Quarterly Financial Report for the Quarter Ended September 30, 2023

Table of contents

  1. Introduction
  2. Highlights of fiscal quarter and fiscal year to date (YTD) results
  3. Risk and uncertainties
  4. Significant changes in relation to operations, personnel and programs
  5. Statement of Authorities (unaudited)
  6. Departmental budgetary expenditures by Standard Object (unaudited)

1. Introduction

This quarterly financial report 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. It should be read in conjunction with the 2023-24 Main Estimates. It has not been subject to an external audit or review nor has it been subject to the approval of the Audit Committee.

1.1 Authority, mandate and programs

The Canadian Institutes of Health Research (CIHR) is the Government of Canada's health research funding agency. It was created in June 2000 by the Canadian Institutes of Health Research Act with a mandate “to excel, according to internationally accepted standards of scientific excellence, in the creation of new knowledge and its translation into improved health for Canadians, more effective health services and products and a strengthened Canadian health care system.”

CIHR invests in high quality health research and health research personnel to help create and apply new knowledge that can improve health outcomes for Canadians, lead to innovative products and services that improve Canada's health care system, and create high quality employment and commercial opportunities.

Further details on CIHR’s mandate and programs can be found in Part II of the Main Estimates and the Department Plan.

1.2 Basis of presentation

This quarterly report has been prepared by CIHR management using an expenditure basis of accounting. The accompanying Statement of Authorities includes CIHR’s spending authorities granted by Parliament and those used by CIHR, consistent with the Main Estimates supplied thus far for the 2023-24 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 (the Government). 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.

CIHR uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results 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 quarterly financial report reflects the results of the current fiscal period in comparison to the authorities supplied by the Main Estimates to date for fiscal year 2023-24, as well as budget adjustments approved by Treasury Board up to September 30, 2023.

2.1 Financial Highlights – Statement of Authorities (Refer to Section 5)

As of September 30, 2023, total authorities available for use for CIHR have increased by $88.5 million (7.1%) compared to September 30, 2022 as shown in figure 2.1.1. below. The increase to CIHR’s total authorities available is due to:

Total authorities used as of September 30, 2023 increased by $47.7 million (8.8%) compared to the prior fiscal year due mainly to grant payments made related to the increased funding mentioned above. CIHR has used 44.4% (43.8% in 2022-23) of its available authorities through the second quarter which is consistent with its annual spending pattern.

Figure 2.1.1. Total annual authorities available and cumulative authorities used.
($ thousands)

Long Description
2023-24 2022-23
Total authorities available for use the year ended March 31Footnote * $1,334,114 $1,245,564
Cumulative authorities used as at September 30 $592,816 $545,104

Table 2.1.1 – Changes to annual authorities available and authorities used during the first quarter (Q1) by vote
($ thousands)

2023-24 2022-23 Variance
Annual authorities available Q1 authorities used % used Annual authorities available Q1 authorities used % used (1) vs (3) (2) vs (4)
(1) (2)   (3) (4)      
Vote 1 - Operating Expenditures 73,737 35,697 48.4% 68,044 32,581 47.9% 8.4% 9.6%
Vote 5 - Grants 1,251,511 552,686 44.2% 1,169,787 508,656 43.5% 7.0% 8.7%
Statutory Authorities – Employee benefits plan 8,866 4,433 50.0% 7,733 3,867 50.0% 14.7% 14.6%
Total 1,334,114 592,816 44.4% 1,245,564 545,104 43.8% 7.1% 8.8%

Figure 2.1.2 Total annual authorities available and authorities used by quarter.
($ thousands)

Long Description
2023-24 2022-23
Total authorities available for use the year ended March 31Footnote * $1,334,114 $1,245,564
Authorities used as at September 30 $299,402 $267,916
Authorities used as at June 30 $293,414 $277,188

Table 2.1.2 – Changes to annual authorities available and authorities used during the second quarter by vote
($ thousands)

