Quarterly Financial Report (unaudited) – For the quarter ended June 30, 2012

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

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 Supplementary Estimates A for the current year, as well as Canada's Economic Action Plan 2012 (Budget 2012). 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 and the Supplementary Estimates for the 2012-2013 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 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 2012-2013, 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.

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 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 contributions 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.

This section presents an analysis of significant components of CIDA's 2012-2013 first quarter (April 1, 2012 to June 30, 2012). Explanation for variances under $10 million is not provided as these are considered to have minimal impact on interpretation of results.

2.1.1 Total authorities available

Total authorities available for use for the first quarter of 2012-2013 were $3,656.4 million compared to $3,518.6 million for the same period in 2011-2012, which represents an increase of $137.8 million.

The following table summarizes the variances:
(in millions of dollars)Variance by budget itemTotal variance by authority
Vote 25 — Net operating expenditures  
Transfer to Shared Services Canada to consolidate and transform information technology(8.8) 
End of additional funding received to ensure a secured presence in Afghanistan(5.0) 
End of the internal reallocation for programming in Sudan to cover the operating costs(3.6) 
Other variances0.6 
Voted budgetary authorities (16.8)
Vote 30 — Grants and contributions  
Climate change initiatives included in the Supplementary Estimates (A) 2012-2013171.0 
Maternal Newborn and Child Health: 2012-2013 adjustment to the level of funding20.9 
Transfer to DFAIT: Canada Fund for Local Initiatives(18.4) 
Sunsetting of funding to the Rural Water and Sanitation initiative(12.0) 
End of the internal reallocation for programming in Sudan to cover the operating costs3.6 
Other variances(8.0) 
Voted budgetary authorities 157.1
Total — voted budgetary authorities 140.3
Encashment of notes (advances) issued to International Financial Institutions0.5 
Employee Benefit Plans(2.0) 
Budgetary statutory authorities (1.5)
Total variance — budgetary authorities 138.8
Total variance — non-budgetary authorities (1.0)
Total variance 137.8

2.1.2 Voted budgetary authorities

The increase in voted budgetary authorities is mainly attributed to supplementary funding for climate change initiatives received through Supplementary Estimates (A) and increased funding received as part of Canada's contribution to the Maternal, Newborn and Child Health initiative announced at the June 2011 G8 meeting in Muskoka. The increase is offset, in part, by the transfer of the Canada Fund for Local Initiatives program to Department of Foreign Affairs and International Trade Canada (DFAIT) as well as the sunsetting of funding to the Rural Water and Sanitation initiative.

CIDA's operating expenditure authorities have also been reduced in 2012-2013 to reflect the transfer of $8.8 million to Shared Services Canada with respect to CIDA's share of the government-wide consolidation of certain information technology functions, as well as a reduction to reflect the end of temporary incremental funding received to support Afghanistan and Sudan programs.

2.1.3 Budgetary statutory authorities

The $1.5 million variance mostly reflects the decreased authority for the Employee Benefit Plans when compared to the same period in the prior year.

2.1.4 Non-budgetary authorities

The non-budgetary authorities of 2012-2013 represent the purchase of capital subscriptions in International Financial Institutions to respond to the global economic crisis and to the longer-term development needs in Africa, the Americas, Asia, and the Caribbean.

2.2 Total authorities used analysis

2.2.1 Total expenditures

Expenditures for the first quarter of 2011-2013 totalled $410.3 million compared to $494.9 million for the same period in 2011-2012.

2.2.2 Voted budgetary expenditures

Grants and contributions in the first quarter of 2012-2013 were $83.5 million lower compared to the same quarter of 2011-2012. The decrease in expenditures was due in part to expected programming adjustments in this quarter, such as Haiti programming returning to pre-earthquake levels and suspension of direct payments to the Government of Mali due to political instability.

2.2.3 Budgetary statutory expenditures

The encashment of notes (advances) issued under the International Development (Financial Institutions) Assistance Act remains relatively unchanged in the first quarter of 2012-2013 compared to the same period in 2011-2012.

