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

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 were 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 grant 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 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 third quarter (from October 1 to December 31, 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 at the end of the third quarter of 2012-2013 were $3,700.7 million compared to $3,557.4 million after the same period in 2011-2012, which represents an increase of $143.3 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
End of additional funding received to ensure a secured presence in Afghanistan(5.0)
Reduction of allocations from the Treasury Board Central Votes for paylist requirements(9.9)
Transfer to Shared Services Canada for the consolidation and transformation information technology initiative net of 2011-12 transferred amount of $4.9 million(3.9)
End of the internal reallocation for programming in Sudan to cover the operating costs(3.6)
Other variances4.6
Voted budgetary authorities(17.8)
Vote 30 — Grants and contributions
Climate change initiative 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 for the Rural Water Supply and Sanitation Initiative(12.0)
End of the internal reallocation for programming in Sudan to cover the operating costs3.6
Other variances(3.0)
Voted budgetary authorities162.1
Total — voted budgetary authorities144.3
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 authorities0.0
Total variance — budgetary authorities144.3
Total variance — non-budgetary authorities(1.0)
Total variance143.3

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 summit 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.

CIDA's operating expenditure authorities have been reduced in 2012-2013 to reflect a decrease of funds allocated from the Treasury Board Central Votes to meet the government's legal requirements as an employer. Reduced authorities also reflect the end of temporary incremental funding received to support Afghanistan and Sudan programs as well as the net transfer to Shared Services Canada with respect to CIDA's share of the government-wide consolidation of certain information technology functions.

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 third quarter of 2012-2013 are $57 million lower when compared to the same period in 2011-2012. Total expenditures of $1,599 million at the end of the third quarter are also $140 million lower than the $1,739 million spent for the same period in 2011-2012.

2.2.2 Voted budgetary expenditures

CIDA's operating expenditures in the third quarter of 2012-2013 were $7.6 million lower compared to the same quarter of 2011-2012. This amount reflects a reduction of $4.8 million in personnel costs due to payouts of severance entitlements that occurred in 2011-2012. The balance of the decrease includes 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 $23.6 million.

Grant and contribution expenditures in the third quarter were $24.0 million lower compared to the same quarter of 2011-2012. This decrease is in line with the Agency's overall reduced year-to-date spending which is $82.9 million lower compared to the same period last year. The decrease is a result of the Agency's continued focus on achieving savings relating to Budget 2012 implementation decisions and the impact of global and regional uncertainty on programming.

2.2.3 Budgetary statutory expenditures

The encashment of notes (advances) issued under the International Development (Financial Institutions) Assistance Act in the third quarter of 2012-2013 amounted to zero and therefore was lower ($3.2 million) when 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 $20.8 million lower than last year due to the timing of payments to the international financial institutions.

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.

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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 size of 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 on-going.

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 maintain its ability to respond to humanitarian crises 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 contribution to 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 commitments to the Muskoka Initiative on Maternal, Newborn and Child Health, as well as delivering important economic growth, children and youth, and food security programming.

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

Approved by:

Original signed by Greta Bossenmaier
for Margaret Biggs
on February 19, 2013

____________________________
Margaret Biggs
President

Gatineau, Canada
Sue Stimpson
on February 19, 2013


____________________________
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 December 31, 2012Year to date used at quarter-end
Vote 25 — Operating expenditures197,31344,757131,457
Vote 30 — Grants and contributions3,121,857538,3771,143,832
Budgetary statutory authorities - Encashment of notes issued to the development assistance funds of the international financial institutions248,654-235,381
Budgetary statutory authorities - Payment to the World Bank for the Advance Market Commitment (AMC) for Pneumococal Vaccines24,504-24,443
Budgetary statutory authorities - Other25,0406,25318,774
Total budgetary authorities3,617,368589,3871,553,887
Non-budgetary authorities — Payments to international financial institutions — Capital subscriptions83,30713,35245,348
Total authorities3,700,675602,7391,599,235

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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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 3 Footnote 4Used during the quarter ended December 31, 2011 Footnote 5Year to date used at quarter-end Footnote 6
Vote 25 — Operating expenditures215,15852,323155,090
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
Budgetary statutory authorities - Payment to the World Bank for the Advance Market Commitment (AMC) for Pneumococal Vaccines22,926-22,926
Budgetary statutory authorities - Other27,1266,77220,329
Total budgetary authorities3,473,071624,6511,673,155
Non-budgetary authorities — Payments to international financial institutions — Capital subscriptions84,28035,28666,160
Total authorities3,557,351659,9371,739,315

Footnotes

Footnote 3

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

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Footnote 4

Pursuant to section 31.1 of the Financial Administration Act and Order-in-Council P.C. 2011-1297 effective November 15, 2011,$4,909 thousand is deemed to have been appropriated to Shared Services Canada in operating expenditures, which results in a reduction for the same amount in CIDA, Vote 25, Appropriation Act No.1, 2011-2012.

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Footnote 5

Includes amounts incurred on behalf of Shared Services Canada from the date of transfer of November 15 to December 31, 2011. It is not possible to reasonably estimate the amount of expenditures incurred on behalf of Shared Services Canada.

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Footnote 6

Includes amounts incurred on behalf of Shared Services Canada from the date of transfer of November 15 to December 31, 2011. It is not possible to reasonably estimate the amount of expenditures incurred on behalf of Shared Services Canada.

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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 7 Footnote 8Expended during the quarter ended December 31, 2012Year to date used at quarter-end
Personnel172,07443,964134,371
Transportation and communications11,1861,7794,336
Information274939
Professional and special services27,4564,0228,185
Rentals2,6585051,538
Repair and maintenance3,7943731,160
Utilities, materials and supplies1,231266420
Acquisition of machinery and equipment3,0582979
Transfer payments Footnote 93,395,015538,3771,403,656
Other subsidies and payments62263103
Total net budgetary expenditures3,617,368589,3871,553,887

Footnotes

Footnote 7

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

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Footnote 8

Planned expenditures do not reflect measures announced in Budget 2012.

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Footnote 9

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 10 Footnote 13Expended during the quarter ended December 31, 2011 Footnote 11 Footnote 14Year to date used at quarter-end Footnote 12 Footnote 15
Personnel191,49848,716151,039
Transportation and communications11,4012,8896,470
Information32258166
Professional and special services29,6114,78312,374
Rentals2,6587471,679
Repair and maintenance2,1491,4952,541
Utilities, materials and supplies1,359219526
Acquisition of machinery and equipment2,890116482
Transfer payments Footnote 163,230,787565,5561,497,736
Other subsidies and payments39672142
Total net budgetary expenditures3,473,071624,6511,673,155

Footnotes

Footnote 10

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

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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

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

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Footnote 13

Pursuant to section 31.1 of the Financial Administration Act and Order-in-Council P.C. 2011-1297 effective November 15, 2011, $4,909 thousand is deemed to have been appropriated to Shared Services Canada in operating expenditures, which results in a reduction for the same amount in CIDA, Vote 25, Appropriation Act No.1, 2011-2012.

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Footnote 14

Includes amounts incurred on behalf of Shared Services Canada from the date of transfer of November 15 to December 31, 2011. It is not possible to reasonably estimate the amount of expenditures incurred on behalf of Shared Services Canada.

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Footnote 15

Includes amounts incurred on behalf of Shared Services Canada from the date of transfer of November 15 to December 31, 2011. It is not possible to reasonably estimate the amount of expenditures incurred on behalf of Shared Services Canada.

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Footnote 16

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

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