Annual Report 2007-2008

[ Table of Contents ]


Providing Stewardship and Accountability

CIHR reports to Parliament through the Minister of Health. Its Governing Council comprises 20 Canadians who have been appointed by Order in Council to renewable three-year terms. Council members represent a wide range of backgrounds and disciplines, reflecting CIHR's broad mandate and vision.

CIHR's Governing Council, 2007-08

Dr. Alan Bernstein
(until November 2007)
(Chair)
President
Canadian Institutes of Health Research

Mr. Keith G. Anderson
Senior Policy Advisor
British Columbia Ministry of Health
Adjunct Professor
Department of Gerontology
Simon Fraser University

Dr. James Brien
Professor of Pharmacology and Toxicology
Director of Research
Faculty of Health Sciences
Queen's University

Dr. Michel Bureau
Professor
Faculty of Medicine
University of Sherbrooke
Director General
Ministère de la Santé et des Services sociaux du Québec

Dr. Harvey Max Chochinov
Canada Research Chair in Palliative Care
Professor of Psychiatry
University of Manitoba and
CancerCare Manitoba

Dr. Nancy Edwards
(Vice-Chair)
Professor
School of Nursing
Department of Epidemiology and Community Medicine
Director
Community Health Research Unit
University of Ottawa

Dr. Brett B. Finlay
Professor
Michael Smith Laboratories
Department of Biochemistry and Molecular Biology
University of British Columbia

Dr. Nicole Letourneau
Associate Professor and Research Fellow
University of New Brunswick

Dr. Christopher W. Loomis
Vice-President (Research)
Memorial University of Newfoundland

Dr. Patrick John McGrath
Vice-President Research
IWK Health Centre
Professor of Psychology, Pediatrics and Psychiatry
Dalhousie University

Dr. Rodney Ouellette
(until November 2007)
Director
Molecular Pathology Laboratory
CEO and Scientific Director
Beausejour Medical Research Unit
Head of Research
Dr. Georges-L.-Dumont Hospital

Dr. Arthur Porter
Director-General and CEO
McGill University Health Centre

Dr. Ray Rajotte
Professor of Surgery and Medicine
Director
Surgical-Medical Research Institute
Director
Islet Transplantation Group
University of Alberta

Dr. Carol Richards
Director
Centre for Interdisciplinary Research in Rehabilitation and Social Integration
Quebec Rehabilitation Institute
Professor
Department of Rehabilitation
Faculty of Medicine
Laval University

Mr. Morris Rosenberg
(ex officio)
Deputy Minister
Health Canada

Dr. Janet Rossant
Chief of Research
Hospital for Sick Children
Professor
Department of Medical Genetics and Microbiology
University of Toronto

Dr. Jean L. Rouleau
Dean of Medicine
University of Montreal

Dr. Robert S. Sheldon
Professor of Cardiac Sciences, Medicine and Medical Genetics
Associate Dean of Clinical Research
University of Calgary
Vice-President Research
Calgary Health Region

Mr. H. Arnold Steinberg
(Deputy Vice-Chair, Honourary and Acting Chair as of November 2007)
Principal
Cleman Ludmer Steinberg, Inc.
Director
McGill University Health Centre Foundation
MUHC Research Institute and Canadian Patient Safety Institute

Dr. Bill Thomlinson
Executive Director
Canadian Light Source Inc.
University of Saskatchewan

Dr. Cornelia Weiman
Co-Director
Indigenous Health Research Development Program
Assistant Professor
Department of Public Health Sciences
Faculty of Medicine
University of Toronto

Institutes of Excellence

CIHR is composed of 13 innovative Institutes. These Institutes bring together all partners in the research process - those who fund research, those who carry it out and those who use its results - to share ideas and focus on what Canadians need - good health and the means to prevent and fight diseases when they happen.

Each Institute is headed by a Scientific Director who is a leader in his or her field. Scientific Directors receive guidance from their Institute Advisory Boards, made up of volunteers from all areas of the health research community.

The following are CIHR's 13 Institutes and their Scientific Directors.

