Quarterly Financial Report for the quarter ended December 31, 2017 (unaudited)

1.1 NRC Mandate

The NRC exists under the National Research Council Act (R.S.C., 1985, c. N-15) and is a Departmental corporation named in Schedule II of the Financial Administration Act (R.S.C., 1985, c. F-11). The mission of the NRC is to work with clients and partners to provide innovation support, strategic research, and scientific and technical services to develop and deploy solutions to meet Canada's current and future industrial and societal needs.

Under the National Research Council Act (R.S.C., 1985, c. N-15), the NRC is responsible for:

• Undertaking, assisting or promoting scientific and industrial research in fields of importance to Canada;
• Providing vital scientific and technological services to the research and industrial communities;
• Investigating standards and methods of measurement;
• Working on the standardization and certification of scientific and technical apparatus, instruments and materials used or usable by Canadian industry;
• Operating and administering any astronomical observatories established or maintained by the Government of Canada;
• Establishing, operating and maintaining a national science library; and
• Publishing and selling or otherwise distributing such scientific and technical information as the Council deems necessary.

Further details on the NRC's legislative framework, authority, mandate and program activities can be found in Part II of the Main Estimates and the Departmental Plan.

1.2 Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the NRC's spending authorities granted by Parliament and those used by the NRC consistent with the Main Estimates, Supplementary Estimates (A) and Supplementary Estimates (B) for 2017-18. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use for spending authorities.

The authority of Parliament is required before money can be spent by the Government of Canada. 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 (pursuant to paragraph 5(1)(e) of the National Research Council Act (R.S.C., 1985, c. N-15), the NRC has authority to expend revenues it has received through the conduct of its operations).

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act (R.S.C., 1985, c. F-11) authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government of Canada 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 NRC uses the full accrual method of accounting to prepare and present its annual departmental financial statements which are part of the Departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

2.1 Authorities and Expenditures

The following graph provides a comparison of the budgetary authorities and expenditures as of December 31, 2017 and those as of December 31, 2016.

Comparison of Budgetary Authorities and Expenditures
as of December 31, 2017 and December 31, 2016
(in millions of dollars)

2.2 Significant Changes to Authorities

As of December 31, 2017, the authorities were $1,230.5M, representing a decrease of $67.4M (5.2%) in comparison to the 2016-17 authorities of the same period.

The decrease of $67.4M in authorities is explained by the following items:

• Combined operating and statutory authorities decreased by $32.1M. The decrease is mainly attributable to decreases of $16.7M in statutory revenue carry-forward for use in subsequent years following the close of fiscal year 2016-17, $7.0M resulting from the reduction of NRC's revenue forecast for 2017-18 and $5.2M of the 2016-17 Operating Budget Carry-Forward.
• Capital authorities decreased by $16.1M. The decrease is mainly attributable to a decrease of $31.1M for the 2014 Federal Infrastructure Initiative, offset by increases of $9.9 for the 2016 Federal Infrastructure Initiative and $3.4M in Capital Budget Carry-Forward.
• Transfer payments consisting of Grants and Contributions (G&C) authorities decreased by $16.5M. The variance is mainly attributable to a decrease of $50.0M in Contributions to Firms, offset by an increase of $32.8M in Contributions to the Thirty Meter Telescope resulting from the reprofiling of funds to 2017-18.

2.3 Significant Changes to Budgetary Expenditures

This section should be read in conjunction with the NRC's tables entitled Statement of Authorities and Departmental budgetary expenditures by Standard Object both located at the end of this report.