Quarterly Financial Report

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

For the period ended December 31, 2015 - Revised

Erratum

Date: April 6, 2016

  • Location:  Statement of Budgetary Authorities (unaudited), fiscal year 2015-16, Expended during the quarter ended December 31, 2015, Employee Benefit Plan
    Revision:  “Employee Benefit Plan 145” replaces “Employee Benefit Plan 146”
  • Location:  Statement of Budgetary Authorities (unaudited), fiscal year 2015-16, Year-to date at quarter end, Employee Benefit Plan
    Revision:  “Employee Benefit Plan 439” replaces “Employee Benefit Plan 294”
  • Location:  Statement of Budgetary Authorities (unaudited), fiscal year 2014-15, Expended during the quarter ended December 31, 2014, Employee Benefit Plan
    Revision:  “Employee Benefit Plan 247” replaces “Employee Benefit Plan 303”
  • Location:  Statement of Budgetary Authorities (unaudited), fiscal year 2014-15, Year-to date at quarter end, Employee Benefit Plan
    Revision:  “Employee Benefit Plan 880” replaces “Employee Benefit Plan 632”

Rational for the revision:  Transcription error occurred during the HTML conversion process.

1. Introduction

This quarterly financial report should be read in conjunction with the Main Estimates and Supplementary Estimates. It has been prepared by Canadian Grain Commission management as required by section 65.1 of the Financial Administration Act and is in the form and manner prescribed by the Treasury Board Accounting Standard 1.3. This quarterly report has not been subject to an external audit or review.

1.1 Authority, mandate and program activities

The Canadian Grain Commission was established in 1912 and is the federal government agency responsible for administering the provisions of the Canada Grain Act.

The Canadian Grain Commission’s mandate as set out in the Canada Grain Act is to, “in the interests of the grain producers, establish and maintain standards of quality for Canadian grain and regulate grain handling in Canada, to ensure a dependable commodity for domestic and export markets.”

The Canadian Grain Commission’s vision is to be “To be a world class, science-based quality assurance provider.” The Minister of Agriculture and Agri-Food is responsible for the Canadian Grain Commission.

In order to effectively pursue its mandate, the Canadian Grain Commission aims to achieve the following strategic outcome: Canada’s grain is safe, reliable and marketable and Canadian grain producers are properly compensated for grain deliveries to licensed grain companies.

The Canadian Grain Commission’s Program Alignment Architecture has four programs. The Quality Assurance Program, Quantity Assurance Program, Grain Quality Research Program, and Producer Protection Program each contributes to making progress to the sole strategic outcome. The Internal Services program supports all other four programs within the Canadian Grain Commission.

Further details on the Canadian Grain Commission’s authority, mandate and program activities may be found in the Report on Plans and Priorities and the Main Estimates.

1.2  Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting (modified cash) and a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities. The accompanying Statement of Budgetary Authorities compares the Department’s spending authorities granted by Parliament to those used by the department. Information in the Statement of Authorities is consistent with that in the Main Estimates and Supplementary Estimates.

The authority of Parliament is required before moneys can be spent by the Government. Approvals are given in the form of annually approved limits through Appropriations Acts or through legislation in the form of statutory spending 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. 

The Canadian Grain Commission uses the full accrual method of accounting to prepare and present its annual departmental financial statements included in the Departmental Performance Reports. However, the spending authorities voted by Parliament are on an expenditure basis (modified cash) of accounting.

1.3 Canadian Grain Commission financial structure

A revolving fund was set up for the Canadian Grain Commission in 1995 with the expectation that the Canadian Grain Commission would be largely self-funded through fees for service. Prior to August 1, 2013, Canadian Grain Commission user fees had not increased since 1991 despite the fact that operating costs had continually increased. As a result, overall cost recovery had fallen from approximately 90 percent in the early 1990s to between 50 and 60 percent in the past decade.  The Canadian Grain Commission’s falling cost recovery level caused the Canadian Grain Commission to rely on ad hoc government appropriation since 1999 to fund operations on an annual basis.

In fall 2012, the Canadian Grain Commission initiated a process to modernize user fees to align with amendments to the Canada Grain Act introduced in Parliament as part of Bill C-45. Bill C-45 received Royal Assent on December 14, 2012. Amended legislation and updated user fees came into force concurrently on August 1, 2013 and eliminated the need for annual ad hoc funding going forward.

The Canadian Grain Commission funding structure is based on budgetary authorities that are comprised of both statutory and voted (non-statutory) authorities. The statutory authorities include employee benefit plan authority for appropriation-funded personnel costs and the Canadian Grain Commission revolving fund authority, which allows the Canadian Grain Commission to re-spend fees that it has collected. The voted authority is Vote 1 – Program Expenditures, which includes annual appropriation authority and any ad hoc appropriation authority for the fiscal year.

The Canadian Grain Commission implemented its sustainable funding model on August 1, 2013. Planned spending for fiscal year 2015-16 is based on operations under an amended Canada Grain Act and updated user fees. The Canadian Grain Commission will recover approximately 91% of its costs through user fees. User fees will increase based on inflation as published in November 2012 in the Canadian Grain Commission’s User Fee Consultation and pre-proposal notification. Planned full time equivalents are 404 during fiscal year 2015-16.