CIHR Institute of Aboriginal Peoples' Health
Dr. Jeff Reading

University of Victoria

CIHR Institute of Aging
Dr. Anne Martin-Matthews

University of British Columbia

CIHR Institute of Cancer Research
Dr. Philip Branton

McGill University

CIHR Institute of Circulatory and Respiratory Health
Dr. Peter Liu

University Health Network
University of Toronto

CIHR Institute of Gender and Health
Dr. Miriam Stewart

(until December 31, 2007)
University of Alberta
Dr. Joy Johnson
(as of January 1, 2008)
University of British Columbia

CIHR Institute of Genetics
Dr. Roderick McInnes

Hospital for Sick Children
University of Toronto

CIHR Institute of Health Services and Policy Research
Dr. Colleen M. Flood

University of Toronto

CIHR Institute of Human Development, Child and Youth Health
Dr. Michael Kramer

Montreal Children's Hospital
McGill University

CIHR Institute of Infection and Immunity
Dr. Bhagirath Singh

University of Western Ontario

CIHR Institute of Musculoskeletal Health and Arthritis
Dr. Jane Aubin

University of Toronto

CIHR Institute of Neurosciences, Mental Health and Addiction
Dr. Rémi Quirion

Douglas Hospital Research Centre
McGill University

CIHR Institute of Nutrition, Metabolism and Diabetes
Dr. Diane Finegood

Simon Fraser University

CIHR Institute of Population and Public Health
Dr. John Frank

University of Toronto

Portraits of Volunteers

Volunteers are the backbone of CIHR's reputation for excellence. They help to set research priorities and strategic directions, ensure that CIHR funding is allocated to the very best research proposals, and provide accountability to the people of Canada - the source of CIHR funding - and to the research community.

In particular, each year, more than 2,000 expert reviewers volunteer their time to one of CIHR's peer review committees, assessing the strengths and weaknesses of each of the many thousands of funding applications CIHR receives. Their work is supplemented by that of thousands of external reviewers who submit written reports for consideration by peer review committees. CIHR's peer review system ensures that CIHR's funding process is fair and open, that taxpayers' money is spent wisely and that the best and the brightest researchers are funded.

CIHR recognizes the dedication of its volunteers and thanks them for their continuing commitment to improving the lives of Canadians. A full listing of all CIHR volunteers can be found in the companion volume to this report, entitled The Power of Volunteers 2007-2008.

Financial Statement Discussion and Analysis

Financial Highlights

Analysis

CIHR's growth is almost entirely dependent on increases to its appropriations approved by Parliament. The 15.1% increase in the 2007-08 CIHR budget resulted in commensurate increases to its net cost of operations which in turn is dominated by Grants and Awards expenditures. Grants and Award expenses in 2007-08 totaled $956.1 million, an increase of $145.9 million or 18.0% as compared to 2006-07.

The most significant component of this increase is the $73.5 million in funding for the Centres of Excellence for Commercialization and Research (CECR) program. The CECR program supports, on an open and competitive basis, the operation of research and commercialization centres that bring people together to translate knowledge into significant commercial advantage, to position Canada at the forefront of breakthrough innovations.

In addition, as part of the 2007 Federal Budget, CIHR was granted a $37 million base budget increase. CIHR management allocated the full $37 million base budget increase to its suite of grant and award programs in 2007-08. More specifically, $33.5 million was allocated to the Open Operating Grants program, and $3.5 million was allocated to fund knowledge translation and commercialization activities. In addition, CIHR received net increased funding of $5.9 million for the Canada Graduate Scholarships, a program that provides scholarships to the most outstanding eligible students pursuing masters or doctoral studies in Canadian universities.

The following graphic indicates how 2007-08 Grants and Awards expenses were allocated by program area. Priority is given to funding health research and researchers through open competitions, strategic initiatives and knowledge translation. CIHR also participates with other federal granting agencies (NSERC, SSHRC) in a number of programs, including the Canada Research Chairs, the Networks of Centres of Excellence, and the new Centres of Excellence for Commercialization and Research.

2007-08 Grants and Awards Expenses*
$956.1 million

2007-08 Grants and Awards Expenses Pie Chart

*Figures do not include refunds of previous years' expenses and may vary due to rounding.

As the graphic indicates, CIHR invests the largest share of its budget on research grants and personnel support awards through Open Competitions, enabling individual researchers, or groups of investigators, to pursue their own research priorities. Applications for assistance undergo rigorous peer review by committees of experts in the field. This process helps ensure that only those proposals that meet internationally accepted standards of excellence are funded.

Strategic Initiatives comprise the second largest area of investment and it targets high priority research areas identified by CIHR's Institutes after broad consultations with stakeholders and partners. These strategic initiatives address emerging health threats and other important health issues of concern to Canadians, for example obesity, cancer, vulnerable populations such as youth and Aboriginals, or measures to improve the effectiveness of the health care system itself.

Knowledge Translation (KT) is a critical and growing part of CIHR's mandate focused on the synthesis, exchange and ethically-sound application of knowledge to accelerate the capture of the benefits of research for Canadians through improved health, more effective services and products and a strengthened health care system.

