Western Economic Diversification Canada's Quarterly Financial Report for the quarter ended December 31, 2016

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

• Introduction
• Highlights of fiscal quarter and fiscal year to date (YTD) results
• Risks and Uncertainties
• Significant changes in relation to operations, personnel and programs
• Quarterly Financial Report

Introduction

This quarterly financial report should be read in conjunction with the Main Estimates, Supplementary Estimates (A), Supplementary Estimates (B), and the Quarterly Financial Reports for the quarters ended June 30, 2016 and September 30, 2016.  It 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 has not been subject to an external audit or review.

Authority, Mandate and Program Activities

Western Economic Diversification Canada (WD) is mandated to "promote the development and diversification of the economy of Western Canada and to advance the interests of the West in national economic policy, program and project development and implementation."

The Report on Plans and Priorities and Main Estimates provide further information on WD's authority, mandate and program activities.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting.  The accompanying Statement of Authorities includes the department's spending authorities granted by Parliament and those used by the department, consistent with the Main Estimates, Supplementary Estimates (A) and Supplementary Estimates (B) for fiscal year 2016–17. 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.

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.

The department uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

Highlights of fiscal quarter and fiscal year to date (YTD) results

Total Authorities Available for Use and Planned Expenditures for the Year Ending March 31, 2017

Planned departmental spending is concentrated in transfer payments (80 percent) and personnel (14 percent).  Combined, they account for 94 percent of total planned expenditures (refer to the fiscal year 2016-17 pie chart below).

The department increased total funding available for use and planned expenditures to $199.8 million for fiscal year 2016-17, compared to $161.8 million for fiscal year 2015-16, as illustrated in the "Statement of Authorities" and "Departmental Budgetary Expenditures by Standard Object" tables. The net increase of $38 million (23 percent) is due to:

• An increase of $46.2 million to fund the Canada 150 Infrastructure Program;
• A decrease of $5.2 million to allow funding of the Thirty Meter Telescope;
• A net decrease of $2.2 million in operating funding for the delivery of programs on behalf of Infrastructure Canada, and other minor operating adjustments;
• An increase of $1.2 million to reinvest the receipt of repayable contributions for the Western Diversification Program;
• A decrease of $1.2 million in funding for the Rick Hansen Foundation; and
• A net decrease of $0.8 million contribution funding from Agriculture and Agri-Food Canada to support the establishment of the Canadian Beef Centre of Excellence and from the Public Health Agency of Canada to support the Pan-Provincial Vaccine Enterprise.

Text Version (Link 1): Pie Chart: Planned Expenditures

(in thousands of dollars)

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Total Authorities Used and Expended for the Quarter Ended December 31, 2016

Total authorities used for the third quarter and year to date are concentrated in transfer payments and personnel.  Combined, they account for 91 percent of third quarter and 93 percent of year to date actual expenditures (refer to the Actual Expenditures pie charts below).  This spending pattern remains consistent when compared to the same period of fiscal year 2015–16, and is expected to continue for the remainder of fiscal year 2016–17.

Third quarter spending reflects a $1.9 million decrease (6 percent) and year to date spending reflects an increase of $2.2 million (3 percent) in total authorities used and actual expenditures for fiscal year 2016–17 when compared to fiscal year 2015–16. This is illustrated in the "Statement of Authorities" and "Departmental Budgetary Expenditures by Standard Object" tables. The changes are due to:

• an increase of $3.2 million quarterly and $4.9 million year to date in expenditures for the Canada 150 Infrastructure Program;
• a decrease of $3.1 million quarterly and $1.3 million year to date due to timing differences in the processing of claims for reimbursement of various transfer payment programs;
• a decrease of $1.8 million quarterly and $1.5 million year to date in spending to support the Rick Hansen Foundation;
• a decrease in personnel of $0.6 million quarterly and $0.9 million year to date due to reductions to deliver programs on behalf of Infrastructure Canada and timing of staffing actions;
• an increase of $0.5 million quarterly and $0.7 million year to date due to Workplace 2.0 fit-up costs; and
• a net decrease of $0.1 million quarterly and a net increase of $0.3 million year to date in other operating expenses.

Text Version (Link 2): Pie Chart: Actual Expenditures

(in thousands of dollars)

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Risks and Uncertainties

The department is managing financial resources within a well-defined framework of accountabilities, policies and procedures including a system of budgets, reporting and other internal controls. WD conducts an annual risk assessment exercise as part of its overall risk management approach. For 2016-17, no significant financial risks were identified or reported in the Corporate Risk Profile.

The department maintains financial management processes to ensure effective budget management. Strategies have been put in place to allow WD to manage increases in salary costs as the collective bargaining agreements currently being negotiated are finalized. Processes are in place to assess the impact of project timing fluctuations and the process for forecasting multi-year funding requirements. The decision-making process facilitates the re-allocation of financial resources to priority initiatives.

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.

Approval by Senior Officials

Approved by:

Edmonton, Canada
Date: February 17, 2017

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Statement of Authorities (unaudited)

More information is available in the following table.

* Includes only authorities available for use and granted by Parliament at quarter end.

Departmental Budgetary Expenditures by Standard Object (unaudited)