Western Economic Diversification Canada
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WD Quarterly Financial Report for the quarter ended December 31, 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, Supplementary Estimates (B) and the Quarterly Financial Report for the quarters ended June 30 and September 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 and 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."

The Report on Plans and Priorities and Main Estimates provide further information on WD’s authority, mandate and program activities.

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 and Supplementary Estimates (B) for fiscal year 2011–12. 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 percent of total planned expenditures (refer to fiscal year 2011–12 pie chart). While this planned spending pattern is expected to continue, when compared to fiscal year 2010–11, the change in the transfer payments and 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).

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 $216.9 million in 2011–12, compared to $488.6 million in 2010–11. The majority of the $271.7 million (56 percent) decrease is due to the wind down of funding for the CEAP initiatives (decrease of $259.3 million) and other changes in authorities resulting in a net decrease of $12.4 million (e.g., decreases in the Western Diversification Program and the 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 and Year to Date Used at Quarter-End

Authorities used during the third quarter and year to date authorities used at quarter-end experienced significant declines relative to the same period last fiscal year ($60.4 million and $108.7 million, respectively). The declines are primarily in Vote 5 – Grants and Contributions and Statutory Grants and Contributions (quarterly and year to date declines of $58.7 million and $106.4 million, respectively), as follows:

  • wind down of the CEAP initiatives (quarterly and cumulative decreases of $49.7 million and $93.7 million, respectively);
  • decreased spending on the Western Diversification Program ($4.2 million quarterly; $4.4 million year to date);
  • completion of the following initiatives, resulting in spending declines:
    • International Vaccine Centre’s Containment Facility (quarterly and year to date declines of $4.0 million and $6.7 million, respectively);
    • Mountain Pine Beetle (quarterly and cumulative declines of $1.7 million and $1.8 million, respectively);
  • increased spending on the Rick Hansen Foundation initiative (year to date increase of $2.2 million);
  • timing differences of payments for the Community Futures Program (quarterly increase of $1.4 million; year to date decrease of $700,000);
  • other program spending pattern changes (net quarterly and year to date declines of $500,000 and $1.3 million, respectively).

While the timing of payments are expected to remain on target for the fiscal year, a downward trend in grants and contributions spending is expected by fiscal year-end due to the decreased spending on the CEAP initiatives, as a result of the wind down.

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 ($271.7 million) when compared to the year prior, with transfer payments and personnel being the greatest contributors with declines of $263.7 million (97 percent) and $4.8 million (2 percent), respectively. This is 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 program.

Expended during the Quarter and Year to Date Used at Quarter-End

The significant declines in transfer payments for the third quarter ($58.7 million) and year to date ($106.4 million) relate mainly to the wind down of the CEAP initiatives that respectively account for $49.7 million (85 percent) and $93.7 million (88 percent) when compared to the previous fiscal year. Other changes to the transfer payment program and trends in departmental spending patterns are included in the "Statement of Authorities – Used during the Quarter and Year to Date Used at Quarter-End" section above.

Although not significant, the fields "Other subsidies and payments" and "Repair and maintenance" reflect a negative expenditure of $33,000 and $200,000, respectively. This is a result of timing differences due to the reclassification of expenditures incurred during a previous quarter.

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Risks and Uncertainties

The department maintains its financial management processes and it will continue to strengthen them, 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 re-allocation 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 at 2010–11 levels of departmental operating budgets for fiscal years 2011–12 and 2012–13. Expenses subject to the operating budget freeze include departmental personnel costs (e.g., salaries – increment freeze) and other operating costs (e.g., transportation, professional services, materials, supplies). The department is addressing reduced flexibility to its operating budget because of the $400,000 reduction in cost containment measures implemented in Budget 2010.

In 2010, the last year of the first four-year cycle of strategic reviews, the department reviewed its programs and spending. This review has presented opportunities to streamline operations, re-align programs and eliminate others 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 2011–12.

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. It has the necessary system of budgets, reporting and other internal controls to manage within available resources and Parliamentary authorities. Proportionally reduced budget allocations to business and 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 time.

Significant changes in relation to operations, personnel and programs

The majority of the decrease in departmental spending between fiscal years 2010–11 to 2011–12 was related to 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 2011–12 when compared to fiscal year 2010–11.

Shared Services Canada (SSC) was established on August 4, 2011, "to consolidate, streamline and improve information technology (IT) infrastructure services (…) across the federal government." As a result, the department has transferred to SSC the control and supervision of the operational domains related to email, data centres and network services. Pursuant to section 31.1 of the Financial Administration Act and Order-in-Council P.C. Number 2011-1297, effective November 15, 2011, the amount of $984,435 is deemed to have been appropriated (transferred) to SSC Vote 1 – Net operating expenditures, which results in a reduction of the same amount in WD’s Vote 1 – Net operating expenditures. During this transition period, WD’s quarterly financial report continues to reflect financial information related to the transferred services.

Approval by Senior Officials

Approved by:

 

Daniel Watson
Deputy Minister

 

Cathy Matthews
Acting Chief Financial Officer

 

Edmonton, Canada
Date: February 20, 2012


 

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 December 31, 2011 Year to date used at quarter-end
Vote 1 - Net operating expenditures 52,137 11,601 35,426
Vote 5 - Grants and contributions 155,098 18,944 46,865
Budgetary statutory authorities
Employee benefit plan 5,171 1,293 3,879
Grants and contributions 4,500 - 2,175
Other 2 - 2
Total authorities 216,908 31,838 88,347

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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 December 31, 2010 Year to date used at quarter-end
Vote 1 - Net operating expenditures 59,397 13,140 37,163
Vote 5 - Grants and contributions 405,316 72,829 143,213
Budgetary statutory authorities
Employee benefit plan 5,873 1,468 4,404
Grants and contributions 18,000 4,847 12,275
Other 2 - 2
Total authorities 488,588 92,284 197,057

More information is available in the following table.

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

Note: Pursuant to section 31.1 of the Financial Administration Act and Order-in-Council P.C. Number 2011-1297, effective November 15, 2011, the amount of $984,400 is deemed to have been appropriated to SSC Vote 1, which results in a reduction for the same amount in WD's Vote 1, Appropriation Act No. 1, 2011–2012. To date, WD has incurred $146,500 in expenditures on behalf of SSC, against SSC Vote 1.

Departmental budgetary expenditures by Standard Object (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 December 31, 2011 Year to date used at quarter-end
Expenditures:
Personnel 37,504 10,278 31,896
Transportation and communications 4,764 911 2,260
Information 397 55 153
Professional and special services 10,442 1,380 3,520
Rentals 1,210 177 468
Repair and maintenance 612 10 81
Utilities, materials and supplies 794 80 230
Acquisition of machinery and equipment 1,587 36 320
Transfer payments 159,598 18,944 49,040
Other subsidies and payments - (33) 379
Total net budgetary expenditures: 216,908 31,838 88,347

 

(in thousands of dollars) Fiscal year 2010–2011
Total available for use for the year ending March 31, 2011* Used during the quarter ended December 31, 2010 Year to date used at quarter-end
Expenditures:
Personnel 42,319 11,324 33,186
Transportation and communications 5,393 1,130 2,627
Information 634 89 217
Professional and special services 11,726 1,519 3,820
Rentals 1,396 162 467
Repair and maintenance 518 (200) 55
Utilities, materials and supplies 1,000 133 304
Acquisition of machinery and equipment 2,086 349 440
Transfer payments 423,316 77,676 155,488
Other subsidies and payments 200 102 453
Total net budgetary expenditures: 488,588 92,284 197,057