Quarterly Financial Report for the quarter ended September 30, 2016 (unaudited)

Quarterly Financial Report for the quarter ended September 30, 2016 (unaudited) (PDF, 2,768 KB)

1. Introduction

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of Canada uses financial information to support decision making, for policy development, for service delivery and for historical reference.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. This Departmental Quarterly Financial Report (QFR) reflects the results of the current fiscal period in relation to the Main Estimates and Supplementary Estimates (A). The QFR should be read in conjunction with the Main Estimates, Supplementary Estimates (A) as well as Canada’s Economic Action Plan (Budget 2012, Budget 2013, Budget 2014, Budget 2015 and Budget 2016). They have been prepared by management as required by section 65.1 of the Financial Administration Act (R.S.C., 1985, c. F-11) and in the form and manner prescribed by the Treasury Board of Canada Secretariat. Although these statements have not been subject to an external audit or review, the National Research Council Canada (NRC) attests that they are an accurate and true reflection of the financial position for the period ended September 30, 2016.

1.1 NRC Mandate

The NRC exists under the National Research Council Act (R.S.C., 1985, c. N-15) and is a Departmental corporation named in Schedule II of the Financial Administration Act (R.S.C., 1985, c. F-11). The mission of the 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 (R.S.C., 1985, c. N-15), the 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, 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.

Further details on the NRC's legislative framework, authority, mandate and program activities can be found in Part II of the Main Estimates and the Report on Plans and Priorities.

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 (A) for 2016-17. 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.

The authority of Parliament is required before moneys can be spent by the Government of Canada. 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 (R.S.C., 1985, c. N-15), the NRC has authority to expend revenues it has received through the conduct of its operations).

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act (R.S.C., 1985, c. F-11) authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government of Canada 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 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. 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 September 30, 2016 compared with the previous fiscal year. This section should be read in conjunction with the NRC’s tables entitled Statement of Authorities and Departmental budgetary expenditures by Standard Object found on the last 2 pages of this report.

2.1 Authorities and Expenditures

The following graph provides a comparison of the budgetary authorities and expenditures as of September 30, 2016 and those as of September 30, 2015.

Comparison of Budgetary Authorities and Expenditures
as of September 30, 2016 and September 30, 2015
(in millions of dollars)

Comparison of Budgetary Authorities and Expenditures. Long description follows.
Long description of the Comparison of Budgetary Authorities and Expenditures
FY 2016‑2017 FY 2015‑2016
Authorities $1,286.1 $1,140.8
Expenditures - Quarter 1 $186.1 $161.7
Expenditures - Quarter 2 $228.6 $199.3

As shown in the graph above, the NRC's expenditures totalled $228.6M during the second quarter of 2016-17 which represents an increase of $29.3M over the second quarter of 2015-16. Higher expenditures are mainly attributable to the combined increase of $11.1M in operating and statutory revenue expenditures, an increase of $9.4M in capital expenditures as well as an increase of $7M in Grants and Contributions. Refer to 2.3 Significant Changes to Budgetary Expenditures for additional details.

2.2 Significant Changes to Authorities

For the period ending September 30, 2016, the authorities provided to the NRC include the Main Estimates, Supplementary Estimates (A), the Statutory revenue authorities carried forward from 2015-2016 as well as all authorities received from Treasury Board of Canada Secretariat Votes. The following table summarizes the significant changes to NRC authorities since June 30, 2016:

Significant Changes to Authorities (unaudited)
For the year ending March 31, 2017 - As of September 30, 2016
(in millions of dollars)

Vote 1
Operating
Vote 5
Capital
Vote 10
Grants & Contributions
Statutory Revenues Contributions to EBP Total
Authorities - Total available for use for the year ending March 31, 2017 - As of June 30, 2016 1,257.5
Operating and Capital Budget Carry-Forward 17.5 11.1 28.6
Total increase (decrease) in authroities in comparison to prior quarter 17.5 11.1 - - - 28.6
Authorities – Total available for use for the year ending March 31, 2017 - As of September 30, 2016 1,286.1

2.3 Significant Changes to Budgetary Expenditures

This section should be read in conjunction with the NRC's tables entitled Statement of Authorities and Departmental budgetary expenditures by Standard Object both located at the end of this report.

2.3.1 Variances in Year-to-date Expenditures

As of September 30 2016, year-to-date expenditures were $414.7M, representing an increase of $53.7M (14.9%) in comparison to the 2015-16 expenditures of the same period. This increase is mostly attributable to the following items:

  • Transfer payments consisting of Grants and Contributions (G&C) expenditures increased by $20.9M compared with the same period in the previous year. This change is mainly attributable to a timing difference of $15.9M in TRIUMF payments, an increase of contributions to Firms of $7.7M offset by a decrease in contributions for the Youth Employment Strategy of $4.9M.
  • Combined operating and statutory expenditures increased by $19.9M compared with the same period of the previous fiscal year. This change is mainly attributable to an increase in personnel expenses of $7.6M, a $4.5M collective increase in the acquisitions of land, buildings and works, and the acquisitions of machinery and equipment as well as a $3.7M increase in professional and special services. The increase in personnel costs is principally attributable to growth in staffing levels.
  • Capital expenditures increased by $12.9M compared with the same period of the previous fiscal year. The increase is mainly attributable to authorities provided through the 2014 Federal Infrastructure Initiative. More specifically, capital spending reported under the acquisition of machinery and equipment, and buildings and infrastructure are up $5.2M and $4.7M respectively.

