Quarterly Financial Report for the quarter ended September 30, 2017 (unaudited)

Quarterly Financial Report for the quarter ended September 30, 2017 (unaudited) (PDF, 312 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of Canada uses financial information to support decision making, for policy development, for service delivery and for historical reference.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, Budget 2016 and Budget 2017). 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, 2017.

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, and 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 Departmental Plan.

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 2017-18. 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, 2017 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, 2017 and those as of September 30, 2016.

Comparison of Budgetary Authorities and Expenditures
as of September 30, 2017 and September 30, 2016
(in millions of dollars)

Comparison of Budgetary Authorities and Expenditures. Long description follows.
Long description of the Comparison of Budgetary Authorities and Expenditures
FY 2017‑2018 FY 2016‑2017
Authorities $1,231.9 $1,286.1
Expenditures - Quarter 2 $225.2 $228.6
Expenditures - Quarter 1 $208.9 $186.1

As shown in the graph above, the NRC’s expenditures totalled $225.2M during the second quarter of 2017-18 which represents a decrease of $3.4M over the second quarter of 2016-17. Lower expenses are mainly attributable to decreases of $3.0M in capital expenditures, $2.5M in Statutory Employee Benefit Plan and $2.3M in Grants and Contributions, offset by a combined increase of $4.4M in operating and statutory revenue expenditures. Refer to 2.3 Significant Changes to Budgetary Expenditures for additional details.

2.2 Significant Changes to Authorities

As of September 30, 2017, the authorities were $1,231.9M, representing a decrease of $54.2M (4.2%) in comparison to the 2016-17 authorities of the same period. The following table summarizes the significant changes to NRC authorities since June 30, 2017:

Significant Changes to Authorities (unaudited)
For the year ending March 31, 2018 ‑ As of June 30, 2017
(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, 2018 - As of June 30, 2017 1,205.1
Operating and Capital Budget Carry-Forward 12.3 14.5 - - - 26.8
Total increase (decrease) in authorities in comparison to prior year 12.3 14.5 - - - 26.8
Authorities – Total available for use for the year ending March 31, 2018 - As of September 30, 2017 1,231.9

The decrease of $54.2M in authorities is explained by the following items:

  • Combined operating and statutory authorities decreased by $29.0M. The decrease is mainly attributable to decreases of $16.7M in statutory revenue carry-forward for use in subsequent years following the close of fiscal year 2016-17, $7.0M resulting from the reduction of NRC's revenue forecast for 2017-18 and $5.2M of the 2016-17 Operating Budget Carry-Forward.
  • Capital authorities decreased by $16.1M. The decrease is mainly attributable to a decrease of $31.1M for the 2014 Federal Infrastructure Initiative, offset by increases of $9.9 for the 2016 Federal Infrastructure Initiative and $3.4M in Capital Budget Carry-Forward.
  • Transfer payments consisting of Grants and Contributions (G&C) authorities decreased by $6.5M. The variance is mainly attributable to a decrease of $50.0M in Contributions to Firms, offset by increases of $32.8M in Contributions to the Thirty Meter Telescope resulting from the reprofiling of funds to 2017-18 and of $10.0M in Youth Employment Strategy – Green Jobs Initiative.

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, 2017, year-to-date expenditures were $434.1M, representing an increase of $19.4M (4.7%) in comparison to the 2016-17 expenditures of the same period. This increase is mostly attributable to the following items:

  • Transfer payments consisting of Grants & Contributions (G&C) expenditures increased by $24.9M compared with the same period in the previous year. This change is principally attributable to an increase of contributions to Firms of $15.9M, to contributions to Organizations of $3.0M, to contributions to Youth Employment Strategy of $1.8M, as well as contributions to the International Astronomical Observatories of $1.1M.
  • Combined operating expenditures and statutory revenue expenditure increased by $3.6M compared with the same period of the previous fiscal year. This change is mainly attributable to increases of $1.8M in utilities, materials and supplies and $0.9 in rentals.
  • Statutory Employee Benefit Plan (EBP) expenditures decreased by $4.9M compared with the same period in the previous year. This change is principally attributable to a reduction of the 2017-18 Main Estimates value.
  • Capital expenditures decreased by $4.2M. The decrease is mainly attributable to a reduction of acquisition of machinery and equipment (special industry machinery, computer equipment as well as research equipment).

3. Risks and Uncertainties

In Q2, NRC's President released the NRC Dialogue Action Plan for 2017-2021 in response to the internal assessment undertaken between Fall 2016, and Winter 2017.  The actions, intended to revitalize and sustain NRC's role at the forefront of research and innovation excellence and in support of the priorities identified in the federal Innovation and Skills Plan, will be rolled out in three waves between Fall 2017 and Summer 2018. The actions will be coordinated through a central project management office to track interdependencies, schedules, resources and key milestones.  Each of the initiatives include consideration of key risks to be managed. In undertaking its corporate risk refresh for 2018-19, NRC will take the above into consideration for any corporate risk implications.

For the remainder of NRC's corporate risks for 2017-18, progress continues in actions to manage them since Q1.

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

A number of internal structural changes were announced for implementation as of October 2, 2017 as part implementation of the NRC Dialogue Action Plan. This includes: realignment of the Engineering division to create a new Transportation and Manufacturing division; the separation of NRC's ICT into two sub-programs to distinguish between Digital Technologies and Advanced Electronics and Photonics; the shift of accountability for investment plan projects and project management to the Chief Financial Officer; and merging of Occupational, Safety, and Health with Environmental Stewardship to enhance service delivery and site management in these areas.

Approved by Senior Officials
Approved by:

Iain Stewart,
President

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

Ottawa, Canada
November 24, 2017

5. Statement of Authorities (unaudited)
For the quarter ended September 30, 2017

Fiscal Year 2017‑2018 (in thousands of dollars)

Total available
for use for the
year ending
March 31, 2018Table 3 & 4 note 1
Used during
the quarter ended
September 30, 2017
Year to date
used at
quarter-end
Vote 1 - Operating expenditures 413,828 102,685 174,567
Vote 5 - Capital expenditures 107,122 11,258 15,478
Vote 10 - Grants and contributions 363,336 64,259 142,225
Statutory revenue Table 3 & 4 note 2 300,883 37,136 82,073
Statutory EBP 46,707 9,872 19,743
Total Budgetary authorities 1,231,876 225,210 434,086

Fiscal Year 2016-2017 (in thousands of dollars)

Total available for
use for the
year ending
March 31, 2017 Table 3 & 4 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 & 4 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

Table notes

Table 3 & 4 note 1

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

Return to table 3 note 1 referrer

Table 3 & 4 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 (unaudited)
For the quarter ended September 30, 2017

Fiscal Year 2017‑2018 (in thousands of dollars)

Planned expenditures
for the year ending
March 31, 2018
Expended
during the
quarter ended
September 30, 2017
Year to date
used at
quarter-end
Expenditures:
Personnel 461,397 98,905 197,940
Transportation and communications 25,823 3,600 6,395
Information 2,840 472 836
Professional and special services 77,416 13,942 21,394
Rentals 12,614 2,342 4,812
Purchased repair and maintenance 40,406 4,525 6,848
Utilities, materials and supplies 69,505 9,640 14,826
Acquisition of land, buildings and works 73,548 8,204 12,183
Acquisition of machinery and equipment 85,572 11,046 15,975
Transfer payments 363,336 64,259 142,225
Other subsidies and payments 19,419 8,275 10,652
Total net budgetary expenditures 1,231,876 225,210 434,086

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
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