Statement Outlining Results, Risks and Significant Changes in Operations, Personnel and Programs
1. Introduction
The Social Sciences and Humanities Research Council of Canada (SSHRC) was established in 1977 by the Social Sciences and Humanities Research Council Act, and is a departmental corporation named in Schedule II of the Financial Administration Act. SSHRC is a funding agency that promotes and supports postsecondary research and training in the social sciences and humanities to enhance the economic, social and cultural development of Canada, its communities and regions. Social sciences and humanities research builds knowledge about people in the past and present, with a view toward creating a better future.
Further information on the SSHRC mandate and program activities can be found in Part II of the Main Estimates.
This Quarterly Financial Report (QFR) 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 report should be read in conjunction with the Main Estimates and Supplementary Estimates for 2013-14.
Basis of Presentation
This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes SSHRC’s spending authorities granted by Parliament and those used by the department, consistent with the Main Estimates and Supplementary Estimates for the 2013-14 fiscal year. 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 monies 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.
As part of the parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year. Budget 2012 was tabled in Parliament on March 29, after the tabling of the Main Estimates on February 28, 2012. As a result, the measures announced in the Budget 2012 could not be reflected in the 2012-13 Main Estimates.
In fiscal year 2012-2013, frozen allotments were established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012. In 2013-2014, the changes to departmental authorities were reflected in the 2013-2014 Main Estimates tabled in Parliament.
When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government 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.
SSHRC uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.
This quarterly report has not been subject to an external audit or review.
2. Highlights of Fiscal Quarter
Statement of Authorities
Available Authorities
SSHRC manages total authorities of $686 million, $332.4 million of which corresponds to the tri-agency Indirect Costs Program on behalf of the other two federal research granting agencies, the Natural Sciences and Engineering Research Council of Canada (NSERC) and the Canadian Institutes of Health Research (CIHR).
As of September 30, 2013, SSHRC’s total available authorities for 2013-14 amount to $686 million. The changes in available authorities are the result of previous federal budget announcements that impact both the operating authorities (vote 90), and the grants and scholarships program authorities (vote 95) in the current fiscal year. To date, for 2013-14, these changes resulted in a decrease in total authorities of $3.5 million (0.5%) over the prior year, of which $1 million (29% of the total changes) represented a decrease in SSHRC’s grants and scholarships programs while the authorities for operating and employee benefits expenditures decreased by $2.5 million.
In this quarter (year-to-date), total available authorities incorporate the elements of the 2013-14 Supplementary Estimates (A) (SEA). The SEA is the first of three opportunities to approve changes in SSHRC’s authority levels for the current fiscal year (other than transfers from Treasury Board votes). The vast majority of these changed elements are the result of previous federal budget announcements, while the balance relates to technical adjustments from Treasury Board and transfers between departments and agencies for specific initiatives. The future and ongoing impacts of SEA elements will be included in SSHRC’s 2014-15 Main Estimates for the next fiscal year. For the ongoing elements from previous federal budget announcements or transfers between departments and agencies, only the net difference in the level of funding between the two fiscal years is presented in the explanation below. The net changes, amounting to the $3.5 million decrease in total available authorities between the current and previous fiscal year, mainly comprise the following:
- an increase of $7.0 million in the Grants and Scholarships program to support world-leading research in the social sciences and humanities through industry-academic partnership initiatives (Budget 2012);
- an increase of $3.3 million for the Centres of Excellence for Commercialization and Research program to create a more effective and efficient way to identify commercialization opportunities (Budget 2007);
- an increase of $1.0 million in the Business-Led Networks of Centres of Excellence program to make the program permanent as part of an initiative to link innovative businesses to Canada’s world-class researchers, helping to create and sustain knowledge-based jobs (Budget 2012);
- an increase of $0.3 million as part of the collective bargaining agreement;
- an increase of $0.1 million in the Networks of Centres of Excellence program to support the Canada-India Research Centre of Excellence initiative to foster innovative and multidisciplinary partnerships in order to accelerate community transformation and sustainability (Budget 2011);
- a decrease of $14.0 million, to reduce government spending and find efficiencies as part of the government’s efforts to return to a balanced budget (Budget 2012);
- a decrease of $0.9 million due to a timing difference on the approval of the operating budget carry-forward in comparison with the previous year; and
- a decrease of $0.3 million due to a timing difference for net grant transfers—between federal departments—made to Canadian Heritage for research funding to inform policy development related to sport participation.
