Archived - Canadian Food Inspection Agency – Quarterly Financial Report for the quarter ended June 30, 2021

ISSN: 2819-0270

On this page

• Introduction
• CFIA mandate
  • Basis of presentation
• Highlights of fiscal quarter and fiscal year-to-date (YTD)
  • Significant changes in the statement of authorities (Annex A at end of the document)
  • Significant changes in the departmental budgetary expenditures by standard object (Annex B at end of the document)
• Risks and uncertainties
  • COVID-19
  • Emergencies
  • Sunsetting resources renewal
  • The Centre for Plant Health
  • Program risk
• Significant changes in relation to operations, personnel and programs
  • Regulatory framework
  • Personnel
• Annex A – Statement of authorities (unaudited)
• Annex B – Departmental budgetary expenditures by standard object (unaudited)

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 2021 to 2022 Main Estimates and the 2021 to 2022 Supplementary Estimates A. Main and Supplementary 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 2021 to 2022 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 10 federal statutes, 22 sets of regulations and 1 fee notice. 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 and 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 interim supplies granted for the 2021 to 2022 Main Estimates and the 2021 to 2022 Supplementary Estimates A. 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. The CFIA was granted its full supply for the 2021 to 2022 fiscal year in June 2021.

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 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% 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 the document)

Authorities available for use

At the end of the first quarter, June 30, 2021 (Q1), the CFIA had $820.8 million of authorities available for use, as detailed in Table 1. This is an increase of $218.5 million (36.3%) compared to the end of the same quarter in 2020-21. Below is a breakdown of this variance.

The increase of $218.5 million in the authorities available for use is largely due to the full supply received in Q1 2021 to 2022, and only 9/12th of supply authorities received in Q1 2020-21 due to the COVID-19 pandemic causing limited sessions in the spring of 2020 for Parliament to study supply. In addition, the CFIA received increased funding for:

• Collective Bargaining ($29.8 million)
• Investing in CFIA ($22.9 million)
• e-Certification ($5.2 million)
• Canadian Food Safety Information Network (CFSIN) ($1.6 million), and
• Sidney Lab Rebuild ($8.9 million)

These increases were partially offset by the sunsetting funds for improving food safety (IFS) ($12.6 million) for which the renewed funding will be made available in subsequent Supplementary Estimates.

Year-to-date expenditures

At the end of the 2021 to 2022 first quarter, the CFIA had expenditures of $184.7 million as outlined in Table 2. This represents an overall increase of $17.2 million (10.3%) compared to the end of the same quarter in 2020-21. Below is a breakdown of the variance.

Compared to the previous year, the 2021 to 2022 operating expenditures (Vote 1) increased by $22.0 million mainly due to increased personnel cost. The agency received investing in CFIA funding earlier this year, that allowed the agency to increase staffing activities. The increased rate of pay from the signed collective agreements in fiscal year 2020 to 2021 also increased the total salary expenditures. In addition, the agency maintained a full surge inspection capacity in the first quarter (Q1) 2021 to 2022 compared to a partial capacity in Q1 2020 to 2021.

The compensation payments in 2021 to 2022 decreased by $4.6 million compared to last fiscal year mainly due to higher payments made under the Health of Animal Act for Chronic Wasting Disease in Q1 2020 to 2021.

Significant changes in the departmental budgetary expenditures by standard object (Annex B at end of the document)

Planned expenditures (equivalent to authorities) by standard object

Compared to the same quarter in 2020 to 2021, the increasing of $218.5 million of authorities is mainly due to the receipt of full supply of the Main Estimates in Q1 2021 to 2022 and increased funding in a number of initiatives as mentioned above.

Total increase more significantly affected the following standard objects:

• Personnel $181.9 million (37.8%)
• Professional and special services $13.1 million (22.0%)
• Acquisition of machinery and equipment $6.3 million (81.9%)
• Utilities, materials and supplies $6.2 million (80.9%)
• Information $4.1 million ($171.5%)
• Rentals $3.3 million ($30.9%)
• Repair and maintenance $2.9 million (38.9%)

Expended during the quarter ended June 30, 2021 and year-to-date expenditures by standard object

Compared to the same quarter in 2020 to 2021, the increase of $17.2 million of expenditures is mainly caused by the following:

• $16.5 million (11.2%) in Personnel mainly due to increased hiring for various funded initiatives mentioned above and higher rate of pay stipulated by the collective agreements; and
• $2.7 million (635.0%) in Other Subsidies and Payments mainly due to various settlements paid in Q1 2021 to 2022

These increases were offset by a decrease in:

• transfer payments of $4.5 million (88.1%) mainly due to less payments for animal health compensation.

Risks and uncertainties

This quarterly financial report reflects the results of the current fiscal period in relation to the Main Estimates and the Supplementary Estimates A for 2021 to 2022. The agency anticipates receiving further 2021 to 2022 funding from the Supplementary Estimates and Treasury Board Central Votes. In addition to managing the delivery of the agency programs based on anticipated total spending authorities, the agency faces other financial and non-financial risks and uncertainties.

