ARCHIVED - Quarterly Financial Report - Quarter ending December 31, 2012
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Table of contents
- 1.0 Introduction
- 2.0 Highlights of Fiscal Quarter and Fiscal Year to Date (YTD) results
- 3.0 Risks and Uncertainties
- 4.0 Significant Changes in Relation to Operations, Personnel and Programs
- 5.0 Budget 2012 Implementation
- 6.0 Statement of Authorities
- 7.0 Departmental Budgetary Expenditures
The Government of Canada uses financial information to support decision making, for policy development, for service delivery and for historical reference. These financial statements have been prepared to respond to these requirements. These statements should be read in conjunction with the Main Estimates and Supplementary Estimates as well as Canada’s Economic Action Plan 2012 (Budget 2012). They have 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. Although these statements have not been subject to an external audit or review, NRC attests that they are an accurate and true reflection of the financial position for the period ending December 31, 2012.
This Departmental Quarterly Financial Report (QFR) reflects the results of the current fiscal period in relation to the Main Estimates, Supplementary Estimates (A), Supplementary Estimates (B), and Treasury Board funding for collective agreements and centrally funded items.
1.1 NRC Mandate
The National Research Council Canada (NRC) exists under the National Research Council Act and is a Departmental corporation named in Schedule II of the Financial Administration Act. The mission of NRC is to work with clients and partners to provide innovation support, strategic research, scientific and technical services to develop and deploy solutions to meet Canada's current and future industrial and societal needs.
Under the National Research Council Act, NRC is responsible for:
- Undertaking, assisting or promoting scientific and industrial research in fields of importance to Canada;
- Providing vital scientific and technological services to the research and industrial communities;
- Investigating standards and methods of measurement;
- Working on the standardization and certification of scientific and technical apparatus and instruments and materials used or usable by Canadian industry;
- Operating and administering any astronomical observatories established or maintained by the Government of Canada;
- Establishing, operating and maintaining a national science library; and
- Publishing and selling or otherwise distributing such scientific and technical information as the Council deems necessary.
1.2 Basis of Presentation
This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the NRC’s spending authorities granted by Parliament and those used by the NRC consistent with the Main Estimates and Supplementary Estimates for 2012-13. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use for spending authorities.
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 in Parliament.
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 (pursuant to paragraph 5(1)(e) of the National Research Council Act, the NRC has authority to expend revenues it has received through the conduct of its operations).
The NRC uses the full accrual method of accounting to prepare and present its annual departmental financial statements which are part of the Departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.
2.0 Highlights of Fiscal Quarter and Fiscal Year to Date (YTD) results
This section highlights the items that contributed most significantly to the changes in budgetary authorities for the current fiscal year and to the actual expenditures for the quarter that ended on December 31, 2012, compared with the previous fiscal year. This section should be read in conjunction with NRC’s Statement of Authorities and Departmental Budgetary Expenditures by Standard Object table.
2.1 Authorities and Expenditures
Comparison of Budgetary Authorities and Expenditures
As of December 31, 2012 and December 31, 2011
(in millions of dollars)
Long description of the table of Comparison of Budgetary Authorities and Expenditures
|Millions of dollars|
(48.5% of Authorities)
(60.0% of Authorities)
As shown in above graph, NRC’s expenditures totaled $166.3 million during the third quarter of the current fiscal year versus the previous year’s equivalent of $151.3 million. As a percentage of Authorities, this represents a decrease of 11.5% over the previous year. The following two sections elaborate on variances in Authorities and Year-to-date Expenditures.
2.2 Significant Changes to Authorities
For the period ending December 31, 2012, the authorities provided to NRC include the Main Estimates, Supplementary Estimates (A), Supplementary Estimates (B), TBS Central Votes, Statutory Revenue Carry Forward and approved Voted Capital and Operating Budget Carry Forwards. NRC has not received any Supplementary Estimates (A) funding during this fiscal year.
Grants & Contributions
|Statutory Revenues||Contributions to EBP||Total|
|Authorities - Total available for use for the year ending March 31, 2013 - As of September 30, 2012||804.9|
|Industrial Research Assistance Program (Budget 2012)||1.4||90.0||91.4|
|Refocusing on business-lead research (Budget 2012)||61.1||61.1|
|Paylist Requirements (Treasury Board funded allowances)||6.6||6.6|
|Canadian Safety & Security Program||0.2||0.2|
|Planned Reductions in Departmental Spending (Budget 2012)||(1.3)||(1.3)|
|Total increase in authorities in comparison to prior quarter||79.9||0.2||90.2||-||-||170.2|
|Authorities - Total available for use for the year ending March 31, 2013 - As of December 31, 2012||975.2|
The quarterly increase in Authorities is mainly attributable to increases announced in Budget 2012 for IRAP, refocusing on business lead research, and funding for pay related items allocated via Treasury Board Votes during this quarter.
2.3 Significant Changes to Budgetary Expenditures
This section should be read in conjunction with NRC’s Departmental Budgetary Expenditures by Standard Object table.
2.3.1 Variances in Year-to-date Expenditures
Expenditures for 2012-13, as of December 31, were $472.6 million. This was $7.2 million, or 1.5% higher than the $465.4 million recorded at the end of the same time in 2011-12.
- Contributions expenditures increased by $10.2 million when compared with the previous fiscal year. This increase is mostly due to higher expenditures for the Digital Technologies Adoption Pilot Program of $8.3 million and increased contributions of $5.6 million to small and medium enterprises from the Industrial Research Assistance Program (IRAP). The increases were offset by a decline of $4.1M in TRIUMF contributions due to timing differences.
