Quarterly Financial Report for the quarter ended September 30, 2017

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About this publication

Publication author : Canada Economic Development for the regions of Quebec

Publish date : November 29, 2017

Summary :

Financial report of the Agency on its spending trends for the second quarter of 2017.

Table of Contents

  1. Introduction
  2. Highlights of fiscal quarter and fiscal year-to-date results
  3. Risks and uncertainties
  4. Significant changes in operations, staff and programs
  5. Approval by seniors officials
  6. Appendices

Introduction

This quarterly financial report has been prepared by Canada Economic Development for Quebec Regions (CED) as required by subsection 65.1 of the Financial Administration Act and in the form and manner prescribed by Treasury Board.

This report should be read in conjunction with the 2017–2018 Main Estimates and the 2017–2018 Departmental Plan. These documents provide a brief description of CED’s mandate and programs.

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

1.1 Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The appended Statement of Authorities includes CED spending authorities granted by Parliament and those used by CED, consistent with the Main Estimates for fiscal year 2017–2018. This quarterly financial 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.

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.

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.

CED uses the full accrual method of accounting to prepare and present its annual financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

1.2 Canada Economic Development for Quebec Regions financial structure

CED manages its expenditures under two annual votes:

Costs under statutory authorities, which represent payments made under legislation previously approved by Parliament and which are not part of the annual appropriation bills, include items such as the employer’s benefit plan.

Highlights of fiscal quarter and fiscal year-to-date results

This section provides a variety of financial information for the current fiscal year up to September 30, 2017, including the authorities available for the year and expenditures incurred during the first quarter, as compared with the previous fiscal year and the previous quarter. The explanations of variances in the amounts are based on the premise that discrepancies of less than 5% have a minimal impact on the interpretation of the results.

Further details of this financial information are provided in Sections 2.1 and 2.2, and in the tables in the Appendices.

2.1 Authorities analysis

At the end of the second quarter, as at September 30, 2017, CED’s annual authorities totalled $305.7M. They were $320.6M as at September 30, 2016.

The variance of $14.9M (4.6%) is due to the following changes:

The following figure shows the annual budgetary authorities by vote on June 30, 2017, and September 30, 2017, compared with the previous fiscal year.

Annual budget authorities by appropriation as at June 30 and September 30, fiscal year 2017–2018 compared with 2016–2017

Annual budget authorities by appropriation as at June 30 and September 30, fiscal year 2017–2018 compared with 2016–2017

Figure 1 - Long description

Analysis of annual budgetary authorities by appropriation: Subdivided into three sections, this graph provides an overview of net available budget authorities by appropriation (Vote 1 – Net Operating Expenditures, Vote 5 – Grants and Contributions, and Budgetary Statutory Authorities) as at June 30, 2017, and September 30, 2017, including a comparison with June 30, 2016 and September 30, 2016.

As at September 30, 2017, Vote 1 authorities (Net Operating Expenditures) totaled $38.7M, compared with $40.0M in 2016–2017; Vote 5 authorities (Grants and Contributions) $262.7M compared with $275.6M in 2016–2017; and Budgetary Statutory Authorities $4.3M, compared with $4.9M in 2016–2017.

As at June 30, 2017, Vote 1 authorities (Net Operating Expenditures) totaled $36.8M, compared with $38.2M in 2016–2017; Vote 5 authorities (Grants and Contributions) $262.7M, compared with $275.6M in 2015–2016; and Budgetary Statutory Authorities $4.3M, compared with $4.9M in 2016–2017.

Vote 1 authorities (Net Operating Expenditures)

A decrease of $1.3M (-3.3%) as at September 30, 2017, compared with the same period in fiscal year 2016–2017 is to be noted but this variance is not significant.

An increase of $1.9M (5.2%) between the first and second quarters of 2017–2018 is due to an adjustment to the authorities to include the carry-forward from the 2016–2017 operating budget.

Vote 5 authorities (Grants and Contributions)

As at September 30, 2016, the annual authorities available for Vote 5 totalled $275.6M. As at September 30, 2017, this amount was $262.7M, a decrease of $12.9M (-4.7%). This variance is not significant. The authority remained stable between the first and second quarters of 2017–2018.

2.2 Expenditure analysis

Total CED expenditures recorded during the first quarter of 2017–2018 were $51.7M, compared with $52.2M during the same quarter of the previous year. This represents a net decrease of $0.5M ( 1.0%) compared with the previous fiscal year.