Authorities Used in Second Quarter
This departmental QFR reflects the results of the current fiscal period in relation to the 2013-14 Main Estimates and the Supplementary Estimates (A), for which full supply was released by Parliament on June 20, 2013.
The total authorities used during the second quarter of 2013-14 amounted to $205.8 million (30% of the total available authorities; 30.3% of the total authorities used for grants and scholarships programs and 22.6% for operating expenditures and employee benefits). This represents a $10.4 million increase from the same quarter in the previous fiscal year ($11.7 million net increase in authorities used for grant and scholarship expenditures while the operating and employee benefit expenditures decreased by $1.3 million compared to last fiscal year’s second quarter spending). The increase in grants and scholarships expenditures is mostly a result of payment timing differences between the first and second quarters of the comparative fiscal years, which are expected to offset by year-end. The decrease in operating and employee benefit expenditures is mainly related to the nonrecurring cash-out of some benefits by SSHRC employees in 2012-13, as per governmental changes in severance pay accumulation.
Grant and scholarship payments vary between periods due to the cycle and results of the merit-reviewed funding opportunity competitions as well as the multi-year award profiles. The operating expenditures cover personnel and other operating expenses required to support the delivery of the grants and scholarships programs. Expenditures related to the Employee Benefit Plan are accounted for separately in statutory authorities. Although the majority of personnel expenditures and other operating costs are incurred in a consistent manner throughout the fiscal year, the balance of expenditures, including temporary employees hired for the peak competition season and travel costs for peer reviewers, occur in direct conjunction with the program cycle and are demand-driven. As a large proportion of the program competitions occur in the last quarter of the fiscal year, the expenditures in each of the first three quarters are typically less than 25% of the annual available operating authorities.
Authorities Used Year-to-date
Total authorities used cumulatively during the first six months of the 2013‑14 fiscal year represented $330.0 million (48% of the available authorities). This represents $4.4 million more than the previous fiscal year. The main factor for this overall increase is payment timing differences in grants and scholarships between the comparative fiscal years. The proportion of the cumulative grants and scholarships authorities used in the fiscal year was increased to 48.2% in 2013-14 from 47.3% in the previous fiscal year. The cumulative authorities used in this fiscal year for operating expenditures and employee benefits plan decreased by $1.2 million over the last fiscal year. SSHRC has spent 45.8% of its operating authorities and employee benefits plan in the current fiscal year, compared to 46% in 2012-13. The main factor in this decrease is the nonrecurring cash-out of some benefits by SSHRC employees in 2012-13, as per governmental changes in severance pay accumulation in the approved collective agreement.
Description of figure
SSHRC Authorities based on elapsed time, percentage of the year elapsed, combined authorities, Vote 95 – Grants and Scholarships, Vote 90-Net Operating Expenditures (including EBP).
This bar graph shows SSHRC’s spending trend, in percentage of elapsed time in fiscal year 2013-14.
The x-axis shows the percentages from 0 per cent to 100 per cent.
SSHRC’s Authorities based on elapsed time in fiscal year 2013-14 was as follows:
- Percentage of year elapsed: 50 per cent
- Combined: 48 per cent
- Vote 95-Grants and Scholarships: 48 per cent
- Vote 90-Net Operating expenditures (including EBP): 46 per cent
Statement of Departmental Budgetary Expenditures by Standard Object
Variation in Amounts Available for Use in 2013-14
As described in the Available Authorities section, SSHRC’s total parliamentary authorities have been decreased by $3.5 million for 2013-14 to date over the prior year, attributable to the decrease in authorities for the transfer payment programs ($1 million) and the decrease in authorities available for operating and employee benefit expenditures ($2.5 million).
Transfer Payment Expenditures (Grants and Scholarships)
Second Quarter Grant and Scholarship Expenditures
Transfer payments represent over 96% of SSHRC’s total available authorities. Variations occur in transfer payment expenditures between quarters due to the nature of the funding opportunity cycles. During the second quarter of 2013-14, SSHRC’s transfer payment expenditures have increased by $11.7 million over the same quarter of the previous fiscal year. The main factors in this increase are payment timing differences of $18.5 million in the Indirect Costs Program, which was paid in the second quarter of 2013-14, while the equivalent payments were made during the first quarter in the prior fiscal year. The difference was offset by a $6.8 million decrease due to the sunsetting of the Standard Research Grant Program.
