Natural Sciences and Engineering Research Council of Canada
Symbol of the Government of Canada

Common menu bar links


NSERC Quarterly Financial Report Ė 2nd Quarter, September 2018

Natural Sciences and Engineering Research Council of Canada Quarterly Financial Report For the Quarter Ended September 30, 2018

Statement outlining results, risks and significant changes in operations, personnel and programs

Introduction

This Quarterly Financial Report (QFR) has been prepared by management as required by section 65.1 of the This link will take you to another Web site Financial Administration Act (FAA), and in the form and manner prescribed by the Treasury Board. It should be read in conjunction with the 2018-19 This link will take you to another Web site Main Estimates. This report has not been subject to an external audit or review.

Authority, mandate and programs

The Natural Sciences and Engineering Research Council of Canada (NSERC) was established in 1978 by the Natural Sciences and Engineering Research Council Act, and is a departmental corporation named in Schedule II of the FAA. NSERCís purpose is to help make Canada a country of discoverers and innovators for the benefit of all Canadians, by supporting postsecondary students and postdoctoral fellows in their advanced studies, promoting discovery by funding the research programs of academic researchers, and stimulating partnerships between academia and industry.

Further information on the NSERC mandate and program activities can be found in This link will take you to another Web site Part II of the Main Estimates.

Basis of presentation

Management prepared this quarterly report using an expenditure basis of accounting. The accompanying Statement of Authorities includes NSERCís spending authorities granted by Parliament and those used by the agency, consistent with the Main Estimates for fiscal 2018-19. 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 the Government of Canada can spend monies. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authorities for specific purposes.

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

Highlights of fiscal quarter and fiscal year-to-date results

This section highlights the significant items that contributed to the change in resources available for the fiscal year, as well as the actual year-to-date and quarterly expenditures compared with the previous fiscal year.

The total available authorities are comprised of the 2018-19 This link will take you to another Web site Main Estimates, the operating budget carry-forward and other approved items by the Treasury Board as at September 30, 2018.

The following graph provides a comparison of budgetary authorities available for the full fiscal year and budgetary expenditures by quarter for fiscal 2018-19 and fiscal 2017-18.

Comparison of budgetary authorities and year-to-date expenditures
Comparison of budgetary authorities and year-to-date expenditures (thousands of dollars)

Significant changes to budgetary authorities

As of September 30, 2018, NSERCís total available authorities for fiscal 2018-19 amounted to $1,300.8 million. This represents an overall increase of $91.6 million (7.6%) from the comparative period of the previous year. Of the $91.6 million, $89.3 million relates to an increase in NSERCís grant and scholarship programs (Vote 5), $2.2 million to an increase in net operating expenditures (Vote 1) and $0.1 million to an increase in budgetary statutory authorities.

The $91.6 million variation in NSERCís budgets between the current and previous fiscal years is:

  • an increase of $44.1 million from Budget 2018 for Fundamental Research;
  • an increase of $35.3 million for the Canada First Research Excellence Fund, a tri-agency initiative to help institutions excel globally in research areas that create long-term economic advantages for Canada;
  • an increase of $7.8 million from Budget 2017 for the Canada 150 Research Chairs, a new grant program created to attract international scholars and researchers who are among the top 5 to 10% in their fields and enhance Canadaís reputation as a global centre for innovation, science and research excellence;
  • an increase of $5.0 million from Budget 2017 for the extension of the College and Community Social Innovation Fund;
  • an increase of $2.4 million from Budget 2017 for the PromoScience Program to support science, technology, engineering and mathematics learning activities for youth;
  • an increase of $2.1 million for the Business-Led Network Centres of Excellence, due to a variation in payment schedule and ending of an award cycle;
  • an increase of $1.5 million to Centres of Excellence for Commercialization and Research program to support world-renowned researchers and their teams, to establish ambitious research programs at Canadian universities;
  • an increase of $1.4 million for negotiated salary adjustments resulting from the renewed Terms and Conditions of Employment approved during the third quarter of 2017-18; and partially offset by:
  • a decrease of $8.0 million for the Canada Excellence Research Chairs Program, due to the ending of an award cycle.

Significant changes to authorities used

Year-to-date spending

The following table provides a comparison of cumulative spending by vote for the current and previous fiscal years.

Year-to-date budgetary expenditures used at quarter-end (millions of dollars) 2018-19 2017-18

Variance

Vote 1 - Operating expenditures
Personnel 21.1 19.3 1.8
Non-personnel 3.7 3.6 0.1
Vote 5 - Grants and scholarships 605.2 577.9 27.3
Total budgetary expenditures 630.0 600.8 29.2

Total budgetary expenditures amounted to $630.0 million at the end of the second quarter of fiscal 2018-19, compared to $600.8 million reported in the same period in the previous fiscal year.

