
Adjustment for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets	(23,719)	(26,941)
Gain (loss) on disposal of tangible capital assets	56	284
Services provided without charge by other government departments	(145,921)	(137,170)
Decrease in vacation pay and compensatory leave	2,767	3,608
Decrease in employee future benefits	1,657	1,690
Refunds/adjustments of previous years' expenditures	12,828	11,232
Bad debt expense	(414)	(382)
Increase in transfer payment accrual	91	3
Decrease in inventory	(70,431)	-
Amortization of advance payments	(23,654)	(23,654)
Statutory spending authority equivalent to revenues earned	51,463	51,463
Other	2,624	(741)
Total items affecting net cost of operations but not affecting authorities	(192,653)	(120,608)
Adjustment for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets	33,754	26,516
Issuance of advance payments	23,654	23,654
Issuance of salary overpayments	2,683	2,115
Issuance of salary advance	109	105
Proceeds from disposal of Crown assets	25	29
Total items not affecting net cost of operations but affecting authorities	60,225	52,419
Requested authorities forecasted to be used	$ 7,495,916	$ 8,678,631

b. Authorities provided/requested

(in thousands of dollars)	Forecast results 2023-24	Planned results 2024-25
Authorities provided/requested
Vote 1: operating expenditures	$ 1,427,971	$ 2,946,903
Vote 5: capital expenditures	33,754	26,516
Vote 10: grants and contributions	5,505,198	5,424,597
Statutory: Payments for dental benefits pursuant to the Dental Benefit Act	339,100	100,200
Other statutory amounts	189,893	180,415
Requested authorities forecasted to be used	$ 7,495,916	$ 8,678,631