Quarterly Financial Report (unaudited) – For the quarter ended September 30, 2011

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

1. Introduction

This quarterly report 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 report should be read in conjunction with the Main Estimates and the previous quarterly financial report for the current year. It was not subject to an external audit or review.

A summary description of the Canadian International Development Agency (CIDA) program activities for the current fiscal year can be found in Part II of the Main Estimates.

Basis of presentation

This quarterly report has been prepared by management according to the Treasury Board accounting standard, using an expenditure basis of accounting. The accompanying Statement of Authorities includes CIDA's spending authorities, as granted by Parliament, and those CIDA used consistent with the Main Estimates for the 2011-2012 fiscal year.

The Government requires the authority of Parliament to spend money. Annually approved limits are given through appropriation acts or 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 allowing 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.

As part of the departmental performance reporting process, CIDA prepares its annual departmental financial statements on a full accrual basis, according to Treasury Board accounting policies. These are based on generally accepted Canadian accounting principles for the public sector. Spending authorities voted by Parliament remain on an expenditure basis.

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

This section presents an analysis of either significant or sensitive components of CIDA's 2011-2012 second quarter (July 1, 2011 to September 30, 2011). The explanation of variances considers that changes under $10 million would have minimal impact on an interpretation of results.

a) Budgetary authorities available

As reflected in the attached Statement of Authorities, in 2011-2012, CIDA has seen an increase in total budgetary authorities from the previous year (2010-11) of 7.3 percent ($236.2 million).

The following table summarizes the variances:

(in millions of dollars)

This table summarizes the variances
Vote 25 - Operating expenditures8.0
Vote 30 - Grants and Contributions207.1
Maternal, Newborn and Child Health (MNCH) initiative211.6
Creation of a Crisis Pool Quick Release Mechanism50.0
Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM) commitment5.4
Other adjustments10.1
Conclusion of initial one-time funding in Haiti-70.0
Budgetary Statutory Authorities21.1
Increased encashment of notes issued to IFIs17.4
Other3.7
Total236.2

The total variance of $236.2 million results, for the most part, from increased funding of $207.1 million in Vote 30—Grants and Contributions, from allocations from the Government's International Assistance Envelope (IAE), the principal means by which Canada allocates foreign aid. An increase of $211.6 million represents additional funding as part of Canada's contribution to G-8 Maternal, Newborn and Child Health (MNCH) initiative and $50 million has been added to CIDA's reference levels from the IAE's Crisis Pool to allow for a quick response to disasters and crises. The balance of Crisis Pool is held in the IAE pending allocation to departments as needed. New funding in Vote 30 is partly offset by reductions resulting from the conclusion of the initial one-time funding to humanitarian and reconstruction assistance for Haiti.

Authorities for the issuance of notes under the International Development (Financial Institutions) Assistance Act were increased mostly to reflect an adjustment for the Global Environment Facility (GEF) based on decisions from Budget 2010. The anticipated encashment of notes has increased accordingly.

b) Budgetary authorities used

During the second quarter of fiscal year 2011-2012, total budgetary expenditures were $584.4 million compared to $800.9 million for the same period for 2010-2011, resulting in a decrease of $216.5 million. The decrease is primarily due to a change in timing of transfer payments, resulting in reduced expenditures in grants and contributions of $205.9 million and reduced encashment of notes (advances) issued under the International Development (Financial Institutions) Assistance Act of $20.9 million. This decrease is partly offset by an increase of $10.4 million in other votes.

Taking into account the reduced expenditures in Afghanistan in 2011-2012 and the one-time funding for Haiti in 2010-2011, the year to date expenditures for grants and contributions are lower than last year's at that same period. However, it is anticipated that funding will align with the planned expenditures as disbursement to CIDA's partners continues in order to fulfill the Agency's priorities.

Variances in the encashment of notes (advances) issued under the International Development (Financial Institutions) Assistance Act are mostly due to the timing of encashment stipulated in the notes schedules.

