Quarterly Financial Report for the Quarter Ended
December 31, 2023

About this publication

Publication author: Canada Economic Development for Quebec Regions

ISSN: 2368-6545

Publish date: February 23, 2024

Table of contents

1. Introduction
2. Highlights of Fiscal Quarter and Fiscal Year-to-Date Results
3. Risks and Uncertainties
4. Significant Changes to Operations, Personnel and Programs
5. Approval by Senior Officials
6. Appendices

1. Introduction

This quarterly financial report has been prepared by Canada Economic Development for Quebec Regions (CED) as required under section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board.

This report should be read in conjunction with the 2023–2024 Estimates and the 2023–2024 Departmental Plan.

This document has not been subject to external audit or review.

1.1 Authorities, mandate and programs

The mission of Canada Economic Development for Quebec Regions (CED) is to promote the long-term economic development of the regions of Quebec by giving special attention to those where slow economic growth is prevalent or opportunities for productive employment are inadequate.

CED is the key economic development player for Quebec’s regions for small and medium-sized enterprises (SMEs). In order to accomplish its core responsibility, which is economic development in Quebec, CED fosters business start-ups and growth. It helps them become more innovative, productive and competitive. It supports efforts to engage the regions of Quebec and attract investments that will help boost the economic well-being of Quebec and Canada.

CED contributes to the economic vitality of all of Quebec’s regions by leveraging their competitive regional advantages, such as wind power and marine technologies. It also supports the transition and diversification of communities that remain dependent on a limited number of sectors or that have been affected by an economic shock, such as the closure of the chrysotile mines.

CED achieves its results by supporting businesses, primarily SMEs, and non-profit organizations (NPOs), through strategic investments. Through its 12 business offices across Quebec’s regions and the relationships it has developed with other economic development players, CED stays abreast of the needs of the regions and businesses and is able to offer financial support to carry out projects that support businesses and communities in their economic development efforts.

CED has three categories of programs that support its core responsibility:

• Regional Innovation
• Community Vitality
• Targeted or Temporary Support

Additional information about CED’s authority, mandate and programs can be found in the 2023–2024 Estimates and the 2023–2024 Departmental Plan.

1.2 Basis of presentation

This quarterly report was prepared by CED using an expenditure basis of accounting. The accompanying Statement of Authorities includes CED’s spending authorities granted by Parliament and used by CED, consistent with the 2023–2024 Main Estimates. This quarterly report was prepared using a special-purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

Prior authority from Parliament is required before funds can be spent by the Government. Authorities available for use are given through appropriation acts in the form of annually approved limits or through legislation in the form of statutory authority for specific purposes.

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.

CED uses the full accrual method of accounting to prepare and present its annual financial statements that make up part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis of accounting.

1.3 Financial structure of Canada Economic Development for Quebec Regions (CED)

There are two annual appropriations for the management of CED’s expenditures:

• Vote 1 – Net operating expenditures, which includes CED authorities related to personnel costs and operating and maintenance expenditures
• Vote 5 – Grants and contributions, which includes all authorities related to transfer payments

Expenses under statutory authorities, for which payments are made under legislation previously approved by Parliament and which are not part of the annual appropriations bills, include items such as the employer’s share of the employee benefit plan.

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

This section presents various financial information as at December 31, 2023, including the authorities available for the year and expenditures incurred during the second quarter, as compared with the previous fiscal year.

The explanation of variances in the amounts is based on the premise that discrepancies of less than 5% have a minimal impact on the interpretation of results.

The details of this financial information are provided in sections 2.1 and 2.2, and in the tables in the Appendix.

2.1 Analysis of authorities

Authorities as at December 31, 2023, totalled $590.8M, compared with $667.6M as at December 31, 2022.

The noted downward variance of $76.8M (-11.5%) is attributed to the following changes:

• Vote 1 – Net operating expenditures: +$2.0M
• Vote 5 – Grants and contributions: -$79.1M
• Budgetary statutory authorities: +$0.3M

NB: Totals in the report may not add up due to rounding off.

The chart below shows the annual budgetary appropriation authorities as at December 31, 2023, compared with the previous fiscal year.

Image 1 - Text Version:

Analysis of annual budgetary appropriation authorities: subdivided into three sections, this graph provides an overview of net available budgetary authorities (Vote 1 – Net Operating Expenditures; Vote 5 – Grants and Contributions; and Budgetary Statutory Authorities) as at September 30 and as at December 31st, 2023, including a comparison as at September 30 and as at December 31st, 2022.