2023-24 2022-23 Variance
Annual authorities available Q2 authorities used % used Annual authorities available Q2 authorities used % used (1) vs (3) (2) vs (4)
(1) (2)   (3) (4)      
Vote 1 - Operating Expenditures 73,737 18,124 24.6% 68,044 17,100 25.1% 8.4% 6.0%
Vote 5 - Grants 1,251,511 279,062 22.3% 1,169,787 248,883 21.3% 7.0% 12.1%
Statutory Authorities – Employee benefits plan 8,866 2,216 25.0% 7,733 1,933 25.0% 14.7% 14.6%
Total 1,334,114 299,402 22.4% 1,245,564 267,916 21.5% 7.1% 11.8%

Vote 1 – Operating Expenditures

Total authorities available for use for Vote 1 - Operating expenditures increased by $5.7 million (8.4%) as at September 30, 2023 compared to the prior fiscal year.

This increase is due to:

Authorities used through the second quarter for Vote 1 – Operating Expenditures authorities have increased by $3.1 million (9.6%) as compared to the prior fiscal year. This variance is primarily due to a $2.5 million increase in personnel costs due to an increased employee count, a $0.5 million increase in expenditures for rentals (more specifically cloud services and yearly software licenses), a $0.3 million increase in professional and special services (for example, management consulting fees and protection services), as well as a $0.2 million increase in transportation and communication costs as a result of increased staff travel and increased data communication costs. This increase is offset by minor decreases in information services (such as e-subscriptions) and other miscellaneous operating costs totaling $0.4 million. The percentage of operating authorities used has increased from the prior year (48.4% and 47.9% respectively) because of the aforementioned reasons.

Overall spending as of September 30, 2023 is consistent with CIHR management expectations.

Vote 5 – Grants

Authorities available for use for Vote 5 – Grants as of September 30, 2023 were $1,251.5 million and included funding for the following transfer payment programs:

Vote 5 authorities available for use increased by $81.7 million (7.0%) as of September 30, 2023 as compared to the prior fiscal year. This increase is due to the following:

Grant authorities used through the second quarter of 2023-24 increased by $44.0 million (8.7%) compared to the prior fiscal year due to grant payments related to the increased funding mentioned above. The percentage of grant authorities used is consistent with the prior year (44.2% and 43.5% respectively) as grants are typically paid out in monthly installments throughout the year.

Overall spending as of September 30, 2023 is consistent with CIHR management expectations.

Statutory Authorities

Contribution to employee benefit plans

Budgetary statutory authorities representing CIHR’s contribution to employee benefit plans available for use increased year over year by $1.1 million (14.7%). The increase to CIHR’s statutory authorities available is due to:

Actual spending for statutory authorities in the second quarter of 2023-24 is 50.0% of the total available authorities for use for the year, which is consistent with CIHR management expectations given that this expenditure is distributed equally throughout the fiscal year.

2.2 Financial Highlights – Statement of Departmental Budgetary Expenditures by Standard Object (Refer to Section 6)

As of September 30, 2023, total authorities available for use by CIHR increased by $88.6 million (7.1%) compared to the prior fiscal year. Total authorities used as of September 30, 2023 increased by $47.7 million (8.8%) compared to the prior fiscal year. These variances are reflected in Table 2.2.1 (where expenditure types are re-grouped into three categories: Personnel, Other Operating Expenditures and Transfer Payments) for further analysis.

Table 2.2.1 – Changes to annual authorities available and cumulative authorities used by expenditure type
($ thousands)

2023-24 2022-23 Variance
Annual authorities available Cumulative authorities used % used Annual authorities available Cumulative authorities used % used (1) vs (3) (2) vs (4)
(1) (2)   (3) (4)      
PersonnelFootnote * 66,621 35,886 53.9% 59,290 33,399 56.3% 12.4% 7.4%
Other Operating Expenditures 15,982 4,244 26.6% 16,487 3,049 18.5% (3.1%) 39.2%
Transfer Payments 1,251,511 552,686 44.2% 1,169,787 508,656 43.5% 7.0% 8.7%
Total 1,334,114 592,816 44.4% 1,245,564 545,104 43.8% 7.1% 8.8%

Table 2.2.2 – Changes to annual authorities available and authorities used during the second quarter by expenditure type
($ thousands)

