Quarterly Financial Report (unaudited) – For the quarter ended September 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 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 Budget 2012 could not be reflected in the 2012-2013 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 on 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 second quarter (July 1 to September 30, 2012). Explanation for variances under $10 million is not provided as these are considered to have minimal impact on the interpretation of results.

2.1.1 Total authorities available

Total authorities available for use for the second quarter of 2012-2013 were $3,690.9 million compared to $3,551.9 million after the same period in 2011-2012, which represents an increase of $139.0 million.

The following table summarizes the variances:

(in millions of dollars)

This table summarizes the variances
Variance by budget itemTotal variance by authority
Vote 25 — Operating expenditures
Transfer to Shared Services Canada for the consolidation and transformation information technology initiative(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 variances0.3
Voted budgetary authorities(17.1)
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 the Department of Foreign Affairs and International Trade: Canada Fund for Local Initiatives(18.4)
End 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 authorities157.1
Total — voted budgetary authorities140.0
Payment to the World Bank for the Advance Market Commitment for Pneumococcal Vaccines1.5
Employee benefit plans(2.0)
Encashment of notes (advances) issued to international financial institutions0.5
Budgetary statutory authorities(0.0)
Total variance — budgetary authorities140.0
Total variance — non-budgetary authorities(1.0)
Total variance139.0

2.1.2 Voted budgetary authorities

The increase in voted budgetary authorities is due to funding for the climate change initiative 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 2010 G-8 meeting in Muskoka. The increase is offset, in part, by the transfer of the Canada Fund for Local Initiatives program to the Department of Foreign Affairs and International Trade Canada.

CIDA's operating expenditure authorities have 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

An increased authority of $1.5 million for the payment to the World Bank for the Advance Market Commitment for Pneumococcal Vaccines partially offsets the $2-million decreased authority for employee benefit plans.

2.1.4 Non-budgetary authorities

The non-budgetary authorities for 2012-2013 represent the purchase of capital subscriptions in international financial institutions to respond to the global economic crisis and support 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 second quarter of 2012-2013 are stable compared to the same period in 2011-2012. Total expenditures of $996.5 million at the end of the second quarter remain $83 million lower than the $1,079.4 million spent for the same period in 2011-2012.

2.2.2 Voted budgetary expenditures

CIDA's operating expenditures in the second quarter of 2012-2013 were $11.4 million lower compared to the same quarter of 2011-2012. This amount reflects a reduction of $8.8 million in personnel costs mainly due to payouts of severance entitlements that occurred in 2011-2012 following the ratification of new collective agreements. The balance of the decrease reflects reduced expenditures resulting from the transfer of responsibilities to Shared Services Canada and the end of temporary incremental funding received to support the Afghanistan program. As a result, the year-to-date expenditures are also lower than last year's expenditures at that same period for an amount of $16.1 million.

Grants and contributions in the second quarter of 2012-2013 were $24.6 million higher compared to the same quarter of 2011-2012. This increase does not entirely compensate for reduced spending in the first quarter, and as a result, year-to-date expenditures remain lower by $58.9 million compared to last year's amount for the same period, reflecting expected programming adjustments, such as Haiti programming returning to pre-earthquake levels and the 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 was slightly lower ($12.1 million) than in the second quarter of 2012-2013 compared to the same period in 2011-2012 due to the timing of encashment stipulated in the notes schedules. Year-to-date expenditures remain stable 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 longer-term development needs in Africa, the Americas, Asia, and the Caribbean. Year-to-date expenditures for 2012-2013 are 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 for these budgetary expenditures as well as for personnel costs 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 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, but are inherent to pursuing development results. Management must be continually vigilant in monitoring its environment and be creative in the development of responses to risks. Proactively managing risks 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. The Agency is also contributing 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 these 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 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 its email system to Shared Services Canada.

Key senior personnel change

The Honourable Beverley J. Oda stepped down as Minister of International Cooperation and as a Member of Parliament in July 2012. 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 so on.

