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Quarterly Financial Report for the quarter ended September 30, 2019 (unaudited) (PDF, 992 KB)
Statement outlining results, risks and significant changes in operations, personnel and programs
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of Canada uses financial information to support decision making, for policy development, for service delivery and for historical reference.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. The QFR should be read in conjunction with the Main Estimates as well as the Federal Budget (Budget 2016, Budget 2017, Budget 2018 and Budget 2019). 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 Canada (NRC) attests that they are an accurate and true reflection of the financial position for the period ended September 30, 2019.
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 2019–20. 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 September 30, 2019 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 September 30, 2019 and those as of September 30, 2018.
Comparison of Budgetary Authorities and Expenditures
as of September 30, 2019 and September 30, 2018
(in millions of dollars)
Long description of the Comparison of Budgetary Authorities and Expenditures
(in million of dollars)
| FY 2019‑20 | FY 2018‑19 | |
|---|---|---|
| Authorities | $1,331.7 | $1,401.7 |
| Expenditures - Quarter 1 | $212.2 | $195.1 |
| Expenditures - Quarter 2 | $268.1 | $232.0 |
As shown in the graph above, the NRC's expenditures totalled $268.1M during the second quarter of 2019–20 which represents an increase of $36.1M over the second quarter of 2018–19. Higher expenditures are attributable to increases of $24.9M in Grants and Contributions, $5.7M in statutory employee benefit plan cost (EBP), $3.0M in capital and $2.5M in combined operating and statutory respendable revenue expenditures. Refer to 2.3 Significant changes to Budgetary Expenditures for additional details.
2.2 Significant changes to authorities
As of September 30, 2019, the authorities were $1,331.7M, representing a decrease of $70.0M (5.0%) in comparison to the 2018–19 authorities of the same period.
The decrease of $70.0M in authorities is mainly explained by the following items:
- Transfer payments consisting of Grants and Contributions (G&C) authorities decreased by $63.6M. The variance is mainly attributable to decreases of $79.2M for the construction of the Thirty Meter Telescope, $17.1M due to the sunsetting of the Canada Accelerator and Incubator Program and $10.0M for the Youth Employment Strategy, offset by an increase of $43.0M for the Industrial Research Assistance Program.
- Capital authorities decreased by $22.7M. The variance is primarily attributable to a decrease of $24.8M in funding received through the 2014 Federal Infrastructure Initiative, offset by an increase of $2.6M for the Free Access to electronic copies of National Building Codes.
- Statutory Employee Benefit Plan (EBP) authorities increased by $12.6M compared with the same period in the previous year. This change is principally attributable to a realignment between the personnel and non-personnel operating vote sub-allotments reflected in NRC's 2019-20 Main Estimates.
The following table summarizes the significant changes to NRC authorities since June 30, 2019:
| Vote 1 Operating |
Vote 5 Capital |
Vote 10 Grants & Contributions |
Statutory Revenues | Contributions to EBP | Total | |
|---|---|---|---|---|---|---|
| Authorities – Total available for use for the year ending March 31, 2019 - As of June 30, 2018 | 1,316.6 | |||||
| Operating Budget Carry-Forward | 14.8 | 14.8 | ||||
| TB Vote 5 | 0.3 | 0.3 | ||||
| Total increase (decrease) in authorities in comparison to prior year | 14.8 | 0.3 | 15.1 | |||
| Authorities – Total available for use for the year ending March 31, 2020 - As of September 30, 2019 | 1,331.7 |
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.
2.3.1 Variances in year-to-date expenditures
As of September 30, 2019, year-to-date expenditures were $480.3M, representing an increase of $53.2M (12.5%) in comparison to the 2018–19 expenditures of the same period. This increase is mostly attributable to the following items:
- Transfer payments consisting of Grants and Contributions (G&C) expenditures increased by $30.9M compared with the same period in the previous year. This change is principally attributable to an increase of contributions to Firms of $52.9M, offset by decreases of $14.2M to contributions to TRIUMF , $4.5M in contributions to Youth Employment Strategy as well as $4.1M due to the sunsetting of the contributions to the Canada Accelerator and Incubator Program.
- Statutory Employee Benefit Plan (EBP) expenditures increased by $11.5M compared with the same period in the previous year. This change is principally attributable to an increase of the 2019–20 Main Estimates value.
- Capital expenditures increased by $5.6M. The increase is mainly attributable to increases of $4.3M in acquisition of machinery and $4.1M in acquisition of buildings and works, offset by a decrease of $2.9M in professional fees.
- Combined operating and statutory respendable revenue expenditures increased by $5.1M compared with the same period of the previous fiscal year. This change is mainly attributable to increases of $11.9M in personnel costs, not including employee benefit costs, as a result of renewed collective agreements, offset by decreases of $3.3M in acquisition of machinery and equipment, $1.8M in utilities, materials and supplies as well as $1.3 in repair and maintenance.
3. Risks and uncertainties
In Q2, the NRC implemented a new, consultative semi-annual risk process. This new process supports the enhancement of bottom-up, top-down synchronization in the development and validation of the NRC's corporate strategic risks and issues, and in-year stock-taking and adjustments. The NRC will officially refresh its Corporate Risk Profile in November 2019.
In Q2, progress continued in managing key issues, with particular focus on:
- Workplace wellness: Significant progress was made on the NRC's Wellness Strategy in Q2. The NRC is on track to launch its strategy and conflict resolution program by the end of March 2020.
- Enabling tools and infrastructure: Several productivity tools were introduced in Q2 (e.g. the launch of an external collaboration tool and roll-out of cloud services to be transitioned into operations). The NRC is also working with Shared Services Canada to develop a new service delivery model that will improve the agility of NRC's research IT.
