Quarterly Financial Report July1, 2013 to September 30, 2013

Northern Pipeline Agency
Quarterly Financial Report (unaudited)
For the Quarter Ended September 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 (“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 (Foothills).  The pipeline is to carry natural gas from Prudhoe Bay, Alaska, to the lower 48 states.  Foothills Ltd. is now owned by TransCanada PipeLines Limited (TCPL).

Further details on the Agency’s authority, mandate and programs are available in Part II of the 2013-2014Main 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 2013 was tabled in Parliament on March 21, after the tabling of the Main Estimates on February 25, 2013, while 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 in Budget 2013 could not be reflected in the 2013-14 Main Estimates and the measures in Budget 2012 were not 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, the Agency 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 Second Fiscal Quarter and Comparative Results

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

2.1 Authorities Available for Use and Planned Spending for the Year

As at September 30, 2013, the Agency has authorities available for use of $3,123,930 in 2013-2014 compared to $3,285,470 in 2012-2013, for a net decrease of $ 161,540 or 4.92%. The key differences are due to the following:

  • A reduction of program expenditures by $100,000 includes transfer payments of $90,000 and other program expenditures of $10,000; and
  • A reduction by $60,150 as no operating budget carry forward was allowed for 2013-2014; and
  • A decrease in employee benefit plans of $1,390.

2.2 Authorities Used and Amounts Expended During the Quarter

During the second quarter in 2013-2014, the Agency spent $260,092 or 8.33% of the total funding available, compared to $637,015 or 19.39% of the total funding available the same period in 2012-2013, for a net decrease of $376,923. However, year to date for 2013-2014 expenditure is at $567,366 compared to $719,964 for the same period in 2012-13, for a net decrease of $152,598 or 21.20%. The key differences are as follows:

  • Due to a decreased amount of engagement activities, a decrease in both salary and transportation expenditures between year to date 2012–2013 and year to date 2013–2014, from $618,783 to $535,233 or 13.50%.
  • Expenditures on professional and special services decreased by $7,067 or 50.56 % between the second quarter of 2012-2013 and 2013-2014 due to the completion of knowledge management projects to digitize major historical and archival records of policy, project and other decisions.
  • No contribution funds were issued in the second quarter of 2013-2014, compared to $72,270 in the same quarter of 2012–2013.

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 TCPL 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 continue to ramp 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
March 31, 2014
Used during the quarter ended
September 30, 2013
Year-to-date used at
quarter-end
  *Total available for use for the year ending
March 31, 2013
Used during the quarter ended
September 30, 2012
Year-to-date used at
quarter-end
Budgetary Authorities
Net Operating expenditures - Vote 30 3,003,000 229,860 506,901   3,163,150 606,435 658,804
Statutory Authority - Employee Benefit Plans 120,930 30,232 60,465   122,320 30,580 61,160
               
Total Budgetary Authorities 3,123,930 260,092 567,366   3,285,470 637,015 719,964

* 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
March 31, 2014
Expended during the quarter ended
September 30, 2013
Year-to-date used at
quarter-end
  *Planned expenditures for the year ending
March 31, 2013
Expended during the quarter ended
September 30, 2012
Year-to-date used at
quarter-end
Expenditures:
Personnel 815,930 247,629 530,457   817,320 526,250 583,299
Transportation and communication 143,312 1,885 4,776   128,643 21,215 35,484
Information 3,125 - 19   4,441 343 343
Professional and special services 365,830 6,911 25,086   391,886 13,978 17,813
Rentals 68,982 3,611 6,432   75,205 (155) 6,832
Repair and maintenance 2,388 - -   3,732 - -
Utilities, materials and supplies 10,314 91 631   8,147 2,359 3,168
Acquisition of machinery and equipment 17,323 - -   26,215 750 750
Transfer Payments 1,620,000 - -   1,710,000 72,270 72,270
Other subsidies and payments 76,726 (35) (35)   119,881 5 5
Total net budgetary expenditures 3,123,930 260,092 567,366   3,285,470 637,015 719,964

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