As at December 31st, 2023, annual authorities under Vote 1 – Net Operating Expenditures, Vote 5 – Grants and Contributions, and Budgetary Statutory Authorities, totalled $50.2M ($48.2M in 2022–2023); $534.7M ($613.8M in 2022–2023); and $6.0M ($5.7M in 2022–2023), respectively.

As at September 30, 2023, annual authorities under Vote 1 – Net Operating Expenditures, Vote 5 – Grants and Contributions, and Budgetary Statutory Authorities, totalled $46.8M ($47.2M in 2022–2023); $433.7M ($509.9M in 2022–2023); and $5.7M ($5.7M in 2022–2023), respectively.

Vote 1 authorities (Net operating expenditures)

As at December 31, 2023, authorities totalled $50.2M, compared with $48.2M as at December 31, 2022. This represents an increase of $2.0M (4.1%) this year.

This increase can be attributed to the additional funds received following the signing of collective agreements for numerous classifications. The approval of funding for the Hurricane Fiona Recovery Fund also contributed to the increase in available operating authorities.

Vote 5 authorities (Grants and contributions)

As at December 31, 2023, authorities totalled $534.7M, compared with $613.8M as at December 31, 2022. This represents a decrease of $79.1M (-12.9%) this year.

This variance stems from a number of items, some of which varied upward, others downward, for a net decrease of $79.1M:

• Increase in funding (+$53.5M)
  • Reinvestment of repayable contributions:* +$42.5M
  • Hurricane Fiona Recovery Fund (HFRF): +$7.1M
  • Tourism Growth Program (TGP): +$3.9M

• Decrease in funding (-$132.6M) **
  • Tourism Relief Fund (TRF): -$66.6M
  • Regional Air Transportation Initiative (RATI): -$19.3M
  • Transfer of repayable contributions:** -$15.0M
  • Jobs and Growth Fund (JGF): -$11.5M
  • Major Festivals and Events Support Initiative (MFESI): -$7.4M
  • Canada Community Revitalization Fund (CCRF): -$6.2M
  • Women Entrepreneurship Strategy (WES) -$3.4M
  • Miscellaneous items: -$1.7M
  • Launch of the regional quantum innovation initiative (RQI): -$1.5M

*In 2020–2021, as a COVID-19 mitigation measure, CED granted its clients a nine-month moratorium on the reimbursement of repayable contributions. Two years later, in 2022–2023, since these repayments were being reinvested in regular programs, CED reported a shortfall. These funds will be recovered over a longer period of time than originally anticipated.
**A total of $15M in funding from 2023–2024 was transferred to 2022–2023 to partially offset this shortfall.

Budgetary statutory authorities

As at December 31, 2023, authorities totalled $6.0M; a total of $5.7M was also reported as at December 31, 2022. The increase of $0.3M (5.4%) is a result of additional funding received for the employee benefit plan following the signing of collective agreements.

2.2 Analysis of expenditures

CED expenditures in the third quarter of 2023–2024 totalled $121.3M, compared with $130.1 million for the same period in the previous year. This represents a net decrease of $8.8M (-6.8%) year-over-year.

This variance can be broken down as follows:

• Vote 1 – Net operating expenditures: +3.1M
• Vote 5 – Grants and contributions: -$12.4M
• Budgetary statutory authorities: +$0.5M

On a cumulative basis, expenditures as at December 31, 2023, amounted to $238.7M, compared with $236.6M for the same period in the previous year. This represents an increase of $2.1M (0.9%) this year.

This variance can be broken down as follows:

• Vote 1 – Net operating expenditures: +$0.4M
• Vote 5 – Grants and contributions: +$1.2M
• Budgetary statutory authorities: +$0.5M

The chart below shows expenditures in the third quarter of 2023–2024 by budgetary appropriation, compared with the previous fiscal year.

Image 2 - Text Version:

Analysis of third quarter expenditures and presentation of year-to-date expenditures by budgetary appropriation as at December 31st, fiscal year 2023–2024, compared with 2022 2023: subdivided into three sections, namely Vote 1 – Net Operating Expenditures, Vote 5 – Grants and Contributions, and Budgetary Statutory Authorities. This graph shows expenditures incurred during the third quarter of 2023–2024, as well as year-to-date expenditures as at September 30, 2023, and includes a comparison with fiscal year 2022–2023.

In the third quarter of 2023–2024, expenditures under Vote 1 (Net Operating Expenditures), Vote 5 (Grants and Contributions), and Budgetary Statutory Authorities, amounted to $13.1M ($10.0M in 2022–2023); $107.2M ($119.6M in 2022–2023); and $1.0M ($0.5M in 2022–2023), respectively.

