Quarterly Financial Report for the quarter ended December 31, 2023 (unaudited)

1. Introduction

The Government of Canada uses financial information to support decision making, for policy development, for service delivery and for historical reference. These financial statements have been prepared to respond to these requirements. This Departmental Quarterly Financial Report (QFR) reflects the results of the current fiscal period in relation to the Main Estimates, Supplementary Estimates (A) and Supplementary Estimates (B). The QFR should be read in conjunction with the Main Estimates and the Federal Budget. They have been prepared by management as required by section 65.1 of the Financial Administration Act (R.S.C., 1985, c. F-11) and in the form and manner prescribed by the Treasury Board of Canada Secretariat. Although these statements have not been subject to an external audit or review, the National Research Council of Canada (NRC) attests that they are an accurate and true reflection of the financial position for the period ended December 31, 2023.

1.1 NRC mandate

The NRC exists under the National Research Council Act (R.S.C., 1985, c. N-15) and is a Departmental corporation named in Schedule II of the Financial Administration Act (R.S.C., 1985, c. F-11). The mission of the NRC is to have an impact by advancing knowledge, applying leading-edge technologies, and working with other innovators to find creative, relevant and sustainable solutions to Canada's current and future economic, social and environmental challenges.

Under the National Research Council Act (R.S.C., 1985, c. N-15), the NRC is responsible for:

  • undertaking, assisting or promoting scientific and industrial research in fields of importance to Canada
  • providing vital scientific and technological services to the research and industrial communities
  • investigating standards and methods of measurement
  • working on the standardization and certification of scientific and technical apparatus, instruments and materials used or usable by Canadian industry
  • operating and administering any astronomical observatories established or maintained by the Government of Canada
  • establishing, operating and maintaining a national science library
  • publishing and selling or otherwise distributing such scientific and technical information as the Council deems necessary

Further details on the NRC's legislative framework, authority, mandate and program activities can be found in Part II of the Main Estimates and the Departmental 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 the NRC's spending authorities granted by Parliament and those used by the NRC consistent with the Main Estimates 2023-24, 2023-24 Supplementary Estimates (A) and 2023-24 Supplementary Estimates (B). This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use for spending authorities.

The authority of Parliament is required before moneys can be spent by the Government of Canada. 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 (pursuant to paragraph 5(1)(e) of the National Research Council Act (R.S.C., 1985, c. N-15), the NRC has authority to expend revenues it has received through the conduct of its operations).

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act (R.S.C., 1985, c. F-11) authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government of Canada 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.

The NRC uses the full accrual method of accounting to prepare and present its annual departmental financial statements which 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

This section highlights the items that contributed most significantly to the changes in budgetary authorities for the current fiscal year and to the actual expenditures for the quarter that ended on December 31, 2023 compared with the previous fiscal year. This section should be read in conjunction with the NRC's tables entitled Statement of Authorities and Departmental budgetary expenditures by Standard Object found on the last 2 pages of this report.

2.1 Authorities and expenditures

The following graph provides a comparison of the budgetary authorities and expenditures as of December 31, 2023 and those as of December 31, 2022.

Comparison of Budgetary Authorities and Expenditures
as of December 31, 2023 and December 31, 2022

(in millions of dollars)

Long description follows.
  • Long description of the Comparison of Budgetary Authorities and Expenditures
    (in millions of dollars)
      FY 2023-24 FY 2022-23
    Authorities $1,806.4 $1,674.5
    Expenditures – Quarter 1 $279.5 $261.5
    Expenditures – Quarter 2 $347.5 $322.0
    Expenditures – Quarter 3 $352.6 $343.3
    Total expenditures $979.6 (54.2% of Authorities) $926.7 (55.3% of Authorities)

As shown in the graph above, the NRC’s expenditures totalled $352.6M during the third quarter of 2023–24 which represents an increase of $9.3M over the third quarter of 2022-23. Refer to 2.3 Significant changes to budgetary expenditures for additional details.

2.2 Significant changes to authorities

As of December 31, 2023, NRC's authorities were $1,806.4M, representing an increase of $131.9M (7.9%) in comparison to the 2022-23 authorities of the same period.