As noted earlier, the key business driver for CIHR is being provided by Parliamentary Appropriations by the Federal Government. The table below summarizes the Parliamentary Appropriations received by CIHR in fiscal year 2007-08:

Summary of Parliamentary Appropriations

(in millions of dollars)

  2007-08
Main
Estimates
2007-08
Supplementary
Estimates
2007-08
Total
Appropriations
Operating Expenditures
(including Salaries & Employee Benefits)
47.0 - 47.0
2006-07 Operating Budget Carryforward - 2.1 2.1
Net Transfer of Funds from Other Departments - 0.9 0.9
Collective Agreement Adjustments - 0.5 0.5
Funding for Increase Evaluation Capacity - 0.3 0.3
Internal Audit Funding   0.2 0.2
Anti-Drug Strategy Funding - 0.1 0.1
Canada Graduate Scholarships Program - 0.1 0.1
Transfer to Grants and Awards - (1.5) (1.5)
Total Operating Expenditures 47.0 2.7 49.7
Grants & Awards 822.5 - 822.5
Funding for Centres of Excellence for Commercialization and Research Program - 73.5 73.5
2007 Federal Budget Increase - 37.0 37.0
Canada Graduate Scholarships Program - 5.9 5.9
International Polar Year Funding - 3.8 3.8
Net Transfer of Funds from Other Departments - 1.8 1.8
Transfer from Operating Expenditures - 1.5 1.5
Re-profiling of Canada Graduate Scholarships - (2.0) (2.0)
Total Grants & Awards 822.5 121.5 944.0
Total 2007-08 CIHR Parliamentary Appropriations 869.5 124.2 993.7
Total 2007-08 Authorities Spent     974.1
Total Lapsed Appropriations for 2007-08     19.6

Note: The total CIHR budget for 2007-08, as appropriated by Parliament, increased by $130.2 million over 2006-07 to $993.7 million. CIHR received an additional $124.2 million in Parliamentary Appropriations for 2007-08 through the Supplementary Estimates (see table above for details). In addition, CIHR received an additional $6.0 million for 2007-08 through the Annual Reference Level Update (reflected in the Main Estimates column in the table above) including additional funding for programs such as HIV/AIDS research ($2.3 million), Public Health Masters and Doctoral Research Awards ($1.3 million) and Fabry's Disease research ($1.1 million).

CIHR lapsed Parliamentary Appropriations in 2007-08 as follows:

(in millions of dollars)

  Vote Lapsed Appropriations
15 Operating Expenses 2.3
20 Grants 17.3
  Total Lapsed Parliamentary Appropriations 19.6

Risks and Uncertainties

Rising Demand for Research Funding

Variance Analysis

Change in Key Financial Indicators

As evidenced by the table below, CIHR expenses and other key financial indicators have increased in relative proportion to the increased Parliamentary Appropriations received by CIHR in 2007-08.
(in millions of dollars)

  2007-08 2006-07 Increase % Increase
Parliamentary Appropriations 993.7 863.5 130.2 15.1%
Net Cost of Operations 999.0 847.2 151.8 17.9%
Grants & Awards Expenses 956.1 810.2 145.9 18.0%
Operations and Administration Expenses 55.3 49.5 5.8 11.7%
Salaries and Employee Benefits 36.5 31.7 4.8 15.1%

Change in Expenditures by Strategic Outcome
(in millions of dollars)

Strategic Outcome 2007-08 2006-07 Increase
% Increase
Health Research 547.8 511.0 36.8 7.2%
Health Researchers in Innovative Environments 317.4 284.3 33.1 11.6%
Transforming Health Research into Action 143.1 62.5 80.6 129.0%
Total Expenses 1,008.3 857.8 150.5 17.5%

Trend Analysis

CIHR Parliamentary Appropriations
(in millions of dollars)

CIHR Parliamentary Appropriations Graph

CIHR Net Cost of Operations
(in millions of dollars)

CIHR Net Cost of Operations Graph

CIHR Grants and Awards Expenses
(in millions of dollars)

CIHR Grants and Awards Expenses Graph

CIHR Operations and Administration Expenses
(in millions of dollars)

CIHR Operations and Administration Expenses Graph

Auditor's Report and Financial Statements

Canadian Institutes of Health Research
Management Responsibility for Financial Statements

Responsibility for the integrity and objectivity of the accompanying financial statements of the Canadian Institutes of Health Research (CIHR) for the year ended March 31, 2008 and all information contained in these statements rests with CIHR's management. These financial statements have been prepared by management in accordance with Treasury Board accounting policies and year-end instructions issued by the Office of the Comptroller General, which are consistent with Canadian generally accepted accounting principles for the public sector.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgement and gives due consideration to materiality. To fulfil its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of CIHR's financial transactions. Financial information submitted to the Public Accounts of Canada and included in CIHR's Departmental Performance Report and Annual Report is consistent with these financial statements.

Management maintains a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are in accordance with the Financial Administration Act, are executed in accordance with prescribed regulations, within Parliamentary authorities, and are properly recorded to maintain accountability of Government funds and endowments. Management also seeks to ensure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility and by communications programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the organization.