Year-to-Date Grants and Scholarships Expenditures
At the end of the second quarter, SSHRC spent $5.6 million (1.8%) more than what was spent at the same point in the previous fiscal year. The main factors in the increase over the prior year include the following:
- A decrease of $13.7 million due to the sunsetting of the Standard Research Grant Program. The last payment will occur in 2014-15.
- An increase of $12.0 million in the Insight Grants mainly because new grants were awarded recently along with the payment of second year commitments for these multi-year grants in accordance with SSHRC’s new program architecture).
An increase of $6.0 million in the Partnership Grants mainly because there were two cohorts to pay this year as opposed to one last year (in accordance with SSHRC’s new program architecture).
- An increase of $1.3 million in the Connection Grants due to a higher number of awards being approved than last year at the same period (in accordance with SSHRC’s new program architecture).
Description of figure
SSHRC Grants and Scholarships Expenditures Trend, first and second quarters, 2012-13 and 2013-14
This line graph shows SSHRC’s Grants and Scholarships spending trend, in millions of dollars, for fiscal years 2012-13 and 2013-14, for the first and second quarters.
The x-axis shows two quarters: Q1 and Q2.
The y-axis shows dollar values. The scale begins at zero and goes to 350 million dollars, in increments of 50 million.
SSHRC’s actual spending by quarter for 2013-14, was as follows:
- Q1: $118.4 million dollars
- Q2: $318.6 million dollars
SSHRC’s actual spending by quarter for 2012-13, was as follows:
- Q1: $124.5 million dollars
- Q2: $313.1 million dollars
Second Quarter and Year-to-Date Personnel Expenditures
Personnel expenditures in support of program delivery account for approximately 70% of SSHRC’s available operating authorities and planned operating expenditures for 2013-14. In comparison with the prior fiscal year, personnel expenditures for the first six months of 2013-14 decreased by $1.0 million (10%) in the second quarter. This decrease is the result of governmental changes related to the cessation of severance pay accumulation for voluntary departures in the SSHRC Collective Agreement, where some nonrecurring benefits to employees were paid out in 2012-13. Treasury Board Secretariat has compensated SSHRC for these expenditures.
Second Quarter and Year-to-Date Non-Personnel Operating Expenditures
Non-personnel operating expenditures include all other operating costs related to the support of program delivery. A significant proportion of these costs relate to funding opportunity competitions that take place predominantly during the latter quarter of the fiscal year. The non-personnel expenditures for the first six months of the fiscal year 2013-14 decreased slightly by $0.2 million (9.8%), in comparison with the same period the previous year. There is a notable increase occurring in professional and special services, and repair and maintenance expenditures, due to increasing technological advancement measures taken in line with the government’s efforts to return to a balanced budget through efficiency enhancements. These increases have been offset by reductions in transportation and communications expenditures resulting from the increasing use of teleconferencing, and a decrease in the acquisition of machinery and equipment expenditures in comparison with the prior fiscal year.
Description of figure
SSHRC Operating Expenditures Trend, first and second quarters, 2012-13 and 2013-14
This line graph shows SSHRC’s Operating spending trend, in millions of dollars, for fiscal years 2012-13 and 2013-14, for the first and second quarters.
The x-axis shows two quarters: Q1 and Q2.
The y-axis shows dollar values. The scale begins at zero and goes to 12 million dollars, in increments of 2 million.
SSHRC’s actual spending by quarter for 2013-14, was as follows:
- Q1: $5.75 million dollars
- Q2: $10.0 million dollars
SSHRC’s actual spending by quarter for 2012-13, was as follows:
- Q1: $5.70 million dollars
- Q2: $11.1 million dollars
3. Risks and Uncertainties
Funding and Program Delivery Risk Factors
Through the Council’s most recent corporate risk identification exercise, the risks that have a potential financial impact or that deal with financial sustainability have been assessed. The impact on SSHRC and the planned mitigation strategies related to these risks are discussed below.
External Risk Factors
SSHRC is funded through annual parliamentary spending authorities and statutory authorities for program transfer payments (grants and scholarships programs) and for its supporting operating expenditures. As a result, its program activities and operations are impacted by any changes to funding approved through Parliament. Accordingly, delivering programs can be affected by factors such as the economic and political climate, technological and scientific development, and evolving government priorities, which impact approved resource levels (total available authorities).
