Quarterly Financial Report for the quarter ended December 31, 2016 (unaudited)

Quarterly Financial Report for the quarter ended December 31, 2016 (unaudited) (PDF, 2,925 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of Canada uses financial information to support decision making, for policy development, for service delivery and for historical reference.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, Supplementary Estimates (A) and Supplementary Estimates (B). The QFR should be read in conjunction with the Main Estimates, Supplementary Estimates (A) and Supplementary Estimates (B) 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 December 31, 2016.

1.1 NRC Mandate

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 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), 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 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 NRC’s spending authorities granted by Parliament and those used by NRC consistent with the Main Estimates, Supplementary Estimates (A) and Supplementary Estimates (B) 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), NRC has authority to expend revenues it has received through the conduct of its operations).

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 December 31, 2016 compared with the previous fiscal year. This section should be read in conjunction with 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 December 31, 2016 and those as of December 31, 2015.

Comparison of Budgetary Authorities and Expenditures
as of December 31, 2016 and December 31, 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 $1,297.9 $1,140.8
Expenditures - Quarter 1 $186.1 $161.7
Expenditures - Quarter 2 $228.6 $199.3
Expenditures - Quarter 3 $246.3 $236.1

As shown in the graph above, NRC’s expenditures totalled $246.3M during the third quarter of 2016-17 which represents an increase of $10.2M over the third quarter of 2015-16. Higher expenditures are mainly attributable to the combined increase of $13.0M in operating and statutory revenue expenditures, an increase of $5.9M in capital expenditures offset by a decrease of $10.3M in Grants and Contributions due principally to payment timing differences. Refer to 2.3 Significant Changes to Budgetary Expenditures for additional details.

2.2 Significant Changes to Authorities

For the period ending December 31, 2016, the authorities provided to NRC include the Main Estimates, Supplementary Estimates (A), Supplementary Estimates (B), 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 September 30, 2016:

Significant Changes to Authorities (unaudited)
For the year ending March 31, 2017 - As of December 31, 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 September 30, 2016 1,286.1
Supplementary Estimates (B) 1.6 - 10.0 - 0.2 11.8
Total increase (decrease) in authroities in comparison to prior quarter 1.6 - 10.0 - 0.2 11.8
Authorities – Total available for use for the year ending March 31, 2017 - As of December 31, 2016 1,297.9

As of December 31, 2016, year-to-date authorities were $1,297.9M, representing an increase of $157.1M (13.8%) in comparison to the 2015-16 authorities of the same period. This increase is mostly attributable to the following items:

  • Transfer payments consisting of Grants and Contributions (G&C) authorities increased by $72.2M compared to the same period in the previous year. The increase is mainly attributable to increases of funding in contributions to Firms of $42.1M, Thirty Meter Telescope of $31.9M, TRIUMF of $9.2M, Canada Accelerator and Incubator Program (CAIP) of $3.9M, offset by decreases in Business Innovation Access Program of $9.8M and Youth Employment Strategy of $5.0M.
  • Capital authorities increased by $64.1M compared with the same period of the previous fiscal year. The increase is mainly attributable to authorities provided through the 2014 Federal Infrastructure Initiative.
  • Combined operating and statutory authorities increased by $20.8M compared with the same period of the previous fiscal year. The increase is mainly attributable to the increase of the Operating Budget Carry-Forward.

2.3 Significant Changes to Budgetary Expenditures

This section should be read in conjunction with 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 December 31 2016, year-to-date expenditures were $661.0M, representing an increase of $63.9M (10.7%) in comparison to the 2015-16 expenditures of the same period. This increase is mostly attributable to the following items:

  • Combined operating and statutory expenditures increased by $34.6M compared with the same period of the previous fiscal year. This change is mainly attributable to an increase in personnel expenses of $13.4M, a $5.5M increase in utilities, materials and supplies, $5.5M increase in professional and special services and a $5.2M collective increase in the acquisitions of land, buildings and works, and the acquisitions of machinery and equipment. The increase in personnel costs is principally attributable to growth in staffing levels.
  • Capital expenditures increased by $18.9M 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 buildings and infrastructure is up $11.2M while repairs and maintenance which increased service potential and the acquisition of machinery and equipment are up $3.5M and $2.9M respectively.
  • Transfer payments consisting of Grants and Contributions (G&C) expenditures increased by $10.5M compared with the same period in the previous year. This change is mainly attributable to increases in contributions to Firms of $7.4M, Thirty Meter Telescope $3.9M, TRIUMF $2.8M, contributions to Organizations $2.4M offset by a decrease in contributions for the Youth Employment Strategy of $6.8M. Increase in contributions to Firms is mainly due to payment timing differences and an overall increase in funding.