COVID-19

The COVID-19 pandemic is a global crisis that poses an unprecedented threat to Canadians' health and the Canadian economy. In early March 2020, as an exponential rise in cases was reported, governments across Canada took wide-ranging steps to mitigate and contain the spread of COVID-19. Within the CFIA, the COVID-19 Incident Command Structure (ICS) was created to ensure the safety of employees and the continuation of departmental operations during this very challenging time.

To further assist in the mitigation of the pandemic, the CFIA activated its business continuity plan in order to prioritize critically important services during the COVID-19 pandemic. These early measures allowed the CFIA to continue to deliver critical services that preserve the integrity of Canada's Food Safety System while safeguarding its animal and plant resource base.

The Government of Canada through its COVID-19 Economic Response Plan provided the CFIA with $20 million per year in both 2020 to 2021 and 2021 to 2022 to respond to emerging vulnerabilities in inspection capacity in light of COVID-19 and to ensure an adequate, safe and reliable food supply for Canadians. These funds will allow the CFIA to continue to perform critical activities by maintaining inspection capacity and investing in equipment and technology to facilitate the delivery of inspection services despite the many challenges the COVID-19 pandemic poses.

As the CFIA moves forward through the COVID-19 pandemic, critical services for Canadians continue to be monitored and prioritized in order to ensure the safety of its employees and to carry on the delivery of frontline services that safeguard Canada's food system, along with the plant and animal resources on which Canadians depend.

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 (for example, 2018 and 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. For example, the agency is currently taking proactive prevention and preparedness measures to mitigate the threat of African swine fever (ASF).

The agency has established a dedicated emergency reserve in order to manage the incremental response costs associated with emergencies. This 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.

Sunsetting resources renewal

In 2021 to 2022, 3 of the agency's sunsetting programs have been renewed. Funding for COVID-19 surge inspection capacity and Daily Shift Inspection Presence (DSIP) in federally registered meat processing establishments has been received through Supplementary Estimates A. The Improving Food Safety (IFS) initiative sunset in 2020 to 2021 and it is in the process of completing the Treasury Board (TB) submission. Once the TB submission and the supplementary estimates have been approved, the funding will be back within the CFIA budget authorities for 2021 to 2022 and 2022 to 2023.

The Centre for Plant Health

As part of the Government's commitment to establishing and maintaining modern federal science infrastructure, Budget 2017 provided $80 million to replace the Centre for Plant Health, located near Sidney, British Columbia. A new, world class plant health research facility will further enhance the safety of Canada's agriculture and agri-food sector, while facilitating the trade and economic growth that benefits all Canadians. Laboratories Canada and the CFIA continue the advancement of the detailed design of the laboratory including network connectivity. As a pathfinder project for Laboratories Canada, lessons learned and best practices will inform future science infrastructure projects. Completion of the new Sidney facility is anticipated in 2025.

The project is aligned with the government-wide strategy for federal science and technology infrastructure which was funded under Budget 2018 with an additional $2.8 billion for Public Services and Procurement Canada to begin the process for the construction of more multi-purpose, collaborative, federal science and technology facilities.

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 food safety 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 2021 to 2022 Departmental Plan.

Significant changes in relation to operations, personnel and programs

Regulatory framework

The CFIA is committed to strengthening Canada's world-class food safety system. On January 15, 2019 the Safe Food for Canadians Regulations (SFCR) came into force. The SFCR improves and strengthens Canada's food safety system, enables industry to innovate, and creates greater market access opportunities for Canadian food products exported abroad.

The SFCR reduces unnecessary administrative burden on businesses by replacing 14 sets of existing regulations with 1, and helps maintain and grow market access for Canada's agri-food and agricultural sector. The SFCR are the result of careful, informed policy development supported by extensive consultations with CFIA staff and Canadians across the country. The regulations make our food system even safer by focusing on prevention and allowing for faster removal of unsafe food from the marketplace.

Some of the requirements for the SFCR were implemented when the regulations came into force, while other requirements are being phased in over a period of 12 to 30 months based on food commodity, type of activity and business size. During the COVID-19 pandemic, the CFIA has continued to prioritize critical services to ensure the ongoing safety of the Canadian food supply.

Personnel

• Sylvie Lapointe was appointed Vice-President of Policy and Programs Branch on March 1, 2021
• Kathleen Donohue was appointed acting Vice-President of International Affairs Branch (IAB) on April 1, 2021
• David Nanang was appointed Associate Vice-President of Operations Branch on May 17, 2021
• France Pégeot, Executive Vice-President of CFIA, left the agency on June 1, 2021
• Jacques Cormier was appointed Vice-President of Corporate Management Branch and Chief Financial Officer on June 21, 2021
• Dr. Mary Jane Ireland was appointed Chief Veterinary Officer (CVO) and the World Organization for Animal Health (WOAH; founded as Office International des Épizooties (OIE)) Delegate for Canada on June 23, 2021

Approved by:

Annex A – Statement of authorities (unaudited)

Annex B – Departmental budgetary expenditures by standard object (unaudited)