Grants and scholarships

At the end of the second quarter of 2018-19, the grant and scholarship expenses increased by $27.3 million, compared to what was reported in the same period of the previous fiscal year. The differences are attributable to the following:

  • an increase of $18.6 million for the Canada First Research Excellence Fund, due to expanded program authorities and timing differences;
  • a net increase of $9.8 million due to timing differences on payments; and
  • a decrease of $1.1 million for the Canada Excellence Research Chairs Program, due to the ending of the first award cycle.

Operating expenditures

Personnel expenditures for fiscal 2018-19 have increased by $1.7 million due to the economic increase resulting from the renewed Terms and Conditions of Employment approved during the third quarter of 2017-18.

Total non-personnel expenditures are in line with previous year expenditures.

Comparison of budgetary authorities and year-to-date expenditures
Authorities used based on elapsed time

The total authorities used at the end of the second quarter ($630.0 million) of fiscal 2018-19 represent 48% of total available authorities ($1,300.8 million).

Quarterly spending

The total authorities used during the second quarter of 2018-19 amounted to $279.8 million (22% of the total available authorities; 21% of the total authorities for grant and scholarship programs; and 23% of the total authorities for operating expenditures and employee benefits).

Budgetary expenditures used during the second quarter (millions of dollars) 2018-19 2017-18

Variance

Vote 1 - Operating expenditures
Personnel 10.6 9.6 1.0
Non-personnel 2.2 1.8 0.4
Vote 5 - Grants and scholarships 267.0 266.3 0.7
Total budgetary expenditures 279.8 277.7 2.1

Grants and scholarships

Transfer payments represent 95.8% of NSERCís available authorities. Variations occur in transfer payment expenditures between quarters due to the nature of program cycles. During the second quarter of 2018-19, NSERCís transfer payment expenditures have increased by $0.7 million compared to those reported in the same quarter of the previous fiscal year. The differences in specific programs from year to year are as follows:

  • an increase of $8.8 million over the previous year for the Canada First Research Excellence Fund;
  • a net decrease in spending of $8.1 million due to timing differences of payments for some programs, such as: the Networks of Centres of Excellence programs, Innovation Enhancement grants and the Canada Graduate Scholarships (Masterís and Doctoral).

Operating expenditures

Personnel expenditures for the second quarter of fiscal 2018-19 have increased by $1.0 million, due to the economic increase resulting from the renewed Terms and Conditions of Employment approved during the third quarter of 2017-18.

Total non-personnel expenditures have increased by $0.4 million (18%), mainly due to the increased spending in professional services.

Risks and uncertainties

Through the corporate risk identification exercise, NSERC annually identifies corporate-level risks and develops response measures to minimize their likelihood and/or impact. Senior management closely follows the risks listed below to ensure they are continuously mitigated and that the residual risk level is acceptable.

Strategic Risk 1 - NSERC may face challenges adjusting in a timely way to government policy decisions resulting from Canadaís Fundamental Science Review and Innovation Agenda.

Particular challenges resulting from recent federal science and innovation policy initiatives that will require senior management attention in the third quarter are two-fold:

  • Greater harmonization across the three federal research funding agenciesóNSERC, the Social Sciences and Humanities Research Council (SSHRC), and the Canadian Institutes of Health Research (CIHR)óof data collection, management and reporting on results, particularly with regard to equity, diversity and inclusion, to ensure consistency, accuracy and clarity;
  • As directed by Budget 2018, NSERC will be undertaking a significant renewal of its research partnership programs that will involve consolidating six existing funding opportunities, broadening partnership eligibility and streamlining program delivery.

To mitigate the risks associated with these activities, NSERC will work within its existing governance, planning, and priority-setting mechanisms to adapt to changing priorities in delivering on its core mandate and NSERC 2020 strategic goals.

As a member of the Canada Research Coordinating Committee (CRCC), NSERC will also work with SSHRC, CIHR and other partners to achieve greater harmonization, integration and coordination of research-related programs and policies.

Strategic Risk 2 - NSERC, as a small agency, may be limited in its ability to reallocate/use resources effectively to meet operational needs and respond to government priorities.

As a small agency, the ability to respond to new government wide priorities and emerging operational needs will require close monitoring of major project initiatives and greater coordination with SSHRC. These initiatives include plans for workplace renewal, adoption of new financial and human resources tracking and reporting systems.