3. Risks and Uncertainties

NRC continued to keep a watch and manage its top risks in Q3 related to: management of talent and expertise; incident and crisis management with a focus on environmental management; and NRC IT security and operational efficiency issues related to continued instability in the organization’s IT infrastructure. Close monitoring of resource use and financial management also remained priorities.

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

There were no significant changes to operations, personnel or programs in Q3. NRC continued its internal stock-taking assessment that includes engagement of staff in 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. NRC also successfully maintained business continuity after experiencing a fire in the Hydro One substation located on NRC property in Ottawa. Normal power was lost on December 26, 2016 and returned to service on December 31, 2016 through a Hydro One mobile utility station.

Approved by Senior Officials
Approved by:

Iain Stewart,
President

Dale MacMillan
Vice-President, Corporate Services and Chief Financial Officer

Ottawa, Canada
February 24, 2017

5. Statement of Authorities

Statement of Authorities (unaudited)
For the quarter ended December 31, 2016

Fiscal Year 2016‑2017 (in thousands of dollars)

Total available
for use for the
year ending
March 31, 2017Table 1 note 1
Used during
the quarter ended
December 31, 2016
Year to date
used at
quarter-end
Vote 1 - Operating expenditures 420,763 97,285 269,588
Vote 5 - Capital expenditures 123,186 17,224 36,916
Vote 10 - Grants and contributions 379,875 78,167 195,450
Statutory revenue Table 1 note 2 324,566 41,360 122,105
Statutory EBP 49,498 12,323 36,970
Total Budgetary authorities 1,297,888 246,359 661,029

Fiscal Year 2015-2016 (in thousands of dollars)

Total available for
use for the
year ending
March 31, 2016 Table 1 note 1
Used during the
quarter ended
December 31, 2015
Year to date
used at
quarter-end
Vote 1 - Operating expenditures 402,097 88,715 250,323
Vote 5 - Capital expenditures 59,086 11,278 18,065
Vote 10 - Grants and contributions 307,659 88,541 184,993
Statutory revenue Table 1 note 2 322,535 36,984 112,041
Statutory EBP 49,427 10,551 31,654
Total Budgetary authorities 1,140,804 236,069 597,076

Table notes

Table 1 note 1

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

Return to table 1 note 1 referrer

Table 1 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 1 note 2 referrer

6. Departmental budgetary expenditures by Standard Object

Departmental budgetary expenditures by Standard Object (unaudited)
For the quarter ended December 31, 2016

Fiscal Year 2016‑2017 (in thousands of dollars)

Planned expenditures
for the year ending
March 31, 2017
Expended
during the
quarter ended
December 31, 2016
Year to date
used at
quarter-end
Expenditures:
Personnel 466,679 100,985 298,655
Transportation and communications 25,042 4,096 10,873
Information 2,850 346 1,351
Professional and special services 82,810 11,585 33,459
Rentals 10,128 2,642 6,297
Purchased repair and maintenance 32,944 5,414 17,391
Utilities, materials and supplies 67,717 16,716 30,480
Acquisition of land, buildings and works 117,521 12,298 23,065
Acquisition of machinery and equipment 89,721 12,043 33,106
Transfer payments 379,875 78,167 195,450
Other subsidies and payments 22,601 2,067 10,902
Total net budgetary expenditures 1,297,888 246,359 661,029

Fiscal Year 2015‑2016 (in thousands of dollars)

Planned expenditures
for the year ending
March 31, 2016
Expended during
the quarter ended
December 31, 2015
Year to date
used at
quarter-end
Expenditures:
Personnel 464,622 95,147 285,250
Transportation and communications 20,803 3,722 9,826
Information 2,061 367 1,064
Professional and special services 86,787 9,216 27,041
Rentals 9,502 1,852 5,407
Purchased repair and maintenance 28,038 5,469 13,264
Utilities, materials and supplies 66,147 10,559 24,726
Acquisition of land, buildings and works 33,955 5,549 9,463
Acquisition of machinery and equipment 93,645 13,932 27,416
Transfer payments 307,659 88,541 184,993
Other subsidies and payments 27,585 1,715 8,626
Total net budgetary expenditures 1,140,804 236,069 597,076
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