Research and innovation are part of global trends; therefore participation in our programs is not only influenced by the Canadian context, but also by initiatives and opportunities worldwide. Formal communications and external relation strategies are developed by SSHRC to ensure that stakeholder relationships and expectations are managed effectively.
There is also the risk that SSHRC fails to achieve its mandate and strategic outcomes. To mitigate this risk, an integrated planning process has been in place at SSHRC since 2009. This process serves as the foundation for SSHRC to plan all aspects of its business in an integrated manner and, to align priorities and resources accordingly.
Internal Risk Factors
SSHRC is a knowledge-based organization that relies on maintaining its talented and committed workforce to deliver its programs. To retain its valuable human resources and their corporate memory, SSHRC has developed a People Strategy that outlines the organization’s commitments and action plan for developing talent and for building and sustaining a thriving and successful workplace and work culture. SSHRC’s financial restraints are challenging the ability to hire the skilled resources needed to successfully achieve the transformation and realignment agendas to meet tomorrow’s needs. Potential consequences could include workload management issues and succession planning challenges.
SSHRC is transforming its business in order to adapt more efficiently to internal changes and to improve external client service.
The budgetary pressures have required internal reductions and reallocation measures. These pressures are compounded by the operational requirement to support an increased and broadened program base while processing an increasing number of applications and absorbing inflationary costs on operating expenditures within limited or decreasing operational envelopes. SSHRC is also managing the requirement for the implementation of modernized technology solutions to better support program delivery.
Thus far, SSHRC has achieved the reduction of its operating pressures through economies of scale achieved by the shared administrative service arrangements with the Natural Sciences and Engineering Research Council of Canada (NSERC), corporate-wide prioritization and harmonization or reduction of activities, internal reallocations, and a focus on streamlining and generating efficiencies wherever possible. An established budgetary process with regular in-year budget reviews and formal reallocations for emerging priorities approved by senior management supports this endeavour. SSHRC is also undertaking a revision of its operating and grant delivery systems and processes to generate further efficiencies and future savings.
SSHRC is a lean agency in terms of operating funding provided to deliver existing and expanding programs (less than 4% of total resources). As noted above, SSHRC is pursuing business transformation to address restraint measures and funding cuts, and to enhance resource decision-making.
4. Significant Changes Related to Operations, Personnel and Programs
SSHRC has undertaken a program architecture renewal initiative to create a more flexible and effective system of program application and assessment, allowing it to maximize the contributions of research and training funds for Canada’s economic prosperity and quality of life. The new program architecture has placed an emphasis on research excellence, fostering partnerships, and reporting on results. This has resulted in greater overall program coherence with flexible programming, a more responsive competition cycle, and an improved and simplified interface for applicants. The implementation of the new program architecture allows for the consolidation of existing and new funding opportunities under three umbrella programs—Talent, Insight and Connection—as well as enhanced service delivery and process re-engineering.
There were a number of important changes in comparison with the previous fiscal year that relate to operations, personnel and programs. These include the impacts generated by SSHRC’s previously increased available program authorities, which resulted in expanded partnership program dimensions. SSHRC is optimizing the new investment of $7 million, announced in Economic Action Plan 2012, to enhance support for industry-academic partnership initiatives. This investment is further enabling SSHRC’s partnership grants and partnership development grants. Another prevalent influence involved the continuing implementation of government-wide operating budget constraint measures and the government’s efforts to return to a balanced budget for which details are described in the section below. The federal Budget 2013, tabled in March, included funding announcements with additional program dimensions that are being implemented by SSHRC, following Treasury Board and Parliament approvals, over the course of the fiscal year.
5. Budget 2012 Implementation
This section provides an overview of the cost containment and savings measures announced in Budget 2012 that are being implemented in order to refocus government and programs; make it easier for Canadians and business to deal with their government; and modernize and reduce the back office.
In the first year of implementing Budget 2012, SSHRC achieved reductions and savings of approximately $7 million for 2012-13 and $14 million in 2013-14 and ongoing. Over Budgets 2012 and 2013, the Government of Canada reinvested $14 million, annually and on an ongoing basis, in the Grants and Scholarships program to support world-leading research through industry-academic partnership initiatives including research related to labour-market participation of persons with disabilities. These reinvestments make the net impact on SSHRC’s overall budget neutral for 2013-14.
SSHRC examined all of its activities and investments, with the intention of streamlining operations and ensuring maximum efficiencies.
