Quarterly Financial Report for the quarter ended September 30, 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of Canada uses financial information to support decision making, for policy development, for service delivery and for historical reference.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 and Supplementary Estimates (A). 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 September 30, 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 for 2023-24. 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 September 30, 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 September 30, 2023 and those as of September 30, 2022.

Comparison of Budgetary Authorities and Expenditures
as of September 30, 2023 and September 30, 2022 (in millions of dollars)

As shown in the graph above, the NRC’s expenditures totalled $347.5M during the second quarter of 2023-24 which represents an increase of $25.5M over the second quarter of 2022-23. Refer to 2.3 Significant changes to budgetary expenditures for additional details.

2.2 Significant changes to authorities

As of September 30, 2023, the authorities were $1,746.8M, representing an increase of $137.2M in comparison to the 2022-23 authorities of the same period.

The increase of $137.2M 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 $25.2M in new funding for the Platform for the Decarbonization of the Construction Sector
• An increase of $10.4M for the International Astronomical Observatories Program, as a result of funding reprofile for the Thirty Meter Telescope
• An increase of $7.3M in funding for IRAP Youth Employment Skills Strategy
• An increase of $6.1M in reprofiled funding associated to the temporary IRAP funding received through Budget 2021
• An increase of $4.6M for the revitalization of the Canadian Photonics Fabrication Centre; offset by:
• A decrease of $5.3M in funding for the Collaboration Science, Technology and Innovation Program
• A decrease of $7.0M in funding of the NRC’s response to COVID-19, and
• A decrease of $14.7M in the value of funding reprofiled through the Capital Budget Carry-Forward mechanism

The following table summarizes the significant changes to NRC authorities:

Significant changes to authorities (unaudited)
For the year ending March 31, 2024 - As of September 30, 2023
(in millions of dollars)

	Vote 1 Operating	Vote 5 Capital	Vote 10 Grants and contributions	Statutory revenues	Contributions to EBP	Total
Authorities – Total available for use for the year ending March 31, 2024 - As of Juner 30, 2023						1,715.5
Operating and capital budget carry-forward	19.2	12.2	-	-	-	31.4
Total increase (decrease) in authorities in comparison to prior year	19.2	12.2	-	-	-	31.4
Authorities – Total available for use for the year ending March 31, 2024 - As of September 30, 2023						1,746.9

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 September 30, 2023, year-to-date expenditures were $627.0M, representing an increase of $43.5M in comparison to the 2022-23 expenditures of the same period. This increase is mostly attributable to the following items: 

• An increase of $39.1M in grants and contribution expenditures, mainly due to increases in IRAP Contribution to Firms and contributions for the Biologics Manufacturing Centre
• An increase of $3.4M in combined operating and statutory expenditures in part due to costs related to the modernization of the NRC facilities, CPFC facility renewal and Innovative Solutions Canada

3. Risks and uncertainties

In the second quarter of 2023-24, issues related to geopolitical conflict and tension, the transition of the NRC’s Industrial Research Assistance Program (NRC IRAP) to the new Canada Innovation Corporation (CIC), and the risk of a potential talent shortage, persisted as top concerns for the NRC. Escalation of international tensions on new fronts and the potential escalation of malicious cyber activity kept the risk of cyber-attacks elevated. In response, the NRC developed a plan to strengthen guidance on research security and finalized its new Cyber Security Event Management Plan. An online course for employees with high-privilege access to IT systems and networks was also launched to enhance security. In addition, change management and communication plans were put in place to facilitate the smooth transition of NRC IRAP to the CIC. The NRC will continue to work closely with the CIC to prepare for the transition. To mitigate the risk of a talent shortage, a new Talent Attraction Strategy was finalized.

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

Following the announcement by the Government of Canada in February that NRC IRAP will be integrated into the new Canada Innovation Corporation (CIC), a core team, led by Emily Harrison, Vice-President Special Initiatives, was established to oversee and ensure a smooth transition of NRC IRAP to the CIC. The team is working closely with internal stakeholders and the CIC.

