Quarterly Financial Report

For the quarter ended December 31, 2011

Table of Contents


1. Introduction

This quarterly financial report should be read in conjunction with the 2011-12 Main Estimates, Supplementary Estimates A and Supplementary Estimates B. 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. It has not been subject to an external audit or review.

The Canadian Institutes of Health Research (CIHR) is the Government of Canada's health research funding agency. Its objective is 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 Strategic Plan identifies five key health research priorities including 1) enhancing patient-oriented care and clinical results; 2) supporting a high-quality, accessible and sustainable healthcare system; 3) reducing health inequities of Aboriginal people and other vulnerable populations including those in the North; 4) preparing for and responding to emerging threats to health; and 5) reducing the burden of chronic disease and mental illness.

Further details on CIHR's authority, mandate and program activities can be found in Part II of the Main Estimates and the Report on Plans and Priorities.

Basis of Presentation

The 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, the Supplementary Estimates A and the Supplementary Estimates B for the 2011-12 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.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

CIHR 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.

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

Statement of Authorities

Available authorities

As of December 31, 2011, total authorities available for use for the Canadian Institutes of Health Research have decreased by approximately $6.0 million to $1.009 billion as compared to the prior fiscal year. This net decrease is a result of an authority decrease to Vote 20 - Operating expenditures ($0.7M) and a decrease in Vote 25 – Grants ($5.7M), offset by a minor increase in Statutory authorities ($0.4M), as described below.

Total authorities available for use in Vote 20 (Operating expenditures) decreased by $0.7M (1.4%) over the prior fiscal year. This decrease was largely due to the fact that CIHR did not carry forward any of its operating budget from 2010-11 into the 2011-12 year.

Authorities available for use for Vote 25 – Grants have decreased by $5.7M (0.6%) compared to the prior year. Despite this net decrease, there were several programs which saw significant increases and decreases as compared to the previous fiscal year, as follows:

Increases in funding: ($30.6M)

Decreases in funding: ($36.3M)

Statutory authorities available for use increased year over year by $0.4M as a result of minor adjustments made to employee benefit rates by Treasury Board.

Authorities Used during the quarter ended December 31

Total authorities used for the three months ending December 31, 2011 have increased by $3.1M (1.7%) to $192.0M as compared to the same quarter in the prior year. The slight increase resulted from increased spending for Vote 25 – Grants of $3.7M and $0.1M for statutory authorities (e.g. employee benefits) offset by a reduction in spending in Vote 20 – Operating expenditures of $0.7M.

The net increase in grant spending of $3.7M for the third quarter in 2011-12 as compared to the prior year third quarter is due to increased and decreased expenditures in several grant programs, as follows:

Increases in third quarter spending: ($7.8M)

Decreases in third quarter spending: ($4.1M)

The $0.7M (4%) decrease in expenditures to Vote 20 – Operating expenditures resulted primarily from greater constraint on discretionary expenditures in the third quarter of 2011-12.

Authorities Used year to date as at December 31

Total authorities used as at December 31, 2011 have decreased by $6.5M (0.9%) to $664.3M over the same three quarters in the prior fiscal year.

The decrease is largely a result of decreased spending for Vote 25 – Grants by $7.4M, offset by increased spending on Vote 20 – Operating expenditures and Statutory authorizes of $0.6M and $0.3M respectively.

The net decrease in grant spending of $7.4M year to date compared to the same period in the prior year is mainly due to:

Increases in year-to-date spending: ($10.6M)

Decreases in year-to-date spending: ($18.0M)

The net increased spending of $0.9M on Vote 20 – Operating expenditures ($0.6M) and Statutory authorities ($0.3M) through the first three quarters of 2011-12 resulted primarily from lower vacancy rates in 2011-12 as compared to 2010-11.

Actual authorities used in the first three quarters of 2011-12 for Vote 20 - Operating expenditures are 68.4% of total 2011-12 Authorities available. Actual authorities used for Vote 25 – Grants in the first three quarters of 2011-12 represent 65.6% of total 2011-12 Grants authorities available for use. These ratios are consistent with those from the prior fiscal year (2010-11) in which CIHR used virtually all Authorities made available by Parliament. In the prior fiscal year, CIHR had used 66.4% of its total Vote 20 – Operating expenditures Authorities and 66.0% of its Vote 25 – Grants Authorities available for use by the end of the third quarter.

CIHR typically disburses grants and awards payments on a bi-monthly basis (starting in May), and as such the proportion of Grant authorities used are highest in the second and fourth quarters of the fiscal year. As such, CIHR anticipates using the vast majority of its Parliamentary Authorities again this fiscal year. The pattern in which CIHR incurs expenditures is quite consistent on a year-to-year basis.

