Western Economic Diversification Canada
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WD Quarterly Financial Report for the quarter ended June 30, 2012

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 Canada’s Economic Action Plan 2012 (Budget 2012). 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 for fiscal year 2012—13. 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.

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year. Budget 2012 was tabled in Parliament on March 29, after the tabling of the Main Estimates on February 28, 2012. As a result the measures announced in the Budget 2012 could not be reflected in the 2012—13 Main Estimates.

In fiscal year 2012—13, frozen allotments will be established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012. In future years, the changes to departmental authorities will be implemented through the Annual Reference Level Update, as approved by Treasury Board, and reflected in the subsequent Main Estimates tabled in Parliament.

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

Total Authorities Available for Use and Planned Expenditures for the Year Ending March 31, 2013

Planned departmental spending is concentrated in transfer payments (73 percent) and personnel (19 percent)—combined, they account for 92 percent of total planned expenditures (refer to the fiscal year 2012—13 pie chart below). This planned spending pattern remains consistent when compared to fiscal year 2011—12 and it is expected to continue for fiscal year 2012—13.

The department experienced an overall decrease in total funding available for use and planned expenditures to $176.3 million for fiscal year 2012—13, compared to $195.5 million for fiscal year 2011—12, as illustrated in the "Statement of Authorities" and "Departmental Budgetary Expenditures by Standard Object" tables. The significant decrease of $19.2 million (10 percent) is due to:

  • a net increase in operating funds to administer programs on behalf of Infrastructure Canada ($1.3 million);
  • a decrease in cash flow requirements for the Alberta-Saskatchewan Centenaries project ($12.3 million);
  • a decrease realized through the 2010 Strategic Review exercise ($5.6 million);
  • a decrease resulting from the transfer of operating funds to Shared Services Canada (SSC) ($2.6 million).

Text Version (Link 1): Pie Chart: Planned Expenditures for Fiscal Year 2012—2013

(in thousands of dollars)

Planned Expenditures Fiscal Year 2012-13Planned Expenditures Fiscal Year 2011-12

Total Authorities Used and Expended for the Quarter Ended June 30, 2012

Total authorities used for the first quarter is concentrated in transfer payments (57 percent) and personnel (37 percent)—combined, they account for 94 percent of first quarter actual expenditures (refer to the fiscal year 2012—13 pie chart below). This spending pattern remains consistent when compared to the first quarter of fiscal year 2011—12 and it is expected to continue for fiscal year 2012—13.

First quarter spending reflects an overall decline in total authorities used and actual expenditures to $24.6 million for fiscal year 2012—13, compared to $27.1 million for fiscal year 2011—12, as illustrated in the "Statement of Authorities" and "Departmental Budgetary Expenditures by Standard Object" tables. The significant decrease of $2.4 million (9 percent) is due to:

  • an overall reduction in departmental staff, notably the transfer of personnel to SSC, the continued implementation of Strategic Review savings and the non-extension of term employees ($1.2 million);
  • timing differences in the processing of claims for reimbursement of various transfer payment programs ($534 thousand);
  • other operating cost reductions, notably the transfer of costs to SSC ($503 thousand);
  • the completion of the Recreational Infrastructure Canada program ($239 thousand).

While the timing differences in the processing of transfer payment claims are expected to remain consistent for fiscal year 2012—13, a downward trend in transfer payment (grants and contributions) and operating (personnel, other operating costs) spending is expected by fiscal year-end with the implementation of departmental spending reduction initiatives.

Text Version (Link 2): Pie Chart: Actual Expenditures for Fiscal Year 2012—2013

(in thousands of dollars)

Actual Expenditures Fiscal Year 2012-13Actual Expenditures Fiscal Year 2011-12

Risks and Uncertainties

Departmental operating budgets were frozen at 2010—11 levels for fiscal years 2011—12 and 2012—13 as a result of cost containment measures announced in Budget 2010 and Budget 2011. This includes no additional funding for fiscal year 2012—13 to cover annual salary increases of approximately $216 thousand against negotiated collective agreements, plus a further forecasted amount of $641 thousand for collective agreements currently under review.