2. Highlights of fiscal year to date

This section highlights any significant items that affected the year-to-date results and/or contributed to the net change in resources available for the year and actual expenditures. It should be read in conjunction with the Statement of Budgetary Authorities and the Departmental Budgetary Expenditures by Standard Object, which can be found at the end of this report.

Authorities available and used for the period ended December 31, 2015 (in millions of dollars)

Authorities available and used for the period ended December 31, 2015. Details below.

Authorities available and used for the period ended December 31, 2015 (in millions of dollars)
Sources of funds Authority available Authority used year to date
2015-16 2014-15 2015-16 2014-15
Statutory (Revolving fund revenue) 55.062 54.060 37.340 38.285
Statutory (Access to accumulated surplus and employee benefits plan) 0.591 8.847 0.439 0.880
Vote 1 (Appropriation including Ad hoc) 5.129 8.352 2.613 3.947
Total 60.782 71.259 40.392 43.112
Authority available based on amounts approved through the Estimates process. Amounts detailed in Statement of Authorities.

2.1 Authority available analysis

As reflected in the Statement of Budgetary Authorities, the department’s total authority available for use (net of Revolving Fund revenue) in the fiscal year as at December 31, 2015 is $5.720 million, as compared to $17.199 million as at December 31, 2014. The decrease of 66.74% ($11.479 million) can be attributed to the transition of the Canadian Grain Commission to a sustainable funding model on August 1, 2013, resulting in the following changes in the Canadian Grain Commission funding source elements:

  1. Vote 1 (Appropriation including Ad hoc) authority has decreased by $3.223 million over the same period last year primarily due to:
    1. a decrease of $2.643 million in voted appropriations to support employee termination benefit obligations with the implementation of amendments to the Canada Grain Act. The Canadian Grain Commission received no funding to support employee termination benefit obligations in 2015-16, and
    2. a decrease of $0.570 million in its operational budget carry forward. The Canadian Grain Commission received $0.245 million in 2015-16 for its operational budget carry forward. The Canadian Grain Commission received $0.815 million in 2014-15 for its operational budget carry forward.
  2. Statutory (Access to Surplus and Employee Benefit Plan) authority decreased by $8.256 million over the same period last year due to:
    1. a decrease of $7.947 million in its access to surplus for severance payments. No authority to access surplus was requested in 2015-16; and
    2. a decrease of $0.309 million for employee benefit plan due to reduction in appropriation to support employee termination benefit obligations with the implementation of amendments to the Canada Grain Act.

With the implementation of revised user fees to support its sustainable funding model, the Canadian Grain Commission forecasts increase of $1.002 million in its revolving fund gross revenues authorities due to inflation. This increase does not affect the change in the Canadian Grain Commission budgetary authorities.

2.2 Authority used analysis

As reflected in the Departmental Budgetary Expenditures by Standard Object, the department’s total budgetary authority used in the quarter ended December 31, 2015 is ($5.374 million), as compared to ($6.701 million) as at the quarter ended December 31, 2014. The increase of $1.327 million in total budgetary authority used can be attributed to:

  1. the overall decrease of $1.343 million in revenues collected in the quarter ended December 31, 2015 primarily due to increase in accounts receivable as at the end of period 9 as compared to last year; and
  2. the overall decrease of $0.016 million in expenditures is as a result of the following significant variances:
    1. Personnel expenditures increased by $0.562 million as compared to the same quarter last fiscal year primarily due to overtime incurred in 2015-16 because of higher grain volumes handled; and 
    2. Acquisition of machinery and equipment decreased by $0.504 million as compared to the same period last year primarily due to the purchase of scientific equipment in 2014-15.

The total budgetary authority used in the year to December  31, 2015 is ($14.398 million) as compared to ($14.663 million) for the same period last year.  The decrease of $0.265 million in budgetary authority used can be attributed to:

  1. the overall decrease of $ 2.985 million in revenues collected primarily due to lower grain volumes handled and an increase in accounts receivable as at end of period 9 as compared to the same period last year; and
  2. the overall decrease of $2.720 million in expenditures is as a result of the following significant variances:
    1. Personnel expenditures to date decreased by $2.172 million as compared to the same period last year due to severance liquidation payments made in 2014-15 and the continued transition to a revised organizational structure realized from amendments to the Canada Grain Act that occurred in 2014-15. There were no severance liquidation expenditures reported in 2015-16;
    2. Professional and special services expenditures to date increased by $0.556 million as compared to the same period as last year primarily due to pay consolidation initiatives as well as costs associated with a consultant for the review of the Grain Research Laboratory space; and
    3. Other subsidies and payments decreased by $1.077 million as compared to the same period last year due to implementing salary payment in arrears by the Government of Canada in 2014-15.

As reflected in both the Statement of Budgetary Authorities and the Departmental Budgetary Expenditures by Standard Object, overall expenditures, with consideration to the above changes, are consistent between fiscal periods.

