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Natural Sciences and Engineering Research Council of Canada Quarterly Financial Report for the quarter ended December 31, 2021

Statement outlining results, risks and significant changes in operations, personnel and programs

NSERC Quarterly Financial Report – 3rd quarter, December 2021

Introduction
Highlights of fiscal quarter and fiscal year-to-date results
Risks and uncertainties
Significant changes related to operations, personnel and programs
Statement of authorities (unaudited)
Departmental budgetary expenditures by standard object (unaudited)

Introduction

This Quarterly Financial Report (QFR) has been prepared by management as required by section 65.1 of the Financial Administration Act (FAA) and in the form and manner prescribed by the Treasury Board. It should be read in conjunction with the 2021–22 Main Estimates, Supplementary Estimates (A) and Supplementary Estimates (B). This report has not been subject to an external audit or review.

Authority, mandate and programs

The Natural Sciences and Engineering Research Council of Canada (NSERC) was established in 1978 by the Natural Sciences and Engineering Research Council Act and is a departmental corporation named in Schedule II of the FAA. NSERC’s purpose is to help make Canada a country of discoverers and innovators for the benefit of all Canadians, by supporting post-secondary students and postdoctoral fellows in their advanced studies, funding the research programs of academic researchers, and stimulating partnerships between academia and industry.

Further information on the NSERC mandate and program activities can be found in Part II of the Main Estimates.

Basis of presentation

Management prepared this quarterly report using an expenditure basis of accounting. The accompanying statement of authorities includes NSERC’s spending authorities granted by Parliament and those used by the agency, consistent with the Main Estimates, Supplementary Estimates (A) and Supplementary Estimates (B) for the fiscal year 2021–22. This 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 the Government of Canada can spend money. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authorities for specific purposes.

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

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

This section highlights the significant items that contributed to the change in resources available for the fiscal year, as well as the actual year-to-date expenditures compared with the previous fiscal year.

The following graph provides a comparison of budgetary authorities available for the full fiscal year and budgetary expenditures by quarter for the fiscal year 2021–22 and the fiscal year 2020–21.

Comparison of budgetary authorities and year-to-date expenditures (thousands of dollars)

Significant changes to budgetary authorities

As of December 31, 2021, NSERC’s total available authorities for the fiscal year 2021–22 amounted to $1.41 billion. This represents an overall decrease of $117.6 million (7.7%) from the comparative period in the previous year. The major changes in NSERC’s budgetary authorities between the current and previous fiscal years include

a decrease of $153.4 million statutory COVID-19 funding received only in previous year (2020–21) from the Public Health Events of National Concern Payments Act (PHENCPA)
an increase of $25.4 million for fundamental research funding, as announced in Budget 2018
an increase of $22.0 million funding to support applied research partnerships, as announced in Budget 2021
a decrease of $7.4 million due to transfer out of the Business-led Networks of Centres of Excellence program and Centres of Excellence for Commercialization and Research program to Innovation, Science and Economic Development Canada Strategic Innovation Fund (SIF) program as per Budget 2018 announcement
an increase of $6.8 million due to an allotment adjustment for compensation
a decrease of $2.5 million for the Canada Excellence Research Chairs program in accordance with the program's design and delivery schedule as renewed in Budget 2019 and planned for sun-setting by 2026–27
an increase of $1.9 million for increasing the number of Canada Graduate Scholarship Master’s and Doctoral awards, as well as for expanding paid parental leave as announced in Budget 2019

Significant changes to authorities used

Year-to-date spending

The following table provides a comparison of cumulative spending by vote for the current and previous fiscal years.

Year-to-date budgetary expenditures used at quarter end (millions of dollars)

Total budgetary expenditures amounted to $988.3 million at the end of the third quarter of the fiscal year 2021–22, compared to $1,124.5 million reported in the same period in the previous fiscal year.

Grants and scholarships

At the end of the third quarter of 2021–22, the grant and scholarship expenses decreased by $145.1 million, compared to those reported in the same period of the previous fiscal year. The decrease is mainly due to the payments of COVID-19 statutory funding received under PHENCPA to support students and youth affected by the COVID-19 pandemic and to support research institutes and universities in fiscal year 2020–21. PHENCPA funding was only applicable to last fiscal year and was not extended to this fiscal year.

Operating expenditures

Personnel expenditure, which include contributions to employee benefit plans, have increased by $8.3 million compared to the same period of the previous year. The increase is mainly due to the implementation of the new terms and conditions of employment (September 2021) and the related clauses relative to salary increase.

Total non-personnel expenditures as of the third quarter of fiscal year 2021–22 are largely in line with the comparative period of the previous year. There was an increase in acquisition of machinery and equipment expenditures related to the Workplace Renewal project launched during 2020–21 in joint partnership with the Social Sciences and Humanities Research Council (SSHRC). There was also an increase in rental and information expenses due to an increase in IT purchases and software license subscriptions to support the organization in operating remotely. Professional and special services expenses decreased, however, due to lower usage of management consulting services. Please see the Departmental budgetary expenditures by standard object table in section 6 for additional details.

Year-to-date budgetary expenditures used at quarter end (millions of dollars)

Fiscal Year 2021-22: Authorities used based on elapsed time

The total authorities used at the end of the third quarter ($988.3 million) of the fiscal year 2021–22 represent 70% of total available authorities ($1.41 billion).