The increase of $131.9M in authorities is mainly explained by the following items:

  • An increase of $71.7M in new funding for the modernization of the National Research Council facilities to support economic growth and government priorities as presented in the Fall Economic Statement 2022
  • An increase of $40.6M to the NRC's statutory revenue carry-forward
  • An increase of $27.4M in funding for Square Kilometre Array Observatory (SKAO)
  • An increase of $25.2M in new funding for the Platform for the Decarbonization of the Construction Sector
  • An increase of $10.6M in funding for Thirty Meter Telescope Observatory and associated reprofiles
  • An increase of $7.3M in funding for IRAP Youth Employment Skills Strategy
  • An increase of $4.6M for the revitalization of the Canadian Photonics Fabrication Centre
  • The increase in authorities is Offset by:
    • A decrease of $14.7M in the value of funding reprofiled through the Capital Budget Carry-Forward mechanism
    • A decrease of $32.7M in funding and associated reprofiles for NRC's response to COVID-19

The following table summarizes the significant changes to NRC authorities:

Significant Changes to Authorities (unaudited)
For the year ending March 31, 2024 –
As of December 31, 2023

(in millions of dollars)

  Vote 1 Operating Vote 5 Capital Vote 10 Grants & Contributions Statutory Revenues Contributions to EBP Total
Authorities – Total available for use for the year ending March 31, 2024 - As of September 30, 2023           1,746.9
Funding to support SKAO
20.1   20.2   0.4 40.6
Funding for Supporting Resilient Infrastructure-Climate Change
5.4       0.8 6.2
Compensation Allocations
4.7         4.7
Funding for Other Programs
4.7 0.7 (1.7)   0.3 4.0
Funding for Critical Minerals Strategy
2.1 1.0 0.5   0.3 3.9
Conversion of operating funding to fund BMC Contribution program
(17.0)   17.0      
Total increase (decrease) in authorities in comparison to prior quarter 20.0 1.7 36.0   1.8 59.5
Authorities – Total available for use for the year ending March 31, 2024 - As of December 31, 2023           1,806.4

2.3 Significant changes to budgetary expenditures

This section should be read in conjunction with the NRC's tables entitled Statement of Authorities and Departmental budgetary expenditures by Standard Object both located at the end of this report.

2.3.1 Variances in year-to-date expenditures

As of December 31, 2023, year-to-date expenditures were $979.6M, representing an increase of $52.9M (5.7%) in comparison to the 2022-23 expenditures of the same period. This increase is mostly attributable to the following items:

  • An increase of $54.0M in grants and contribution expenditures, mainly due to increases in IRAP Contribution to Firms and contributions for the Biologics Manufacturing Centre, offset by a reduction in contributions to the Thirty Meter Telescope Observatory
  • An increase of $10.2M in combined operating and statutory expenditures in part due to costs related to the modernization of the NRC facilities and the decarbonization of the construction sector
  • A decrease of $11.3M in capital expenditures as a result of the completion of construction of the Clinical Trial Material Facility (CTMF) in spring 2023 offset by an increase in expenses related to the modernization of the NRC facilities

3. Risks and uncertainties

In the third quarter of 2023-24, issues related to geopolitical conflict, talent attraction and retention, and growing threats of cyber-attacks continued to be areas of concern for the NRC. On the geopolitical front, the NRC continues to monitor conflicts in Europe and the Middle East, and new and ongoing tensions in various regions to inform international relations, collaboration and contracting. To mitigate the risk of talent shortage, the NRC is implementing its new Talent Strategy to better articulate the organization's value proposition, support hiring diverse talent and help build a strong pipeline for future talent.

The NRC has advanced a number of new initiatives under its Talent Strategy, including 2 new recruitment programs: the Persons with Disabilities Internship Pilot and the Indigenous Student recruitment Program. In ongoing work to address cyber-security concerns, the NRC has recently deployed a new cybersecurity tool and is refreshing IT security policy instruments, as well as continuing to provide additional training for NRC employees.

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

The NRC launched the Critical Battery Materials Initiative in November 2023, which will establish automated, AI-enabled platforms that can discover new critical battery materials and processes in a third of the time it takes today. This 4-year initiative will provide funding for collaborative projects to innovate in the battery mid-stream supply chain under the Canadian Critical Minerals Strategy, and grow targeted capabilities and partnerships under the Energy, Mining and Environment Research Centre's Advanced Clean Energy program.