This variance can be broken down as follows:

On a cumulative basis, total expenditures as at September 30, 2017, were $88.5M, compared with $80.9M for the same period a year earlier. This represents a net increase of $7.6M (+9.4%). This variance can be largely explained by a major increase in contribution expenditures in the second quarter of 2017–2018.

The following figure illustrates second quarter 2017–2018 expenditures and year-to-date expenditures, compared with the previous fiscal year.

Second Quarter Expenditures and Year-to-Date Expenditures as at September 30 by Budgetary Appropriation, Fiscal Year 2017–2018 Compared with 2016–2017

Second Quarter Expenditures and Year-to-Date Expenditures as at September 30 by Budgetary Appropriation, Fiscal Year 2017–2018 Compared with 2016–2017

Figure 2 - Long description

Analysis of second quarter and year-to-date expenditures as at September 30 by appropriation, for fiscal year 2017-2018, compared with 2016-2017: Subdivided into three sections (Vote 1 – Net Operating Expenditures, Vote 5 – Grants and Contributions, and Budgetary Statutory Authorities), this graph illustrates the expenditures made during the second quarter of 2017–2018 and year-to-date expenditures as at September 30, 2017, including a comparison with fiscal year 2016–2017.

For the second quarter, Vote 1 authorities (Net Operating Expenditures) totaled $9.6M, compared with $9.1M in 2016–2017; year-to-date Vote 5 authorities (Grants and Contributions) $41.0M, compared with $41.9M in 2016–2017; and year-to-date Budgetary Statutory Authorities $1.1M, compared with $1.2M in 2016–2017.

As at September 30, 2017, year-to-date Vote 1 authorities (Net Operating Expenditures) totaled $18.4M, compared with $17.3M in 2016–2017; year-to-date Vote 5 authorities (Grants and Contributions) $67.9M, compared with $61.1M in 2016–2017; and year-to-date Budgetary Statutory Authorities $2.2M, compared with $2.5M in 2016–2017.

Vote 1 expenditures (Net Operating Expenditures)

Net operating expenditures for the second quarter of 2017–2018 and 2016–2017 were $9.6M and $9.1M respectively. The variance of $0.5M (+5.5%) comprises several items, including “Staff” expenditures explained by payments issued following the ratification of collective agreements. In addition, there was also a $0.8M (+9.1%) increase over the previous quarter.

When consulting the Departmental Budgetary Expenditures by Statutory Authority table in the Appendix, the Canada Business Service Centre (CBSC) expenditures have been charged to the Advance Account under the current item “Other Grants and Payments” since 2015–2016 until they are duly authorized and charged to Professional and Special Services. The variance observed in the item “Professional and Support Services” between the first and second quarters of 2017–2018 can be largely explained by the fact that there were claims from the CBSC that were approved during the quarter of 2017-18, for a total of $0.6M, while they had been charged to the third quarter of 2016–2017. Moreover, $0.2M in legal services expenditures were also charged to this item during the quarter.

(For further details on these expenditures, see the table entitled Departmental Budgetary Expenditures by Statutory Authority in Appendix 6.2.)

Vote 5 expenditures (Grants and Contributions)

During the second quarter of 2017–2018, CED spent $41.0M on grants and contributions. This is down $0.9M (-2.1%) from the second quarter of 2016–2017. This variance is not significant.

However, an increase of $14.1M (+52.4%) in grants and contributions expenditures between the first quarter ($26.9M) and the second quarter ($41.0M) is observed due to significant expenditures made in all programs, both in regular programming and specific initiatives, such as the Canadian Economic Diversification Initiative of Communities Reliant on the Chrysotile Industry, the Strategic Initiative to Combat the Spruce Budworm Outbreak in Quebec and the Canada 150 Community Infrastructure Program.

(For further details on these expenditures, see the table entitled Departmental Budgetary Expenditures by Statutory Authority in Appendix 6.2.)

Risks and uncertainties

To achieve its results, CED needs to have an overview of the changing factors that have a marked impact on its environment and activities. It integrates these factors into its decision-making process. Incorporating risk management in departmental planning allows CED to implement appropriate risk management strategies in order to achieve its results.

CED has a mandate to promote economic development; therefore, its principal external risk is linked to its ability to adapt the delivery of its mandate in a changing economic environment. Many factors, such as fluctuations in the value of commodities and the Canadian dollar, strong global competition in certain industries, numerous technological and policy changes, as well as changes in market measures affecting trade on the world markets, are likely to have an impact on the delivery of the organization's mandate. These external factors may limit CED’s ability to achieve its expected results, including the creation of new businesses and the expansion of existing businesses. To mitigate this risk, for example, CED will continue to develop and implement regional strategies and scorecards to monitor departmental priorities.

