2015-2016 Quarterly Financial Report for the Quarter Ended September 30, 2015
Management Statement
for the Quarter Ended September 30, 2015
1. Introduction
This quarterly financial 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 financial report should be read in conjunction with the 2015-16 Main EstimatesFootnote 1.
1.2 Mandate and Program Activities
The objects of the Canadian Space Agency (CSA) are to promote the peaceful use and development of space, to advance the knowledge of space through science and to ensure that space science and technology provide social and economic benefits for Canadians.
More information is available on the CSA's mandate and Program Activities in the 2015-16 Report on Plans and PrioritiesFootnote 1.
1.3 Basis of Presentation
This quarterly financial report (QFR) has been prepared by management using an expenditure basis of accounting. The Statement of Authorities annexed to this report includes the CSA's spending authorities granted by Parliament and those used by the CSA, consistent with the Main Estimates and Supplementary estimates voted as at September 30 for fiscal years 2014-15 and 2015-16. This QFR 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 CSA uses the full accrual method of accounting to prepare and present its annual financial statements, which are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis, that is, a partial accrual method of accounting. Expenditure basis accounting thus includes disbursements as well as some accruals for salaries and salary allowances.
This QFR report has not been subject to an external audit. However, it has been reviewed by the members of the CSA Audit Committee, who are satisfied with its presentation and content.
2. Highlights of the Quarterly Financial Results
This section highlights the significant factors that contributed to the changes to the authorities available for the fiscal year, as well as to the quarterly and year-to-date expenditures for the quarter ended September 30, 2015.
The following graph provides an overview of variations in available authorities and expenditures. Additional details on these variations are provided in sections 2.1 and 2.2 as well as in the appended annexes.
| Authorities | Quarterly Expenditures | Year to Date Expenditures | |
|---|---|---|---|
| Fiscal Year 2015-2016 | 502.7 | 62.0 | 141.2 |
| Fiscal Year 2014-2015 | 479.4 | 67.5 | 110.2 |
Totals may not add up due to rounding.
2.1 Significant Changes in Authorities (Total Vote Available for Use) between fiscal 2015-2016 and 2014-2015.
The total vote available for use as at September 30, 2015 is $502.7 million, and represents an increase of $23.4 million compared to the same period of the previous year.
| Authorities (in thousands of dollars) | 2015-2016 | 2014-2015 | Variance | % |
|---|---|---|---|---|
| Vote 1 - Operating expenditures | 177,757 | 163,196 | 14,561 | 9 % |
| Vote 5 - Capital expenditures | 269,750 | 266,888 | 2,861 | 1 % |
| Vote 10 - Grants and contributions | 45,356 | 39,307 | 6,049 | 15 % |
| Contributions to employee benefit plans | 9,803 | 9,919 | (116) | - 1 % |
| Spending of proceeds from the disposal of surplus Crown assets | 54 | 44 | 10 | 22 % |
| Total budgetary authorities | 502,720 | 479,354 | 23,366 | 5 % |
The increase of $14.6 million in Vote 1 - Operating Expenditures is mainly explained by the following items:
- An increase of $8.0 million due to additional funding received in order to provide enhanced space-based Automatic Identification System data services to support the Government of Canada activities for safety and security.
- An increase of $6.3 million resulting in a transfer from the Capital Expenditures Vote to present the budget required in the proper voted in accordance with the CSA Investment plan.
- An increase of $0.7 million due to additional funding through the 2015-16 Supplementary Estimates (A) for repairs and upgrades to the David Florida Laboratory as part of the Economic Action Plan – Federal Infrastructure.
The increase of $2.9 million in Vote 5 - Capital Expenditures is mainly explained by the following items:
- An increase of $3.3 million due to additional funding through the 2015-16 Supplementary Estimates (A) for repairs and upgrades to the David Florida Laboratory as part of the Economic Action Plan – Federal Infrastructure.
- An increase of $3.1 million obtained for the project Maritime Monitoring and Messaging Microsatellite (M3MSat) due to increased costs related to the change of launch services provider.
- An increase of $3.0 million related to the RADARSAT Constellation Mission (RCM). The variation between the two years is due to different needs for cash flows.
- A decrease of $6.8 million resulting in a transfer from the Capital Expenditures Vote to other budgetary voted to present the budget required in the proper voted in accordance with the CSA Investment plan.
- A decrease of $1.5 million since the capital carry forward from 2014-2015 to 2015-2016 was less important than the carry forward from 2013-2014 to 2014-2015.
- The residual difference representing an increase of $1.8 million is composed of multiple variations inherent to the Canadian Space Program (CSP) Resource Management. They result from the fact that budgetary requirements by vote are not linear from one year to the other, requiring vote transfers or fund carry forwards to another fiscal year.
The increase of $6.0 million in Vote 10 - Grants and Contributions Expenditures is mainly explained by the following items:
- An increase of $7.2 million related to cash flow requirements for the Class Contribution and Grant Program to support research, awareness and learning in space science and technology, mainly for the Space Technology Development Program.