2023-24 2022-23 Variance
Annual authorities available Q2 authorities used % used Annual authorities available Q2 authorities used % used (1) vs (3) (2) vs (4)
(1) (2)   (3) (4)      
PersonnelFootnote * 66,621 18,215 27.3% 59,290 17,660 29.8% 12.4% 3.1%
Other Operating Expenditures 15,982 2,125 13.3% 16,487 1,373 8.3% (3.1%) 54.8%
Transfer Payments 1,251,511 279,062 22.3% 1,169,787 248,883 21.3% 7.0% 12.1%
Total 1,334,114 299,402 22.4% 1,245,564 267,916 21.5% 7.1% 11.8%

Personnel and Other Operating Expenditures

Authorities available for Personnel Expenditures for the period ended September 30, 2023 increased by $7.3 million (12.4%) as compared to the prior year. Authorities available for Other Operating Expenditures decreased by $0.5 million (3.1%). These variances are due to:

Personnel authorities used through the second quarter increased by $2.5 million (7.4%) compared to the prior fiscal year, mainly due to an increased employee count. The percentage of authorities used for Personnel Expenditures in the second quarter (53.9%) is reasonable for this type of expenditure and is consistent with the prior year (56.3%).

Other Operating Expenditures used through the second quarter increased by $1.2 million (39.2%) compared to the prior fiscal year due to a $0.5 million increase in expenditures for rentals (more specifically cloud services and yearly software licenses), a $0.3 million increase in professional and special services (for example, management consulting fees and protection services), $0.2 million increase in transportation and communication costs as a result of increased staff travel and increased data communication costs and less significant increases for materials and supplies ($0.1 million) and the acquisition of machinery and equipment ($0.1 million).

Overall spending as of September 30, 2022 is consistent with CIHR management expectations.

Transfer Payments

Authorities available for the period ended September 30, 2023 increased by $81.7 million (7.0%) over the prior year due primarily to the net re-profiled funds from fiscal year 2022-23 for the Clinical Trials fund, as well as, increases to existing funding and funding for new programs. Authorities used through the quarter ended September 30, 2023 increased by $44.0 million (8.7%) compared to the prior fiscal. The percentage of grant authorities used up to the second quarter of 2023-24 (44.2%) is similar to the authorities used in the second quarter of 2022-23 (43.5%).

2.3 Other Non-Financial Highlights

Other non-financial highlights for the second quarter of 2023-24 include:

3. Risk and uncertainties

CIHR is funded through voted parliamentary spending authorities and statutory authorities for operating expenditures and transfer payments. As a result, its operations are impacted by any changes to funding approved through Parliament. Delivering programs and services may depend on several risk factors such as economic fluctuations, technological and scientific development, evolving government priorities, and central agency or government-wide initiatives.

CIHR is committed to a disciplined, risk management process in its daily operations. In 2023–24, CIHR developed a new Corporate Risk Profile (CRP) through a cross-organizational consultation process led by an external consultant firm to identify current risks for the Agency. The CRP provides a proactive response to manage and monitor risks to ensure CIHR's ability to deliver on its mandate. The key risks identified for implementation in 2023–24 and 2024–25 are as follows.

Risk 1 - Corporate Prioritization

There is a risk that CIHR’s current corporate prioritization process may cause it to establish new priorities without preplanning to ensure the necessary resources (e.g., infrastructure, staff, funding) are available thus risking the viability of initiatives, programs and Agency plans as well as expending available resources beyond sustainable levels.

Risk 2 - CIHR/Institutes’ Authorities, Roles, and Responsibilities

There is a risk that the lack of a clear governance framework within CIHR and between CIHR and the Institutes including the authorities, roles, and responsibilities may cause an important misalignment between who is accountable for what, and how decisions are made, leading to potential reputational damage to CIHR as well as inefficient decision-making and use of limited resources.

Risk 3 - Tri-Agency Grants Management Solution (TGMS)

There is a risk that CIHR’s current issues in sustaining the ongoing TGMS initiative could result in the failure of the TGMS project itself (or unacceptable delays in its operational delivery), thus leading to a significant loss of confidence in CIHR’s role as an innovative leader in the health research eco-system.

