Quarterly Financial Report for the Quarter Ended December 31, 2018

Table of contents

  1. Introduction
  2. Highlights of fiscal quarter and fiscal year to date (YTD) results
  3. Risks and uncertainties
  4. Significant changes in relation to operations, personnel and programs
  5. Statement of Authorities (unaudited)
  6. Departmental budgetary expenditures by Standard Object (unaudited)

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. It should be read in conjunction with the 2018-19 Main Estimates and Supplementary Estimates A. It has not been subject to an external audit or review nor has it been subject to the approval of the Audit Committee.

1.1 Authority, mandate and programs

The Canadian Institutes of Health Research (CIHR) is the Government of Canada's health research funding agency. It was created in June 2000 by the Canadian Institutes of Health Research Act with a mandate "to excel, according to internationally accepted standards of scientific excellence, in the creation of new knowledge and its translation into improved health for Canadians, more effective health services and products and a strengthened Canadian health care system."

CIHR invests in high quality health research and health research personnel to help create and apply new knowledge that can improve health outcomes for Canadians, lead to innovative products and services that improve Canada's health care system, and create high quality employment and commercial opportunities. CIHR's Health Research Roadmap II: Capturing Innovation to Produce Better Health and Health Care for Canadians presents CIHR's vision to capture excellence and accelerate health innovation via three strategic directions, including:

  1. Promoting excellence, creativity and breadth in health research and knowledge translation;
  2. Mobilizing health research for transformation and impact; and
  3. Achieving organizational excellence.

Further details on CIHR's mandate and programs can be found in Part II of the Main Estimates and the Department Plan.

1.2 Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes CIHR's spending authorities granted by Parliament and those used by CIHR, consistent with the Main Estimates and Supplementary Estimates A for the 2018-19 fiscal year. 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 monies 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.

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

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

This quarterly financial report reflects the results of the current fiscal period in comparison to the authorities provided in the Main Estimates and Supplementary Estimates A for fiscal year 2018-19, as well as budget adjustments approved by Treasury Board up to December 31, 2018.

2.1 Financial Highlights – Statement of Authorities (Refer to Section 5)

As of December 31, 2018, total authorities available for use for CIHR have increased by $65.9 million (6.0%) compared to December 31, 2017 as shown in the tables below. The increase to CIHR's total authorities available is due to:

Total authorities used as at December 31, 2018 have also increased by $22.0 million (3.0%) as compared to the prior fiscal year mainly due to the grant payments towards the newly created programs mentioned above. CIHR has used 64.3% (66.2% in 2017-18) of its available authorities through the third quarter, which is consistent with its annual spending pattern.

Table 2.1.1 – Changes to annual authorities available and authorities used by vote
($ thousands)

2018-19 2017-18 Variance
Annual Authorities available Cumulative Authorities used % used Annual Authorities available Cumulative Authorities used % used (1) vs (3) (2) vs (4)
(1) (2) (3) (4)
Vote 1 - Operating Expenditures 57,880 40,342 69.7% 54,665 39,611 72.5% 5.9% 1.8%
Vote 5 - Grants 1,094,883 700,456 64.0% 1,032,332 679,071 65.8% 6.1% 3.1%
Statutory Authorities 5,956 4,250 71.4% 5,856 4,364 74.5% 1.7% (2.6%)
Total 1,158,719 745,048 64.3% 1,092,853 723,046 66.2% 6.0% 3.0%

Table 2.1.2 – Changes to annual authorities available and authorities used during the third quarter by vote
($ thousands)

2018-19 2017-18 Variance
Annual Authorities available Q3 Authorities used % used Annual Authorities available Q3 Authorities used % used (1) vs (3) (2) vs (4)
(1) (2) (3) (4)
Vote 1 - Operating Expenditures 57,880 13,726 23.7% 54,665 13,972 25.6% 5.9% (1.8%)
Vote 5 - Grants 1,094,883 197,686 18.1% 1,032,332 197,606 19.1% 6.1% 0.0%
Statutory Authorities 5,956 1,417 23.8% 5,856 1,455 24.8% 1.7% (2.6%)
Total 1,158,719 212,829 18.4% 1,092,853 213,033 19.5% 6.0% (0.1%)