Section 144 of the Budget and Economic Statement Implementation Act (2007) provided a budgetary statutory authority for the payment to the World Bank for the Advance Market Commitment (AMC) for pneumococcal vaccines. Related statutory payments are funded from a statutory vote from the Consolidated Revenue Fund on an annual demand basis. The payment of $23 million made in July 2011 is in line with the payment made in the previous year.

c) Non-budgetary authorities used

The non-budgetary authorities used in 2011-2012 reflect the purchase of capital shares in IFIs to respond to the global economic crisis and to the longer-term development needs in Africa, the Americas, Asia and the Caribbean.

d) Budgetary expenditures by standard object

For the purposes of this table, expenditures incurred under the Grants and Contributions vote, the encashment of notes (advances) issued under the International Development (Financial Institutions) Assistance Act and the payment to the World Bank for the Advance Market Commitment (AMC) for pneumococcal vaccines are presented under the Transfer Payments expenditures. As outlined in the "Budgetary authorities used" section above, reduced expenditures in those votes explain significant variances compared to fiscal year 2010-2011.

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3. Risks and Uncertainties

Because of the nature of CIDA's work, substantial risks are associated with both operating and partner activities. These risks are reduced to the degree possible and closely managed in all cases, but are inherent to operating in very poor and/or fragile and conflict-affected countries.

Although the long-term outlook is positive, international development gains remain inherently uncertain, particularly in the short term. Significant political, economic, social, and environmental events, beyond the Agency's control, can threaten the attainment of development outcomes, and even reverse gains made.

To remain relevant in the present and future international development environment, CIDA must adapt to changes and conditions on the ground. The Agency's success is closely linked to its capacity to monitor and adapt to global and regional developments, as well as its ability to manage risk.

CIDA continually assesses risks and develops appropriate responses. CIDA's fiduciary risk exposure—the risk that funds are misappropriated or mismanaged—is mitigated by strong controls and by working with a portfolio of diverse partners, many of which are low-risk international organizations.

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

Budgets

At the Muskoka 2010 G-8 Summit, the initiative on Maternal, Newborn and Child Health (MNCH) was launched. Canada committed an additional $1.1 billion over 5 years to MNCH spending through CIDA, beyond the $1.75 billion ongoing investment over the same period. In 2011-2012, CIDA will also continue to apply its strategies of stimulating sustainable economic growth, securing the future of children and youth, and increasing food security.

Budget 2010 fulfilled Canada's commitment to double the International Assistance Envelope (IAE) to $5 billion in 2010-2011. With the achievement of this target, subsequent IAE commitments have been capped at this level and will be assessed alongside all other government priorities on an annual basis in the budget.

Also, as announced in the 2010 Budget, operating budgets of departments are frozen at the 2010-2011 reference levels in 2011-2012 and 2012-2013. As part of Canada's agenda for aid effectiveness, CIDA had already committed to improve efficiencies in CIDA's program delivery and operations, while maintaining high level of stewardship and due diligence. In order to improve efficiencies, program business processes are being redesigned to be more streamlined and to enable more effective program delivery. Larger, scaled-up projects continue to be emphasized, as appropriate, to have fewer, faster and more cost-effective transactions. Senior management is continuing to exercise diligent oversight of staffing and travel. In implementing the measures to respect the aid effectiveness agenda commitments, CIDA is also respecting the cost containment measures introduced in Budget 2010.

Shared Services Canada

The Government of Canada announced measures to drive savings and improve service in Information Technology through Shared Services Canada (SSC) which will lead to the consolidation of the existing resources and personnel from 44 departments and agencies, including CIDA. Senior management is actively involved in the planning and management of resource transfers and in the identification of the impacts this will have on the Agency.

Deficit reduction action plan

Budget 2011 announced the conduct of a comprehensive review of program and operating costs across all of government in 2011-2012. Under this exercise, CIDA's activities will be reviewed in the context of productivity improvements, program relevance and effectiveness. Pursuant to this review, future years' budgets may be reduced for fiscal years commencing in 2012-2013. CIDA's Management Board is already considering the impacts of potential future reductions on programs and, importantly, on people. However, the nature and extent of any reductions are not known at this time.

