Canadian International Development Agency Quarterly Financial Report

For the quarter ended June 25, 2013

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 Actand in the form and manner prescribed by Treasury Board. This report should be read in conjunction with the Main Estimates and the Supplementary Estimatesfor 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 2013-2014 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 2013-2014, the changes to departmental authorities were reflected in the 2013-2014 Main Estimates tabled in Parliament.

Additional funding was sought by CIDA through the 2012-2013 Supplementary Estimates C. The Agency received this additional authority net of the planned savings or other amounts transferred by Treasury Board authority to a frozen allotment.

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

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 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 Actas 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 2013-2014 first quarter (from April 1 to June 25, 2013).

2.1.1 Total authorities available

Total authorities available for use at the end of the first quarter of 2013-2014 were $721.8 million compared to $3,656.4 million after the same period in 2012-2013. The decrease of $2,934.6 million reflects an overall decrease to CIDA’s authorities of $383.6 million and the $2,551 million transfer of financial authorities to the new Department of Foreign Affairs, Trade and Development as a result of the amalgamation of CIDA and the Department of Foreign Affairs and International Trade.

The following table summarizes the variances:

Table 1: Total Authorities Available
(in millions of dollars)Variance by budget itemTotal variance by authority
Operating expenditures
Deemed appropriations of Foreign Affairs, Trade and Development(135.5) 
Budget 2012 Implementation(15.0) 
Allocations from the Treasury Board Central Votes4.6 
Sub-total (145.9)
Grants and contributions
Deemed appropriations to Foreign Affairs, Trade and Development(2,315.2) 
Budget 2012 Implementation(162.2) 
Climate change initiative included in the Supplementary Estimates (A) 2012-2013(171.0) 
Funding for Crisis Pool Quick Release Mechanism(50.0) 
Gradual decrease of funding for Afghanistan(13.2) 
Other variances0.4 
Sub-total (2,711.2)
Total ― voted budgetary authorities (2,857.1)
Budgetary statutory authorities
Transfer of statutory authorities to Foreign Affairs, Trade and Development(48.0) 
Encashment of notes (advances) issued to international financial institutions(2.7) 
Budget 2012 Implementation - Employee benefit plans(2.5) 
Currency fluctuations – Quarter-end adjustment29.2 
Other variances0.5 
Budgetary statutory authorities (23.5)
Total variance ― budgetary authorities (2,880.6)
Transfer of non-budgetary authorities to Foreign Affairs, Trade and Development(52.3) 
Currency and replenishment forecast fluctuations – payments to international financial institutions (capital subscriptions)(1.7) 
Total variance ― non-budgetary authorities (54.0)
Total variance (2,934.6)
2.1.2 Voted budgetary authorities

The $2,711.2-million decrease in voted budgetary authorities mostly reflects the authorities deemed to have been appropriated to the newly created Department of Foreign Affairs, Trade and Development stemming from the amalgamation of CIDA and the Department of Foreign Affairs and International Trade, as announced in the Economic Action Plan 2013. Savings relating to Budget 2012 implementation decisions also contribute to the reduction of CIDA’s authorities. The overall decrease also reflects funding for climate change initiatives, which was received through Supplementary Estimates (A) in 2012-2013 whereas no funds were obtained in the first quarter of 2013-2014 as well as the gradual reduction of funding for Afghanistan and the sunsetting of temporary funding for the Crisis Pool Quick Release Mechanism. Incremental funding for the latter will be sought in the 2013-2014 Supplementary Estimates as the mechanism becomes permanent.

2.1.3 Budgetary statutory authorities

The $23.5-million variance in budgetary statutory authorities represents a $48-million decrease relating to the transfer of statutory authorities to the newly created Department of Foreign Affairs, Trade and Development. The decrease is offset by an adjustment of $29.2 million to account for fluctuations resulting from the quarter-end revaluation of financial assets and liabilities denominated in foreign currencies.

2.1.4 Non-budgetary authorities

The non-budgetary authorities represent the fluctuation of 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. The decrease of $54 million reflects the transfer of statutory authorities to the new Department of Foreign Affairs, Trade and Development.

2.2 Total authorities used analysis

2.2.1 Total expenditures

Expenditures for the first quarter of 2013-2014 totalled $721.8 million compared to $410.3 million for the same period in 2012-2013. A breakdown by type of authority is provided below.

Voted budgetary expenditures

Grants and contributions in the first quarter of 2013-2014 were $256.9 million higher compared to the same quarter of 2012-2013. The increase in expenditures is mostly due to timing of disbursements.