Year-to-date expenditures as at December 31st, 2023, under Vote 1 (Net Operating Expenditures), Vote 5 (Grants and Contributions), and Budgetary Statutory Authorities, totalled $33.8M ($33.4M in 2022–2023); $201.1M ($199.9M in 2022–2023); and $3.8M ($3.3M in 2022–2023), respectively.

Vote 1 expenditures (Net operating expenditures)

CED’s net operating expenditures for the third quarter of 2023–2024 totalled $13.1M, compared with $10.0M in 2022–2023. This represents an increase of $3.1M (31.1%) this year.

The increase in quarterly spending can be attributed to the hiring of additional staff to fill the many vacant positions identified in the second quarter. Expenditures were also incurred for office refits and IT equipment purchases.

Cumulative expenditures totalled $33.8M as at December 31, 2023, compared with $33.4M as at December 31, 2022. This represents an increase of $0.4M (1.1%) this year.

(For further details on these expenditures, see the table entitled “Departmental budgetary expenditures by standard object” in Appendix 6.2.)

Vote 5 expenditures (Grants and contributions)

Grant and contribution expenditures for the third quarter of 2023–2024 totalled $107.2M, compared with $119.6M in 2022–2023, for a net decrease of $12.4M (-10.4%) this year.

The difference is primarily a result of the Agency’s major focus on the delivery of the Tourism Relief Fund (-$24.6M) in the third quarter of the previous year. Although the initiative was extended by one year, most of the funding was spent last year. The year-over-year decrease is offset by increased spending for the Aerospace Regional Recovery Initiative (+$10.4M). Although this initiative was launched in 2022–2023, a number of projects had to be postponed until 2023–2024 because of the labour shortage, as well as the scarcity of subcontractors, and supply issues.

On a cumulative basis as at December 31, 2023, expenditures totalled $201.1M, compared with $199.9M as at December 31, 2022. This represents a slight increase in spending this year of $1.2M (0.6%).

Expenditures under budgetary statutory authorities

Spending on statutory authorities in the third quarter of 2023–2024 totalled $1.0M, compared with $0.5M as at December 31, 2022. This represents a year-over-year increase of $0.5M (102.5%).

This variance can be attributed to different cut-offs for the two years. Employee benefit remittances for the third quarter of 2022–2023 were made in January of that year, whereas they were made in December this year.

Cumulative expenditures as at December 31, 2023, stood at $3.8M and consisted solely of employee benefit plan remittances. As at December 31, 2022, expenditures totalled $3.3M. The variance of $0.5M (15.7%) is explained above.

(For further details on these expenditures, see the table entitled “Departmental budgetary expenditures by standard object” in Appendix 6.2.)

3. Risks and uncertainties

The post-pandemic context marked by an anticipated economic slowdown is compounding the risk that businesses, now more indebted and having exhausted their contingency funds, will cancel their investment projects in order to modernize their operations. Businesses have also had to deal with related challenges, such as supply chain disruptions, rising interest rates and operating expenses, and labour shortages. To help Quebec businesses in this new and changing economic context, CED will continue to implement some of the economic recovery initiatives announced in Budget 2021. Furthermore, to facilitate the delivery of services to its clients, CED will be setting up a new client portal and reviewing its continuum of services.

CED manages the allocation of resources within a well-defined framework of accountability, policies and procedures. The organization will continue to develop financial risk mitigation measures by rigorously managing its budgetary and allocation processes, supported by a series of financial controls, including internal controls over financial reporting, general IT controls, and business process controls.

CED is also pursuing the stabilization of the SAP solution and the development of complementary tools. It should be noted that the rollout of the new SAP system has had a significant impact on the business intelligence required for G&C program delivery. To mitigate this risk, a governance structure has been put in place to ensure better planning and to optimize investment in the development of management reports and dashboards.

4. Significant changes to operations, personnel, and programs

The most noteworthy changes for CED in 2023–2024 remain those resulting from the end of the various economic recovery initiatives announced in Budget 2021, both in terms of the management of the end of these initiatives and the monitoring of the numerous contributions, which will continue for a number of years in the case of the:

• Canada Community Revitalization Fund
• Aerospace Regional Recovery Initiative
• Major Festivals and Events Support Initiative
• Tourism Relief Fund
• Jobs and Growth Fund
• Black Entrepreneurship Program

5. Approval by Senior Officials

The purpose of this section is to provide the approval of senior officials, as required by the Policy on Financial Management, as follows:

Approved by :

Original signed by

_____________________________________
Sony Perron
Deputy Minister / President

Montréal, Canada
February 12, 2024

Original signed by

__________________________________
Maxime Garon
Chief Financial Officer

Montréal, Canada
February 7, 2024

6. Appendices

6.1 Statement of authorities (unaudited)

6.2 Departmental budgetary expenditures by standard object (unaudited)