Quarterly Financial Report ending September 30, 2015
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 Main Estimates.
Contributing to the jobs and growth in Canada, the Canadian Northern Economic Development Agency (CanNor) works to develop a diversified, sustainable and dynamic economy across Canada’s three territories. It does this by delivering economic development programs, undertaking policy and research, and by collaborating with and aligning the efforts of other federal departments, territorial governments, Aboriginal organizations, and industry. This is particularly the case in resource development through its Northern Projects Management Office (NPMO).
Further details on CanNor's authorities, mandate and program activities may be found in the Report on Plans and Priorities, and in the Main Estimates (Part II).
Basis of Presentation
This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes CanNor’s spending authorities granted by Parliament and those used by the Agency consistent with the Main Estimates for the 2015-2016 fiscal year. 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.
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. For 2015-2016, the Main Estimates were tabled on February 24, 2015.
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.
As part of the departmental performance reporting process, CanNor prepares its annual departmental financial statements on a full accrual basis in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector. However, the spending authorities voted by Parliament remain on an expenditure basis.
Highlights of fiscal quarter and fiscal year to date (YTD) results
Statement of Authorities
As at September 30, 2015, total authorities available for fiscal year 2015-2016 amounted to $50.7M, a $158K decrease from the same quarter last year.
This decrease is the result of a reduction in contribution for the Northern Basic Education Program funding in the amount of $3M as it is sunsetting this year, offset by an additional operating funding of $390K for the Northern Projects Management Office (NPMO) and contribution funding for the Centre for Northern Innovation in Mining (CINM’s) of $2.4M.
Statement of Departmental Budgetary Expenditures by Standard Object
Compared to the previous year, total budgetary expenditures recorded in the quarter ending September 30, 2015 are higher by $3.2M ($7.1M versus $3.9M) and overall for the six months by $3.2M ($10.0M versus $6.8M), mainly due to a higher issuance of transfer payments to date.
Transfer payments are higher by $3.4M for the first six months versus the same period last year. This increase relates to timing differences for contribution payments.
Personnel costs in the second quarter of 2015-16 are just slightly higher than the same quarter of the previous year while personnel costs on a year to date basis are similar to the previous year.
Operating costs excluding personnel and transfer payment costs reflected an overall decrease in the first six months of $146K over the previous year. Most of the decrease relates to the one-time transition payments of $263K included in the other subsidies and payments reporting object last year for which there is no corresponding cost this year. Increases in other reporting objects have slightly offset this decrease, as for example:
- Transportation and communications costs are slightly higher than the previous year. Most of these costs are incurred in the fall and winter when proponents and employees are more available to attend conferences, meetings or other events, which explains the lower cost reported after six months.
- Professional and Special Services, and Rentals also have slightly higher costs than the previous year. The lower expenses in the first six months of the year are common because most of the costs are based on billings from other government departments where invoicing occurs later in the year.
Risks and Uncertainties
Business development in the North needs to deal with the complexities related to remote communities, sparse population, dependence on natural resource extraction and associated challenges, such as underdeveloped infrastructure and labour market gaps.
Program delivery in the North therefore requires a strong focus on risk management and mitigation.
The Canadian Northern Economic Development Agency’s updated Corporate Risk Profile and revised risk assessment is presented in the 2015-16 Report on Plans and Priorities. The revised risk profile is in direct response to the increasingly dynamic and unique environment in which the Agency operates and is reflective of the Agency’s immediate reality.
CanNor has identified the following key risk areas in the 2015-2016 Report on Plans and Priorities:
- Performance Measurement
- Efficient measurement and reporting of program effectiveness.
- Human and Knowledge Capital
- Acknowledgement of the staffing and staff retention challenges of human resource management in the North.
- Commitment to Nunavut Land Claims Agreement Article 23 obligations.
- Alignment of CanNor Activities with Priorities and Needs
- Organizational alignment of activities, priorities and resources to meet service expectations and organizational priorities.
- Information Management and Information Technology (IM/IT)
- Continued integration of the CanNor IM/IT transformation agenda in collaboration with mutual stakeholders.
- Operational Environment
- Reflective of the challenges in delivering economic development programming and regulatory coordination services in the North.
Further details on these risks and how CanNor plans to manage and mitigate these risks can be found in the Report on Plans and Priorities for the Agency.
CanNor monitors expenditures and carries out business planning to ensure that financial risks are mitigated and that program delivery is optimized. Efforts are underway to increase the pace of project review and disbursements of contribution programs in order to reduce the risk of year-end lapses.
Approved by:
Janet King
President
Ottawa, Canada
November 6, 2015
Yves Robineau CPA, CA
Chief Financial Officer
Statement of Authorities (unaudited)
| Fiscal year 2015-2016 | Fiscal year 2014-2015 | |||||
|---|---|---|---|---|---|---|
| (In thousands of dollars) | Total available for use for the year ending March 31, 2016* |
Used during the quarter ended September 30, 2015 |
Year-to date used at quarter-end | Total available for use for the year ending March 31, 2015* |
Used during the quarter ended September 30, 2014 |
Year-to date used at quarter-end |
| * Includes only Authorities available for use and granted by Parliament at quarter-end. | ||||||
| Vote 1 - Net Operating | 14,410 | 2,368 | 4,654 | 13,930 | 2,327 | 4,868 |
| Vote 5 - Transfer payments | 35,002 | 4,392 | 4,741 | 35,642 | 1,358 | 1,358 |
| Budgetary statutory authorities | 1,257 | 315 | 629 | 1,255 | 264 | 536 |
| Total Budgetary authorities | 50,669 | 7,075 | 10,024 | 50,827 | 3,949 | 6,762 |
| Non-budgetary authorities | 0 | 0 | 0 | 0 | 0 | 0 |
| Total authorities | 50,669 | 7,075 | 10,024 | 50,827 | 3,949 | 6,762 |
Departmental budgetary expenditures by Standard Object (unaudited)
| Fiscal year 2015-2016 | Fiscal year 2014-2015 | |||||
|---|---|---|---|---|---|---|
| (In thousands of dollars) | Planned expenditures for the year ending March 31, 2016 | Used during the quarter ended September 30, 2015 | Year-to-date used at quarter-end | Planned expenditures for the year ending March 31, 2015 | Used during the quarter ended September 30, 2014 | Year-to-date used at quarter-end |
| Expenditures: | ||||||
| Personnel | 8,743 | 2,357 | 4,817 | 8,669 | 2,295 | 4,792 |
| Transportation and communications | 1,780 | 52 | 172 | 1,918 | 113 | 127 |
| Information | 33 | 5 | 8 | 100 | 2 | 9 |
| Professional and special services | 3,699 | 204 | 215 | 2,566 | 160 | 178 |
| Rentals | 1,221 | 24 | 26 | 1,290 | 5 | 5 |
| Repair and maintenance | 111 | 26 | 26 | 145 | 3 | 16 |
| Utilities, materials and supplies | 66 | 14 | 18 | 150 | 10 | 11 |
| Acquisition of land, buildings and works | 15 | 0 | 0 | 0 | 0 | 0 |
| Acquisition of machinery and equipment | 0 | 1 | 1 | 260 | 3 | 3 |
| Transfer payments | 35,001 | 4,392 | 4,741 | 35,642 | 1,358 | 1,358 |
| Public Debt charges | 0 | 0 | 0 | 0 | 0 | 0 |
| Other subsidies and payments | 0 | 0 | 0 | 87 | 0 | 263 |
| Total budgetary expenditures | 50,669 | 7,075 | 10,024 | 50,827 | 3,949 | 6,762 |