4. Significant changes in relation to operations, personnel and programs
On June 25, the NRC held its first Women in STEM Luncheon. Geneviève Tanguay, Vice-President of Emerging Technologies, was joined by 80 NRC researchers to discuss important topics such as equity, diversity and inclusion; leadership and mentorship; recruitment and attraction of girls in STEM; work-life balance and wellness; motherhood and childcare; and strategies to promote women in STEM. Based on the success of the first luncheon, the NRC will host additional events to continue the promotion of careers in STEM and an inclusive workplace.
Vice-President of Engineering, Michel Dumoulin and NRC Council Chair, Doug Muzyka participated in the official launch of the Karluk Collaboration Space in St. John's, Newfoundland on June 28. This collaboration with the Memorial University of Newfoundland will facilitate leading innovation in ocean engineering, technology and science. Research will span disciplines as varied as maritime technology, oceanography, naval architecture and digitization of seaways.
On July 12, the NRC's Vice-President of Transportation and Manufacturing, François Cordeau, accepted an 18-month executive assignment to oversee the delivery of a key NRC Dialogue initiative: the simplification of internal NRC processes (including: contracting in, licensing and management of intellectual property; project management and timecoding of staff; leaning out procurement; onboarding of new employees; and a facilities review and recapitalization planning). The Director General for the Medical Devices Research Centre, Jean-François Houle is the acting Vice-President of Transportation and Manufacturing during this period.
Approved by senior officials
Approved by:
Iain Stewart
President
Johanne Diotte
Vice-President, Corporate Services and Chief Financial Officer (Acting)
Ottawa, Canada
November 22, 2019
5. Statement of Authorities (unaudited)
For the quarter ended September 30, 2019
| Total available for use for the year ending March 31, 2020 Table 2 note 1 |
Used during the quarter ended September 30, 2019 |
Year to date used at quarter-end |
|
|---|---|---|---|
| Vote 1 - Operating expenditures | 451,284 | 110,478 | 217,413 |
| Vote 5 - Capital expenditures | 58,320 | 15,072 | 23,053 |
| Vote 10 - Grants and contributions | 449,105 | 94,714 | 158,142 |
| Statutory revenue Table 2 note 2 | 311,745 | 32,592 | 51,103 |
| Statutory EBP | 61,237 | 15,309 | 30,619 |
| Total Budgetary authorities | 1,331,691 | 268,165 | 480,330 |
| Total available for use for the year ending March 31, 2019 Table 3 note 1 |
Used during the quarter ended September 30, 2018 |
Year to date used at quarter-end |
|
|---|---|---|---|
| Vote 1 - Operating expenditures | 445,656 | 86,503 | 186,535 |
| Vote 5 - Capital expenditures | 81,048 | 12,086 | 17,269 |
| Vote 10 - Grants and contributions | 512,680 | 69,841 | 127,256 |
| Statutory revenue Table 3 note 2 | 313,666 | 53,978 | 76,912 |
| Statutory EBP | 48,683 | 9,565 | 19,129 |
| Total Budgetary authorities | 1,401,733 | 231,973 | 427,101 |
Table notes
- Table note 1
-
Includes only Authorities available for use and granted by Parliament at quarter-end.
- Table note 2
-
Includes Statutory Revenue available for use in future years pursuant to paragraph 5(1)(e) of the National Research Council Act (R.S.C., 1985, c. N-15).
6. Departmental budgetary expenditures by Standard Object (unaudited)
For the quarter ended September 30, 2019
| Total available for use for the year ending March 31, 2020 Table 4 note 1 |
Used during the quarter ended September 30, 2019 |
Year to date used at quarter-end |
|
|---|---|---|---|
| Expenditures: | |||
| Personnel | 469,099 | 116,355 | 227,993 |
| Transportation and communications | 25,980 | 3,969 | 7,437 |
| Information | 2,599 | 404 | 722 |
| Professional and special services | 109,494 | 15,148 | 23,483 |
| Rentals | 16,520 | 1,952 | 4,893 |
| Purchased repair and maintenance | 29,598 | 3,625 | 6,539 |
| Utilities, materials and supplies | 68,020 | 6,758 | 12,370 |
| Acquisition of land, buildings and works | 49,912 | 5,395 | 8,841 |
| Acquisition of machinery and equipment | 60,183 | 13,033 | 21,067 |
| Transfer payments | 449,105 | 94,714 | 158,142 |
| Other subsidies and payments | 51,181 | 6,812 | 8,843 |
| Total net budgetary expenditures | 1,331,691 | 268,165 | 480,330 |
| Total available for use for the year ending March 31, 2019 Table 5 note 1 |
Used during the quarter ended September 30, 2018 |
Year to date used at quarter-end |
|
|---|---|---|---|
| Expenditures: | |||
| Personnel | 494,860 | 106,213 | 204,856 |
| Transportation and communications | 23,176 | 3,702 | 6,590 |
| Information | 2,649 | 339 | 824 |
| Professional and special services | 87,710 | 16,072 | 26,619 |
| Rentals | 11,104 | 2,202 | 4,533 |
| Purchased repair and maintenance | 31,300 | 4,058 | 7,416 |
| Utilities, materials and supplies | 66,355 | 8,304 | 13,947 |
| Acquisition of land, buildings and works | 78,878 | 4,195 | 6,435 |
| Acquisition of machinery and equipment | 67,799 | 11,142 | 20,146 |
| Transfer payments | 512,680 | 69,841 | 127,256 |
| Other subsidies and payments | 25,222 | 5,905 | 8,479 |
| Total net budgetary expenditures | 1,401,733 | 231,973 | 427,101 |