2.2.4 Non-budgetary expenditures

Capital shares in International Financial Institutions are purchased to respond to the global economic crisis and support the longer-term development needs in Africa, the Americas, Asia and the Caribbean. The expenditures for the first quarter of 2012-2013 were stable compared to the same period in 2011-2012.

2.2.5 Budgetary expenditures by standard object

For the purposes of Table 1, expenditures incurred under the Grants and Contributions vote and the encashment of notes (advances) issued under the International Development (Financial Institutions) Assistance Act are presented as "Transfer payments". Variances are outlined in the sections above.

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3. Risks and uncertainties

Risk is inherent in international development. CIDA works systematically with its partners to identify, assess, monitor, and manage risks in order to optimize development results. Because of the nature of CIDA's work, substantial risks are associated with both operating and partner activities. These risks are managed to the degree possible and closely monitored in all cases. Management must be continually vigilant in monitoring its environment and be creative in the development of responses to risks. Pro-actively managing risk increases the effectiveness of CIDA's efforts to achieve concrete development results.

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

New initiatives

As part of Canada's commitment to provide financing to developing countries for climate change adaptation and mitigation in accordance with the Copenhagen Accord, CIDA is contributing to the creation of the Canadian Climate Fund to advance climate action in the Americas, and to the Clean Technology Fund, to catalyze investment opportunities to reduce emissions in the long-term, focusing on middle-income and fast-growing developing countries. CIDA's participation in the funds is managed with only minimal incremental operational resources.

Transfer to Shared Services Canada

Shared Services Canada was created on August 4, 2011, pursuant to section 31.1 of the Financial Administration Act and Order in Council P.C. 2011-0877, with a mandate to streamline and reduce duplication of information technology services in the federal government in order to reduce costs, improve services, and leverage capacity in the public and private sectors through pooled resources and greater buying power. As a result, CIDA transferred resources linked to networks, data centres, and email system to Shared Services Canada.

Key senior personnel change

In July 2012, the Honourable Beverley J. Oda, Minister of International Cooperation stepped down as a Minister and Member of Parliament and, on July 4, the Prime Minister appointed the Honourable Julian Fantino as Minister of International Cooperation.

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5. 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.

Budget 2012 included a 9.7 percent reduction in the reviewed spending base for the International Assistance Envelope. For CIDA, this will result in savings of $152.7 million in 2012-2013, $191.6 million in 2013-2014, and $319.2 million in 2014-2015, and ongoing.

To achieve these savings, CIDA will be:

  • Concentrating programming efforts to optimize resources and maximize impact; and
  • Restructuring and streamlining corporate services and program operations to reduce operational costs.

CIDA will continue to strengthen its focus on countries where it can have a real impact and it will enhance its presence in the field to increase the impact of Canada's international assistance dollars.

Over the next two years, CIDA will wind down country programs in Cambodia, China, Malawi, Nepal, Niger, Rwanda, Zambia, and Zimbabwe, to achieve greater cost effectiveness. CIDA will continue to contribute to poverty reduction efforts in these countries and regions through multilateral and Canadian partners. As well, CIDA will continue to respond to humanitarian crises, if and when they occur.

Regional programming in Africa will be consolidated. The Agency will also reduce program budgets in a number of countries, including Bolivia, Pakistan, Mozambique, Ethiopia, Tanzania, and South Africa. Programming in these countries will remain significant and will continue to make a meaningful difference toward poverty reduction.

CIDA will also be reducing and consolidating its contribution to a number of multilateral, global and Canadian partnership programs.

The Agency will continue to deliver on its Muskoka Initiative on Maternal, Newborn and Child Health commitment as well as important economic growth, children and youth, and food security programming. The Agency will maintain its ability to provide humanitarian assistance to meet the needs of those affected by disasters and crises.

CIDA's corporate branches will help increase the Agency's efficiency and effectiveness by further consolidating and streamlining internal services.

The implementation of Budget 2012 decisions began in the first quarter and is on schedule. The balance of Budget 2012 savings will be reflected later in the fiscal year and in future fiscal years. There are no financial risks or uncertainties related to these savings.