Vote 1 – Operating Expenditures

Total authorities available for use for Vote 1 – Operating expenditures have increased by $3.2 million (5.9%) as at December 31, 2018 as compared to the prior fiscal year as a result of:

Operating expenditures authorities used year-to-date have increased by $0.7 million (1.8%) primarily due to increased Personnel costs associated with the collective bargaining increases and compensation adjustments.

Authorities used during the third quarter for Vote 1 – Operating Expenditures have decreased minimally by $0.3 million (1.8%) as compared to the prior fiscal year quarter in most non-salary operating categories, due to the timing of purchases.

Vote 5 – Grants

Authorities available for use for Vote 5 – Grants at December 31, 2018 were $1,094.9 million and included funding for the following transfer payment programs:

Vote 5 – Grants authorities available for use have increased by approximately $62.6 million (6.1%) through the third quarter as compared to the prior fiscal year, as a result of:

Year-to-date grant expenditures have increased by $21.4 million (3.1%) compared to the prior fiscal year due to increased grant payments resulting from the increased authorities available for use. The percentage of grant authorities used through the third quarter of 2018-19 (64.0%) is consistent with authorities used at the third quarter of the prior fiscal year (65.8%). Please note that the percentage of grant authorities used is highest during the second and fourth quarters of the fiscal year as grants are typically disbursed in bi-monthly installments starting in May of each fiscal year.

Grant authorities used during the third quarter of 2018-19 have remained similar to the prior fiscal year quarter.

Overall spending as at December 31, 2018 is comparable to the previous fiscal year and is consistent with management expectations.

Statutory Authorities

Budgetary statutory authorities (representing CIHR's contribution to employee benefit plans) available for use increased marginally year over year by $0.1 million (1.7%). The increase to CIHR's statutory authorities available is due to:

Actual spending for statutory authorities through the third quarter of 2018-19 is 71.4% of the total available authorities for use for the year. This is an expected pattern given this expenditure is distributed equally throughout the fiscal year.

2.2 Financial Highlights – Statement of Departmental Budgetary Expenditures by Standard Object (Refer to Section 6)

As of December 31, 2018, total authorities available for use by CIHR have increased by $65.9 million (6.0%) as compared to the prior fiscal year due to increased funding received. Total authorities used as at December 31, 2018 have increased by $22.0 million (3.0%) as compared to the prior fiscal year. These increases are reflected in Tables 2.2.1 and 2.2.2 (where expenditure types are re-grouped into three categories: Personnel, Other Operating Expenditures and Grants) for further analysis:

Table 2.2.1 – Changes to annual authorities available and cumulative authorities used by expenditure type
($ thousands)

2018-19 2017-18 Variance
Annual Authorities available Cumulative Authorities used % used Annual Authorities available Cumulative Authorities used % used (1) vs (3) (2) vs (4)
(1) (2) (3) (4)
Personnel 46,121 36,742 79.7% 43,102 36,175 83.9% 7.0% 1.6%
Other operating expenditures 17,715 7,850 44.3% 17,419 7,800 44.8% 1.7% 0.6%
Grants 1,094,883 700,456 64.0% 1,032,332 679,071 65.8% 6.1% 3.1%
Total 1,158,719 745,048 64.3% 1,092,853 723,046 66.2% 6.0% 3.0%

Table 2.2.2 – Changes to annual authorities available and authorities used during the third quarter by expenditure type
($ thousands)