In realizing operating budget reductions and savings, a number of measures are being implemented to generate greater efficiency and effectiveness, including an enhanced use of technological advancements, such as teleconferencing and virtual meetings for our adjudication and merit-review processes. SSHRC has also redesigned its program architecture which has resulted in a simpler framework for grant funding and management. A rigorous and cohesive approach to priority setting, project planning and training further helps the Council meet its goals.
Expenditures in the second quarter of 2013-14 are higher than the same period from the previous fiscal year. The difference between the two fiscal years is mainly due to timing differences on grants payments at this stage. Excluding the effect of the non recurring severance benefits cash-out, operating expenditures are decreasing, which reflects savings resulting from implementing SSHRC’s plan to contribute to government’s efforts to return to balanced budgets.
There was no incremental funding was provided to SSHRC to implement cost savings measures.
There are no specific financial risks or uncertainties related to these savings.
Approved by:
Originally signed by:
Chad Gaffield, PhD, FRSC
President, SSHRC
Ottawa, Canada
November 20 , 2013
Originally signed by:
Jaime W. Pitfield
Vice-President and Chief
Financial Officer, SSHRC
6. Statement of Authorities (unaudited)
Social Sciences and Humanities Research Council of Canada
Quarterly Financial Report
For the quarter ended September 30, 2013
Fiscal year 2013-14
| (In thousands of dollars) |
Total available for use for the year ending March 31, 2014* |
Used during the quarter ended September 30, 2013 |
Year-to-date used at quarter-end |
| Vote 90 - Net Operating Expenditures |
22,122 |
4,930 |
10,028 |
| Vote 95 - Grants and Contributions |
661,335 |
200,187 |
318,621 |
| Budgetary Statutory Authorities - Employee Benefit Plans |
2,610 |
653 |
1,305 |
|
Total Budgetary Authorities
|
686,067 |
205,770 |
329,954 |
Fiscal year 2012-13
| (In thousands of dollars) |
Total available for use for the year ending March 31, 2013* |
Used during the quarter ended September 30, 2012 |
Year-to-date used at quarter-end |
| Vote 90 - Net Operating Expenditures |
24,445 |
6,135 |
11,131 |
| Vote 95 - Grants and Contributions |
662,353 |
188,521 |
313,070 |
| Budgetary Statutory Authorities - Employee Benefit Plans |
2,800 |
700 |
1,400 |
| Total Budgetary Authorities |
689,598 |
195,356 |
325,601 |
* Includes only authorities available for use and granted by Parliament at quarter-end.
7. Departmental Budgetary Expenditures by Standard Object (unaudited)
Social Sciences and Humanities Research Council of Canada
Quarterly Financial Report
For the quarter ended September 30, 2013
Fiscal Year 2013-14
| (In thousands of dollars) |
Planned expenditures for the year ending March 31, 2014 |
Expended during the quarter ended September 30, 2013 |
Year-to-date used at quarter-end |
| Expenditures: |
| Personnel |
17,611 |
4,670 |
9,535 |
| Transportation and Communications |
1,281 |
126 |
294 |
| Information |
333 |
41 |
65 |
| Professional and Special Services |
3,815 |
572 |
1,053 |
| Rentals |
157 |
23 |
48 |
| Repair and Maintenance |
474 |
98 |
243 |
| Utilities, Materials and Supplies |
147 |
12 |
45 |
| Acquisition of Machinery and Equipment |
914 |
41 |
50 |
| Transfer Payments |
661,335 |
200,187 |
318,621 |
| Total Budgetary Expenditures |
686,067 |
205,770 |
329,954 |
Fiscal year 2012-13
| (In thousands of dollars) |
Planned expenditures for the year ending March 31, 2013 |
Expended during the quarter ended September 30, 2012 |
Year-to-date used at quarter-end |
| Expenditures: |
| Personnel |
18,711 |
5,819 |
10,537 |
| Transportation and Communications |
1,461 |
129 |
423 |
| Information |
430 |
53 |
66 |
| Professional and Special Services |
4,607 |
440 |
898 |
| Rentals |
206 |
20 |
46 |
| Repair and Maintenance |
595 |
52 |
205 |
| Utilities, Materials and Supplies |
150 |
25 |
27 |
| Acquisition of Machinery and Equipment |
1,085 |
297 |
329 |
| Transfer Payments |
662,353 |
188,521 |
313,070 |
| Total Budgetary Expenditures |
689,598 |
195,356 |
325,601 |