The department was required to review its programs and spending in fiscal year 2010—11 as a result of the 2010 strategic review exercise. This review has presented opportunities to streamline operations, re-align programs and eliminate others that are no longer necessary. The department will realize cumulative three-year savings of $8.9 million as outlined in Budget 2011, of which $5.6 million has been reduced from the 2012—13 funding level.

The department is addressing reduced flexibility to its transfer payment and operating budgets by managing the implementation of cost containment measures and 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.

The department maintains its financial management processes and it will continue to strengthen them, such that budget management remains effective. 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.

Significant changes in relation to operations, personnel and programs

Shared Services Canada was established on August 4, 2011, "to consolidate, streamline and improve information technology infrastructure services (…) across the federal government." As a result, WD transferred $2.6 million to SSC—personnel costs of $702 thousand and other operating costs of $1.9 million.

Budget 2012 Implementation

This section provides an overview of the savings measures announced in Budget 2012 that will be implemented in order to refocus government and programs; make it easier for Canadians and business to deal with their government; and, modernize and reduce the back office.

The department will achieve savings of $16.3 million by fiscal year 2014—15 through efficiency measures and scaling back where the need is reduced; transforming how it works internally; and by consolidating and streamlining. The department has undertaken a review of internal services that will consolidate functions, notably procurement and accounting operations, to eliminate duplication and reduce operating costs. With these changes WD will focus on supporting management excellence and accountability across government.

In the first year of implementation, WD will achieve savings of $6.6 million. Savings will increase to $9.3 million in 2013—14 and will result in ongoing savings of $16.3 million by 2014—15.

There is no variance in total authorities available for use and planned expenditures between fiscal year 2011—12 and 2012—13 related to Budget 2012 savings. Authorities available for use in 2012–13 will be adjusted by $6.6 million later in the fiscal year.

There is no significant variance in total authorities used and actual expenditures between the first quarter of 2011—12 and 2012—13 related to Budget 2012 savings. The balance of Budget 2012 savings will be reflected later in the fiscal year.

There are no significant financial risks or uncertainties related to Budget 2012 savings for this quarterly financial report. However, WD continues to manage the implementation of Budget 2012 savings through financial management and monitoring processes that facilitate the re-allocation of resources, and financial and human resources planning.

There are no significant changes in relation to operations, personnel and programs for this reporting period. Planned and actual expenditures will reflect Budget 2012 savings later in the fiscal year.

Approval by Senior Officials

Approved by:

 

Daniel Watson
Deputy Minister
Jim Saunderson
Chief Financial Officer

 

Edmonton, Canada
Date: August 14, 2012
 

 

Statement of Authorities (unaudited)

(in thousands of dollars) Fiscal year 2012—13
Total available for use for the
year ending March 31, 2013 * **
Used during the quarter ended June 30, 2012 Year to date used at quarter-end
Vote 1 — Net operating expenditures 43,223 9,354 9,354
Vote 5 — Grants and contributions 123,496 13,972 13,972
Budgetary statutory authorities
Employee benefit plan 5,086 1,271 1,271
Grants and contributions 4,500
Other 13 7 7
Total authorities 176,318 24,604 24,604

 

(in thousands of dollars) Fiscal year 2011—12
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
More information is available in the next table.
* Includes only authorities available for use and granted by Parliament at quarter-end.
** Total available for use does not reflect measures announced in Budget 2012.

 

Departmental Budgetary Expenditures by Standard Object (unaudited)

(in thousands of dollars) Fiscal year 2012—13
Planned expenditures for the year ending March 31, 2013 * Expended during the quarter ended June 30, 2012 Year to date used at quarter-end
Expenditures
Personnel 33,984 9,042 9,042
Transportation and communications 3,156 264 264
Information 419 55 55
Professional and special services 7,402 698 698
Rentals 766 445 445
Repair and maintenance 227 3 3
Utilities, materials and supplies 641 49 49
Acquisition of machinery and equipment 1,727 5 5
Transfer payments 127,996 13,972 13,972
Other subsidies and payments 71 71
Total net budgetary expenditures 176,318 24,604 24,604
* Planned expenditures do not reflect measures announced in Budget 2012.

 

(in thousands of dollars) Fiscal year 2011—12
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