Quarterly Financial Report ending December 31, 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 December 31, 2015, total authorities available for fiscal year 2015-2016 amounted to $51.2M, a $1.2M decrease from the same quarter last year.

This decrease is the result of a reduction in contributions for the Northern Basic Education Program funding in the amount of $3M as it is sunsetting this year, offset by additional operating funding of $390K for the Northern Projects Management Office (NPMO) and increased contribution funding for the Centre for Northern Innovation in Mining (CNIM) of $1.4M.

Statement of Departmental Budgetary Expenditures by Standard Object

Compared to the previous year, total budgetary expenditures recorded in the quarter ending December 31, 2015 are higher by $2.9M ($10.9M versus $8.0M) and overall for the nine months by $6.1M ($20.9M versus $14.8M), mainly due to a higher issuance of transfer payments to date.

Transfer payments are higher by $5.9M for the first nine months versus the same period last year.  The Operations Branch at CanNor have made greater efforts to have recipients submit required financial statements on a more timely basis which is facilitating the earlier issuance of contributions.

Personnel costs in the third quarter of 2015-2016 are just slightly higher than the same quarter of the previous year; this is also the case for the year to date figures. This can be attributed to increased staffing actions across the CanNor offices.

Operating costs excluding personnel and transfer payment costs reflected an overall decrease in the first nine months of $152K over the previous year.  

The following three reporting objects incurred notable decreases over the previous year:

  1. Professional and Special Services ($95K) – See below
  2. Repair and Maintenance ($52K)
  3. Other subsidies and payments ($263K) - one-time transition payments ($263K) reflected only in 2014-15 amounts.

The following increases have slightly offset the above decreases:

  1. Transportation and communications costs are $91K higher than the previous year primarily because of increased relocation costs.
  2. Rentals costs are $172K higher than the previous year – See below

Other reporting objects had minor variances.

Certain expenses fluctuate based on the timing of billings received from other government departments. This is the case for the Professional and Special Services costs and Rentals.

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:

  1. Performance Measurement
    • Efficient measurement and reporting of program effectiveness
  2. 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.
  3. Alignment of CanNor Activities with Priorities and Needs
    • Organizational alignment of activities, priorities and resources to meet service expectations and organizational priorities
  4. Information Management and Information Technology (IM/IT)
    • Continued integration of the CanNor IM/IT transformation agenda in collaboration with mutual stakeholders.
  5. 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
December 31, 2015		 Year-to date used at quarter-end Total available for use for the year ending
March 31, 2015*		 Used during the quarter ended
December 31, 2015		 Year-to date used at quarter-end
* Includes only Authorities available for use and granted by Parliament at quarter-end.
Vote 1 - Net Operating 14,972 3,425 8,078 14,589 3,125 7,992
Vote 5 - Transfer payments 35,001 7,126 11,868 36,617 4,653 6,012
Budgetary statutory authorities 1,257 314 943 1,255 268 804
Total Budgetary authorities 51,230 10,865 20,889 52,461 8 046 14,808
Non-budgetary authorities 0 0 0 0 0 0
Total authorities 51,230 10,865 20,889 52,461 8 046 14,808

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 December 31, 2015 Year-to-date used at quarter-end Planned expenditures for the year ending March 31, 2015 Used during the quarter ended December 31, 2014 Year-to-date used at quarter-end
Expenditures:
Personnel 9,304 2,687 7,504 9,344 2,336 7,128
Transportation and communications 1,780 284 456 1,918 239 365
Information 33 4 12 100 12 22
Professional and special services 3,699 277 492 2,550 408 587
Rentals 1,221 470 496 1,290 320 324
Repair and maintenance 111 1 27 145 64 79
Utilities, materials and supplies 66 15 33 150 15 26
Acquisition of land, buildings and works 15 0 0 0 0 0
Acquisition of machinery and equipment 0 1 1 260 0 3
Transfer payments 35,001 7,126 11,868 36,617 4,652 6,011
Public Debt charges 0 0 0 0 0 0
Other subsidies and payments 0 0 0 87 0 263
Total budgetary expenditures 51,230 10,865 20,889 52,461 8,046 14,808

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