A high priority over the coming quarter will be to ensure that strong governance is in place for the planning and eventual development of a shared, harmonized, tri-agency grants management system. NSERC will work closely with the other partner agencies, the Treasury Board and other stakeholders to ensure that the proper project and expenditure authorities are in place for the planning, development and deployment of a grants management system that will meet the current and future user needs and provide value to Canadians.

In addition, NSERC will implement its People Strategy Action Plan to ensure that the workforce is well prepared to adapt to change, and to promote workplace wellness and mental health.

Read more about NSERCís key strategic risks for the current year.

Significant changes related to operations, personnel and programs

In Budget 2018, the Government of Canada announced historic new investments in science, technology and innovation, including more than $1.7 billion over five years to support the next generation of Canadian researchers through Canadaís granting agencies and research institutes. NSERC funding announced in the federal budget entails:

  • $354.7 million over five years ($90.1 million per year ongoing) to support fundamental research;
  • $140 million over five years ($30 million per year ongoing) for the Colleges and Community Innovation Program;
  • $82 million over five years ($20 million per year ongoing) for the Canada Research Chairs Program;
  • $15 million over five years for increasing diversity in science;
  • consolidation of the Engage Grants (including Engage Plus Grants), Industrial Research Chairs, Connect Grants, Strategic Partnership Grants for Networks and Projects, Experience Awards, and the Collaborative Research and Development Grants into a single grant program.

Over the course of the coming quarter, NSERC will secure the required spending authorities from the Budget 2018 commitments.

On September 19, 2018, Dr. B Mario Pinto resigned as President of NSERC. In the event of interim presidency, and in accordance with the NSERC Act s.6(2), Dr. Digvir S. Jayas, Vice-President and Chair of Council, holds all the powers of the President.

Approved by:

Original signed by

Digvir S. Jayas
Interim President, NSERC



Ottawa, Canada
November 29, 2018

 

Original signed by

Patricia Sauvé-McCuan
Vice-President and Chief Financial Officer, NSERC

 

Statement of authorities (unaudited)

  Fiscal Year 2018-19 (in thousands of dollars)
  Total available for use for the year ending March 31, 2019* Used during the quarter ended September 30, 2018 Year-to-date used at quarter-end
Vote 1 – Net Operating Expenditure 49,071 11,418 22,170
Vote 5—Grants and Scholarships 1,246,296 267,046 605,224
Budgetary Statutory Authorities
Contributions to the employee benefit plan 5,362 1,318 2,636
Spending of revenues pursuant to subsection 4(2) of the Natural Sciences and Engineering Research Council Act 88 - -
Total Budgetary Authorities 1,300,817 279,782 630,030
* Includes only authorities available for use and granted by Parliament at quarter-end.

 

  Fiscal Year 2017-18 (in thousands of dollars)
  Total available for use for the year ending March 31, 2018* Used during the quarter ended September 30, 2017 Year-to-date used at quarter-end
Vote 1 – Net Operating Expenditure 46,845 10,229 20,527
Vote 5—Grants and Scholarships 1,156,972 266,297 577,912
Budgetary Statutory Authorities
Contributions to the employee benefit plan 4,786 1,197 2,393
Spending of revenues pursuant to subsection 4(2) of the Natural Sciences and Engineering Research Council Act 579 - -
Total Budgetary Authorities 1,209,182 277,723 600,832
* Includes only authorities available for use and granted by Parliament at quarter-end.

 

Departmental budgetary expenditures by standard object (unaudited)

  Fiscal Year 2018-19 (in thousands of dollars)
  Planned expenditures for the year ending
March 31, 2019
Expended during the quarter ended
September 30, 2018
Year-to-date used at quarter-end
Expenditures      
Personnel 40,041 10,546 21,140
Transportation and communications 4,471 575 1,036
Information 2,178 214 351
Professional and special services 5,335 1,018 1,440
Rentals 1,333 178 507
Repair and maintenance 121 35 38
Utilities, materials and supplies 201 34 118
Acquisition of machinery and equipment 841 136 176
Transfer payments 1,246,296 267,046 605,224
Total budgetary expenditures 1,300,817 279,782 630,030

 

  Fiscal Year 2017-18 (in thousands of dollars)
  Planned expenditures for the year ending
March 31, 2018
Expended during the quarter ended
September 30, 2017
Year-to-date used at quarter-end
Expenditures      
Personnel 36,900 9,587 19,350
Transportation and communications 5,254 551 1,013
Information 1,741 225 591
Professional and special services 5,308 792 1,191
Rentals 1,559 134 536
Repair and maintenance 230 10 43
Utilities, materials and supplies 275 39 84
Acquisition of machinery and equipment 943 88 112
Transfer payments 1,156,972 266,297 577,912
Total budgetary expenditures 1,209,182 277,723 600,832