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 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 CIDA is on track to achieve savings by the end of the fiscal year. However, there was minimal direct impact on spending in the second quarter. There are no financial risks or uncertainties related to Budget 2012 savings.

Approved by:

Original signed by Greta Bossenmaier
for Margaret Biggs
on November 27, 2012

____________________________
Margaret Biggs
President

Gatineau, Canada
Sue Stimpson
on November 27, 2012


____________________________
Sue Stimpson
Chief Financial Officer

Gatineau, Canada

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Statement of authorities (unaudited)

Fiscal year 2012-2013

(in thousands of dollars)

Statement of Authorities (unaudited) for the fiscal year 2012-2013
Total available for use for the year ending March 31, 2013 Footnote 1 Footnote 2Used during the quarter ended September 30, 2012Year to date used at quarter-end
Vote 25 — Operating expenditures194,25445,61986,700
Vote 30 — Grants and contributions3,115,236458,303605,455
Budgetary statutory authorities - Encashment of notes issued to the development assistance funds of international financial institutions248,65451,968235,381
Budgetary statutory authorities - Payments to the World Bank for the Advance Market Commitment for Pneumococal Vaccines24,50424,44324,443
Budgetary statutory authorities - Other25,0406,26112,521
Total budgetary authorities3,607,688586,594964,500
Non-budgetary authorities — Payments to international financial institutions — Capital subscriptions
Footnote 3
83,307-35231,996
Total authorities3,690,995586,242996,496

Footnotes

Footnote 1

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

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Footnote 2

Total available for use does not reflect measures announced in Budget 2012.

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Footnote 3

Authorities used during the quarter show a negative balance, which represents an adjustment required to reflect the fluctuation of the exchange rate on a payment made in the first quarter.

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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 4Used during the quarter ended September 30, 2011Year to date used at quarter-end
Vote 25 — 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 international financial institutions248,11364,024244,897
Budgetary statutory authorities - Payment to the World Bank for the Advance Market Commitment (AMC) for Pneumococal Vaccines22,92622,92622,926
Budgetary statutory authorities - Other27,1266,77613,557
Total budgetary authorities3,467,640584,4391,048,504
Non-budgetary authorities — Payments to international financial institutions — Capital subscriptions
Footnote 5
84,280-30,874
Total authorities3,551,920584,4391,079,378

Footnotes

Footnote 4

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

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Footnote 5

Authorities used during the quarter show a negative balance, which represents an adjustment required to reflect the fluctuation of the exchange rate on a payment made in the first quarter.

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Table 1: Budgetary expenditures by standard object (unaudited)

Fiscal year 2012-2013

(in thousands of dollars)

Budgetary expenditures by standard object for the fiscal year 2012-2013
ExpendituresPlanned expenditures for the year ending March 31, 2013 Footnote 6  Footnote 7Expended during the quarter ended September 30, 2012Year to date used at quarter-end
Personnel169,01547,10490,407
Transportation and communications11,1861,1602,557
Information2741830
Professional and special services27,4562,4794,163
Rentals2,6586371,033
Repair and maintenance3,794345787
Utilities, materials and supplies1,23188154
Acquisition of machinery and equipment3 0582750
Transfer payments Footnote 83,388,394534,714865,279
Other subsidies and payments6222240
Total net budgetary expenditures3,607,688586,594964,500

Footnotes

Footnote 6

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

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Footnote 7

Planned expenditures do not reflect measures announced in Budget 2012.

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Footnote 8

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

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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 9Expended during the quarter ended September 30, 2011
Footnote 10
Year to date used at quarter-end Footnote 11
Personnel183,68955,990102,323
Transportation and communications12,2211,6333,581
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 12
3,229,189520,612932,180
Other subsidies and payments3963070
Total net budgetary expenditures3,467,640584,4391,048,504

Footnotes

Footnote 9

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

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Footnote 10

Comparative figures have been reclassified to conform to the current year's presentation.

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Footnote 11

Comparative figures have been reclassified to conform to the current year's presentation.

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Footnote 12

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

Return to footnote 12 referrer