Operating expenditures in the first quarter of 2013-2014 were lower than those of 2012-2013 when comparing the same period. The decrease is mainly due to implementation of Budget 2012 decisions. The reduction was partly offset by an increase in personnel costs due to payouts of severance entitlements that occurred in 2013–2014.

Budgetary statutory expenditures

The encashment of notes (advances) issued under the International Development (Financial Institutions) Assistance Act in the first quarter of 2013-2014 amounted to $215.3 million and therefore was higher ($31.8 million) when compared to the same period in 2012-2013 due to the timing of encashment stipulated in the notes schedules.

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. Expenditures for the first quarter of 2013-2014 are $3.1 million lower than last year due to the timing of payments to the international financial institutions.

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’’ and expenditures incurred under the Losses on foreign exchange vote are presented as “Other subsidies and payments”. Variances for these budgetary expenditures as well as for personnel costs are outlined in the sections above.

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

Amalgamation of CIDA with the Department of Foreign Affairs and International Trade

In order to promote greater international policy coherence and achieve improved outcomes for Canadians, the government tabled legislation as part of the Budget Implementation Act to move forward with the commitment made in Economic Action Plan 2013 to amalgamate CIDA and the Department of Foreign Affairs and International Trade.

On June 26, 2013, the Governor General gave Royal Assent to Bill C-60, creating the new Department of Foreign Affairs, Trade and Development. Canada now has a single integrated foreign affairs, trade and development ministry. The new department has foreign policy responsibilities that range from advancing Canadian values and interests, providing international development and humanitarian assistance, providing consular services to Canadians, promoting Canadian trade and investment and pursuing Canada’s economic prosperity agenda through international trade. Canada's Economic Action Plan 2013 outlines the government's plans to better align Canada's foreign policy, trade, and development interests.

Under the Foreign Affairs, Trade and Development Act, the department has three ministers, the Minister of Foreign Affairs, the Minister of International Trade and the Minister of International Development.

Key senior personnel change

As announced in June 2013, by Prime Minister Stephen Harper, CIDA’s President, Margaret Biggs became Senior Advisor to the Privy Council Office. Effective July 8, 2013, Paul Rochon occupies the position of Deputy Minister under the newly amalgamated department.

5. Budget 2012 implementation

This section provides an overview of the savings measures announced in Budget 2012 that are being 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.

The Economic Action Plan 2012 announced a 9.7-percent reduction in the reviewed spending base for the International Assistance Envelope. For CIDA, this represents savings of $152.7 million in 2012-2013, $191.6 million in 2013-2014 and $319.2 million in 2014-2015 and ongoing (including the employee benefit plans). CIDA undertook an assessment of the status of all Budget 2012 savings measures within the Agency. The savings targets are on track.

These savings were achieved by:

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

Canada is winding down country programs in eight countries of modest presence: Cambodia, China, Malawi, Nepal, Niger, Rwanda, Zambia, and Zimbabwe. Development assistance will continue to contribute to poverty reduction efforts in these countries and regions through multilateral and Canadian partners.

Regional programming in Africa is consolidated into a single entity – the Pan-Africa regional program. Program budgets have been reduced in the Southeast Asia regional program and in a number of countries: Bolivia, Ethiopia, Mozambique, Pakistan, South Africa, and Tanzania. Programming in these countries will remain significant and will continue to make a meaningful difference toward poverty reduction.

Canada will continue to strengthen its focus on countries where it can have a real impact and increase the impact of Canada’s international assistance dollars.

Canada’s contribution to a number of multilateral and global programs has been reduced and consolidated. In particular, CIDA has reduced funding and streamlined support for multilateral initiatives; and certain voluntary contributions will wind down.

Canada will continue to respond to humanitarian crises, if and when they occur.

For CIDA’s operating expenditures authority, Budget 2012 implementation signifies savings of $2.1 million in 2012-2013, $15 million in 2013-2014, and $21.4 million in 2014-2015, and ongoing.

In order to continue to drive progress with respect to operating efficiencies, there was a pronounced emphasis on finding administrative savings. Accordingly, over half of the identified reductions in the operating budget are realized in the internal services areas including Information Technology, Human Resources and Finance. CIDA has almost concluded the process of reducing positions by advancing personnel reductions planned for future years and through prudent management of staffing.

There are no financial risks or uncertainties related to these savings.