3. Risks and Uncertainties

Since the last quarterly financial report, the Senior Executive Committee (SEC) recognized the continuing risk around management of NRC talent and expertise, including ensuring that the right skills are available where needed through alignment of staff utilization with capacity and competency requirements.

Occupational Safety and Health (OSH) including management of hazardous materials, personal security and safety, and environmental impact continue to be a high priority. This includes greater rigour in integrating safety reviews prior to launching new projects, embedding environmental and OSH risk management as part of the project management process, as well as adherence to standard operating procedures. Environmental issues are being addressed by the new Environmental Stewardship Committee, with high risk issues escalated and discussed at SEC. A draft environmental policy has been developed for SEC review and approval.

Financial risks are continuing to be monitored and managed related to large capital projects, client relationships and foreign exchange fluctuations.

4. Significant changes in relation to operations, personnel and programs

In Q2, a new NRC President was appointed with the mandate of undertaking an internal stock-taking assessment for the betterment of the organization and how it can contribute to the Government of Canada's Innovation Agenda. The assessment includes engaging staff in a dialogue on the areas of: growing innovation-based global firms; excellence in emerging and advanced science; solutions to Government's public policy challenges; engagement and technology clusters; governance and performance framework; central management processes, program approval and resource allocation systems; and occupational health and safety and environmental stewardship. A new Vice-President of Policy was appointed to lead this initiative and prepare a report and recommendations for consideration by Ministers in spring 2017. During this period, NRC will continue to focus on maintaining its business and operational commitments to its clients.

Approved by Senior Officials
Approved by:

Original signed by

Iain Stewart,
President

Original signed by

Gail McLellan, CPA, CMA
Director General, Finance Branch
and Chief Financial Officer (Acting)

Ottawa, Canada
November 24, 2016

5. Statement of Authorities

Statement of Authorities (unaudited)
For the quarter ended September 30, 2016

Fiscal Year 2016‑2017 (in thousands of dollars)

Total available
for use for the
year ending
March 31, 2017Table 3 note 1
Used during
the quarter ended
September 30, 2016
Year to date
used at
quarter-end
Vote 1 - Operating expenditures 419,145 100,656 172,303
Vote 5 - Capital expenditures 123,186 14,275 19,692
Vote 10 - Grants and contributions 369,875 66,586 117,283
Statutory revenue Table 3 note 2 324,566 34,720 80,745
Statutory EBP 49,302 12,323 24,647
Total Budgetary authorities 1,286,074 228,560 414,670

Fiscal Year 2015-2016 (in thousands of dollars)

Total available for
use for the
year ending
March 31, 2016 Table 3 note 1
Used during the
quarter ended
September 30, 2015
Year to date
used at
quarter-end
Vote 1 - Operating expenditures 402,074 90,095 161,608
Vote 5 - Capital expenditures 59,086 4,917 6,787
Vote 10 - Grants and contributions 307,659 59,551 96,452
Statutory revenue Table 3 note 2 322,535 34,194 75,057
Statutory EBP 49,427 10,551 21,103
Total Budgetary authorities 1,140,781 199,308 361,007

Table notes

Table 1 note 1

Includes only Authorities available for use and granted by Parliament at quarter-end.

Return to table 3 note 1 referrer

Table 3 note 2

Includes Statutory Revenue available for use in future years pursuant to paragraph 5(1)(e) of the National Research Council Act (R.S.C., 1985, c. N-15).

Return to table 3 note 2 referrer

6. Departmental budgetary expenditures by Standard Object

Departmental budgetary expenditures by Standard Object (unaudited)
For the quarter ended September 30, 2016

Fiscal Year 2016‑2017 (in thousands of dollars)

Planned expenditures
for the year ending
March 31, 2017
Expended
during the
quarter ended
September 30, 2016
Year to date
used at
quarter-end
Expenditures:
Personnel 465,507 99,528 197,670
Transportation and communications 24,890 3,820 6,778
Information 2,850 676 1,005
Professional and special services 82,676 12,068 21,874
Rentals 10,128 1,548 3,655
Purchased repair and maintenance 32,819 7,810 11,977
Utilities, materials and supplies 67,486 8,936 13,765
Acquisition of land, buildings and works 117,521 7,444 10,767
Acquisition of machinery and equipment 89,721 13,587 21,063
Transfer payments 369,875 66,586 117,283
Other subsidies and payments 22,601 6,557 8,833
Total net budgetary expenditures 1,286,074 228,560 414,670

Fiscal Year 2015‑2016 (in thousands of dollars)

Planned expenditures
for the year ending
March 31, 2016
Expended during
the quarter ended
September 30, 2015
Year to date
used at
quarter-end
Expenditures:
Personnel 464,599 95,944 190,103
Transportation and communications 20,803 3,428 6,104
Information 2,061 360 697
Professional and special services 86,787 10,170 17,825
Rentals 9,502 1,742 3,555
Purchased repair and maintenance 28,038 4,218 7,795
Utilities, materials and supplies 66,147 8,477 14,167
Acquisition of land, buildings and works 33,955 2,522 3,915
Acquisition of machinery and equipment 93,645 8,400 13,484
Transfer payments 307,659 59,551 96,452
Other subsidies and payments 27,585 4,496 6,910
Total net budgetary expenditures 1,140,781 199,308 361,007
Date modified: