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

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 91% 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.

Text Version: Planned Expenditures for Fiscal Year 2011-2012

(in thousands of dollars)

This pie chart breaks down planned expenditures for the fiscal year 2011-2012.This pie chart breaks down planned expenditures for the fiscal year 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 $199.5 million for fiscal year 2011-2012, compared to $453.7 million for fiscal year 2010-2011. The majority of the $254.2 million (56%) decrease is due to the wind down of funding for the CEAP initiatives (decrease of $267.5 million) and other changes in authorities resulting in a net increase of $13.3 million (e.g., increase in the Western Diversification Program; decrease in International Vaccine Centre’s Containment Facility initiative). As originally planned, funding for the CEAP initiatives was to end on March 31, 2011. However, on December 2, 2010, the Government announced an extension to the RInC Program to October 31, 2011.

Used during the Quarter & Year to Date Used at Quarter-End

There is no significant second quarter or year to date change in Vote 1 – Net Operating Expenditures compared to the previous year. Of the $23.8 million second quarter decrease and the $42.5 million year to date decrease in Vote 5 – Grants and Contributions, when compared to the prior year, the wind down of the CEAP initiatives account for decreases of $25.3 million and $36.6 million (86%) respectively. The second quarter decline in spending on the CEAP initiatives (decrease of $25.3 million) and other program spending changes (net decrease of $1.0 million) were partially off-set by an increase in spending on the Community Futures Program of $2.5 million. Year to date, and in addition to the decline in spending on the CEAP initiatives (decrease of $36.6 million), other significant changes relate mainly to the timing of processing claims for reimbursement of expenditures (Community Futures Program – decrease of $2.1 million), the completion of another transfer payment initiative (International Vaccine Centre’s Containment Facility – decrease of $2.7 million) and other program spending changes (net decrease of $1.1 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 second quarter decrease in the amount of spending on Budgetary Statutory Authorities results from Grants and Contributions (CEAP initiatives – decrease of $7.4 million), when compared to the same quarter of the previous fiscal year. Year to date, the increase in spending on the Rick Hansen Foundation ($2.2 million) partially off-set the decline in spending on the CEAP initiatives, resulting in an overall decline in Statutory Grants and Contributions of $5.2 million when compared to the prior 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 ($254.2 million) when compared to the year prior, with Transfer Payments and Personnel being the greatest contributors, with declines of $245.5 million (97%) and $5.3 million (2%) 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 & Year to Date Used at Quarter-End

The significant second quarter and year to date declines in Transfer Payments of $31.3 million and $47.7 million relate mainly to the wind down of the CEAP initiatives that respectively account for $32.7 million and $44.0 million (92%) when compared to the previous fiscal year. The second quarter spending on the Community Futures Program (increase of $2.5 million) and other program spending changes (net decrease of $1.1 million) further contribute to the overall decline in spending in Transfer Payments. Other notable year to date spending pattern changes include: the timing of processing claims for reimbursement of expenditures (Community Futures Program – decrease of $2.1 million), the completion of another transfer payment initiative (International Vaccine Centre’s Containment Facility – decrease of $2.7 million), the spending in other transfer payment initiatives (Rick Hansen Foundation – increase of $2.2 million) and other program spending changes (net decrease of $1.1 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.

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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 – increment freeze) and a variety of other operating costs (e.g., transportation, professional services, materials, supplies). The department is addressing reduced flexibility to its operating budget as a result of a reduction of $0.4 million in Cost Containment Measures implemented in Budget 2010.

In 2010, the last year of the first four-year cycle of Strategic Reviews, the department undertook a Strategic Review of its programs and spending. This Review has presented opportunities to streamline operations, re-align programs and eliminate programs that are no longer necessary. As outlined in Budget 2011, the department will realize cumulative three-year savings of $8.9 million, commencing in fiscal year 2011-2012.

The department is managing the implementation of the Cost Containment Measures and the Strategic Review savings 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. Proportional reduced budget allocations to business/internal services units, supported by the regular review of staffing, and “actual” and “forecast” expenditure reports ensure resource utilization remains in-line with financial and human resources planning, 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 substantially 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

 

Edmonton, Canada
Date : November 21, 2011

 

Cathy Matthews
Acting Chief Financial Officer

 

 

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 September 30, 2011 Year to date used at quarter-end
Vote 1 - Net Operating expenditures 48,952 12,813 23,827
Vote 5 - Grants and contributions 140,862 15,351 27,921
Budgetary statutory authorities
Employee benefit plan 5,171 1,293 2,586
Grants and contributions 4,500 - 2,175
Other 2 1 1
Total authorities 199,487 29,458 56,510

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(in thousands of dollars) Fiscal Year 2010-2011
Total available for use for the year ending March 31, 2011* Used during the quarter ended September 30, 2010 Year to date used at quarter-end
Vote 1 - Net Operating expenditures 56,981 12,500 24,024
Vote 5 - Grants and contributions 377,383 39,196 70,384
Budgetary statutory authorities
Employee benefit plan 5,873 1,468 2,936
Grants and contributions 13,500 7,428 7,428
Other 2 1 1
Total authorities 453,739 60,593 104,773

Note: Variances between quarters are due to rounding.
More information is available in the following 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 September 30, 2011 Year to date used at quarter-end
Expenditures:
Personnel 35,114 11,404 21,618
Transportation and communications 4,558 725 1,348
Information 380 67 98
Professional and special services 10,051 1,340 2,140
Rentals 1,158 249 291
Repair and maintenance 585 43 71
Utilities, materials and supplies 760 81 150
Acquisition of machinery and equipment 1,519 48 284
Transfer payments 145,362 15,351 30,096
Other subsidies and payments - 150 414
Total net budgetary expenditures: 199,487 29,458 56,510

 

(in thousands of dollars) Fiscal Year 2010-2011
Planned expenditures for the year ending March 31, 2011 Expended during the quarter ended September 30, 2010 Year to date used at quarter-end
Expenditures:
Personnel 40,418 11,241 21,863
Transportation and communications 5,336 843 1,497
Information 628 71 128
Professional and special services 11,320 1,137 2,301
Rentals 1,384 146 305
Repair and maintenance 513 215 255
Utilities, materials and supplies 992 73 172
Acquisition of machinery and equipment 2,067 57 91
Transfer payments 390,883 46,624 77,812
Other subsidies and payments 198 186 349
Total net budgetary expenditures: 453,739 60,593 104,773

Note: Variances between quarters are due to rounding.