Western Economic Diversification Canada
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WD Quarterly Financial Report for the quarter ended June 30, 2011

Statement outlining results, risks and significant changes in operations, personnel and program


Introduction

This quarterly financial report should be read in conjunction with the Main Estimates. It has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. This quarterly report has not been subject to an external audit or review.

Authority, Mandate & Program Activities

Western Economic Diversification Canada (WD) is mandated to “promote the development and diversification of the economy of Western Canada and to advance the interests of the West in national economic policy, program and project development and implementation.”

Further information on Western Economic Diversification Canada’s authority, mandate and program activities may be found in the Report on Plans and Priorities and the Main Estimates.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the department’s spending authorities granted by Parliament and those used by the department consistent with the Main Estimates for the 2011-2012 fiscal year. This quarterly 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.

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

Highlights of fiscal quarter and fiscal year to date (YTD) results

Planned departmental spending is concentrated in Transfer Payments and Personnel, combined, they account for over 92% of total planned expenditures (refer to fiscal year 2011-2012 pie chart). While this planned spending pattern is expected to continue, when compared to fiscal year 2010-2011 the change in the Transfer Payments/Personnel percentage allocation reflects the overall decrease in funding related to the Community Adjustment Fund (CAF) and the Recreational Infrastructure Canada (RInC) Program, both delivered under Canada’s Economic Action Plan (CEAP) initiatives.

(in thousands of dollars)

Text Version: Planned Expenditures for Fiscal Year 2011-2012 / 2010-2011

Statement of Authorities

Total Available for Use for the Year
The “Statement of Authorities” table reflects a significant decline in funding available for use, to $195.5 million for fiscal year 2011-2012, compared to $451.7 million for fiscal year 2010-2011. The majority of the $256.2 million (57%) decrease is due to the wind down of funding for the CEAP initiatives.

Used during the Quarter
There is no significant first quarter change in Vote 1 – Net Operating Expenditures compared to the previous year. Of the $18.6 million first quarter decrease in Vote 5 – Grants and Contributions compared to the same quarter of the prior year, the wind down of the CEAP initiatives account for $11.3 million (61%). The other changes relate mainly to the timing of processing claims for reimbursement of expenditures (Community Futures Program – decrease of $4.6 million) and the completion of another transfer payment initiative (International Vaccine Centre’s Containment Facility – decrease of $2.7 million). By fiscal year-end, a downward trend in Grants and Contributions spending is expected, largely due to the decreased spending on the CEAP initiatives as a result of program wind down.

The significant first quarter increase in the amount of spending on Budgetary Statutory Authorities results from Grants and Contributions (Rick Hansen Foundation – increase of $2.2 million), when compared to the same quarter of the previous fiscal year.

Departmental Budgetary Expenditures by Standard Object

Planned Expenditures for the Year
The “Departmental Budgetary Expenditures by Standard Object” table reflects a significant yearly decline in overall planned expenditures for the current fiscal year ($256.2 million) when compared to the year prior, with Transfer Payments and Personnel experiencing the greatest declines of $245.5 million (96%) and $6.5 million (2.5%) respectively. This is largely attributed to the wind down of the CEAP initiatives, and the applicable human and financial resources attributed to the delivery of the CAF and RInC programs.

Expended during the Quarter
The significant first quarter decline in Transfer Payments of $16.4 million relates mainly to the wind down of the CEAP initiatives, which account for $11.3 million (69%) of the decline in spending, when compared to the same quarter of the previous fiscal year. Other notable spending pattern changes include: the timing of processing claims for reimbursement of expenditures (Community Futures Program – decrease of $4.6 million), the completion of another transfer payment initiative (International Vaccine Centre’s Containment Facility – decrease of $2.7 million) and the spending in other transfer payment initiatives (Rick Hansen Foundation – increase of $2.2 million). The timing of processing claims for reimbursement of expenditures is expected to remain on target for the fiscal year although the decreased spending on the CEAP initiatives will result in a downward trend in Transfer Payment spending.