Approved by:

Paul Rochon
Deputy Minister of International Development

Sue Stimpson
Vice-President and Chief Financial Officer, former CIDA

Gatineau, Canada
Date: August 27, 2013

Morris Rosenberg
Deputy Minister of Foreign Affairs

Nadir Patel
Assistant Deputy Minister and Chief Financial Officer,
Corporate Planning, Finance and Human Resources

Ottawa, Canada
Date: August 29, 2013

Table 2a: Statement of Authorities (Unaudited)
(In thousands of dollars)Fiscal year 2013-2014
Total available for use for the year ending March 31, 20141 2Used during the quarter ended June 25, 2013Year to date used at quarter end
1 Includes only authorities available for use and granted by Parliament at quarter-end.
2Pursuant to s. 18 of An act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures effective June 26, 2013, $135,519.3 thousand is deemed to have been appropriated to the Department of Foreign Affairs, Trade and Development Vote 1 Operating Expenditures and $2,315,222.4 thousand is deemed to have been appropriated to the Department of Foreign Affairs, Trade and Development Vote 10 Grants and contributions, which results in a reduction for the same amounts in the Canadian International Development Agency's Vote 25 Operating expenditures and Vote 30 Grants and contributions, Appropriation Act No. 1, 2013-2014.
Operating expenditures38,22238,22238,222
Grants and contributions404,044404,044404,044
Encashment of notes issued to the development assistance funds of the international financial institutions215,256215,256215,256
Losses on foreign exchange29,20229,20229,202
Contributions to employee benefits plans5,7205,7205,720
Minister for the International Cooperation - Salary and motor car allowance202020
Spending of proceeds from the disposal of surplus Crown assets222
Total budgetary authorities692,466692,466692,466
Non-budgetary authorities - Payments to international financial institutions - Capital subscriptions29,29129,29129,291
Total authorities721,757721,757721,757
Table 2b: Statement of Authorities (Unaudited)
(In thousands of dollars)Fiscal year 2012-2013
Total available for use for the year ending March 31, 20131 3Used during the quarter ended June 30, 2012Year to date used at quarter end
1 Includes only authorities available for use and granted by Parliament at quarter-end.
3 Total available for use does not reflect measures announced in Budget 2012.
Operating expenditures184,16241,08141,081
Grants and contributions3,115,236147,152147,152
Encashment of notes issued to the development assistance funds of the international financial institutions248,654183,413183,413
Losses on foreign exchange---
Contributions to employee benefits plans24,9636,2416,241
Minister for the International Cooperation - Salary and motor car allowance771919
Spending of proceeds from the disposal of surplus Crown assets---
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
Table 3a: Budgetary Expenditures by Standard Object (unaudited)
(In thousands of dollars)Fiscal year 2013-2014
Planned expenditures for the year ending March 31, 20141 2Expended during the quarter ended June 25, 2013Year to date used at quarter-end
1 Includes only authorities available for use and granted by Parliament as of quarter-end.
2 Pursuant to s. 18 of An act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures effective June 26, 2013, $135,519.3 thousand is deemed to have been appropriated to the Department of Foreign Affairs, Trade and Development Vote 1 Operating Expenditures and $2,315,222.4 thousand is deemed to have been appropriated to the Department of Foreign Affairs, Trade and Development Vote 10 Grants and contributions, which results in a reduction for the same amounts in the Canadian International Development Agency's Vote 25 Operating expenditures and Vote 30 Grants and contributions, Appropriation Act No. 1, 2013-2014.
4 Includes Vote 30 and Budgetary statutory authorities (encashment of notes).
Expenditures
Personnel40,24040,24040,240
Transportation and communications1,2591,2591,259
Information555
Professional and special services1,5381,5381,538
Rentals522522522
Repair and maintenance326326326
Utilities, materials and supplies535353
Acquisition of machinery and equipment151515
Transfer payments4619,300619,300619,300
Other subsidies and payments29,20829,20829,208
Total net budgetary expenditures692,466692,466692,466
Table 3b: Budgetary Expenditures by Standard Object (unaudited)
(In thousands of dollars)Fiscal year 2012-2013
Planned expenditures for the year ending March 31, 20131 3Expended during the quarter ended June 30, 2012Year to date used at quarter-end
1 Includes only authorities available for use and granted by Parliament as of quarter-end.
3 Planned expenditures do not reflect measures announced in Budget 2012.
4 Includes Vote 30 and Budgetary statutory authorities (encashment of notes).
Expenditures
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 payments43,363,890330,565330,565
Other subsidies and payments5239898
Total net budgetary expenditures3,573,092377,906377,906