Risk 4 – Cybersecurity

There is a risk that CIHR’s current IM/IT infrastructure (e.g., systems, software) and support framework (e.g., strategies, policies, procedures, expertise) may allow for significant cybersecurity incidents affecting confidentiality, integrity, and availability of services (core and/or critical).

Risk 5 – Research Funding Integrity

There is a risk that the lack of a clearly defined, widely understood, and strictly applied research funding delivery framework compliant with applicable policy requirements (CIHR policies, Central Agency policies) may result in an uneven and/or non-compliant application of the research funding delivery process. This may significantly impact the process’ integrity as well as CIHR’s overall reputation and financial management autonomy.

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

Dr. Michael Strong completed his term as CIHR President on September 30, 2023. Executive Vice-President Catherine MacLeod’s 90-day maximum term as acting President ended on October 8. CIHR’s Governing Council appointed Tammy Clifford, Vice-President, Research – Learning Health Systems, acting President, effective October 9, for a period not to exceed 90 days as authorized under the CIHR Act.

On April 1st, 2023 CIHR transitioned away from Freebalance, its previous financial system, to a new system named “System Applications and Products in Data Processing (widely known as SAP)”. CIHR has joined a cluster of other government departments that are hosted and serviced on SAP by the Treasury Board Secretariat (TBS).

Budget 2023 proposes to reduce spending on consulting, other professional services, and travel by roughly 15 per cent of planned 2023-24 discretionary spending in these areas. This will result in savings starting in 2023-24. The government will focus on targeting these reductions on professional services, particularly management consulting.

Budget 2023 also proposes to phase in a roughly 3 per cent reduction of eligible spending by departments and agencies by 2026-27. This will reduce government spending over four years, starting in 2024-25.

CIHR is currently revising its spending plans in accordance with this guidance from the Treasury Board Secretariat and the Department of Finance.

Approval by Senior Officials

Approved by:

[original signed by]

Tammy Clifford
Acting President

[original signed by]

Jimmy Fecteau, MBA, CPA, CMA
Chief Financial Officer

Ottawa, Canada
November 29, 2023

5. Statement of Authorities (unaudited)

For the quarter ended September 30, 2023

Fiscal year 2023-24 Fiscal year 2022-23
(in thousands of dollars) Total available for use for the year ending March 31, 2024Footnote * Used during the quarter ended September 30, 2023 Year to date used at quarter-end Total available for use for the year ending March 31, 2023Footnote * Used during the quarter ended September 30, 2021 Year to date used at quarter-end
Vote 1 – Operating expenditures 73,737 18,124 35,697 68,044 17,100 32,581
Vote 5 - Grants 1,251,511 279,062 552,686 1,169,787 248,883 508,656
Budgetary statutory authorities
Contributions to employee benefit plans 8,866 2,216 4,433 7,733 1,933 3,867
Total budgetary authorities 1,334,114 299,402 592,816 1,245,564 267,916 545,104
Footnote *

Includes only Authorities available for use and granted by Parliament at quarter-end.

* referrer

6. Departmental budgetary expenditures by Standard Object (unaudited)

For the quarter ended September 30, 2023

Fiscal year 2023-24 Fiscal year 2022-23
(in thousands of dollars) Planned expenditures for the year ending March 31, 2024Footnote * Expended during the quarter ended September 30, 2023 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2023Footnote * Expended during the quarter ended September 30, 2022 Year to date used at quarter-end
Expenditures:
Personnel 66,621 18,215 35,886 59,290 17,660 33,399
Transportation and communications 853 141 373 3,481 122 138
Information 845 104 150 635 145 219
Professional and special services 9,906 1,222 1,746 8,738 918 1,440
Rentals 3,276 501 1,667 2,778 163 1,126
Repair and maintenance 44 (22) 26 86 4 41
Utilities, materials and supplies 301 40 124 284 9 9
Acquisition of machinery and equipment 757 139 155 485 50 59
Transfer payments 1,251,511 279,062 552,686 1,169,787 248,883 508,656
Other subsidies and payments - - 3 - (38) 17
Total budgetary expenditures 1,334,114 299,402 592,816 1,245,564 267,916 545,104
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