Statement Outlining Results, Risks and Significant Changes in Operations, Personnel and Programs

1. Introduction
   1. 1.1 Authority, mandate and programs
   2. 1.2 Basis of presentation
2. Highlights of fiscal quarter and fiscal year-to-date results
   1. 2.1 Significant changes to budgetary authorities
   2. 2.2 Significant changes to authorities used
3. Risks and uncertainties
4. Significant changes related to operations, personnel and programs
5. Statement of authorities (unaudited)
6. Departmental budgetary expenditures by standard object (unaudited)

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1. Introduction

This Quarterly Financial Report (QFR) has been prepared by management as required by section 65.1 of the Financial Administration Act (FAA), and in the form and manner prescribed by the Treasury Board. It should be read in conjunction with the Main Estimates for 2017-18. This report has not been subject to an external audit or review.

1.1 Authority, mandate and programs

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 FAA. 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.

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 SSHRC’s spending authorities granted by Parliament and those used by the agency, consistent with the Main Estimates for fiscal 2017-18. 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.

SSHRC 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.

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

This QFR reflects the results of the current fiscal period in relation to the 2017-18 Main Estimates.

Sections 2.1 and 2.2 below highlight the significant items that contributed to the net increase in resources available from fiscal 2016-17 to fiscal 2017-18 and the actual expenditures as at September 30, 2017, and September 30, 2016.

The following graph provides a comparison of budgetary authorities available for the full fiscal year and budgetary expenditures for the first two quarters of fiscal 2017-18 and fiscal 2016-17.

Description of figure

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

This stacked bar graph shows SSHRC’s budgetary expenditures compared to the budgetary authorities by quarter for the current and prior fiscal year.

The x-axis shows the fiscal years in question: 2017-18 and 2016-17.

The y-axis shows the amounts in thousands of dollars from zero to $900,000.

SSHRC’s budgetary authorities and expenditures in fiscal 2017-18 were as follows:

• Budgetary authorities: $780,427
• Authorities used during the quarter ended June 30, 2017: $188,192
• Authorities used during the quarter ended September 30, 2017: $200,222

SSHRC’s budgetary authorities and expenditures in fiscal 2016-17 were as follows:

• Budgetary authorities: $737,153
• Authorities used during the quarter ended June 30, 2016: $87,886
• Authorities used during the quarter ended September 30, 2016: $284,498

2.1 Significant changes to budgetary authorities

As of September 30, 2017, SSHRC’s total available authorities for 2017-18 amounted to $780.4 million. To date, for 2017-18, total authorities have increased by $43.3 million over the previous year at September 30. The major changes in SSHRC’s budgetary authorities between the current and previous fiscal years include:

• an increase of $19.0 million due to the Research Support Fund, which assists Canadian postsecondary institutions with the costs associated with managing their research enterprise, helping them to maintain a world-class research environment (Budget 2016);
• a $14.7 million increase to support investigator-led discovery research in the social sciences and humanities (Budget 2016);
• an increase of $11.0 million for the Canada First Research Excellence Fund, a tri-agency initiative that helps Canadian postsecondary institutions excel globally in research areas that create long-term economic advantages for Canada;
• a reduction of $1.1 million in funding for the Centres of Excellence for Commercialization and Research, which supports the development of commercially promising technologies and promotes the transfer of knowledge and technologies to Canadian companies for commercialization; and
• a reduction of $0.2 million in funding for the Networks of Centres of Excellence, which builds on multisectoral partnerships that harness the creativity and inventiveness of the best minds in various disciplines and sectors to find solutions for Canada's pressing challenges using internationally competitive research.

2.2 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)	2017-18	2016-17	Variance
Vote 1—Operating Expenditures
Personnel	10.2	10.4	(0.2)
Non-personnel	1.8	1.8	-
Vote 5—Grants and Scholarships	376.4	360.1	16.3
Total budgetary expenditures	388.4	372.3	16.1

Total authorities used cumulatively during the first six months of fiscal 2017-18 represented $388.4 million (49.8 per cent of the available authorities).