Risks and Uncertainties

The department maintains, and will continue to strengthen its financial management processes such that budget management remains effective. For example, this includes assessing the impact of project timing fluctuations and the process for forecasting multi-year funding requirements. The decision-making process facilitates the reallocation of financial resources to higher priority initiatives.

In Budget 2010 and reiterated in Budget 2011, the Government announced and outlined Cost Containment Measures aimed at reducing the rate of growth of operating expenses. These Measures included the freezing of departmental operating budgets for fiscal years 2011-2012 and 2012-2013, at their 2010-2011 levels. Expenses subject to the operating budget freeze include departmental personnel costs (e.g., salaries) and a variety of other operating costs (e.g., transportation, professional services, materials, supplies).

The department manages its operating budget within a well-defined framework of accountabilities, policies and procedures, and has the necessary system of budgets, reporting and other internal controls to manage within available resources and Parliamentary authorities. The department regularly reviews “actual” and “forecast” reports to ensure resource utilization remains within established targets, such that adjustments can be made on a timely basis.

Significant changes in relation to operations, personnel and programs

The majority of the decrease in departmental spending from the 2010-2011 to 2011-2012 fiscal year was related to the funding for CEAP initiatives, which were completed on March 31, 2011. As a result quarterly and yearly expenditure activity will continue to reflect a decrease in fiscal year 2011- 2012 (when compared to fiscal year 2010-2011).

Approval by Senior Officials

Approved by:

 

 

_________________________
Daniel Watson
Deputy Minister

 

______________________
Jim Saunderson
Chief Financial Officer

Edmonton, Canada
Date: August 15, 2011

Statement of Authorities (unaudited)

(in thousands of dollars) Fiscal year 2011-2012
Total available for use for the year ending March 31, 2012* Used during the quarter ended June 30, 2011 Year to date used at quarter-end
Vote 1 - Net Operating expenditures 44,995 11,012 11,012
Vote 5 - Grants and contributions 140,862 12,570 12,570
Budgetary statutory authorities
Employee benefit plan 5,171 1,293 1,293
Grants and contributions 4,500 2,175 2,175
Other 2 1 1
Total authorities 195,530 27,051 27,051

 

(in thousands of dollars) Fiscal year 2010-2011
Total available for use for the year ending March 31, 2011* Used during the quarter ended June 30, 2010 Year to date used at quarter-end
Vote 1 - Net Operating expenditures 54,895 11,523 11,523
Vote 5 - Grants and contributions 377,383 31,188 31,188
Budgetary statutory authorities
Employee benefit plan 5,873 1,468 1,468
Grants and contributions 13,500 - -
Other 2 1 1
Total authorities 451,653 44,180 44,180

More information is available in the attached table.

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

Departmental budgetary expenditures by Standard Object (unaudited)

(in thousands of dollars) Fiscal year 2011-2012
Planned expenditures for the year ending March 31, 2012 Expended during the quarter ended June 30, 2011 Year to date used at quarter-end
Expenditures:
Personnel 33,902 10,214 10,214
Transportation and communications 3,900 624 624
Information 325 31 31
Professional and special services 8,600 800 800
Rentals 991 42 42
Repair and maintenance 500 28 28
Utilities, materials and supplies 650 69 69
Acquisition of machinery and equipment 1,300 236 236
Transfer payments 145,362 14,745 14,745
Other subsidies and payments - 262 262
Total net budgetary expenditures: 195,530 27,051 27,051

 

(in thousands of dollars) Fiscal year 2010-2011
Planned expenditures for the year ending March 31, 2011 Expended during the quarter ended June 30, 2010 Year to date used at quarter-end
Expenditures:
Personnel 40,418 10,621 10,621
Transportation and communications 4,840 654 654
Information 570 57 57
Professional and special services 10,267 1,164 1,164
Rentals 1,255 159 159
Repair and maintenance 465 40 40
Utilities, materials and supplies 900 98 98
Acquisition of machinery and equipment 1,875 34 34
Transfer payments 390,883 31,188 31,188
Other subsidies and payments 180 165 165
Total net budgetary expenditures: 451,653 44,180 44,180