3. Risks and uncertainties

The Canadian Grain Commission receives funding through both voted appropriations and fees related to the handling of grain. Service fee revenue is largely based on grain volumes handled—a volume which fluctuates from year to year. The Canadian Grain Commission revolving fund is utilized as effectively as possible. The annual budget is also re-profiled through the year to deal with shifting needs and priorities, including planning for and accommodating a potential 20 percent swing in projected grain volumes during budgeting.

Legislation to amend the Canada Grain Act was introduced as part of Bill C-45, the Jobs and Growth Act, 2012, in October 2012. Bill C-45 received royal assent on December 14, 2012. On November 1, 2012, the Canadian Grain Commission launched consultations on new Canadian Grain Commission user fees that reflect an updated Canada Grain Act and streamlined Canadian Grain Commission operations. Most of the legislative amendments came into force on August 1, 2013. Updating user fees have eliminated the Canadian Grain Commission’s dependence on annual ad hoc funding and create a more stable environment for integrated people and business management. A stable funding environment may reduce overall organizational risk and allow the Canadian Grain Commission to continue to successfully deliver its program activities and deliver upon its strategic outcome.

4. Significant changes to operations, personnel and programs

From fiscal year 2012-13 to fiscal year 2015-16, the Canadian Grain Commission  has transformed itself into a streamlined and financially sustainable organization. This is due to certain activities being eliminated and other activities being adjusted and/or implemented to allow the Canadian Grain Commission to continue to achieve its mandate and manage risk. Changes will result in a reduction in operational spending of $21.835 million between 2012-13 and 2015-16.

Planned operational spending will stabilize at approximately $60.537 million in 2015-16. This includes $5.475 million from annual appropriation and projected spending of approximately $55.062 million of revenue earned through user fees as adjusted for inflation. Planned human resource requirements will have decreased from approximately 731 full time equivalents (as at March 31, 2013) to 404 full time equivalents by the end of this fiscal year.

Approved by:

Jim Smolik
Acting Chief Commissioner
Winnipeg, Manitoba
Febraury 17, 2016

David Peters
Acting Chief Financial Officer
Winnipeg, Manitoba
February 17, 2016

Statements of Budgetary Authorities (unaudited)

Statements of Budgetary Authorities (unaudited) for the period ended December 31, 2015
Sources of funds Fiscal year 2015-16 Fiscal year 2014-15
Total available for use for the year ending March 31, 2016Footnote * Expended during the quarter ended December 31, 2015 Year-to date at quarter end Total available for use for the year ending March 31, 2015Footnote * Expended during the quarter ended December 31, 2014 Year-to date at quarter end
(in thousands of dollars) (in thousands of dollars)
Vote 1 Appropriation including Ad hoc 5,129 868 2,613 8,352 1,074 3,947
Statutory Authorities Revolving Fund Gross Expenditures 55,062 13,222 37,340 62,007 12,929 38,285
Revolving Fund Gross Revenues (55,062) (19,609) (54,790) (54,060) (20,952) (57,775)
Revolving Fund Net Expenditures 0 (6,387) (17,450) 7,947 (8,023) (19,490)
Employee Benefit Plan 591 145 439 900 247 880
Total Statutory Authorities 591 (7 382) (10 769) 8,847 (8 154) (10 834)
Total Budgetary Authorities 5,720 (5,374) (14,398) 17,199 (6,701) (14,663)
Due to rounding, totals may not add to totals shown.

Departmental Budgetary Expenditures by Standard Object (unaudited)

Departmental Budgetary Expenditures by Standard Object (unaudited) for the period ended December 31, 2015
Sources of funds Fiscal year 2015-16 Fiscal year 2014-15
Total available for use for the year ending March 31, 2016Footnote * Expended during the quarter ended December 31, 2015 Year-to date at quarter end Total available for use for the year ending March 31, 2015Footnote * Expended during the quarter ended December 31, 2014 Year-to date at quarter end
(in thousands of dollars) (in thousands of dollars)
Expenditures Personnel 41,919 10,369 29,489 52,361 9,805 31,660
Transportation and communication 3,510 1,119 2,299 3,369 1,095 2,324
Information 199 62 192 191 77 130
Professional and special services 3,212 445 1,693 3,790 539 1,137
Rentals 5,156 1,361 4,087 4,948 1,239 3,776
Repairs and maintenance 930 39 444 892 138 734
Utilities, materials and supplies 1,605 163 510 1,540 171 383
Acquisition of machinery and equipment 4,251 677 1,670 4,168 1,181 1,882
Other subsidies and payments 0 0 8 0 5 1,086
Total expenditures 60,782 14,235 40,392 71,259 14,251 43,112
Revolving fund revenue (to be credited to vote) (55,062) (19,609) (54,790) (54,060) (20,952) (57,775)
Total budgetary authorities 5,720 (5,374) (14,398) 17,199 (6,701) (14,663)
Due to rounding, totals may not add to totals shown.

Footnotes

Footnote 1

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

Return to footnote * referrer