Description of figure

Authorities used based on elapsed time

This bar graph shows SSHRC’s spending trend, in percentage of elapsed time in fiscal 2017-18.

The x-axis shows the percentages from zero to 100 percent in increments of 20 percent.

SSHRC’s authorities based on elapsed time in fiscal 2017-18 were as follows:

• Percentage of year elapsed: 50.0%
• Combined authorities: 49.8%
• Vote 5—Grants and Scholarships: 50.1%
• Vote 1—Net operating expenditures (including employee benefits premium): 42.0%

Grants and scholarships

At the end of the second quarter in 2017-18, the grants and scholarships expenses increased by $16.3 million, compared to what was reported in the previous fiscal year. The increase is due to payments made prior to September 30 in 2017-18, compared to after September 30 in 2016-17. The timing differences are mainly related to the following:

• Research Support Fund ($13.8 million increase);
• Networks of Centres of Excellence ($1.0 million decrease); and
• Canada First Research Excellence Fund ($3.5 million increase).

This timing variance will be offset by year-end. In addition to the timing differences, funding for the Canada First Research Excellence Fund increased by $5.5 million this year compared to last year.

Operating expenditures

Operating expenditures cover personnel and other operating expenses required to support the delivery of grant and scholarship 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, are tied to the program cycle and are demand-driven. As a large proportion of 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 percent of the annual available operating authorities.

Personnel expenditures in support of program delivery account for the largest proportion of SSHRC’s planned operating expenditures (approximately 69 percent of available operating authorities and planned operating expenditures for fiscal 2017-18). The personnel expenditures for the two quarters of fiscal 2017-18 are in line with the same period of the previous year.

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 final quarter of the fiscal year. Total non-personnel expenditures for the first six months of fiscal 2017-18 are consistent with the comparative period of the previous year.

Quarterly spending

The total authorities used during the second quarter of 2017-18 amounted to $200.2 million (25.6 percent of the total available authorities; 25.8 percent of total authorities for grant and scholarship programs; and 20.8 percent of total authorities for operating expenditures and employee benefits).

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Budgetary expenditures used during the second quarter (millions of dollars)	2017-18	2016-17	Variance
Vote 1—Operating Expenditures
Personnel	5.0	5.2	(0.2)
Non-personnel	0.9	0.9	-
Vote 5—Grants and Scholarships	194.3	278.4	(84.1)
Total budgetary expenditures	200.2	284.5	(84.3)

Grants and scholarships

Transfer payments represent 96.3 percent of SSHRC’s available authorities. Variations occur in transfer payment expenditures between quarters due to the nature of program cycles. During the second quarter of 2017-18, SSHRC’s transfer payment expenditures have decreased by $84.1 million compared with the same quarter of the previous fiscal year. There are a number of differences in specific programs from year to year that include:

• a net timing difference on payments resulted in a decrease of $87.6 million over the previous year in a variety of programs, most notably:
  
  • Research Support Fund ($79 million decrease);
  • Research Development Grants ($6 million decrease);
  • SSHRC Institutional Grants ($2.6 million decrease);
  • Partnership Grants ($2.5 million increase); and
  • Canada Graduate Scholarship Grants ($1 million increase); and
• an increase of $3.5 million over the previous year, stemming from the increased authorities in the Canada First Research Excellence Fund.

Operating expenditures

The personnel and non-personnel expenditures are in line with those of the second quarter of the prior fiscal year. The variances are mainly due to the timing of expenditures.

