2015-2016 Quarterly Financial Report for the Quarter Ended December 31, 2015

Management Statement
for the Quarter Ended December 31, 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 December 31 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 December 31, 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 December 31 (in millions of dollars)
Authorities Quarterly Expenditures Year to Date Expenditures
Fiscal Year 2015-2016 502.7 105.7 246.9
Fiscal Year 2014-2015 483.6 77.2 187.4

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 December 31, 2015 is $502.7 million, and represents an increase of $19.1 million compared to the same period of the previous year.

Compared to the second quarter ended September 30, 2015, the CSA has not received a significant increase in its annual authorities. The significant increase in the 2015-16 annual authorities compared to last year occurred during the first quarter of 2015-16.

Authorities (in thousands of dollars) 2015-2016 2014-2015 Variance %
Vote 1 - Operating expenditures 177,757 169,442 8,315 5 %
Vote 5 - Capital expenditures 269,750 262,285 7,465 3 %
Vote 10 - Grants and contributions 45,356 41,893 3,463 8 %
Contributions to employee benefit plans 9,803 9,919 (116) - 1 %
Spending of proceeds from the disposal of surplus Crown assets 56 50 6 12 %
Total budgetary authorities 502,720 483,589 19,134 4 %

The increase of $8.3 million in Vote 1 - Operating Expenditures, compared to the previous year, is mainly explained by the following items:

The increase of $7.5 million in Vote 5 - Capital Expenditures, compared to the previous year, is mainly explained by the following items:

The increase of $3.5 million in Vote 10 - Grants and Contributions Expenditures, compared to the previous year, 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 December 31, 2015 are of $105.7 and $246.9 million, and represent an increase of $28.5 million and $59.5 million compared to the same period of the previous year.

Expenditures by Vote

Expenditures and variations by Vote for the quarter ended December 31:

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 45,013 103,629 37,144 95,068 7,869 8,561
Vote 5 - Capital expenditures 49,107 114,742 27,314 61,682 21,793 53,060
Vote 10 - Grants and contributions 9,133 21,135 10,254 23,195 (1,121) (2,060)
Contributions to employee benefit plans 2,451 7,353 2,480 7,439 (29) (86)
Spending of proceeds from the disposal of surplus Crown assets 2 2 (2) 12 4 (10)
Total budgetary expenditures by Vote 105,706 246,861 77,190 187,396 28,516 59,465

The increase of $7.9 and $8.6 million in the use of Vote 1 – Operating expenditures quarterly and year to date, the particular noted variance in the third quarter of 2015-16, is mainly explained by the following:

The increase of $21.8 and $53 million in the use of Vote 5 - Capital expenditures quarterly and year to date is mainly explained by the following:

The decrease of $1.1 and $2 million in the use of Vote 10 – Grants and contributions 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 December 31:

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 16,518 49,208 16,745 51,838 (227) (2,630)
Transportation and communications 997 2,324 1,180 2,379 (183) (55)
Information 3,028 7,895 2,247 3,029 781 4,866
Professional and special services 26,852 50,769 18,764 42,228 8,088 8,541
Rentals 1,086 1,888 1,433 2,424 (347) (536)
Repair and maintenance 1,751 2,575 1,460 2,024 291 551
Utilities, materials and supplies 489 1,383 545 1,309 (56) 74
Acquisition of land, buildings and works - - 29 29 (29) (29)
Acquisition of machinery and equipment 45,801 107,523 24,502 54,861 21,299 52,662
Transfer payments 9,133 21,135 10,254 23,195 (1,121) (2,060)
Other subsidies and payments 51 2,161 31 4,080 20 (1,919)
Total budgetary expenditures by Standard Object 105,706 246,861 77,190 187,396 28,516 59,465

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 3nd quarter of 2015-16 represent 49% of our authorities whereas 75% 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.

Risks also arise from the Canada / ESA Cooperation Agreement such as variations in amounts payable caused by changes in the Gross National Product (GNP) statistics, the fluctuation 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 third quarter of 2015-16.

Approval by Senior Officials

Approved by,

The original version was signed by Sylvain Laporte, President, in Longueuil, Quebec, on February 19, 2016.

The original version was signed by Marie-Claude Guérard, CPA CGA, Chief Financial Officer, in Longueuil, Quebec, on February 19, 2016.

Annex 1

Canadian Space Agency
Quarterly Financial Report
For the quarter ended December 31, 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
December 31, 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
December 31, 2014
$
Year to date
used at
quarter-end
$
Vote 1: Operating expenditures 177,757 45,013 103,629 169,442 37,144 95,068
Vote 5: Capital expenditures 269,750 49,107 114,742 262,285 27,314 61,682
Vote 10: Grants and contributions 45,356 9,133 21,135 41,893 10,254 23,195
Contributions to employee benefit plans 9,803 2,451 7,353 9,919 2,480 7,439
Spending of proceeds from the disposal of surplus Crown assets 56 2 2 50 (2) 12
Total budgetary authorities 502,722 105,706 246,861 483,589 77,190 187,396

Annex 2

Canadian Space Agency
Quarterly Financial Report
For the quarter ended December 31, 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
December 31, 2015
$
Year to date
used at
quarter-end
$
Planned expenditures for the year ending
March 31, 2015
$
Used
during the
quarter ended December 31, 2014
$
Year to date
used at
quarter-end
$
Expenditures:
Personnel 68,156 16,518 49,208 70,251 16,745 51,838
Transportation and communications 3,568 997 2,324 4,405 1,180 2,379
Information 848 3,028 7,895 6,227 2,247 3,029
Professional and special services 152,201 26,852 50,769 110,201 18,764 42,228
Rentals 1,531 1,086 1,888 3,986 1,433 2,424
Repair and maintenance 8,830 1,751 2,575 3,012 1,460 2,024
Utilities, materials and supplies 2,294 489 1,383 3,271 545 1,309
Acquisition of land, buildings and works 564 - - - 29 29
Acquisition of machinery and equipment 215,879 45,801 107,523 236,677 24,502 54,861
Transfer payments 45,356 9,133 21,135 41,893 10,254 23,195
Other subsidies and payments 3,495 51 2,161 3,666 31 4,080
Total budgetary expenditures 502,722 105,706 246,861 483,589 77,190 187,396
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