Quarterly Financial Report (unaudited) – For the quarter ended December 31, 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, the Supplementary 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

2.1 Authorities analysis

CIDA has three major categories of expenditure authority:

  • Voted budgetary authorities: Included in this category are the operational expenditures as well as authorized expenditures under grants and contribution programs. These expenditures must be specifically approved by Parliament through an appropriation act.
  • Budgetary statutory authorities: Included in this category are expenditure authorities that are granted through an existing Act of Parliament. Although they may be reflected in supplementary estimates for information purposes, further parliamentary approval is not required for expenditures related to statutory amounts. It is within the normal course of business that statutory expenditures may, in some cases, exceed planned spending estimates. The Agency's statutory payments include those made under the International Development (Financial Institutions) Assistance Act as well as the Budget and Economic Statement Implementation Act (2007).
  • Non-budgetary authorities: Included in this category are disbursements made by the Agency, which do not have a direct budgetary impact to the Government. CIDA non-budgetary authorities include the purchase of capital shares in International Financial Institutions (IFIs).

This section presents an analysis of either significant or sensitive components of CIDA's 2011-2012 third quarter (October 1, 2011 to December 31, 2011). The explanation of variances considers that changes under $10 million would have minimal impact on an interpretation of results.

2.1.1 Total authorities available

Total authorities available for use of $3,562.2 million are comparable to $3,560.9 million available at the same time last year. The total variance of $1.3 million is comprised of an increase of $47.4 million in non-budgetary authorities partly offset by a reduction in budgetary authorities of $46.1 million.

The following table summarizes the variances:

(in millions of dollars)

This table summarizes the variances
Variance by budget itemTotal by authority
Vote 25 — Net operating expenditures3.2
Vote 30 — Grants and contributions
Climate change initiatives-75.0
Conclusion of initial one-time funding in Haiti-70.0
Canada's response to the humanitarian crisis resulting from the floods in Pakistan-16.5
Creation of a Crisis Pool Quick Release Mechanism50.0
Maternal, Newborn and Child Health (MNCH) initiative38.1
Infrastructure integration in Central America/Carribean5.0
Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM) commitment5.4
Other variances11.2-51.8
Voted Budgetary Authorities-48.6
Reduced encashment of notes (advances) issued to IFIs-1.0
Increased payments to the World Bank for the Advance Market Commitment (AMC) for pneumococcal vaccines2.5
Others1.0
Budgetary Statutory Authorities2.5
Total Variance — Budgetary Authorities-46.1
Total Variance — Non-Budgetary Authorities47.4
Total Variance1.3

2.1.2 Voted budgetary authorities

The main driver of the change in voted budgetary authority is a reduction of $51.8 million in Vote 30 — Grants and Contributions. This reduction is attributed to a one-time funding received in 2010-2011 for Haiti, humanitarian crises and climate change initiatives. The reduction is partly offset by increased funding received from the Government's International Assistance Envelope (IAE), the principal means by which Canada allocates foreign aid. As presented in the 2011-2012 Main Estimates, additional funding was received as part of Canada's contribution to G-8 Maternal, Newborn and Child Health (MNCH) initiative ($38.1 million) and from the IAE's Crisis Pool ($50 million) that would allow CIDA to respond quickly to disasters and crises.

2.1.3 Budgetary statutory authorities

The $2.5 million variance compared to the same period in the prior year mostly reflects the increased authority for payments to the World Bank for the Advance Market Commitment (AMC) for pneumococcal vaccines.

2.1.4 Non-budgetary authorities

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

2.2 Expenditure analysis

2.2.1 Total authorities used

Expenditures in the third quarter of fiscal 2011-2012 were $659.9 million compared to $575.8 million for the same period for 2010-2011, representing an increase of $84.1 million or 15%. This variance in spending reflects increased grants and contributions payments and capital subscriptions with IFIs. The net operating expenditures in the third quarter were relatively unchanged over the same period in 2010-2011.

2.2.2 Voted budgetary expenditures

The net increase of $103.4 million is primarily due to a change in timing of transfer payments, resulting in higher expenditures in grants and contributions in the third quarter of 2011-2012. This increase does not entirely compensate for reduced spending in the first six months of the year and, as a result, year-to-date expenditures remain lower than last year's for the same period. Although 2011-2012 expenditures reflect spending for humanitarian assistance following the East African drought, year-to-date spending is lower than the previous year due to the end of the one-time humanitarian assistance delivered in 2010-2011 after the earthquake in Haiti and floods in Pakistan.