- A decrease of $1.2 million related to cash flow requirements for contributions under the Canada / European Space Agency (ESA) Cooperation Agreement.
2.2 Significant Changes in Quarterly and Year-to-Date Expenditures (Votes Used) between fiscal 2015-2016 and 2014-2015
Quarterly and year-to-date expenditures for the quarter ended September 30, 2015 are of $61.9 and $141.2 million, and represent a quarterly decrease of $5.6 million, but a cumulative increase of $30.9 million compared to the same period of the previous year.
Expenditures by Vote
Expenditures and variations by Vote for the quarter ended September 30:
| Expenditures by Vote (in thousands of dollars) |
2015-2016 | 2014-2015 | Variance | |||
|---|---|---|---|---|---|---|
| Quarterly | Year to date | Quarterly | Year to date | Quarterly | Year to date | |
| Vote 1 - Operating expenditures | 33,693 | 58,616 | 33,423 | 57,924 | 270 | 692 |
| Vote 5 - Capital expenditures | 23,948 | 65,635 | 30,528 | 34,368 | (6,580) | 31,267 |
| Vote 10 - Grants and contributions | 1,891 | 12,002 | 1,103 | 12,941 | 788 | (939) |
| Contributions to employee benefit plans | 2,451 | 4,902 | 2,479 | 4,959 | (28) | (57) |
| Spending of proceeds from the disposal of surplus Crown assets | - | - | 10 | 14 | (10) | (14) |
| Total budgetary expenditures by Vote | 61,983 | 141,155 | 67,543 | 110,206 | (5,560) | 30,949 |
The decrease of $6.6 and an increase of $31.3 million in the use of Vote 5 - Capital expenditures quarterly and year to date is mainly explained by the following:
- The variations in the payment schedules and in the project development cycle, in particular for the RCM project, which are an inherent implementation characteristic of the Canadian Space Program.
Expenditures by Standard Object
Expenditures and variations by standard object for the quarter ended September 30:
| Expenditures by Standard Object (in thousands of dollars) | 2015-2016 | 2014-2015 | Variance | |||
|---|---|---|---|---|---|---|
| Quarterly | Year to date | Quarterly | Year to date | Quarterly | Year to date | |
| Personnel | 14,247 | 32,690 | 15,374 | 35,093 | (1,127) | (2,403) |
| Transportation and communications | 697 | 1,327 | 627 | 1,199 | 70 | 128 |
| Information | 3,069 | 4,867 | 567 | 782 | 2,502 | 4,085 |
| Professional and special services | 17,303 | 23,917 | 17,887 | 23,464 | (584) | 453 |
| Rentals | 568 | 802 | 732 | 991 | (164) | (189) |
| Repair and maintenance | 512 | 824 | 384 | 564 | 128 | 260 |
| Utilities, materials and supplies | 609 | 894 | 391 | 764 | 218 | 130 |
| Acquisition of land, buildings and works | - | - | - | - | - | - |
| Acquisition of machinery and equipment | 21,040 | 61,722 | 28,962 | 30,359 | (7,922) | 31,363 |
| Transfer payments | 1,891 | 12,002 | 1,103 | 12,941 | 788 | (939) |
| Other subsidies and payments | 2,047 | 2,110 | 1,516 | 4,049 | 531 | (1,939) |
| Total budgetary expenditures by Standard Object | 61,983 | 141,155 | 67,543 | 110,206 | (5,560) | 30,949 |
- The $1.1 and $2.4 million decreases in quarterly and year-to-date expenditures for the Personnel standard object is primarily due to a periodic variation in the recording of payroll transactions compared to the previous year.
- The $2.5 and 4.1 million increases in quarterly and year-to-date expenditures for the Information standard object is primarily due to additional funding received in order to provide enhanced space-based Automatic Identification System data services to support the Government of Canada activities for safety and security.
- The decrease of $7.9 and the increase of $31.4 million in quarterly and year-to-date expenditures for the Acquisition of machinery and equipment standard object is mainly explained by the variations in the payment schedules and in the project development cycle, in particular for the RCM project, which are an inherent implementation characteristic of the Canadian Space Program.
- The $1.9 million decrease in year-to-date expenditures for the Other subsidies and payments standard object is due to a one-time transition payment for the implementation of salary payments in arrears by the Government of Canada.
3. Risks and Uncertainties
Characteristics specific to the implementation of the Canadian Space Program: International cooperation is essential to the achievement of the CSA's programs because partnerships with other space-faring nations make it possible to share technical expertise, knowledge and infrastructure. The CSA also relies on partnerships with Canadian businesses and universities to convert scientific and technological advances into innovative products and services. The domestic market is relatively small and the viability of Canada's space sector depends on its positioning on international markets. Furthermore, space projects make use of innovative technologies that will sometimes be tested for the first time in harsh space conditions.