The internal risk for CED, linked to the maintenance of a functional and secure technological infrastructure, is most likely to have an impact on the achievement of CED’s results over the next year. CED’s current technological infrastructure is aging; the risk of service outages or data loss is increasing, pending infrastructure renewal or migration to a data centre. These data outages or losses could adversely affect the reliability of the financial information presented in CED’s reporting, and limit the ability to appropriately track its financial situation. To mitigate this risk, the scope of which is beyond the control of CED, the Agency has maintained a close relationship with the central agencies and the FreeBalance consulting group, and has assessed its options and its plan for maintaining and renewing its technological assets in order to address infrastructure and technology needs, as well as information management systems.

CED manages its resources within a well-defined framework of responsibilities, policies and procedures, including an appropriate system of budget, reporting and other controls allowing it to manage its operations within the limits of available resources and Parliamentary authorities. It regularly monitors the progress and effectiveness of their implementation through several budgetary review processes and activities, together with expenditure analysis and budgetary estimates by organizational unit on a monthly basis. The financial risks are mitigated in large part by the implementation of strong internal controls over financial reporting. CED conducts periodic assessments such as entity controls, general IT controls, and business process controls.

Significant changes in operations, staff and programs

A number of leases in CED’s real property portfolio will expire between 2017 and 2021, giving CED an opportunity to adhere to the Government of Canada’s vision for modern workplaces. Much more than moves, the change is an opportunity both to modernize the workspace and to innovate through new ways of doing things.

Approval by seniors officials

Approval of Senior Officials

The purpose of this section is to provide the approval of senior officials, as required by the Policy on Financial Management, as follows:

Approved by:

Manon Brassard
Deputy Minister

Montréal, Quebec
November 29, 2017
Guy Lepage
Chief Financial Officer

Appendices

Fiscal year 2017–2018 (in thousands of dollars)
Total available appropriations for the fiscal year ending March 31, 2018* Appropriations used for the quarter ended September 30, 2017 Year-to-date used at quarter-end
Vote 1 – Net Operating Expenditures 38,664 9,590 18,413
Vote 5 – Grants and Contributions 262,730 41,018 67,930
Total budgetary statutory authorities 4,332 1,083 2,166
Total authorities 305,726 51,691 88,509
Fiscal year 2016–2017 (in thousands of dollars)
Total available appropriations for the fiscal year ending March 31, 2017* Appropriations used for the quarter ended September 30, 2016 Year-to-date used at quarter-end
Vote 1 – Net Operating Expenditures 40,047 9,074 17,293
Vote 5 – Grants and Contributions 275,622 41,904 61,090
Total budgetary statutory authorities 4,917 1,229 2,459
Total authorities 320,586 52,207 80,842

*Includes only authorities available for use and granted by Parliament at quarter-end.

6.2 Departmental budgetary expenditures by statutory authority (unaudited)

Fiscal year 2017–2018 (in thousands of dollars)
Planned expenditures for the year ending March 31, 2018* Expenditures during the quarter ended September 30, 2017 Year-to-date used at quarter-end
Expenditures
Staff* 31,923 9,125 18,073
Transportation and communication 1,203 169 352
Information 531 54 73
Professional and special services 6,934 1,219 1,603
Rentals 861 88 287
Repairs and maintenance 49 4 9
Utilities, materials and supplies 235 49 70
Acquisition of land, buildings and works 0 0 0
Acquisition of machinery and equipment 902 20 46
Transfer payments 262,730 41,018 67,930
Other subsidies and payments 358 (55) 66
Total net budgetary expenditures 305,726 51,691 88,509

*Includes employee benefit plans (EBPs)

Fiscal year 2016–2017 (in thousands of dollars)
Planned expenditures for the year ending March 31, 2017* Expenditures during the quarter ended September 30, 2016 Year-to-date used at quarter-end
Expenditures
Staff* 33,507 8,382 16,223
Transportation and communication 1,476 219 420
Information 576 77 131
Professional and special services 7,111 937 1,787
Rentals 882 260 287
Repairs and maintenance 56 4 7
Utilities, materials and supplies 277 29 53
Acquisition of land, buildings and works 0 0 0
Acquisition of machinery and equipment 1,056 60 79
Transfer payments 275,622 41,904 61,090
Other subsidies and payments 23 335 765
Total net budgetary expenditures 320,586 52,207 80,842

*Includes employee benefit plans (EBPs)

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