Quarterly Financial Report for the quarter ended September 30, 2014

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About this publication

Publication author : Canada Economic Development for Quebec regions

Publish date : November 28, 2014

Summary :

Financial report of the Agency on its spending trends for the second quarter.

Table of Contents

  1. Section 1: Introduction
  2. Section 2: Highlights of Financial and Year-to-Date (YTD) Results
  3. Section 3: Risks and uncertainties
  4. Section 4: Significant changes in relation to operations, personnel and programs
  5. Section 5: Budget 2012 implementation
  6. Statement of Authorities (unaudited)
  7. Departmental Budgetary Expenditures by Standard Object (unaudited)

Section 1: Introduction

This quarterly financial report has been prepared by the Agency as required by subsection 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board (TB) Accounting Standard 1.3 – Departmental and Agency Quarterly Financial Report.

This quarterly financial report should be read in conjunction with the 2014-2015 Main Estimates, the Supplementary Estimates, previous quarterly financial reports and Canada’s Economic Action Plan 2012 (Budget 2012).

This report has not been subject to an external audit or review.

Authorities, Mandate and Programs

According to its enabling act, which came into effect on October 5, 2005, the Economic Development Agency of Canada for the Regions of Quebec’s (the Agency) mission is to promote long-term economic development in the regions of Quebec by giving special attention to those where slow economic growth is prevalent or opportunities for productive employment are inadequate.

Additional information on the Agency’s authorities, mandate and programs can be found in the Report on Plans and Priorities and the Main Estimates.

Basis of Presentation

This quarterly report has been prepared by the Agency using an expenditure basis of accounting and a special purpose financial reporting framework designed to meet financial information needs with respect to spending authorities. The accompanying Statement of Authorities includes the spending authorities Parliament granted to the Agency with authorities used by the Agency, which are consistent with the information presented in the Main Estimates and the Supplemental Estimates for the 2014-2015 fiscal year.

The authority of Parliament is required before monies 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.

Within the framework of the Business of Supply in Parliament, the Main Estimates must be tabled in Parliament on or before the first day of March preceding the start of the new fiscal year.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government 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 Agency uses the full accrual method of accounting to prepare and present its annual departmental financial statements published in the Departmental Performance Report. However, the spending authorities voted by Parliament are always established on an expenditure basis.

Financial Structure of CED

There are two annual appropriations for the Agency’s expenditures management:

Expenses under budgetary statutory authorities, for which payments are made under a law previously approved by Parliament and which are not part of the annual appropriations bills, include items such as employer’s benefit plans.

Section 2: Highlights of Financial and Year-to-Date (YTD) Results

This section presents various financial information for the current fiscal year, such as budgetary authorities, quarterly and cumulative expenditures for the quarter ending September 30th, while establishing comparisons with the previous year.

The explanation of variances considers that changes of less than 5% have minimal impact on the interpretation of results.

The graph below provides an overview of total expenditures as of September 30th (quarterly and cumulative) compared to total annual authorities, for both the current and previous year.

Further details of these changes are presented in Section 2.1, Section 2.2 and the tables in the appendix.

Graph 1 – Total expenditures as of September 30 compared to total annual authorities

Graph 1 – Total expenditures as of September 30 compared to total annual authorities: Long Description

Authorities and Expenditures Analysis: Subdivided into two sections, this graph provides an overview of net budgetary authorities available for the current year, expenditures incurred for the second quarter of 2014-2015 and cumulative expenditures for 2014-2015 compared to those of 2013-2014.

Annual Authorities totalled $254.9 M for 2013-2014 while they totalled $247.8 M in 2014-22015. Expenditures for the second quarter of 2013-2014 amounted to $37.9 M compared to $46.7 M for the current year. Finally, cumulative expenditures as of September 30 of fiscal year 2013-14 amounted to $64.2 M versus $75.6 M for the current year.

 

Analysis of Authorities

At the end of the current quarter, the Agency’s annual authorities totalled $247.8 million. This the same amount reported for the first quarter of 2014-2015 (no discrepancy observed). The current amount of authorities represents a net decrease of $7.1 million compared to the same period last year.