On December 4th, 2023, the NRC and the Killam Trusts announced the creation of the Killam NRC Paul Corkum Fellowship in honour of Dr. Paul Corkum's outstanding contributions to research in Canada. This new program will provide opportunities for external researchers to access the NRC's unique infrastructure and resources, and work with an NRC researcher to build Canada's future through advanced study.

On December 20th, the Department of Finance announced that full implementation of the Canada Innovation Corporation (CIC) will now take place no later than 2026-27, with the transition of the NRC Industrial Research Assistance Program (NRC IRAP) to the CIC to follow. NRC IRAP and its employees will remain with the NRC until that time, and will continue the important work of supporting innovative small and medium-sized businesses in Canada.

NRC President Iain Stewart retired on January 2, 2024 after 30 years of public service, including 7 years with the NRC. Mitch Davies was appointed the next NRC President, with his 5-year term beginning on January 3, 2024. Mr. Davies has held various leadership positions in the federal public service, notably as President of the NRC for 9 months in 2021. Mr. Davies' 32 years' experience in the public service includes more than 16 years with what is now Innovation, Science and Economic Development Canada (ISED).

Approved by senior officials

Approved by:

Mitch Davies
President

Dale MacMillan
Vice-President, Corporate Services and Chief Financial Officer

Ottawa, Canada

5. Statement of authorities (unaudited)

For the quarter ended December 31, 2023

Fiscal Year 2023-24 (in thousands of dollars)
  Total available for use for the year ending March 31, 2024 Table note * Used during the quarter ended December 31, 2023 Year to date used at quarter-end
Vote 1 - Operating expenditures 577,212 139,587 393,945
Vote 5 - Capital expenditures 119,608 17,918 42,984
Vote 10 - Grants and contributions 687,207 146,115 394,220
Statutory revenue Table note ** 349,044 31,108 94,787
Statutory EBP 73,337 17,895 53,684
Total Budgetary authorities 1,806,408 352,623 979,620
Fiscal Year 2022-23 (in thousands of dollars)
  Total available for use for the year ending
March 31, 2023 Table note *
Used during the quarter ended December 31, 2022 Year to date used at quarter-end
Vote 1 - Operating expenditures 532,705 137,121 388,608
Vote 5 - Capital expenditures 79,649 28,807 54,306
Vote 10 - Grants and contributions 684,760 131,201 340,176
Statutory revenue Table note ** 308,433 28,973 92,114
Statutory EBP 68,959 17,179 51,537
Total Budgetary authorities 1,674,506 343,281 926,741

6. Departmental budgetary expenditures by Standard Object

For the quarter ended December 31, 2023

Fiscal Year 2023-24 (in thousands of dollars)
  Total available for use for the year ending March 31, 2024 Table note * Used during the quarter ended December 31, 2023 Year to date used at quarter-end
Expenditures:
Personnel
555,380 136,400 403,421
Transportation and communications
7,317 4,431 11,807
Information
1,885 283 965
Professional and special services
143,145 21,579 52,537
Rentals
23,553 3,440 10,015
Purchased repair and maintenance
40,071 5,666 14,268
Utilities, materials and supplies
87,832 11,005 29,607
Acquisition of land, buildings and works
42,958 7,270 14,660
Acquisition of machinery and equipment
181,733 14,111 37,707
Transfer payments
687,207 146,115 394,220
Other subsidies and payments
35,326 2,323 10,413
Total net budgetary expenditures 1,806,407 352,623 979,620
Fiscal Year 2022-23 (in thousands of dollars)
  Total available for use for the year ending March 31, 2023 Table note * Used during the quarter ended December 31, 2022 Year to date used at quarter-end
Expenditures:
Personnel
535,697 130,563 393,904
Transportation and communications
11,751 3,098 6,777
Information
2,016 275 737
Professional and special services
135,186 21,157 47,987
Rentals
14,777 4,043 10,028
Purchased repair and maintenance
32,689 5,784 14,018
Utilities, materials and supplies
74,846 15,759 33,884
Acquisition of land, buildings and works
46,923 17,994 36,144
Acquisition of machinery and equipment
107,863 10,911 30,784
Transfer payments
684,760 131,201 340,176
Other subsidies and payments
27,995 2,496 12,302
Total net budgetary expenditures 1,674,503 343,281 926,741