Quarterly financial Report for the period ending June 30, 2013

1.1 Authorities, Mandate and Programs

According to its enabling act, which came into force on October 5, 2005, the Agency’s mission is to promote long-term economic development in the regions of Quebec.

Additional information on the Agency’s authorities, mandate and programs can 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 the Agency using an expenditure basis of accounting and a special purpose financial reporting framework designed to meet financial information needs with respect to spending authorities. The accompanying Statement of Authorities can be used to compare the spending authorities Parliament granted to the Agency with authorities used by the Agency.

The information in the Statement of Authorities is consistent with the information presented in the Main Estimates for the 2013-2014 fiscal year. However, within the framework of the Business of Supply in Parliament, the Main Estimates must be tabled in Parliament on or before the first day of March preceding the start of the new fiscal year. Budget 2012 was tabled in Parliament on March 29, following the tabling of the Main Estimates on February 28, 2012. As a result, the measures announced in Budget 2012 do not feature in the Main Estimates for 2012-2013.

For fiscal 2012-2013, frozen allotments were established by Treasury Board in departmental votes to prevent the spending of funds already set aside for savings measures in Budget 2012. In 2013-2014, the Treasury-Board-approved Annual Reference Level Update were used to amend departmental authorities and were reflected in the 2013-2014 Main Estimates tabled before Parliament.

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 departmental financial statements published in the Departmental Performance Report. However, the spending authorities voted by Parliament are always established on an expenditure basis.

2.1 Analysis of Authorities

There was a net decrease of $45.8 million (about 15%) in available authorities in 2013-2014, compared to the same period of 2012-2013, from $300.8 million to $254.9 million. This is the result of an 11% decrease in Vote 1 – Net Operating Expenditures ($4.6 million), a decrease of 16% in Vote 5 – Grants and Contributions ($40.6 million) and an 11% decrease in budgetary statutory authorities ($0.6 million).

The graph on the following page provides an overview of net budgetary authorities that correspond to resources available for use for the fiscal year ending March 31, 2014.

Graph 1 – First quarter actual expenditures vs annual authorities (in millions of dollars)

Vote 1 – Operating Authorities

The 11% decrease in operating expenditures (from $43.2 million in 2012-2013 to $38.5 million in 2013-2014) is related to a combination of a several factors, including the impact of the 2010 Strategic Review, the implementation of savings measures in Budget 2012 and the end of certain temporary programs and initiatives. (See table Statement of Authorities)

Vote 5 - Grants and Contributions

The 16% decrease in authorities (from $252.0 million in 2012-2013 to $211.5 million in 2013-2014) is the result of the combined effect of:

• A decrease in contributions related to the end of some temporary initiatives, including the Initiative in Support of the Development of International Cruises on the St Lawrence and Saguenay Rivers, the Temporary Initiative for the Strengthening of Quebec’s Forest Economies and the Contribution Program to Fund the Construction of a Gas Pipeline between Valley Junction and Thetford Mines, for an amount of $50.9 million;
• A decrease in contributions resulting from the 2010 Strategic Review, for an amount of $2.8 million;
• Decrease in contributions related to regular programming, for an amount of $2.4M;
• An increase related to new funding received for the Community Infrastructure Improvement Fund (CIIF) ($ 15.5 million);

(See table Statement of Authorities)

2.2 Analysis of Expenditures

Total recorded expenditures in the first quarter of 2013-2014 were $1.5 million (18%) higher than in the first quarter of 2012-2013, up from $24.9 million to $26.4 million. This increase is due to a 16% increase in expenditures linked to Vote 5 – Grants and Contributions ($2.2 million), an 11% decrease in Vote 1 – Net Operating Expenditures ($1.1 million), and a 34% increase in expenditures related to statutory appropriations ($0.3 million). However, this last increase is entirely attributable to an accounting technicality which will be reversed during the second quarter of the year.

Vote 1 – Operating Expenditures

Following the implementation of the 2010 Strategic Review, the Deficit Reduction Action Plan and the Administrative Review, the Agency established a number of measures to restrain spending, so as to comply with key government objectives. Similarly, the end of some temporary initiatives also helped to reduce net operating expenditures. In the first quarter of 2013-2014, net expenditures thus decreased by 11% as compared to the corresponding quarter, declining from $9.9 million in 2012-2013 to $8.8 million in 2013-2014.

These efforts resulted in reduced expenses for the Staff (reduction of 5% compared to the first quarter of 2012-2013) and Transportation and Communications (reduction of 18%) standard objects. Rental expenditures declined by 93%, largely as the result of transferring responsibility for Microsoft product licences to Shared Services Canada and the fact that maintenance costs for Oracle products had not yet been paid by June 30, 2013, in contrast to 2012.

Expenses related to Professional and Special Services increased by 12% over the corresponding quarter, owing to an increase in spending on interpretation and translation.

Upward and downward variances in other standard objects are not considered significant.

Vote 5 - Grants and Contributions Expenditures

During the first quarter of 2013-2014, the Agency spent $16.3 million in grants and contributions, compared with $14.1 million in 2012-2013 (see table Departmental Budgetary Expenditures by Standard Object). This 16% ($2.2 million) increase is related to the fact that clients submitted expenditure reimbursement claims at a faster pace than last year. The Agency actually disbursed 8% of authorities obtained, compared to 6% in 2012-2013.