2018-19 2017-18 Variance
Annual Authorities available Q3 Authorities used % used Annual Authorities available Q3 Authorities used % used (1) vs (3) (2) vs (4)
(1) (2) (3) (4)
Personnel 46,121 12,715 27.6% 43,102 12,367 28.7% 7.0% 2.8%
Other operating expenditures 17,715 2,427 13.7% 17,419 3,060 17.6% 1.7% (20.7%)
Grants 1,094,883 197,687 18.1% 1,032,332 197,606 19.1% 6.1% 0.0%
Total 1,158,719 212,829 18.4% 1,092,853 213,033 19.5% 6.0% (0.1%)

Personnel and other operating expenditures

Authorities available for Personnel Expenditures for the period ended December 31, 2018 have increased by $3.0 million (7.0%) as compared to the prior year. Authorities available for Other Operating Expenditures have also increased by $0.3 million (1.7%). These increases are due to:

Personnel authorities used year to date increased by $0.6 million (1.6%) as compared to the prior fiscal year and Personnel authorities used during the third quarter increased by $0.3 million (2.8%). The increase is due primarily to the additional funding received as listed above. The percentage of authorities used for Personnel Expenditures through the third quarter (79.7%) is reasonable for this type of expenditure and is in line with expectations.

Other Operating Expenditures used year to date increased by $0.05 million (0.6%) as compared to the prior fiscal year and Other Operating Expenditures used during the third quarter decreased by $0.6 million (20.7%) as compared to the prior fiscal year quarter. The increase quarter to quarter is due simply to the timing of purchases varying by quarter each year as the year to date expenditures are consistent.

Grants

Authorities available for the period ended December 31, 2018 have increased by $62.6 million (6.1%) over the prior year primarily due to additional health research funding highlighted in section 2.1. Authorities used year-to-date for the quarter ended December 31, 2018 have also increased by $21.4 million (3.1%) due to increased grant payments resulting from the increased authorities available for use. The percentage of grant authorities used through the third quarter of 2018-19 (64.0%) is consistent with authorities used as at December 31st of the prior fiscal year (65.8%).

2.3 Other Non-Financial Highlights

Other non-financial highlights for the third quarter of 2018-19 include:

3. Risks and uncertainties

CIHR is funded through voted parliamentary spending authorities and statutory authorities for operating expenditures and transfer payments. As a result, its operations are impacted by any changes to funding approved through Parliament. Therefore, delivering programs and services may depend on several risk factors such as economic fluctuations, technological and scientific development, evolving government priorities, and central agency or government-wide initiatives.

Since the 2018-19 corporate risks were developed, there have been significant leadership changes at the executive and extended executive levels and at senior committees. In particular, the appointment of the new president and the renewal of Governing Council have had a major positive impact on the implementation of the mitigation activities. As a result, the development of a new strategic plan will be deferred until 2020-21. CIHR will continue to operate under its current strategic plan - Roadmap II: Capturing Innovation to Produce Better Health and Health Care for Canadians.

CIHR is committed to a disciplined, integrated risk management process in its daily operations. Based on departmental best practices, the Corporate Risk Profile (CRP) is updated twice annually and provides a proactive response to manage and monitor risks to ensure CIHR's ability to operationalize its activities, achieve outcomes and deliver on its mandate. CIHR is mitigating and monitoring the risks identified in its CRP as follows:

Risk 1: Effective Governance for Decision-Making

Since this risk was identified, a significant number of changes have been implemented including the appointment of CIHR's new President, Vice-President Research Programs, and several new Governing Council members. Additionally, updates have been made to the CIHR Act to support strengthened governance and operations. As CIHR adapts to these changes, the roles and responsibilities for corporate governance will be re-examined to reduce risk and support the design of CIHR's new strategic plan.

Risk 2: Effective Strategic and Operational Prioritization

CIHR has been working with internal stakeholders, its Institutes, partners and the research community to crystalize priorities under the leadership of CIHR's new president by beginning the development of its new strategic plan in direct alignment with business planning activities. The plan is focused on implementing the CIHR Act to improve health systems and/or improve health outcomes in these priority areas for Canadians.