Quarterly spending

The total authorities used during the third quarter of 2021–22 amounted to $320.4 million (23% of the total available authorities; 23% of the total authorities for grant and scholarship programs; and 24% of the total authorities for operating expenditures and employee benefits).

Budgetary expendures used during the third quarter

Grants and scholarships

Transfer payments represent 96% of NSERC’s available authorities. Variances in transfer payments stem from the nature of program cycles. During the third quarter of 2021–22, NSERC’s transfer payment expenditures increased by $22.9 million compared to the same quarter of the previous fiscal year. The increase is mainly due to timing differences on payments.

Operating expenditures

Personnel expenditures, which include contributions to employee benefit plans, for the third quarter of fiscal year 2021–22 have increased by $1.6 million compared to the same quarter of the previous year, mainly due to the implementation of the new terms and conditions of employment (September 2021) and related clauses relative to salary increase.

Total non-personnel expenditures for the third quarter of fiscal year 2021–22 have remained in line with expenses incurred during the same period of the previous fiscal year. There was an increase in the acquisition of equipment for the Workplace Renewal project. There was also an increase in rental expenses due to an increase in software license subscriptions to support the organization in operating remotely. Professional and special services expenses decreased due to lower usage of management consulting services. Please see the Departmental budgetary expenditures by standard object table in section 6 for additional details.

Risks and uncertainties

NSERC produces an annual Corporate Risk Profile close to the beginning of a new fiscal year that includes corporate risks along with risk mitigation activities. NSERC has linked corporate risk management with its integrated planning process to ensure greater cohesion and executive oversight in the delivery of its mandate.

Senior management closely monitors the top two risks, listed below, to ensure they are continuously mitigated and that the residual risk level is acceptable.

Aging IT system: There is a risk that if aging software and database systems are not updated, and NSERC does not invest sufficiently in legacy IM/IT systems, these systems will be unable to support existing and new programs.

NSERC has built a number of business capabilities on the MS Dynamics platform to support key tri-agency initiatives such as the Canada Research Chairs and the New Frontiers in Research Fund, and is now focused on on-boarding Discovery Horizons and College and Community Innovation. NSERC maintains and monitors the platforms closely to ensure ongoing operations and support.
Resource management: There is a risk that if resources (human, technological and/or financial) are not allocated in an informed, flexible and strategic manner, NSERC may not be able to support its highest priorities and/or emerging needs.

The number of priorities and key commitments identified in the integrated planning process may not be fully funded due to budget and human resource pressures related to key investment projects. In addition, the uncertainty created by the COVID-19 pandemic is still a reality, and mitigation measures have been put in place to ensure that program and corporate organizational priorities are delivered.

Significant changes related to operations, personnel and programs

As part of our agency’s path to continuously foster a healthy, positive and productive work environment for all employees, NSERC launched the new Office of the Ombuds and Workplace Well-being to support NSERC employees. The Office of the Ombuds and Workplace Well-being provides new in-house informal conflict management and mental health and well-being services.

The NSERC-SSHRC COVID-19 Vaccination Policycame into effect November 8, 2021, requiring all employees to be fully vaccinated, whether they are working remotely or on-site. Full compliance with the policy was required by December 15, 2021. In alignment with this important measure, all supplier personnel (including subcontractor personnel) who access federal government workplaces were required to be fully vaccinated against COVID-19. Full compliance with the policy was required by November 15, 2021.

In October 2021 NSERC launched the Alliance Missions grants, a unique opportunity aimed at addressing critical science and technology challenges that can play a pivotal role in Canada’s economy. In December 2021 NSERC launched the Alliance International grants, a new funding stream to support Canadian university researchers working with leading international academic researchers to establish and grow international research collaborations and projects of global importance that will generate benefits to Canada. NSERC also launched the Mobilize grants, a new opportunity available through the tri-agency College and Community Innovation (CCI) program, managed by NSERC in collaboration with SSHRC and CIHR. The CCI program has been redesigned to simplify, streamline and address the changing dynamics of applied research in colleges and communities across Canada. By consolidating 14 streams to 5, the simplified suite of grants aims to increase connectivity within the research and innovation ecosystem by exploring new ways to continue to develop tri-agency collaboration, expand the range of partner organizations and create more training opportunities for college students.

Following the announcement of the formal partnership between NSERC and the US National Science Foundation (NSF), NSERC announced the first joint collaborative research opportunity focusing on discoveries and innovations in the areas of quantum science and artificial intelligence. The work funded through this call is expected to push the boundaries of new knowledge and provide a rich training experience for young researchers.

NSERC, SSHRC and CIHR have harmonized their policy to align more clearly with the Treasury Board Policy on Transfer Payments (PTP) with regard to the eligibility and funding of research projects or programs submitted by applicants who are formally affiliated with a Canadian postsecondary institution, but who are employed by the federal government. The harmonized policy position stipulates that

if the proposed research falls outside the federal employer’s mandate and will not be performed using federal facilities or resources, it will then be deemed eligible
if the proposed research falls within the federal employer’s mandate and is performed using federal facilities or resources, it will then be assessed by the agencies and funding may be allocated for support of students only (salaries or stipends and travel costs)

Approved by:

Original signed by

Prof. Alejandro Adem, FRSC
President

Ottawa, Canada
March 1, 2022