Quarterly Financial Report ending September 30, 2017
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, Indigenous 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 Departmental Plan, and in the Main Estimates.
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 2017-2018 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 2017-2018, the Main Estimates were tabled on February 23, 2017.
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, 2017, total authorities available for fiscal year 2017-2018 amounted to $50.1M, a $6M decrease from the same quarter last year.
The decrease in authorities is a result of the sunsetting in 2016-17 of both the Northern Adult Basic Education Program for $3.9M and the Centre for Northern Innovation in Mining for $1.1M. The remaining decrease is a result of administrative adjustments.
Statement of Departmental Budgetary Expenditures by Standard Object
Compared to the previous year, total expenditures for the quarter ending September 30, 2017 increased by $4.9M ($4M to $8.9M).
Personnel costs in the second quarter of 2017-2018 increased by $461K compared to previous year values. This reflects a reduced number of vacant positions in the Agency.
Other operating costs decreased by $559K over the previous year, including recoveries which reduced gross budgetary expenditures. The Agency receives money from other government departments to support the operation of Pilimmaksaivik, the Inuit Centre of Excellence and Employment. The recoveries were recorded during this quarter in advance of expenditures being incurred, resulting in the "professional and special services" field reflecting negative expenditures. Additional expenditures will be incurred in future quarters.
Although not significant, the "other subsidies and payments" field reflects a negative expenditure. This is a result of timing differences due to the reclassification of expenditures incurred during a previous quarter.
Transfer payment expenditures increased by $5M in the second quarter compared to the previous year, reflecting earlier project reviews and disbursements.
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 Corporate Risk Profile and risk assessment is published in its 2017-18 Departmental Plan. The risk profile identifies the following key risk areas:
- Limited Economic Diversification – A high degree of reliance on the mining and oil/gas sector results in an increased vulnerability to the cyclical changes in commodity prices.
- Infrastructure deficit – Significant capital and operating costs resulting from a core infrastructure deficit, including connectivity, constrain opportunities for northern economic development, impacting the effectiveness of CanNor's programming.
- Labour Market – Competition within the limited labour pool in the North carries risks for recruitment and retention and impacts the ability of businesses to grow and diversify.
- Short-term Program Renewals – 66% of contribution funding sunsets on March 31, 2018. Short-term (2 year) funding cycles limits CanNor's capacity to make long-term investments.
Approved by:
Dr. Janet King
President
Ross Miller CPA, CMA
Chief Financial Officer
Statement of Authorities (unaudited)
| Fiscal year 2017-2018 | Fiscal year 2016-2017 | |||||
|---|---|---|---|---|---|---|
| (In thousands of dollars) | Total available for use for the year ending March 31, 2018* |
Used during the quarter ended September 30, 2017 |
Year-to-date used at quarter-end | Total available for use for the year ending March 31, 2017* |
Used during the quarter ended September 30, 2016 |
Year-to-date used at quarter-end |
| Vote 1 - Net Operating | 13,200 | 2,751 | 5,980 | 14,256 | 2,960 | 5,590 |
| Vote 5 - Transfer payments | 35,500 | 5,797 | 7,528 | 40,187 | 767 | 1,420 |
| Budgetary statutory authorities | 1,381 | 345 | 691 | 1,638 | 234 | 468 |
| Total Budgetary authorities | 50,081 | 8,893 | 14,199 | 56,081 | 3,961 | 7,478 |
| Non-budgetary authorities | 0 | 0 | 0 | 0 | 0 | 0 |
| Total authorities | 50,081 | 8,893 | 14,199 | 56,081 | 3,961 | 7,478 |
| * Includes only Authorities available for use and granted by Parliament at quarter-end. | ||||||
Departmental budgetary expenditures by Standard Object (unaudited)
| Fiscal year 2017-2018 | Fiscal year 2016-2017 | |||||
|---|---|---|---|---|---|---|
| (In thousands of dollars) | Planned expenditures for the year ending March 31, 2018 | Used during the quarter ended September 30, 2017 | Year-to-date used at quarter-end | Planned expenditures for the year ending March 31, 2017 | Used during the quarter ended September 30, 2016 | Year-to-date used at quarter-end |
| Expenditures: | ||||||
| Personnel | 10,182 | 2,910 | 5,639 | 10,589 | 2,449 | 5,040 |
| Transportation and communications | 600 | 156 | 291 | 890 | 92 | 168 |
| Information | 80 | 2 | 5 | 44 | 14 | 14 |
| Professional and special services | 2,600 | (400) | (122) | 3,145 | 204 | 394 |
| Rentals | 1,000 | 452 | 457 | 896 | 412 | 415 |
| Repair and maintenance | 40 | 12 | 48 | 255 | 0 | 4 |
| Utilities, materials and supplies | 60 | 19 | 23 | 61 | 13 | 13 |
| Acquisition of land, buildings and works | 0 | 0 | 0 | 14 | 0 | 0 |
| Acquisition of machinery and equipment | 10 | 12 | 140 | 0 | 10 | 10 |
| Transfer payments | 35,500 | 5,797 | 7,528 | 40,187 | 767 | 1,420 |
| Public Debt charges | 0 | 0 | 0 | 0 | 0 | 0 |
| Other subsidies and payments | 9 | (67) | 189 | 0 | 0 | 0 |
| Total budgetary expenditures | 50,081 | 8,893 | 14,199 | 56,081 | 3,961 | 7,478 |