Risk 3: Optimizing Existing Human Resource Capacity

Since this risk was identified, the talent management initiative has been piloted with the goal of enabling CIHR to optimize its plan for human resources (HR), by attracting, engaging, developing, and retaining excellent talent in support of realizing the organization's business objectives. This program will be further refined in the coming year. A new Director-General of Human Resources has been appointed. Under her leadership, the Human Resources Unit has focused on reviewing their HR service delivery model to develop and implement a three-year HR operational plan, which should allow CIHR to have the capacity and the resources required to fulfill its mandate.

Risk 4: Optimizing Technology

Since this risk was identified, the three granting agencies approved a collaborative approach to implement a single grants management solution, which will improve CIHR's ability to maintain its ongoing business as well as support new business processes. A new Director-General of Information Management, Technology and Security/Chief Information Officer has been appointed.

4. Significant changes in relation to operations, personnel and programs

Effective, October 1, 2018, Dr. Michael J. Strong assumed his duties as the new President of CIHR.

Effective, October 29, 2018, Dr. Tammy J. Clifford assumed her duties as the permanent Vice-President, Research Programs.

In November 2018, the new president, confirmed CIHR's commitment to developing a new strategic plan and renewing its current governance structure. Executive roles within the organization have been clarified and new management positions have been created to generate greater operational efficiencies and better support the organization as it undertakes these new priorities.

Effective December 17, 2018, Dalia Morcos Fraser was appointed to the role of Chief Financial Officer.

 

Approval by Senior Officials

Approved by: 

[Original signed by]

Michael J. Strong, MD, FRCPC, FAAN, FCAHS
President

[Original signed by] 

Dalia Morcos Fraser, CPA, CMA
Chief Financial Officer

Ottawa, Canada
February 28, 2019

5. Statement of Authorities (unaudited)

For the quarter ended December 31, 2018

Fiscal year 2018-2019 Fiscal year 2017-2018
(in thousands of dollars) Total available for use for the year ending
March 31, 2019Footnote 1
Used during the quarter ended December 31, 2018 Year to date used at quarter-end Total available for use for the year ended
March 31, 2018Footnote 1
Used during the quarter ended December 31, 2017 Year to date used at quarter-end
Vote 1 – Operating expenditures 57,880 13,726 40,342 54,665 13,972 39,611
Vote 5 - Grants 1,094,883 197,686 700,456 1,032,332 197,606 679,071

Budgetary statutory authorities – Contributions to employee benefit plans



5,956


1,417


4,250


5,856


1,455


4,364
Total budgetary authorities 1,158,719 212,829 745,048 1,092,853 213,033 723,046

6. Departmental budgetary expenditures by Standard Object (unaudited)

For the quarter ended December 31, 2018

Fiscal year 2018-2019 Fiscal year 2017-2018
(in thousands of dollars) Planned expenditures for the year ending
March 31, 20191
Expended during the quarter ended December 31, 2018 Year to date used at quarter-end Planned expenditures for the year ending
March 31, 20181
Expended during the quarter ended December 31, 2017 Year to date used at quarter-end
Personnel 46,121 12,715 36,743 43,102 12,367 36,175
Transportation and communications 6,522 1,072 3,156 4,505 1,380 3,287
Information 343 68 265 549 66 276
Professional and special services 7,814 808 2,509 9,844 988 2,730
Rentals 1,763 183 875 1,261 340 775
Repair and maintenance 57 2 93 58 4 9
Utilities, materials and supplies 308 31 70 147 53 74
Acquisition of machinery and equipment 908 97 664 1,055 176 485
Transfer payments 1,094 883 197,686 700,456 1,032,332 197,606 679,071
Other subsidies and payments - 167 217 - 53 164
Total budgetary expenditures 1,158,719 212,829 745,048 1,092,853 213,033 723,046
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