Management Statement of Risks and Significant Changes in Operations, Personnel and Programs (2015-2016, Q1)

For Quarter ended June 30, 2015

Introduction

The Canadian Environmental Assessment Agency’s (the Agency) first quarterly financial statement report for the period ended June 30, 2015 has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by Treasury Board under the Treasury Board Accounting Standard (TBAS 1.3). It should be read in conjunction with the Main Estimates and Supplementary Estimates for the current year as well as Canada’s Economic Action Plan 2012.

This report has not been subject to an external audit or review.

The Agency is the responsible authority for all projects subject to the Canadian Environmental Assessment Act, 2012 (CEAA 2012) except for those that are regulated by the National Energy Board or the Canadian Nuclear Safety Commission. In accordance with the transitional provisions of CEAA 2012, the Agency is also responsible for managing the environmental assessment (EA) of most projects that are required to be completed under the former Canadian Environmental Assessment Act.

In addition, the Agency advises and assists the Minister of the Environment in establishing review panels and supports panels in their work. It also supports the Minister in fulfilling responsibilities under CEAA 2012, including the development and issuance of enforceable EA decision statements.

The Agency administers a Participant Funding Program that supports individuals, not-for-profit organizations, and Aboriginal groups participating in federal EAs.

The Agency also has responsibilities for reviewing projects of a federal nature under the environmental and social protection regimes set out in sections 22 and 23 of the 1975 James Bay and Northern Quebec Agreement. The President of the Agency is designated by Order-in-Council as the federal administrator of these processes.

The Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals establishes a self-assessment process for conducting a strategic EA of a policy, plan or program proposal. The Agency supports the Minister of the Environment in promoting the application of the Cabinet Directive and provides training and guidance for federal authorities.

The Agency's activities are carried out under three different programs: Environmental Assessment Delivery, Environmental Assessment Policy and Internal Services.

Environmental Assessment Delivery program ensures that high-quality EA of major projects are conducted and completed in a timely and predictable way, supporting economic growth while preventing or reducing adverse environmental effects. The most appropriate means of avoiding duplication of assessment activities with other jurisdictions is applied, thereby increasing efficiency and providing certainty for all participants in the process. The Agency will promote, monitor, and facilitate compliance with CEAA 2012. The EA provides for meaningful participation of the public and Aboriginal groups. Aboriginal consultation obligations are integrated to the greatest extent possible with the federal EA process. As such, the Agency consults with Aboriginal groups during the EA process to assess how the proposed project may adversely affect potential or established Aboriginal or treaty rights and related interests, and find ways to avoid or minimize these adverse impacts.

The EA Policy program develops and promotes robust policies and practices for high-quality EA in accordance with CEAA 2012. This is achieved by: building and reinforcing policies, procedures and criteria for the conduct of federal EAs; promoting cooperation and coordinated action between the federal government and other jurisdictions; promoting communication and cooperation with Aboriginal peoples; and developing instruments and training for EA practitioners. The EA Policy program enables continuous improvement through research, monitoring, analysis and advice. Recommendations inform the development of new regulatory and policy approaches as well as the revision of guidance, training and knowledge-based instruments. The program also provides support for the conduct of EAs through various means, such as federal-provincial agreements and policy criteria.

Internal Services comprises related activities and resources to support the needs of programs and other corporate obligations of the Agency. These include Management and Oversight Services, Communications Services, Legal Services, Human Resources Management Services, Financial Management Services, Information Management Services, Information Technology Services, the Access to Information and Privacy Office, Real Property Services, Materiel Management Services, Acquisition Services, and Travel and Other Administrative Services. Internal Services includes activities and resources that apply across an organization, not those provided specifically to a program.

The Agency was established in 1994 and is led by a President, who reports directly to the Minister of the Environment. It has its headquarters in Ottawa and regional offices in Halifax, Québec City, Toronto, Edmonton, and Vancouver.

