Quarterly Financial Report ending September 30, 2020
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 quarterly report should be read in conjunction with the Main Estimates and Supplementary Estimates (A).
The Canadian Northern Economic Development Agency (CanNor) works with partners to advance economic development in Canada's territories. The Agency supports, invests in and advocates for national, territorial and community level economic development; fosters growth and innovation; contributes to building capacity; and invests in foundational economic development projects in the territories. In addition, through the Northern Projects Management Office the Agency coordinates federal participation in the territorial environmental review processes and maintains the Crown consultation record for major projects.
Further details on CanNor's authorities, mandate and program activities may be found in the Departmental Plan and the Main Estimates.
Basis of Presentation
This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes CanNor's spending authorities granted by Parliament and those used by the Agency consistent with the Main Estimates and Supplementary Estimates (A), for the 2020-2021 fiscal year. The authority of Parliament is required before moneys can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.
This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.
As part of the departmental performance reporting process, CanNor prepares its annual departmental financial statements on a full accrual basis in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector. However, the spending authorities voted by Parliament remain on an expenditure basis.
Highlights of fiscal quarter and fiscal year to date (YTD) results
Statement of Authorities
Total authorities available for use in the second quarter of fiscal year 2020-2021 amounted to $83.6 million, a $18.3 million net increase compared to the second quarter of 2019-2020. The increase is attributable to additional funding of $34.5 million ($29.3 million in Vote 5; $5.0 million in Budgetary statutory authorities; and $0.2 million in Vote 1) mainly to address the economic impact of the Coronavirus disease (COVID-19) global pandemic.
The decrease of $16.2 million is primarily attributable to Parliament approving only 75 percent of interim supply for the 2020-2021 Main Estimates at quarter-end, due to the COVID-19 global pandemic and limited Parliamentary sessions to study supply. Full supply is expected to be approved in December 2020.
Statement of Departmental Budgetary Expenditures by Standard Object
Total expenditures by standard object for the quarter ended September 30, 2020, amounted to $27.7 million, an increase of $15.9 million over the $11.8 million reported for the quarter ended September 30, 2019. This variance is primarily attributable to an increase of $14.6 million in current year transfer payment spending, due to the timely processing of COVID-19 financial relief and support claims.
Non-transfer payment spending increased by a net of $1.3 million reflecting increased staffing levels (personnel), additional spending on COVID-19 safety measures (acquisition of equipment) and timing differences of when expenditures were incurred, when compared to the quarter ended September 30, 2019 (other subsidies and payments; rentals). These increases largely off-set the reduction in travel expenditures (transportation and communications), due to reduced activity and the continued recognition of travel restrictions.
Risks and Uncertainties
While the North presents opportunities for economic development, growth and innovation, factors including its vast and remote geography, lack of infrastructure, connectivity challenges, the cost and access to energy, and shortage of skilled labour all contribute to a challenging operating environment. These factors create additional challenges for businesses and can also prevent Northerners from fully benefiting from economic development opportunities.
CanNor's key risks and response strategies are published in the Departmental Plan, except for the risk associated with the COVID-19 global pandemic:
- Limited Economic Diversification - A high degree of reliance on the public service and resource development sectors have resulted in limited diversification and an increased vulnerability to the cyclical changes in commodity prices.
- Infrastructure Deficit - Higher capital and operating costs compared to southern Canada and the challenges of distance and geography have resulted in a core infrastructure deficit, including connectivity, and constrained opportunities for northern economic development which impact the effectiveness of CanNor's programming.
- Labour Market - Competition within the limited labour pool in the North carries risks for recruitment and retention, which impacts the ability of businesses to grow and diversify.
- COVID-19 Global Pandemic - Territories have re-opened as per their respective plans; however, long standing infrastructure deficits, and reliance on southern-based supply chains may continue to slow re-start efforts. These challenges may be further compounded by extended border closures, limiting both leisure and business tourism.
Significant Changes in Relation to Operations, Personnel and Programs
There are no significant changes in relation to operations, personnel and programs for this reporting period, not already disclosed in the quarter ended June 30, 2020.
Approved by:
Paula Isaak
President
Carole Bourget
Acting Chief Financial Officer
| Authorities | Fiscal year 2020-2021 | Fiscal year 2019-2020 | ||||
|---|---|---|---|---|---|---|
| Total available for use for the year ending March 31, 2021* | Used during the quarter ended September 30, 2020 | Year-to-date used at quarter-end | Total available for use for the year ending March 31, 2020* | Used during the quarter ended September 30, 2019 | Year-to-date used at quarter-end | |
| Vote 1 - Net Operating | 13,692 | 4,672 | 7,911 | 17,107 | 3,224 | 6,575 |
| Vote 5 - Transfer payments | 63,304 | 17,677 | 28,181 | 46,354 | 8,062 | 12,246 |
| Budgetary statutory authorities | 6,597 | 5,399 | 5,665 | 1,878 | 505 | 757 |
| Total authorities | 83,593 | 27,748 | 41,757 | 65,339 | 11,791 | 19,578 |
| * includes only Authorities available for use and granted by Parliament at quarter-end. | ||||||
| Expenditures | Fiscal year 2020-2021 | Fiscal year 2019-2020 | ||||
|---|---|---|---|---|---|---|
| Planned expenditures for the year ending March 31, 2021 | Used during the quarter ended September 30, 2020 | Year-to-date used at quarter-end | Planned expenditures for the year ending March 31, 2020 | Used during the quarter ended September 30, 2019 | Year-to-date used at quarter-end | |
| Personnel | 9,904 | 3,702 | 6,868 | 13,619 | 2,934 | 5,698 |
| Transportation and communications | 978 | 23 | 60 | 729 | 112 | 293 |
| Information | 74 | 2 | 2 | 97 | 13 | 28 |
| Professional and special services | 2,723 | 306 | 345 | 3,159 | 295 | 486 |
| Rentals | 1,157 | 514 | 518 | 1,239 | 379 | 506 |
| Repair and maintenance | 154 | 16 | 16 | 45 | 3 | 3 |
| Utilities, materials and supplies | 99 | 14 | 21 | 73 | 19 | 33 |
| Acquisition of machinery and equipment | 193 | 53 | 54 | 12 | 11 | 12 |
| Transfer payments | 68,304 | 22,677 | 33,181 | 46,354 | 8,062 | 12,246 |
| Other subsidies and payments | 7 | 441 | 692 | 12 | (37) | 273 |
| Total budgetary expenditures | 83,593 | 27,748 | 41,757 | 65,339 | 11,791 | 19,578 |