- The Employee Benefit Plan (EBP) expenditures are $7.8 million less than the same period during the previous fiscal year. EBP expenditures are based on estimated salary expenditures, as listed in the Main Estimates, and are adjusted at year end to reflect actual salary expenditures.
- Net operating expenditures decreased by $2.9 million, compared with the previous fiscal year. This change is attributable to a $5.8 million decrease in other operating expenditures and a $2.9 increase in personnel expenditures (excluding the EBP).
- Capital expenditures increased by $8.2 million. Last fiscal year, the new framework for the NRC Investment Plan caused delays in the flow of capital expenditures.
3.0 Risks and Uncertainties
3.1 NRC Corporate Risks
During the third quarter of FY2012-13 (Q3), the most significant risks identified as part of NRC’s Corporate Risk Profile for FY2013-14 relate in large part to ensuring that the organization has the design and management capacity in place to build and deliver the right programs for industry uptake as NRC continues its refocusing efforts to better meet the needs of Canadian stakeholders and industry. At the same time, NRC must effectively manage the associated changes and impacts – both internally with staff to maintain operations, and externally with partners and clients to sustain engagement.
Key internal and external factors affecting NRC’s risks include:
- Internally, as part of the organization’s refocusing efforts, new business and operating models have been implemented, including restructuring of corporate services to allow for greater efficiencies, as well as implementation of new financial management, program management and client relationship management processes and systems.
- Externally, the Canadian Government has endorsed NRC’s role to effect greater private sector innovation by doubling NRC-IRAP’s budget to $220M per year, impacting its level of activity.
- The ongoing fragile global economy and declining Canadian global competitiveness are anticipated to have an impact on the performance of NRC clients, potentially affecting NRC’s achievement of business targets.
To address the risks as defined in NRC’s Corporate Risk Profile for FY2013-14, areas of action for the organization will focus on:
- Building management capacity and expertise to design and mobilize an effective program-based management organization (including identifying the gaps and undertaking the necessary sourcing actions);
- Effectively managing NRC’s refocusing changes while sustaining operational efficiency (including continuing and new staff engagement initiatives and enhanced client relationship management through redesigned positions and function); and
- Enhancing operational effectiveness through continued training and support for new processes and systems, defining scope and responsibilities (including better integrating common services) to support NRC’s new operating model and continued efforts for streamlining where possible.
Moving forward, NRC’s corporate risks and progress against actions will be reviewed by NRC’s Senior Executive Committee on a quarterly basis for updates and adjustments where needed.
4.0 Significant Changes in Relation to Operations, Personnel and Programs
NRC is transitioning to a program based market driven organization to address Canadian industry challenges. As a result the NRC is currently realigning its resources to meet this objective.
5.0 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.
Budget 2012 identified savings of $1.3 million in 2012-13 and $16.3 million per year starting in 2013-14 for NRC. This latter amount is offset by $1.1M in Fiscal Framework Credits, resulting in net savings of $15.2M per year. These represent cost savings associated with sun-setting certain projects and programs, and through new organizational efficiencies.
The impact of Budget 2012 will be minimal this fiscal year and greater savings will be reflected beginning next fiscal year.
John R. McDougall, P.Eng.
National Research Council Canada
Date: 14 February 2013
Michel Piché, M.P.A., CMA, CIA
VP, Corporate Management and Chief Financial Officer
National Research Council Canada
Date: 14 February 2013
6.0 Statement of Authorities
|Fiscal Year 2012-2013||Fiscal Year 2011-2012|
|Total available for use for the year ending March 31, 2013Table 3 note 1||Used during the quarter ended December 31, 2012||Year to date used at quarter-end||Total available for use for the year ending March 31, 2012Table 3 note 3||Used during the quarter ended December 31, 2011Table 3 note 4||Year to date used at quarter-endTable 3 note 4|
|Vote 60 - Net Operating expendituresTable 3 note 3||404,647||76,422||276,882||389,848||84,460||279,806|
|Vote 65 - Capital expenditures||42,089||7,655||15,371||42,166||4,607||7,210|
|Vote 70 - Grants & contributions||259,566||51,440||109,854||164,535||34,732||99,643|
|Statutory revenueTable 3 note 2||228,367||20,674||40,132||123,047||14,795||40,533|
|Total Budgetary authorities||975,182||166,319||472,624||770,550||151,332||465,407|
7.0 Departmental Budgetary Expenditures
|Fiscal Year 2012-2013||Fiscal Year 2011-2012|
|Expenditures||Planned expenditures for the year ending March 31, 2013||Expended during the quarter ended December 31, 2012||Year to date used at quarter-end||Planned expenditures for the year ending March 31, 2012Table 4 note 1||Expended during the quarter ended December 31, 2011Table 4 note 2||Year to date used at quarter-endTable 4 note 2|
|Transportation & communications||19,747||1,920||7,140||21,155||3,742||10,277|
|Professional & special services||43,888||8,003||24,399||68,885||9,469||22,178|
|Repair & maintenance||17,633||2,401||7,734||20,539||3,591||9,056|
|Utilities, materials & supplies||74,901||9,201||30,104||90,749||12,722||30,930|
|Acquisition of machinery & equipment||9,690||1,087||1,299||13,573||1,129||2,079|
|Other subsidies & payments||11,806||1,240||10,265||17,545||1,116||10,341|
|Total net budgetary expenditures||852,719||166,319||472,624||741,568||151,332||465,407|
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