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3. Risks and uncertainties

Funding and program delivery risk factors

Through the 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

Stakeholder relations: The organization might not effectively manage diverse stakeholder relationships and challenges to its reputation, which may affect its ability to deliver on its mandate to fund research excellence in the social sciences and humanities

• Risk response: to ensure effective stakeholder engagement and to mitigate the risk of misalignment with stakeholders’ priorities and values, a group of institution representatives, SSHRC Leaders, was created. SSHRC Leaders provide an ongoing channel of communication between their institutions and SSHRC, helping all parties stay informed of developing issues. This open dialogue permits the relay of information on new policy and program developments. For their part, SSHRC Leaders are able to gather information and ideas from their community, feeding into the development of SSHRC policies and programs.

Internal risk factors

Information technology: SSHRC’s information infrastructure may limit its ability to implement changes required to programs and program delivery in a timely manner.

• Risk response: An assessment of the state of SSHRC’s legacy systems was completed in December 2016. The report presented 13 recommendations, 10 of which will be implemented in 2017-18.

Information management: SSHRC’s information infrastructure may not be optimal to meet the needs of the organization to track and report on results.

• Risk response: SSHRC will, in partnership with the Natural Sciences and Engineering Research Council of Canada, develop an information management strategy. SSHRC will strengthen its corporate data management, identifying areas of need to move toward information management maturity.

Planning and priority setting: The organization may limit its ability to deliver on all priorities and respond to pressures from external influences in a timely manner.

• Risk response: SSHRC will make use of its corporate governance structures and rely on key planning documents, such as the strategic plan, to ensure strong governance for and oversight of SSHRC’s planning and achievement of results.

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4. Significant changes related to operations, personnel and programs

As in previous years, a number of changes relate to operations, personnel and programs. Budget 2017 included $117.6 million over eight years for approximately 25 Canada 150 Research Chairs. The program will be delivered through SSHRC’s Tri-agency Institutional Programs Secretariat, in collaboration with, and on behalf of, the three federal research funding agencies.

Approved by:

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5. Statement of authorities (unaudited)

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 Expenditures	25,951	5,297	10,700
Vote 5—Grants and Scholarships	751,815	194,284	376,432
Budgetary Statutory Authorities—Contributions to the Employee Benefit Plan	2,566	641	1,283
Budgetary Statutory Authorities—Spending of revenues pursuant to subsection 4 (2) of the Social Sciences and Humanities Research Council Act	95	-	-
Total budgetary authorities	780,427	200,222	388,415

Fiscal year 2016-17

(in thousands of dollars)	Total available for use for the year ending March 31, 2017*	Used during the quarter ended September 30, 2016	Year-to-date used at quarter-end
Vote 1—Net Operating Expenditures	25,311	5,427	10,891
Vote 5—Grants and Scholarships	708,996	278,392	360,135
Budgetary Statutory Authorities—Contributions to the Employee Benefit Plan	2,751	679	1,358
Budgetary Statutory Authorities—Spending of revenues pursuant to subsection 4 (2) of the Social Sciences and Humanities Research Council Act	95	-	-
Total budgetary authorities	737,153	284,498	372,384

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6. Departmental budgetary expenditures by standard object (unaudited)

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	19,775	5,025	10,218
Transportation and communications	1,538	156	292
Information	1,353	77	227
Professional and special services	3,383	564	863
Rentals	752	61	262
Repair and maintenance	141	9	28
Utilities, materials and supplies	106	(6)	26
Acquisition of machinery and equipment	1,564	52	67
Transfer payments	751,815	194,284	376,432
Total budgetary expenditures	780,427	200,222	388,415

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Fiscal Year 2016-17

(in thousands of dollars)	Planned expenditures for the year ending March 31, 2017	Expended during the quarter ended September 30, 2016	Year‑to‑date used at quarter‑end
Expenditures
Personnel	18,764	5,166	10,428
Transportation and communications	1,362	189	360
Information	1,368	200	240
Professional and special services	4,295	464	844
Rentals	1,473	57	290
Repair and maintenance	109	4	25
Utilities, materials and supplies	125	8	35
Acquisition of machinery and equipment	661	18	27
Transfer payments	708,996	278,392	360,135
Total budgetary expenditures	737,153	284,498	372,384

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