Management Statement of Risks and Significant Changes in Operations, Personnel and Programs (2015-2016, Q3)

For Quarter ended December 31, 2015

Introduction

The Canadian Environmental Assessment Agency’s (the Agency) third quarterly financial statement report for the period ended December 31, 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.

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 Environment and Climate Change 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 Indigenous 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 Environment and Climate Change 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 Indigenous groups. Indigenous consultation obligations are integrated to the greatest extent possible with the federal EA process. As such, the Agency consults with Indigenous groups during the EA process to assess how the proposed project may adversely affect potential or established Indigenous or treaty rights and related interests, and find ways to avoid or minimize these adverse impacts.

The Environmental Assessment 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 Indigenous 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 Environment and Climate Change. It has its headquarters in Ottawa and regional offices in Halifax, Québec City, Toronto, Edmonton, and Vancouver.

Basis of Presentation

This year-to-date third 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 third 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 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.

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 9 months ended December 31, 2015.

Figure 1 outlines the net budgetary authorities ($31,122,385 in 2014-2015 and $31,259,325 in 2015-2016), which represent the resources available for the year as at December 31, 2015 net of the revenue that is expected to be collected. The increase of available authorities between this quarter and the second quarterly financial statement is attributable to the Major Projects Management Office Initiative funding of $6,383,000 which was approved by the Treasury Board Secretariat of Canada in the third quarter of 2015. The $168,991 increase of authority between the third quarter of 2014-2015 and the second quarter of 2014-2015 is attributable to additional program funding for comprehensive claims and self-government negotiations across Canada and compensation adjustments.

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

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

The Agency’s third quarterly year-to-date budgetary expenditures net of revenues have increased by $1.4 million from the previous year ($18,898,227 in 2014-2015 and $20,297,403 in 2015-2016). This is comprised of a $0.9 million decrease in expenditures offset by a $2.3 million reduction in revenues.

As at the end of the third quarter, the 2015-2016 year-to-date budgetary expenditures have decreased by $0.9 million in comparison with 2014-2015 due to following reasons:

  • A decrease of $1.04 million related to the Agency’s Participant Funding Program;
  • An increase of $0.49 million in professional services, mainly due to an increase in litigation costs; and
  • An overall decrease of $0.35 million in various other operating and maintenance expenditures.

The year-to-date revenues at the end of the third quarter of 2015-2016 were $2.3 million lower in comparison with the third quarter of 2014-2015 due to a decrease in the number of EA review panels underway in comparison to the previous year.

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, Indigenous 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 and are reflected in the 2015-2016 figures.

The Agency’s expenditures and revenues are 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 EA. Unused commitments are carried forward from one year to another and are honoured by the Agency as they become due.

In addition, during the fourth quarter of 2015-2016 and into 2016-2017, the Agency may be subject to a number of additional financial pressures including: costs related to the review of EA processes; costs associated with the delivery of non-cost recoverable EA review panels; increasing legal and litigation costs; and potential accommodation relocation costs due to the expiry of a number of office leases. Due to the uncertainties associated with these items, these costs have not been reflected in the planned spending. The Agency will develop strategies to manage these pressures as details and timing of these activities become clearer.

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 third 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
February 24, 2016

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 December 31, 2015 Year to date used at quarter-end
VOTE 1 - Net Operating Expenditures $ 29,156,074 $ 6,643,332 $ 18,977,215
Statutory Authorities - Employee Benefits $ 2,103,251 $ 440,063 $ 1,320,188
Total Authorities $ 31,259,325 $ 7,083,395 $ 20,297,403
Fiscal Year 2014-2015 (in dollars)
  Total available for use for the year ending March 31, 2015 Used during the quarter ended December 31, 2014 Year to date used at quarter-end
VOTE 1 - Net Operating Expenditures $ 28,369,223 $ 7,307,279 $ 16,845,987
Statutory Authorities - Employee Benefits $ 2,753,162 $ 684,080 $ 2,052,240
Total Authorities $ 31,122,385 $ 7,991,359 $ 18,898,227

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 December 31, 2015 Year to date used at quarter-end

Note 1: An amount of $6,383,000 ($8,000,000 net of Employee Benefit Plan and Accommodations) is now included in the planned expenditures relating to the Major Projects Management Office Initiative; but were excluded in the second quarter because of the timing of tabling the Supplementary Estimates.

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

Expenditures (Note 1)
Personnel $ 19,195,934 $ 5,835,879 $ 16,968,376
Transportation and Telecommunications $ 1,808,158 $ 218,090 $ 491,610
Information $ 543,368 $ 29,612 $ 101,009
Professional Services $ 4,773,897 $ 948,593 $ 2,442,764
Rentals $ 383,735 $ 19,926 $ 58,698
Purchased Repair and Maintenance $ - $ 785 $ 9,010
Utilities, materials and supplies $ 153,494 $ 32,643 $ 57,859
Acquisition of Machinery & Equipment $ 1,152,739 $ 6,423 $ 33,418
Transfer Payments $ 4,715,000 $ 268,724 $ 580,781
Other expenses $ - $ - $ -
Total Gross Budgetary Expenditures $ 32,726,325 $ 7,360,675 $ 20,743,525
Less Revenues netted against Expenditures
Planned Revenues (Note 2)
Environmental assessment and training services -$ 1,467,000 -$ 277,280 -$ 446,122
Total net budgetary expenditures $ 31,259,325 $ 7,083,395 $ 20,297,403
Fiscal Year 2014-2015 (in dollars)
  Planned Expenditures for the year ending March 31, 2015 Expended during the quarter ended December 31, 2014 Year to date used at quarter-end
Expenditures
Personnel $ 19,462,011 $ 6,068,571 $ 16,988,516
Transportation and Telecommunications $ 2,690,347 $ 239,198 $ 555,720
Information $ 597,855 $ 25,797 $ 155,250
Professional Services $ 9,864,608 $ 1,203,341 $ 1,955,982
Rentals $ 597,855 $ 65,422 $ 106,717
Purchased Repair and Maintenance $ - -$ 241 $ 1,069
Utilities, materials and supplies $ 298,927 $ 16,558 $ 96,205
Acquisition of Machinery & Equipment $ 896,782 $ 119,844 $ 163,951
Transfer Payments $ 4,715,000 $ 589,348 $ 1,622,830
Other expenses $ - $ 190 $ 1,293
Total Gross Budgetary Expenditures $ 39,123,385 $ 8,328,028 $ 21,647,533
Less Revenues netted against Expenditures
Planned Revenues
Environmental assessment and training services -$ 8,001,000 -$ 336,669 -$ 2,749,306
Total net budgetary expenditures $ 31,122,385 $ 7,991,359 $ 18,898,227
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