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 available for use and expenditures as at September 30 (in millions of dollars)
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:

The increase of $2.9 million in Vote 5 - Capital Expenditures is mainly explained by the following items:

The increase of $6.0 million in Vote 10 - Grants and Contributions Expenditures is mainly explained by the following items:

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:

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

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

Canadian Space Agency
Quarterly Financial Report
For the quarter ended September 30, 2015
Statement of Authorities
(unaudited)
(in thousands of dollars)
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

Canadian Space Agency
Quarterly Financial Report
For the quarter ended September 30, 2015
Departmental budgetary expenditures by Standard Object
(unaudited)
(in thousands of dollars)
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
$
Expenditures:
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
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