These specific characteristics of the space sector create a risk of delays in the realization of projects and therefore, risk of deferral of the use of funds.
The year-to-date expenditures for the 2nd quarter of 2015-16 represent 28% of our authorities whereas 50% of our fiscal year has passed. This situation is similar to that of the previous fiscal years and represents no concerns. The situation concerning the cumulative expenditures will be restored at fiscal year-end when the accruals will be recorded, according to the full accrual method of accounting, combined with the deferral of budgets to the following year.
Government organizations are increasingly using space assets to deliver their mandate. Where there is a large diversity of missions and partnership opportunities to choose from, there is a risk that gaps may emerge between users' needs and services provided. In this context, the CSA has implemented a new interdepartmental governance model that will facilitate the identification and mitigation of potential gaps between supply and demand while ensuring that adequate financial resources will be allocated to space activities.
From the Canada / ESA Cooperation Agreement also arise risks such as variations in amounts payable caused by changes in the Gross National Product (GNP) statistics, the depreciation of the Canadian dollar against the euro (exchange rate), inflation and the enforcement of the ESA's industrial policy. These risks have an impact on both costs and cash flow profiles.
To mitigate these risks, the CSA regularly reviews its project portfolio, activity plans, schedules and financial management strategies to adjust to changes brought to the space programs of its key partners (National Aeronautics and Space Administration (NASA), ESA and other space agencies). In addition, the CSA continued the implementation of its new governance framework and investment monitoring, which will effectively improve the management and control process already in place.
4. Significant Changes in Relation to Operations, Personnel and Programs
There were no major changes in operations, personnel and programs, in the second quarter of 2015-16.
Approval by Senior Officials
Approved by,
The original version was signed by Sylvain Laporte, President, in Longueuil, Quebec, on November 25, 2015.
The original version was signed by Marie-Claude Guérard, CPA CGA, Chief Financial Officer, in Longueuil, Quebec, on November 25, 2015.
Annex 1
| Authorities | Fiscal Year 2015-2016 | Fiscal Year 2014-2015 | ||||
|---|---|---|---|---|---|---|
| Total available for use for the year ending March 31, 2016 Footnote 2 $ |
Used during the quarter ended September 30, 2015 $ |
Year to date used at quarter-end $ |
Total available for use for the year ending March 31, 2015 Footnote 2 $ |
Used during the quarter ended September 30, 2014 $ |
Year to date used at quarter-end $ |
|
| Vote 1: Operating expenditures | 177,757 | 33,693 | 58,616 | 163,196 | 33,423 | 57,924 |
| Vote 5: Capital expenditures | 269,750 | 23,948 | 65,635 | 266,888 | 30,528 | 34,368 |
| Vote 10: Grants and contributions | 45,356 | 1,891 | 12,002 | 39,307 | 1,103 | 12,941 |
| Contributions to employee benefit plans | 9,803 | 2,451 | 4,902 | 9,919 | 2,479 | 4,959 |
| Spending of proceeds from the disposal of surplus Crown assets | 54 | - | - | 44 | 10 | 14 |
| Total budgetary authorities | 502,720 | 61,983 | 141,155 | 479,354 | 67,543 | 110,206 |
Annex 2
| Expenditures: | Fiscal Year 2015-2016 | Fiscal Year 2014-2015 | ||||
|---|---|---|---|---|---|---|
| Planned expenditures for the year ending March 31, 2016 $ |
Used during the quarter ended September 30, 2015 $ |
Year to date used at quarter-end $ |
Planned expenditures for the year ending March 31, 2015 $ |
Used during the quarter ended September 30, 2014 $ |
Year to date used at quarter-end $ |
|
| Personnel | 68,156 | 14,247 | 32,690 | 70,032 | 15,374 | 35,093 |
| Transportation and communications | 3,568 | 697 | 1,327 | 4,405 | 627 | 1,199 |
| Information | 848 | 3,069 | 4,867 | 2,227 | 567 | 782 |
| Professional and special services | 152,199 | 17,303 | 23,917 | 112,771 | 17,887 | 23,464 |
| Rentals | 1,531 | 568 | 802 | 3,986 | 732 | 991 |
| Repair and maintenance | 8,830 | 512 | 824 | 3,012 | 384 | 564 |
| Utilities, materials and supplies | 2,294 | 609 | 894 | 3,271 | 391 | 764 |
| Acquisition of land, buildings and works | 564 | - | - | - | - | - |
| Acquisition of machinery and equipment | 215,879 | 21,040 | 61,722 | 236,677 | 28,962 | 30,359 |
| Transfer payments | 45,356 | 1,891 | 12,002 | 39,307 | 1,103 | 12,941 |
| Other subsidies and payments | 3,495 | 2,047 | 2,110 | 3,666 | 1,516 | 4,049 |
| Total budgetary expenditures | 502,720 | 61,983 | 141,155 | 479,354 | 67,543 | 110,206 |