Quarterly Financial Report April 1, 2013 to June 30, 2013

Northern Pipeline Agency
Quarterly Financial Report (unaudited)
For the Quarter Ended June 30, 2013
 

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

1. Introduction

This quarterly financial report should be read in conjunction with the Main Estimates, Supplementary Estimates (A), and the Net Budgetary Authorities published on the Treasury Board Secretariat website, as well as Canada’s Economic Action Plan 2013 (Budget 2013).  It 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. This quarterly financial report has not been subject to an external audit or review.

1.1 Authority, Mandate and Programs

The Northern Pipeline Agency (hereinafter referred to as “the Agency”) was created by legislation in 1978 to carry out federal responsibilities in relation to the planning and construction in Canada of the Alaska Highway Gas Pipeline (AHGP) project by Foothills Pipe Lines Limited.  The pipeline is to carry natural gas from Prudhoe Bay, Alaska, to the lower 48 states.  Foothills Ltd. is now owned by TransCanada PipeLines Ltd.

Further details on the Agency’s authority, mandate and programs are available in Part II of the 2013-2014 Main Estimates.

1.2 Basis of Presentation

This quarterly financial 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 authorities used by the Agency are consistent with the Main Estimates and Supplementary Estimates (A), for the 2013-2014 fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework.

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.

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year.

Budget 2012 was tabled in Parliament on March 29, after the tabling of the Main Estimates on February 28, 2012.  As a result the measures announced in the Budget 2012 could not be reflected in the 2012-13 Main Estimates.

In fiscal year 2012-2013, frozen allotments were established by Treasury Board authority in applicable departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012.  In 2013-2014, the changes to departmental authorities were reflected in the 2013-2014 Main Estimates tabled in Parliament.

In regards to the Agency’s specific situation, it will not be drawing on Budget 2012 funding for 2013-2014.  Please see the explanation in Section 5 below.

Although the Agency uses the full accrual method of accounting to prepare and present its annual audited financial statements that are part of the Departmental Performance Report and its Annual Report, the spending authorities voted by Parliament remain on an expenditure basis.

2. Highlights of the First Fiscal Quarter and Comparative Results

This Quarterly Financial Report reflects the result as at June 30, 2013, including Main Estimates, Supplementary Estimates (A), and the details presented in this report focus on and compare the first quarter results of 2013-2014 with those of 2012-2013.

2.1 Authorities Available for Use and Planned Spending for the Year

As at June 30, 2013, the Agency has authorities available for use of $3,123,930 in 2013-2014 compared to $3,225,320 in 2012-2013, for a net decrease of $ 101,390 or 3.1%. The difference is due to the following:

  • An overall reduction of net operating funds totalling $100,000 due to less consultation activities, primarily with Aboriginal groups who may be affected by the project;
  • A decrease in employee benefit plans of $1,390.

2.2 Authorities Used and Amounts Expended During the Quarter

During the first quarter in 2013-2014, the Agency spent $307,274 or 9.84% of the total funding available, compared to $82,949 or 2.57% of the total funding available the same period in 2012-2013, for a net increase of $224,325, which is primarily as a result of personnel costs as well as professional and special services.

  • Unlike the salary accrual in the first quarter of 2013-2014, a salary accrual was not done in the first quarter of 2012-2013, which leads to $225,779 difference in personnel costs.
  • Expenditures on professional and special services increased by $14,341 between the first quarter of 2012-2013 ($3,835) and 2013-2014 ($18,176) due to the implementation of Knowledge Management and Digitalization projects to digitize major historical and archival records of policy, project and other decisions.
  • No contribution funds were issued in the first quarter of 2013-2014.

3. Risks and Uncertainties

In planning for an efficient and effective review and regulation of the project, the Agency must adapt to project developments by the proponent, i.e., to carry out its responsibilities and to make the necessary preparations in concert with the pace of the project’s development.

3.1 Risk Mitigation Framework

The Agency identifies and responds to the pace of the project’s development by continuous corporate-level forecasting, tracking and management of issues that could affect or require a response from the Agency.  For example, on March 30, 2012, ExxonMobil, ConocoPhillips, BP and TransCanada announced a work plan to assess liquefied natural gas (LNG) exports from south-central Alaska as an alternative to a natural gas pipeline through Canada.  As a result of continued work on the LNG project, the AHGP project has been put on hold indefinitely.  In response, the Agency will be ramping down operations over 2013-14.

4. Significant Changes in Relation to Operations, Personnel and Programs

There were no significant changes to operations, personnel and programs.

5. Budget 2012 Implementation

This section provides an overview of the measures announced in Budget 2012 which aim to refocus government and programs; make it easier for Canadians and business to deal with their government; and modernize and reduce the back office.

Budget 2012 provided the Agency with authorities of $47 million over two years (to be cost recovered) to carry out federal regulatory responsibilities related to the AHGP project, however, the Agency will not be drawing on Budget 2012 funding for 2013-2014, in light of the March 30, 2012 announcement noted in the Risk Mitigation Framework section above.

Approved by:

 

 


 

Table 1: Statement of Authorities (Unaudited)  
 
  Fiscal year 2013-2014   Fiscal year 2012-2013
  *Total available for use for the year ending Used during the quarter ended Year-to-date used at   Total available for use for the year ending Used during the quarter ended Year-to-date used at
Budgetary Authorities March 31, 2014 June 30, 2013 quarter-end   March 31, 2013 June 30, 2012 quarter-end
Net Operating expenditures - Vote 30 3,003,000 277,042 277,042   3,103,000 52,369 52,369
               
Statutory Authority - Employee Benefit Plans 120,930 30,232 30,232   122,320 30,580 30,580
               
Total Budgetary Authorities 3,123,930 307,274 307,274   3,225,320 82,949 82,949

* Includes only Authorities available for use and granted by Parliament at quarter-end: Main and Supplementary Estimates (A).


 

Table 2: Budgetary Expenditures by Standard Object (Unaudited)
 
  Fiscal year 2013-2014   Fiscal year 2012-2013
  *Planned expenditures for the year ending Expended during the quarter ended Year-to-date used at   *Planned expenditures for the year ending Expended during the quarter ended Year-to-date used at
Expenditures: March 31, 2014 June 30, 2013 quarter-end   March 31, 2013 June 30, 2012 quarter-end
               
Personnel
 
815,930
 
282,828
 
282,828
 
  817,320
 
57,049
 
57,049
 
Transportation and communication
 
143,312
 
2,891
 
2,891
 
  118,436
 
14,269
 
14,269
 
Information
 
3,125
 
19
 
19
 
  4,089
 
-
 
-
 
Professional and special services
 
365,830
 
18,176
 
18,176
 
  360,794
 
3,835
 
3,835
 
Rentals
 
68,982
 
2,821
 
2,821
 
  69,238
 
6,987
 
6,987
 
Repair and maintenance
 
2,388
 
-
 
  3,436
 

 

 
Utilities, materials and supplies
 
10,314
 
539
 
539
 
  7,501
 
809
 
809
 
Acquisition of machinery and equipment
 
17,323
 
-
 
-
 
  24,135
 

 
-
 
Transfer Payments
 
1,620,000
 
-
 
-
 
  1,710,000
 
-
 
-
 
Other subsidies and payments
 
76,726
 
-
 
-
 
  110,370
 

 

 
               
Total net budgetary expenditures 3,123,930 307,274 307,274   3,225,320 82,949 82,949

* Includes only Authorities available for use and granted by Parliament at quarter-end: Main and Supplementary Estimates (A).