Quarterly Financial Report For the quarter ended June 30, 2024 (unaudited)

1. Introduction

The Government of Canada uses financial information to support decision making, for policy development, for service delivery and for historical reference. These financial statements have been prepared to respond to these requirements. This Departmental Quarterly Financial Report (QFR) reflects the results of the current fiscal period in relation to the Main Estimates and Supplementary Estimates (A). The QFR should be read in conjunction with the Main Estimates and the Federal Budget. They have been prepared by management as required by section 65.1 of the Financial Administration Act (R.S.C., 1985, c. F-11) and in the form and manner prescribed by the Treasury Board of Canada Secretariat. Although these statements have not been subject to an external audit or review, the National Research Council of Canada (NRC) attests that they are an accurate and true reflection of the financial position for the period ended June 30, 2024.

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 have an impact by advancing knowledge, applying leading-edge technologies, and working with other innovators to find creative, relevant and sustainable solutions to Canada's current and future economic, social and environmental challenges.

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
• 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 for 2024-25. 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 moneys 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. Highlights of fiscal quarter and fiscal year-to-date (YTD) results

This section highlights the items that contributed most significantly to the changes in budgetary authorities for the current fiscal year and to the actual expenditures for the quarter that ended on June 30, 2024 compared with the previous fiscal year. This section should be read in conjunction with the NRC's tables entitled Statement of Authorities and Departmental budgetary expenditures by Standard Object found on the last 2 pages of this report.

2.1 Authorities and expenditures

The following graph provides a comparison of the budgetary authorities and expenditures as of June 30, 2024 and those as of June 30, 2023.

Long description of the Comparison of Budgetary Authorities and Expenditures

Long description of the Comparison of Budgetary Authorities and Expenditures (in millions of dollars)

	FY 2024-25	FY 2023-24
Authorities	$1,798.0	$1,715.5
Expenditures – Quarter 1	$307.0	$279.5
Year-to-date expenditures	(17.1% of Authorities)	(16.3% of Authorities)

As shown in the graph above, the NRC's expenditures totalled $307.0M during the first quarter of 2024-25 which represents an increase of $27.5M over the first quarter of 2023-24. Refer to 2.3 Significant changes to budgetary expenditures for additional details.

2.2 Significant changes to authorities

As of June 30, 2024, the authorities were $1,798.0M, representing an increase of $82.5M (5%) in comparison to the 2023-24 authorities of the same period.

The increase of $82.5M in authorities is mainly explained by the following items:

• An increase of $49.3M in funding for the modernization of the NRC facilities to support economic growth and government priorities as presented in the Fall Economic Statement 2022;
• An increase of $40.7M in funding for Square Kilometre Array Observatory (SKAO);
• An increase of $36.0M to the NRC's statutory revenue carry-forward;
• An increase of $33.3M in compensation allocation related to the signing of collective bargaining agreements;
• An increase of $11.3M in funding for the Critical Minerals Strategy;
• An increase of $6.2M in funding for Supporting Resilient Infrastructure-Climate Change;

• The increase in authorities is Offset by:
  • A decrease of $10.5M in funding for the Refocusing Government Spending initiative;
  • A decrease of $20.8M in funding for the Thirty Meter Telescope Observatory and associated reprofiles;
  • A decrease of $24.8M in funding and associated reprofiles for NRC's response to COVID-19;
  • A decrease of $36.2M in funding and associated reprofiles associated to the temporary IRAP funding received through Budget 2021.

The following table summarizes the significant changes to NRC authorities:

3. Risks and uncertainties

In the first quarter of 2024-25, the top risks for the NRC were related to cyber-attack, international conflict, talent constraints, and employee harassment/discrimination. The NRC continued to implement measures to mitigate the security-related risks, including its Cyber Security Event Management Plan, Security Strategy and new research security guidance. To manage the impact of the risks to the NRC's workforce, the NRC launched a revised NRC Code of Conduct and a toolkit to support managers in preventing and resolving harassment and violence in the workplace, and in restoring the workplace should harassment or violence be found to have occurred. The NRC also advanced work to attract leading talent, including a new Talent Attraction Strategy and employer value proposition.