Statement of Departmental Budgetary Expenditures by Standard Object

Total planned expenditures as of December 31, 2011, for the year ended March 31, 2012, have decreased by approximately $6.0 million over the prior year. The decrease is primarily due to decreased planned Transfer payment expenditures of $5.7M in 2011-12.

Actual expenditures for the three month period ended December 31, 2011 are slightly higher ($3.1M or 1.7%) than the same period in the prior year. The majority of the increase is the result of increased Transfer payments of $3.7M. Total Operating Expenditures for the three month period ended December 31, 2011 declined slightly ($0.6M or 4.3%) due largely to a decrease in expenditures on Professional and special services of $0.5M. Greater constraint was placed on discretionary expenditures at CIHR during the quarter.

Actual expenditures for the nine month period ending December 31, 2011 are $6.5M (1.0%) lower than the same period in the prior year reflecting the decline in 2011-12 Parliamentary Authorities available for use. Once again, the majority of the decrease in expenditures is the result of a decrease to Transfer payments of $5.7M due to expected decreases in program spending (as described above in the Authorities section). This decrease was offset by an increase to Personnel expenditures of $1.5M for the nine month period due to lower vacancy rates in 2011-12 compared to 2010-11. The remaining Standard Objects remained fairly consistent period over period, with only minor increases and decreases.

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. CIHR is a knowledge-based organization and as such, relies on maintaining its talented and committed workforce to continue delivering programs and services.

In Budget 2010, the Minister of Finance announced that the operating budgets of departments, as appropriated by Parliament, would be frozen at their 2010-11 levels for the years 2011-12 and 2012-13. As a result CIHR has been managing this constraint through the following actions and mitigation strategies: CIHR has implemented a vacancy management exercise to control salary costs, the largest part of its operational budget. In an effort to offset the rising costs of peer review, CIHR has implemented various cost reduction options for travel and hospitality and will continue to monitor progress in these areas.

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

There have been no significant changes in relation to operations, personnel and programs over the last year.

5. Approval by Senior Officials

Approved by:

[Originally signed by]

Alain Beaudet, MD, PhD
President

[Originally signed by]

James Roberge, CMA
Chief Financial Officer

Ottawa, Canada
February 22, 2012

6. Statement of Authorities (unaudited)

For the quarter ended December 31, 2011

Fiscal year 2011-2012 (in thousands of dollars)
Authorities Total available for use for the year ending March 31, 2012 * Used during the quarter ended December 31, 2011 Year to date used at quarter-end
* Includes only Authorities available for use and granted by Parliament at quarter-end.
Vote 20 – Operating expenditures 52,740 11,804 35,706
Vote 25 - Grants and contributions 951,734 178,907 624,621
Statutory authorities 5,292 1,305 3,966
Total authorities 1,009,766 192,016 664,293

Fiscal year 2010-2011 (in thousands of dollars)
Authorities Total available for use for the year ending March 31, 2011 * Used during the quarter ended December 31, 2010 Year to date used at quarter-end
* Includes only Authorities available for use and granted by Parliament at quarter-end.
Vote 20 – Operating expenditures 53,479 12,491 35,087
Vote 25 - Grants and contributions 957,445 175,182 632,008
Statutory authorities 4,900 1,208 3,677
Total authorities 1,015,824 188,881 670,772

7. Departmental budgetary expenditures by Standard Object (unaudited)

For the quarter ended December 31, 2011

Fiscal year 2011-2012 (in thousands of dollars)
Expenditures Planned expenditures for the year ending March 31, 2012 * Expended during the quarter ended December 31, 2011 Year to date used at quarter-end
* Includes only Authorities available for use and granted by Parliament at quarter-end.
Personnel 35,875 10,855 33,195
Transportation and communications 6,323 1,105 2,892
Information 1,104 206 574
Professional and special services 11,755 715 2,139
Rentals 440 103 247
Repair and maintenance 84 18 263
Utilities, materials and supplies 333 28 109
Acquisition of machinery and equipment 2, 118 12 189
Transfer payments 951,734 178,907 624,621
Other subsidies and payments - 67 64
Total budgetary expenditures 1,009,766 192,016 664,293

Fiscal year 2010-2011 (in thousands of dollars)
Expenditures Planned expenditures for the year ending March 31, 2011 * Expended during the quarter ended December 31, 2010 Year to date used at quarter-end
* Includes only Authorities available for use and granted by Parliament at quarter-end.
Personnel 35,405 10,775 31,708
Transportation and communications 8,527 908 2,445
Information 1,681 291 505
Professional and special services 9,495 1,182 2,926
Rentals 491 50 184
Repair and maintenance 23 70 72
Utilities, materials and supplies 523 79 160
Acquisition of machinery and equipment 1,083 299 662
Transfer payments 957,445 175,182 632,008
Other subsidies and payments 1,151 45 102
Total budgetary expenditures 1,015,824 188,881 670,772
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