Basis of Presentation

This year-to-date first quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Agency's spending authorities granted by Parliament and those used by the Agency consistent with the Main Estimates and Supplementary Estimates (as applicable) for the 2015-2016 fiscal year.

This year-to-date first 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. 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.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Actauthorizes 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.

The Agency 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.

Highlights of fiscal quarter and fiscal year-to-date (YTD) results

This section highlights the significant items that contributed to the net increase in actual expenditures for the 3 months ended June 30, 2015.

Figure 1 outlines the net budgetary authorities ($30,964,106 in 2014-2015 and $23,928,922 in 2015-2016), which represent the resources available for the year as at June 30, 2015 net of the revenue that is expected to be collected. The 2015-2016 authorities as presented as at June 30, 2015 do not include amounts related to the Major Projects Management Office Initiative ($8 million per annum funding which was renewed in Budget 2015). The Agency will request an additional $8 million funding authorities for this fiscal year as part of the normal Supplementary Estimates Appropriation process later in 2015-2016. For the remaining 4 years, the funding authorities for the Major Projects Management Office Initiative will be part of the Main Estimates.

Figure 1: First Quarter Year-to-Date Expenditures Compared to Annual Authorities

Figure 1: First Quarter Year-to-Date Expenditures Compared to Annual Authorities

The Agency’s first quarterly year-to-date budgetary expenditures net of revenues have increased by $2.59 million from the previous year ($4,498,123 in 2014-2015 and $7,090,265 in 2015-2016). This is comprised of a $0.78 million increase in expenditures offset by a $1.8 million reduction in revenues.

As at the end of the first quarter, the 2015-2016 year-to-date budgetary expenditures increased by $0.78 million in comparison with 2014-2015 due to following reasons:

  • An increase of $1.2 million in personnel and benefits costs mostly due to :
    • An increase of $0.55 million in personnel and benefits costs,
    • A variance due to a $0.65 million understatement in the first quarter of 2014-2015 for the one-time transition and accounting treatment for implementing salary payment in arrears by the Government of Canada;
  • A decrease of $0.11 million related to the Agency’s Participant Funding Program and;
  • An overall decrease of $0.31 million in professional service contracts, transportation and telecommunications, information, materials and supplies and the acquisition of machinery and equipment.

The year-to-date revenues at the end of the first quarter were $1.8 million lower in comparison with 2014-2015 due to a decrease in the number of panel reviews currently underway.

Risks and Uncertainties

The Agency is funded through annual appropriations. As a result, its operations are impacted by any changes in funding approved through Parliament. The Agency has two initiatives, Aboriginal Consultation ($6.8 million per annum) and Major Projects Management Office ($8 million per annum), which were renewed in Budget 2015 for five years starting fiscal year 2015-2016.

The Agency’s expenditures and revenues are also influenced by the number of EAs conducted during any given fiscal year and are heavily influenced by economic conditions outside the control of the Agency. To off-set portions of its expenditures, the Agency has vote-netted authority to recover certain costs from proponents in the conduct of review panels. Timing of revenue collections is uncertain and can cause unpredictable financial results.

In addition, the timing of requests for participant funding for consultation also varies and is unpredictable. A commitment to participant funding may be planned in one year but could be realized across multiple fiscal years depending on the progression of the Environmental Assessment. Unused commitments are carried forward from one year to another and are honoured by the Agency as they become due.

The Agency is also subject to litigation, the extent and costs which are difficult to predict but are normally absorbed by the Agency’s annual appropriations.

Significant Changes in Relation to Operations, Personnel and Programs

There were no significant financial changes in relation to Operations, Personnel and Programs at the end of the first quarter of 2015-2016.