4. Significant changes in relation to operations, personnel and programs

On April 1, 2024, the NRC launched its new Quantum and Nanotechnologies Research Centre, bringing together the employees and facilities from the former Advanced Electronics and Photonics, Nanotechnology, and Security and Disruptive Technologies research centres. The new research centre combines quantum, photonics, advanced materials, nanotechnologies and electronics capabilities to increase their collective impact in responding to Canada's needs.

Also effective April 1, 2024, the NRC renamed its Energy, Mining and Environment Research Centre to the Clean Energy Innovation Research Centre. The new name reflects the research centre's commitment to support Canada's transition to a thriving net-zero economy, built on clean energy and decarbonized industries.

On April 16, 2024, the Government of Canada announced $2.4 billion as part of Budget 2024 measures to secure Canada's AI advantage, including $100 million for the new NRC Industrial Research Assistance Program's (NRC IRAP) AI Assist Program to help small and medium-sized businesses scale up and increase productivity by building and deploying new AI solutions. These investments will accelerate job growth in Canada's AI sector and beyond, and boost productivity by helping researchers and businesses develop and adopt AI responsibly. Budget 2024 also proposed major research and science infrastructure investments, including $399.8 million over 5 years, starting in 2025-26, to support TRIUMF, Canada's sub-atomic physics research laboratory, located on the University of British Columbia's Vancouver campus. TRIUMF receives operational funding from the Government of Canada through a contribution agreement with the NRC.

On May 1, 2024, the Government of Canada announced changes to the direction on prescribed presence in the workplace, which increases the minimum requirement for on-site presence to 3 days per week (or 60% of an employee's regular schedule), and 4 days per week for executives. NRC employees will comply with the new requirements by September 9, 2024.

The 2024-2029 NRC Strategic Plan: Research Powering Innovation for Canada officially launched on May 13, 2024. The 5-year plan reflects the NRC's collective vision to advance research and innovation priorities that will have an impact for Canada in climate change and sustainability, health and biomanufacturing, digital and quantum technologies, and foundational research. Underpinning these research areas are the organizational priorities of health and safety, support to business innovation, inclusive innovation, research excellence, and organizational excellence to help drive contributions to an innovative and prosperous Canada.

Canada officially joined the Square Kilometre Array Observatory (SKAO) as a member, which was announced on June 3, 2024. As part of its membership, Canada will invest $269 million over 8 years and the NRC's Herzberg Astronomy and Astrophysics Research Centre will represent Canada in the governance of the observatory. SKAO membership will enable opportunities for Canadian industry and academic institutions to deliver key observatory systems and provide Canadian astronomers with access to the world's largest radio astronomy observatory.

On June 4, 2024, the Honourable François-Philippe Champagne, Minister of Innovation, Science and Industry, announced the transfer of Sustainable Development Technology Canada (SDTC) programming to NRC IRAP due to its long-standing role and track record in supporting innovative technology-focused small and medium-sized businesses. A phased transition will preserve continuity for current clean technology projects and stability for SDTC employees. Until the transition to NRC IRAP is complete, SDTC will continue its operations under strengthened program requirements.

As announced on June 12, 2024, Canada was selected as co-chair of the Eureka Network with Germany for 2024-25. This is the first time in Eureka's almost 40-year history that two countries will share the responsibility of leading the network, and Canada is the first non-European country to chair. NRC President Mitch Davies was in Istanbul for the official handover ceremony from Türkiye to Canada and Germany. As Canada's National Office for Eureka, the NRC will play a key role in co-chairing Eureka, an important milestone and opportunity to highlight Canada's leadership in research and innovation on the global stage.

Approved by senior officials

Approved by:

Ottawa, Canada

5. Statement of Authorities (unaudited)
For the quarter ended June 30, 2024

6. Departmental budgetary expenditures by Standard Object (unaudited)
For the quarter ended June 30, 2024