2.2.3 Budgetary statutory expenditures

A statutory adjustment of $48.8 million was made in the third quarter of 2010-2011, representing the amount of debt forgiven for the Government of the Islamic Republic of Pakistan in relation to loan agreements. The unused debt forgiveness authority at the end of last year is available for 2011-2012 and future years. However, the amount to be forgiven in 2011-2012 has not yet been determined and, as such, is not included in authorities used to date.

Adjustments in the encashment of notes (advances), issued under the International Development (Financial Institutions) Assistance Act, explain the balance of the variation in budgetary statutory expenditures for the current quarter as well as in year-to-date spending. Variations are due to the timing of encashment stipulated in the notes schedules.

2.2.4 Non-budgetary expenditures

Increased authorities in CIDA's capital shares in IFIs were only approved at the end of the third quarter of 2010-2011. Related payments were made later that year, where authorities for 2011-2012 were available for payment at the beginning of fiscal year.

2.2.5 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 as transfer payments. The amount of debt forgiveness to Pakistan is presented under other subsidies and payments. As outlined in the sections above, variances in the timing of approval of related authorities and payments explain the 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 pursuing development results. At the Busan High-Level Forum in November 2011, Canada clarified its engagement in fragile and conflict-affected states, which particularly requires being smart risk takers, weighing risks against desired outcomes and against the risk of not engaging.

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.

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 a 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 are reviewed in the context of productivity improvements, program relevance and effectiveness. Pursuant to this review, budgets of future years may be reduced for fiscal years commencing in 2012-2013.

Busan Partnership for effective Development Cooperation

During the Fourth High Level Forum on Aid Effectiveness held in Busan, South Korea, the Minister has endorsed the Busan Partnership for Effective Development Cooperation. This proposes increased engagement in fragile states and in managing versus avoiding the consequent risks. The Minister has highlighted Canada's concrete actions to strengthen accountability for results by all stakeholders at the country and sector level.

Approved by:

Original signed by Margaret Biggs
on February 13, 2012

____________________________
Margaret Biggs
President

Gatineau, Canada


____________________________
Date
Original signed by Sue Stimpson
on February 10, 2012

____________________________
Sue Stimpson
Chief Financial Officer

Gatineau, Canada


____________________________
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 December 31, 2011Year to date used at quarter-end
Vote 25 — Net operating expenditures220,06752,323155,090
Vote 30 — Grants and contributions2,959,748562,3711,226,728
Budgetary statutory authorities:
Encashment of notes issued to the development assistance funds of the International Financial Institutions248,1133,185248,082
Payment to the World Bank for the Advance Market Commitment (AMC) for Pneumococcal Vaccines22,92622,926
Debt forgiveness to Pakistan
Others27,1266,77220,329
Total budgetary authorities3,477,980624,6511,673,155
Non-budgetary authorities — Payments to International Financial Institutions — Capital subscriptions84,28035,28666,160
Total authorities3,562,260659,9371,739,315

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 December 31, 2010Year to date used at quarter-end
Vote 25 — Net operating expenditures216,81552,765147,579
Vote 30 — Grants and contributions3,011,537458,5331,348,522
Budgetary statutory authorities:
Encashment of notes issued to the development assistance funds of the International Financial Institutions249,1419,151214,324
Payment to the World Bank for the Advance Market Commitment (AMC) for Pneumococcal Vaccines20,46820,259
Debt forgiveness to Pakistan48,79148,791
Others26,1106,52619,577
Total budgetary authorities3,524,071575,7661,799,052
Non-budgetary authorities — Payments to International Financial Institutions — Capital subscriptions36,847
Total authorities3,560,918575,7661,799,052

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 December 31, 2011Year to date used at quarter-end
Personnel192,43148,716151,039
Transportation and communications12,2212,8386,306
Information32258166
Professional and special services30,5654,78312,374
Rentals2,6597471,679
Repair and maintenance3,5821,4942,540
Utilities, materials and supplies1,367219526
Acquisition of machinery and equipment3,650116482
Transfer payments Footnote 43,230,787565,5561,497,736
Other subsidies and payments396124307
Total net budgetary expenditures3,477,980624,6511,673,155

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 December 31, 2010Year to date used at quarter-end
Personnel186,32046,986139,213
Transportation and communications12,7632,8576,886
Information33083169
Professional and special services32,9766,72114,942
Rentals2,2555801,990
Repair and maintenance3,3059211,799
Utilities, materials and supplies1,155259519
Acquisition of machinery and equipment2,391421747
Transfer payments Footnote 63,281,146467,6841,583,105
Other subsidies and payments1,43049,25449,682
Total net budgetary expenditures3,524,071575,7661,799,052

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