In September, Dr. Geneviève Tanguay started a 2-year interchange with the Office of the Prime Minister’s Chief Science Advisor as Vice-Chief Science Advisor of Canada, following 7 years at the NRC as Vice-President of Emerging Technologies. In August, Dr. Julie Lefebvre succeeded Dr. Tanguay as Vice-President of Emerging Technologies. Dr. Lefebvre had held the position of Director General of the Security and Disruptive Technologies Research Centre (SDT) since 2019.

In September, Trevor Nightingale was appointed in a new role as the Associate Vice-President, Engineering Division to lead executive stakeholder engagement focused on climate change programs and initiatives. Thomas Ferguson, replaced Mr. Nightingale as Director General of the Construction Research Centre. These changes will help the NRC deliver on its climate change adaptation and mitigation priorities.

Finally, as part of the NRC’s new Platform to Decarbonize the Construction Sector at Scale, the Construction Research Centre launched two new Challenge programs. The Construction Sector Digitalization and Productivity Challenge program supports new solutions to increase innovation potential and productivity in the construction sector through the use of digital technology. The second Challenge program, the Low Carbon Built Environment Challenge program, supports the development and use of low carbon materials, systems, methodologies and improved approaches to construction operations and maintenance to minimize the carbon emissions of buildings and infrastructure throughout their life-cycle.

Approved by senior officials

Approved by:

Ottawa, Canada

5. Statement of authorities (unaudited)

For the quarter ended September 30, 2023

Fiscal year 2023-24 (in thousands of dollars)

	Total available for use for the year ending March 31, 2024 Table 2 note1	Used during the quarter ended September 30, 2023	Year to date used at quarter-end
Vote 1 - Operating expenditures	557,112	129,295	254,358
Vote 5 - Capital expenditures	117,948	13,571	25,066
Vote 10 - Grants and contributions	651,152	155,567	248,106
Statutory revenue Table 2 note2	349,044	31,160	63,679
Statutory EBP	71,579	17,895	35,790
Total budgetary authorities	1,746,835	347,488	626,999

Fiscal year 2022-23 (in thousands of dollars)

	Total available for use for the year ending March 31, 2023 Table 2 note1	Used during the quarter ended September 30, 2022	Year to date used at quarter-end
Vote 1 - Operating expenditures	513,461	136,842	251,487
Vote 5 - Capital expenditures	77,920	15,630	25,498
Vote 10 - Grants and contributions	641,080	118,830	208,976
Statutory revenue Table 3 note2	308,433	33,519	63,141
Statutory EBP	68,716	17,179	34,358
Total budgetary authorities	1,609,610	322,000	583,460

Table notes

6. Departmental budgetary expenditures by standard object (unaudited)

For the quarter ended September 30, 2023

Fiscal year 2023-24 (in thousands of dollars)

	Total available for use for the year ending March 31, 2024 Table 4 note1	Used during the quarter ended September 30, 2023	Year to date used at quarter-end
Expenditures:
Personnel	542,495	134,300	267,022
Transportation and communications	7,317	3,563	7,376
Information	1,884	417	681
Professional and special services	138,659	18,171	30,958
Rentals	22,656	2,905	6,575
Purchased repair and maintenance	39,622	5,193	8,603
Utilities, materials and supplies	84,692	7,549	18,602
Acquisition of land, buildings and works	42,611	4,024	7,390
Acquisition of machinery and equipment	180,421	12,285	23,596
Transfer payments	651,152	155,567	248,105
Other subsidies and payments	35,326	3,514	8,091
Total net budgetary expenditures	1,746,835	347,488	626,999

Fiscal year 2022-23 (in thousands of dollars)

	Total available for use for the year ending March 31, 2023 Table 5 note1	Used during the quarter ended September 30, 2022	Year to date used at quarter-end
Expenditures:
Personnel	526,820	134,330	263,341
Transportation and communications	11,751	2,257	3,679
Information	2,016	295	463
Professional and special services	126,117	15,524	26,830
Rentals	14,777	2,556	5,985
Purchased repair and maintenance	32,689	5,126	8,234
Utilities, materials and supplies	73,307	10,661	18,126
Acquisition of land, buildings and works	46,689	13,549	18,149
Acquisition of machinery and equipment	106,367	11,525	19,874
Transfer payments	641,080	118,830	208,975
Other subsidies and payments	27,995	7,347	9,804
Total net budgetary expenditures	1,609,608	322,000	583,460