Vote 1 Authority – Operating Expenditures

Available Vote 1 Authorities amounted to $37.9 million for the current period, compared to $38.5 million in 2013-14. This is a decrease of $0.5 million (2%) compared last year’s budget.

Vote 5 Authorities – Grants and Contributions

Vote 5 Authorities totalled $205.3 million for the current period and are comparable to those of 2013-2014, which amounted to $211.5 million. This is a net decrease of 6.2 million (3%).

Analysis of Expenditures

Compared to the second quarter of 2013-2014, total expenditures recorded during the second quarter of 2014-2015 increased by $8.8 million (23%), from $37.9 million to $46.7 million. This increase is attributable to a:

Graph 2 – Second quarter expenditures by type of expenditures compared to the previous year

Graph 2 – Second quarter expenditures by type of expenditures compared to the previous year: Long Description

Quarter Expenditures Analysis: Subdivided into three sections, this graph provides an overview for each of the budgetary vote which are: Vote 1 – Operating Expenditures, Vote 5 – Grants and Contributions and Statutory Authorities recorded for the second quarter of 2014-2015 compared to 2013-2014.

Expenditures for Vote 1, Vote 5 and Statutory Authorities were $8.8 M, $36.8 M and $1.2 M respectively in the second quarter of 2014-2015, compared to $9.3 M, $27.4 M and $1.2 M in the second quarter of 2013-2014.

 

Vote 1 – Operating Expenditures

Overall, the Agency reported a net decrease of $0.5 million (5%) of operating expenses for the quarter compared to the same period in 2013-2014. This decrease is not considered significant. It is the result of upward and downward variances in the various standard objects, deemed insignificant as well.

That being said, there is an increase of almost $1.0 million in the “Other Subsidies and Payments” standard object. This is attributable to a one-time transition payment, made during the first quarter, for the implementation of salary payment in arrears by the Government of Canada.

(See table Departmental Budgetary Expenditures by Standard Object in the Appendix for more details)

Vote 5 – Grants and Contributions Expenditures

During the second quarter of 2014-2015, the Agency spent $36.8 million in Grants and Contributions compared to $27.4 million in 2013-2014. This is an increase of $9.4 million (34%).

On a cumulative basis, for the first half of the fiscal year 2014-15, there is a net increase of $11.8 million (27%) in Vote 5 – Grants and Contributions expenditures compared to the same semester in 2013-2014.

Although relatively important, this increase in spending is due to the rate at which clients have submitted their claims. Incurred expenditures represent 27% of the annual authorities.

(See table Departmental Budgetary Expenditures by Standard Object in the Appendix for more details)

Graph 3 – Grants and Contributions Expenditures (Second quarter and cumulative) compared to the previous year

Graph 3 – Grants and Contributions Expenditures (Second quarter and cumulative) compared to the previous year: Long Description

The graph shows the current quarter and cumulative grants and contributions expenditures incurred for the current year as compared to last year.

For fiscal year 2014-2015, grants and contributions expenditures incurred during the second quarter totalled $36.8 M while they amounted to $38.4 M in 2013-2014. On a cumulative basis for the current year, expenses incurred were $55.5 M while they were $43.7 M in 2013-2014.

 

Section 3: Risks and uncertainties

The Agency makes sure to take a global view of the evolving factors that influence its environment and interventions to attain its results. These factors are incorporated in its decision making. Thus, the integration of risk management into corporate planning allows the Agency to implement appropriate risk management strategies to achieve its results.

The main risk for the Agency’s mandate, which is to promote economic development, is the “economic risk and institutional capacities” directly linked to changes in Quebec and Canada’s economic growth prospects. Moreover, its mandate is also influenced by the availability of funding from other levels of government or the private sector, as well as the potential postponement of SME’s investment decisions. To mitigate this risk, for instance, the Agency continuously reviews the evolution of worldwide, national and provincial economic prospects as well as national and provincial programs.