Approval by Senior Officials

Approved by:

_______Original signed by_______
Ron Hallman
President

_______Original signed by_______
Juliet Woodfield, CPA,CA
Vice-President, Corporate Services and Chief Financial Officer

Ottawa, Canada
August 28, 2015

Statement of Authorities (unaudited)

Fiscal Year 2015-2016 (in dollars)
Total available for use for the year ending March 31, 2016 Used during the quarter ended June 30, 2015 Year to date used at quarter-end
VOTE 1 - Net Operating Expenditures $ 21,825,669 $ 6,650,202 $ 6,650,202
Statutory Authorities - Employee Benefits $ 2,103,251 $ 440,063 $ 440,063
Total Authorities $ 23,928,920 $ 7,090,265 $ 7,090,265
Fiscal Year 2014-2015 (in dollars)
Total available for use for the year ending March 31, 2015 Used during the quarter ended June 30, 2014 Year to date used at quarter-end
VOTE 1 - Net Operating Expenditures $ 28,100,220 $ 3,814,043 $ 3,814,043
Statutory Authorities - Employee Benefits $ 2,863,886 $ 684,080 $ 684,080
Total Authorities $ 30,964,106 $ 4,498,123 $ 4,498,123

Agency Budgetary Expenditures by Standard Object (unaudited)

Fiscal Year 2015-2016 (in dollars)
Planned Expenditures for the year ending March 31, 2016 Expended during the quarter ended June 30, 2015 Year to date used at quarter-end
Expenditures (Note 1)
Personnel
$ 14,295,934 $ 6,733,327 $ 6,733,327
Transportation and Telecommunications $ 1,521,857 $ 108,313 $ 108,313
Information $ 457,332 $ 7,833 $ 7,833
Professional Services $ 4,951,416 $ 74,901 $ 74,901
Rentals $ 322,975 $ 16,286 $ 16,286
Purchased Repair and Maintenance $ - $ 187 $ 187
Utilities, materials and supplies $ 129,190 $ 10,033 $ 10,033
Acquisition of Machinery & Equipment $ 970,216 $ 14,528 $ 14,528
Transfer Payments $ 2,747,000 $ 124,856 $ 124,856
Other expenses $ - $ - $ -
Total Gross Budgetary Expenditures $ 25,395,920 $ 7,090,265 $ 7,090,265
Less Revenues netted against Expenditures
Planned Revenues (Note 2)

Environmental assessment and training services
-$ 1,467,000 $ - $ -
Total Revenue netted against expenditures -$ 1,467,000 $ - $ -
Total net budgetary expenditures $ 23,928,920 $ 7,090,265 $ 7,090,265
Fiscal Year 2014-2015 (in dollars)
Planned Expenditures for the year ending March 31, 2015 Expended during the quarter ended June 30, 2014 Year to date used at quarter-end
Expenditures
Personnel
$ 19,320,075 $ 5,529,277 $ 5,529,277
Transportation and Telecommunications $ 2,687,406 $ 123,013 $ 123,013
Information $ 597,201 $ 41,017 $ 41,017
Professional Services $ 9,853,820 $ 252,398 $ 252,398
Rentals $ 597,201 $ 18,916 $ 18,916
Purchased Repair and Maintenance $ - $ 998 $ 998
Utilities, materials and supplies $ 298,601 $ 72,636 $ 72,636
Acquisition of Machinery & Equipment $ 895,802 $ 34,164 $ 34,164
Transfer Payments $ 4,715,000 $ 234,024 $ 234,024
Other expenses $ - $ 502 $ 502
Total Gross Budgetary Expenditures $ 38,965,106 $ 6,306,945 $ 6,306,945
Less Revenues netted against Expenditures
Planned Revenues

Environmental assessment and training services
-$ 8,001,000 -$ 1,808,822 -$ 1,808,822
Total net budgetary expenditures $ 30,964,106 $ 4,498,123 $ 4,498,123

Note 1: An amount of $8,000,000 is excluded in the planned expenditures relating to the Major Projects Management Office Initiative; funding will be requested later during 2015-2016 fiscal year as part of the normal Supplementary Estimates Appropriation process.

Note 2: The Agency has authority to collect up to $8,001,000 in vote-netted revenue.

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