Approved by :

Original signed by Margaret Biggs
on November 23, 2011

____________________________
Margaret Biggs
President

Gatineau, Canada


____________________________
Date
Original signed by Sue Stimpson
on November 23, 2011

____________________________
Sue Stimpson
Chief Financial Officer




____________________________
Date

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Statement of Authorities (unaudited)

Fiscal Year 2011-2012

(in thousands of dollars)

Statement of Authorities (unaudited) for the fiscal year 2011-2012
Total available for use for the year ending March 31, 2012 Footnote 1Used during the quarter ended September 30, 2011Year to date used at quarter-end
Vote 25 — Net operating expenditures211,32557,051102,767
Vote 30 — Grants and contributions2,958,150433,662664,357
Budgetary statutory authorities:
Encashment of notes issued to the development assistance funds of the International Financial Institutions248,11364,024244,897
Payment to the World Bank for the Advance Market Commitment (AMC) for Pneumococcal Vaccines22,92622,92622,926
Others27,1266,77613,557
Total budgetary authorities3,467,640584,4391,048,504
Non-budgetary authorities — Payments to International Financial Institutions — Capital subscriptions84,28030,874
Total authorities3,551,920584,4391,079,378

Footnotes

Footnote 1

Includes only authorities available for use and granted by Parliament as well as supplementary funding, received from Treasury Board as of quarter-end.

Return to footnote 1 referrer

Fiscal Year 2010-2011

(in thousands of dollars)

Statement of Authorities (unaudited) for the fiscal year 2010-2011
Total available for use for the year ending March 31, 2011 Footnote 2Used during the quarter ended September 30, 2010Year to date used at quarter-end
Vote 25 — Net operating expenditures203,36349,58494,814
Vote 30 — Grants and contributions2,751,042639,589889,989
Budgetary statutory authorities:
Encashment of notes issued to the development assistance funds of the International Financial Institutions230,69184,960205,173
Payment to the World Bank for the Advance Market Commitment (AMC) for Pneumococcal Vaccines20,25920,25920,259
Others26,1106,52213,051
Total budgetary authorities3,231,465800,9141,223,286
Non-budgetary authorities — Payments to International Financial Institutions — Capital subscriptions
Total authorities3,231,465800,9141,223,285

Footnotes

Footnote 2

Includes only authorities available for use and granted by Parliament as well as supplementary funding, received from Treasury Board as of quarter-end.

Return to footnote 2 referrer

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Table 1: Budgetary Expenditures by Standard Object (unaudited)

Fiscal Year 2011-2012

(in thousands of dollars)

Budgetary expenditures by standard object for the fiscal year 2011-2012
ExpendituresPlanned expenditures for the year ending March 31, 2012 Footnote 3Expended during the quarter ended September 30, 2011Year to date used at quarter-end
Personnel183,68955,990102,323
Transportation and communications12,2211,5203,468
Information32270108
Professional and special services30,5654,6727,591
Rentals2,659554932
Repair and maintenance3,5824281,046
Utilities, materials and supplies1,367208307
Acquisition of machinery and equipment3,650242366
Transfer payments Footnote 43,229,189520,612932,180
Other subsidies and payments396143183
Total net budgetary expenditures3,467,640584,4391,048,504

Footnotes

Footnote 3

Includes only authorities available for use and granted by Parliament as well as supplementary funding, received from Treasury Board as of quarter-end.

Return to footnote 3 referrer

Footnote 4

Includes Vote 30 and Budgetary statutory authorities (encashment of notes and AMC)

Return to footnote 4 referrer

Fiscal Year 2010-2011

(in thousands of dollars)

Budgetary expenditures by standard object for the fiscal year 2010-2011
ExpendituresPlanned expenditures for the year ending March 31, 2011 Footnote 5Expended during the quarter ended September 30, 2010Year to date used at quarter-end
Personnel179,23546,56192,227
Transportation and communications11,6052,0414,029
Information3015186
Professional and special services28,5355,5068,221
Rentals2,0609031,410
Repair and maintenance3,015489878
Utilities, materials and supplies1,055180260
Acquisition of machinery and equipment2,361265326
Transfer payments Footnote 63,001,992744,8081,115,421
Other subsidies and payments1,306110428
Total net budgetary expenditures3,231,465800,9141,223,286

Footnotes

Footnote 5

Includes only authorities available for use and granted by Parliament as well as supplementary funding, received from Treasury Board as of quarter-end.

Return to footnote 5 referrer

Footnote 6

Includes Vote 30 and Budgetary statutory authorities (encashment of notes and AMC)

Return to footnote 6 referrer