Quarterly Financial Report for the quarter ended September 30, 2024 (unaudited)

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of Canada uses financial information to support decision making, for policy development, for service delivery and for historical reference.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 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 September 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 and 2024-25 Supplementary Estimates (A). 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, 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 September 30, 2024 and those as of September 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	$1,837.1	$1,746.8
Expenditures – Quarter 1	$307.0	$279.5
Expenditures – Quarter 2	$341.4	$347.5
Year-to-date expenditures	(35.3% of Authorities)	(35.9% of Authorities)

As shown in the graph above, the NRC's expenditures totalled $341.4M during the second quarter of 2024-25 which represents a decrease of $6.1M over the second quarter of 2023-24. Refer to 2.3 Significant changes to budgetary expenditures for additional details.

2.2 Significant changes to authorities

As of September 30, 2024, the authorities were $1,837.1M, representing an increase of $90.3M (5.2%) in comparison to the 2023-24 authorities of the same period.

The increase of $90.3M 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 $6.5M in the value of funding reprofiled through the Capital Budget Carry-Forward;
• An increase of $6.2M in funding for Supporting Resilient Infrastructure-Climate Change;

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:

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, 2024, year-to-date expenditures were $648.4M, representing an increase of $21.4M in comparison to the 2023-24 expenditures of the same period. This increase is mostly attributable to the following items:

• An increase of $39.9M in combined operating and statutory expenditures compared with the same period of the previous fiscal year, mainly due to increase in personnel costs due to the ratification of collective bargaining, increases in Square Kilometer Array Observatory expenditures, and increases in Payments in lieu of taxes;
• An increase of $7.7M in capital expenditures due to expenses related to the modernization of the NRC facilities;

Offset by:

• A decrease of $24.4M in grants and contributions expenditures compared with the same period in the previous year, mostly due to decreases in IRAP Contribution to Firms and IRAP Youth Employment Program contributions.

3. Risks and uncertainties

In the second quarter of 2024-25, the top risks for the NRC were related to cyber-attack, workplace health and safety, and talent constraints. The NRC continued to implement measures to mitigate security-related risks, including its Cyber Security Event Management Plan, Security Strategy and the official release of its Policy Statement on Research Security. To manage the impact of risks to the NRC's workforce, the NRC launched an organization-wide safety campaign to complement local health and safety practices, and continued to update corporate directives, procedures and tools related to workplace health and safety. Regarding talent attraction and retention, the NRC also launched its new employee value proposition which details what the NRC offers as an employer and what an employee can expect in a career with the NRC.

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

On July 10, 2024, the NRC introduced its Policy Statement on Research Security reinforcing its commitment to advancing research and supporting innovation in the interests of Canada. The Policy Statement and related procedures provide the framework within which the NRC can advance research and innovation with integrity, in an open and collaborative manner, while also securing benefits for Canada.

On July 26, 2024, President Mitch Davies joined the Honourable Jenna Sudds, Minister of Families, Children and Social Development to announce milestones for 2 new collaborative science facilities that will be located on the NRC's Montreal Road campus in Ottawa, Ontario. These projects will provide scientists with leading-edge, multi-purpose, sustainable and collaborative facilities to complement existing government science laboratories and capabilities.

On September 4, 2024, the Honourable François-Philippe Champagne, Minister of Innovation, Science, and Industry, announced that the NRC has launched consultations with provinces, territories, industry, accessibility advocates and fire safety experts, as part of a research project to study the safety of, and inform potential model code provisions for multi-unit residential buildings with a single means of egress (pathway to exit). The consultations are being conducted to better understand the needs and perspectives of stakeholders, and will be used to inform the consideration of changes to the National Building Code. The consultations will be completed by the end of September 2024.

Approved by senior officials

Approved by:

Ottawa, Canada

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

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