The Agency manages the implementation of these mitigation measures in the context of reduced budgetary allocations. It regularly monitors the progress and effectiveness of their implementation through several budgetary review processes and activities along with expenditure analysis and budgetary estimates by organizational unit on a monthly basis.

Section 4: Significant changes in relation to operations, personnel and programs

There have been no significant changes in relation to operations and programs impacting the results of this quarter, other than the implementation of measures related to Budget 2012.

With regard to personnel, it should be noted that, since April 22, 2014, the Deputy Head has worked with a new Executive Director for Corporate Services and Chief Financial Officer.

Also, during the second quarter of 2014-2015, a new Vice-President was appointed to the Policy and Communications Sector.

Section 5: Budget 2012 implementation

This section provides an overview of the savings measures announced in Budget 2012 that are being implemented in order to refocus on government and programs: to make it easier for Canadians and business to deal with their government; and, to modernize and reduce the back office.

Canada Economic Development’s contribution to this exercise consisted in:

During 2012-2013, the first year of implementation of Budget 2012, the Agency achieved savings of around $7.4 million, and approximately $26.7 million in the second year, 2013-2014. The implementation of savings measures will proceed as expected and will result in savings of $28.1 million in 2014-2015. Projected savings to be made during the year will result from the continuation of transformation and modernization activities for the Agency so that its services and programs are more accessible and more modern.

The original version was signed by:

Marie Lemay, P.Eng, ing.
Deputy Minister / President
Montreal, Quebec, Canada
November 28th, 2014

Marc Lemieux, MA, MBA, CMA
Chief Financial Officer
Montreal, Quebec, Canada
November 28th, 2014

Statement of Authorities (unaudited)

For the quarter ended September 30, 2014
Fiscal Year 2014-2015
(in thousands of dollars)
Fiscal Year 2013-2014
(in thousands of dollars)
Authorities 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 Total available for use for the year ending March 31, 2014* Used during the quarter ended September 30, 2013 Year-to-date used at quarter end
Vote 1 – Net Operating Expenditures 37,907 8,804 17,807 38,535 9,276 18,069
Vote 5 – Grants and Contributions 205,310 36,770 55,526 211,467 27,358 43,689
Total Budgetary Statutory Authorities 4,624 1,156 2,312 4,929 1,232 2,465
Non-budgetary Authorities - - - - - -
Total Authorities 247,841 46,730 75,645 254,931 37,866 64,223

* Includes only Authorities available for use and granted by Parliament at quarter-end.
(An incremental difference in the sum of data may result from rounding)

Departmental Budgetary Expenditures by Standard Object (unaudited)

For the quarter ended September 30, 2014
Fiscal Year 2014-2015
(in thousands of dollars)
Fiscal Year 2013-2014
(in thousands of dollars)
Expenditures Planned expenditures for the year ending March 31, 2015* Spent during the quarter ended September 30, 2014 Year-to-date used at quarter end Planned expenditures for the year ending March 31, 2014* Spent during the quarter ended September 30, 2013 Year-to-date used at quarter end
Staff 32,648 8,520 16,488 33,259 8,987 18,052
Transportation and Communications 2,075 234 442 2,041 102 267
Information 593 59 87 612 62 95
Professional and Special Services 4,349 948 1,677 4,899 990 1,674
Rental 988 32 240 919 211 232
Repair and Maintenance 99 6 9 102 6 11
Utilities, Materials and Supplies 297 33 57 204 34 63
Acquisition of Land, Buildings and Works - - - - - -
Acquisition of Machinery and Equipment 1,384 120 160 1,327 113 136
Transfer Payments 205,309 36,770 55,526 211,467 27,358 43,689
Other Subsidies and Payments 99 8 959 102 2 4
Total Net Budgetary Expenditures 247,841 46,730 75,645 254,931 37,866 64,223

* Includes only Authorities available for use and granted by Parliament at quarter-end.
(An incremental difference in the sum of data may result from rounding)

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