Approved by:

Original signed by Greta Bossenmaier
for Margaret Biggs
on August 24, 2012

Original signed by Sue Stimpson
on August 24, 2012


_______________________________
Margaret Biggs
President

Gatineau, Canada


_______________________________
Sue Stimpson
Chief Financial Officer

Gatineau, Canada

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Statement of Authorities (unaudited)

Fiscal Year 2012-2013

Statement of Authorities - Fiscal Year 2012-2013
(in thousands of dollars)Total available for use for the year ending March 31, 2013Footnote 1Used during the quarter ended June 30, 2012Year to date used at quarter-end
Vote 25 — Net operating expenditures184,16241,08141,081
Vote 30 — Grants and contributions3,115,236147,152147,152
Budgetary statutory authorities - Encashment of notes issued to the development assistance funds of the international financial institutions248,654183,413183,413
Budgetary statutory authorities - Other25,0406,2606,260
Total budgetary authorities3,573,092377,906377,906
Non-budgetary authorities — Payments to International Financial Institutions — Capital subscriptions83,30732,34832,348
Total authorities3,656,399410,254410,254

Fiscal Year 2011-2012

Statement of Authorities - Fiscal Year 2011-2012
(in thousands of dollars)Total available for use for the year ending March 31, 2012Footnote 2Used during the quarter ended June 30, 2011Year to date used at quarter-end
Vote 25 — Net operating expenditures200,90245,71645,716
Vote 30 — Grants and contributions2,958,150230,695230,695
Budgetary statutory authorities - Encashment of notes issued to the development assistance funds of the international financial institutions248,113180,873180,873
Budgetary statutory authorities - Other27,1266,7816,781
Total budgetary authorities3,434,291464,065464,065
Non-budgetary authorities — Payments to International Financial Institutions — Capital subscriptions84,28030,87430,874
Total authorities3,518,571494,939494,939

Table 1: Budgetary Expenditures by Standard Object (unaudited)

Fiscal Year 2012-2013

Budgetary expenditures by standard object - Fiscal year 2012-2013 (in thousands of dollars)

ExpendituresPlanned expenditures for the year ending March 31, 2013Footnote 3 Footnote 4Expended during the quarter ended June 30, 2012Year to date used at quarter-end
Personnel166,92643,30343,303
Transportation and communications9,4061,3171,317
Information2301212
Professional and special services23,0861,6841,684
Rentals2,235396396
Repair and maintenance3,190442442
Utilities, materials and supplies1,0356666
Acquisition of machinery and equipment2 5712323
Transfer paymentsFootnote 53,363,890330,565330,565
Other subsidies and payments5239898
Total net budgetary expenditures3,573,092377,906377,906

Fiscal Year 2011-2012

Budgetary expenditures by standard object - Fiscal year 2011-2012 (in thousands of dollars)

ExpendituresPlanned expenditures for the year ending March 31, 2012Footnote 6Expended during the quarter ended June 30, 2011Year to date used at quarter-end
Personnel177,39046,33346,333
Transportation and communications11,3011,9481,948
Information2983838
Professional and special services28,2632,9192,919
Rentals2,459378378
Repair and maintenance3,312618618
Utilities, materials and supplies1,2649999
Acquisition of machinery and equipment3,375124124
Transfer paymentsFootnote 73,206,263411,568411,568
Other subsidies and payments3664040
Total net budgetary expenditures3,434,291464,065464,065

Footnotes

Footnote 1

Includes only authorities available for use and granted by Parliament as of quarter-end and total available for use does not reflect measures announced in Budget 2012.

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Footnote 2

Includes only authorities available for use and granted by Parliament as of quarter-end.

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Footnote 3

Includes only authorities available for use and granted by Parliament as of quarter-end.

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Footnote 4

Planned expenditures do not reflect measures announced in Budget 2012.

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Footnote 5

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

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Footnote 6

Includes only authorities available for use and granted by Parliament as of quarter-end.

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Footnote 7

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

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