The Standing Committee on Performance Measurement, Evaluation and Audit, appointed by the Governing Council of CIHR, has reviewed these statements with management and the auditors, and has reported to the Governing Council. The Governing Council has approved the financial statements.

The financial statements of CIHR have been audited by the Auditor General of Canada, the independent auditor for the Government of Canada.

Approved by:

James Roberge, CMA
Chief Financial Officer

Pierre Chartrand, PhD
Acting President

May 30, 2008


Auditor's Report

To the Canadian Institutes of Health Research and the Minister of Health

I have audited the statement of financial position of the Canadian Institutes of Health Research (CIHR) as at March 31, 2008 and the statements of operations, equity and cash flow for the year then ended. These financial statements are the responsibility of CIHR's management. My responsibility is to express an opinion on these financial statements based on my audit.

I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In my opinion, these financial statements present fairly, in all material respects, the financial position of CIHR as at March 31, 2008 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.

Nancy Y. Cheng, FCA
Assistant Auditor General
for the Auditor General of Canada

Ottawa, Canada
May 30, 2008


Statement of Operations
for the Year Ended March 31

(in thousands of dollars)

  2008 2007
Expenses (Note 4)
Health research 547,858 511,042
Health researchers in innovative environments 317,424 284,348
Transforming health research into action 143,060
62,421
Total Expenses 1,008,342
857,811
Revenues (Note 5)
Health research 5,099 6,319
Health researchers in innovative environments 2,954 3,516
Transforming health research into action 1,332
772
Total Revenues 9,385
10,607
Net Cost of Operations 998,957
847,204

The accompanying notes are an integral part of these financial statements.


Statement of Financial Position
as at March 31

(in thousands of dollars)

  2008
2007
Assets
Financial Assets
Due from the Consolidated Revenue Fund 36,371 15,751
Accounts receivable:    
Other Federal Government departments 296 678
External parties 465 395
Advances 196
196
Total financial assets 37,328 17,020
Non-financial assets
Prepaid expenses 82 445
Tangible capital assets (Note 6) 3,134
3,904
Total non-financial assets 3,216
4,349
Total Assets 40,544
21,369
Liabilities
Accounts payable and accrued liabilities    
Other Federal Government departments 465 444
External parties 3,894 2,577
Gairdner Foundation grant (Note 7) 20,000 -
Vacation pay and compensatory leave 1,316 1,110
Deferred revenue (Note 8) 12,011 12,730
Employee severance benefits (Note 9) 6,573
5,248
Total Liabilities 44,259
22,109
Equity of Canada (3,715)
(740)
Total Liabilities and Equity of Canada 40,544
21,369

Contingent liabilities (Note 10)
Contractual obligations (Note 11)
The accompanying notes are an integral part of these financial statements.

Approved by Governing Council:

Pierre Chartrand, PhD
Acting President

Approved by Management:

James Roberge, CMA
Chief Financial Officer


Statement of Equity
as at March 31

(in thousands of dollars)

  2008
2007
Equity of Canada, Beginning of Year (740) (41)
Net cost of operations (998,957) (847,204)
Net cash provided by Government 969,803 844,170
Change in Due from the Consolidated Revenue Fund 20,620 (2,889)
Services provided without charge by other Government departments (Note 12) 5,559
5,224
Equity of Canada, End of Year (3,715)
(740)

The accompanying notes are an integral part of these financial statements.


Statement of Cash Flow
for the Year Ended March 31

(in thousands of dollars)

  2008
2007
Operating Activities
  Net cost of operations 998,957 847,204
  Non-cash items:
  Amortization of tangible capital assets (1,868) (1,498)
    Services provided without charge by other Government departments (5,559) (5,224)
    Gain on disposal of capital assets -
4
  (7,427) (6,718)
 
  Variations in Statement of Financial Position:
  (Decrease) increase in accounts receivable and advances (312) 358
   

(Decrease) increase in prepaid expenses

(363) (97)
    (Increase) decrease in liabilities (22,150)
2,074
  (22,825)
2,335
Cash Used by Operating Activities 968,705 842,821

 

Capital Investment Activities    
  Acquisitions of tangible capital assets 1,098 1,358
 

Proceeds on disposal of capital assets

-
(9)
Cash Used by Capital Investment Activities 1,098
1,349
Financing Activities
  Net Cash Provided by Government of Canada 969,803
844,170

The accompanying notes are an integral part of these financial statements.


Notes to the Financial Statements
for the Year Ended March 31, 2008

1. Authority and Objectives

The Canadian Institutes of Health Research (CIHR) was established in June 2000 under the Canadian Institutes of Health Research Act, replacing the former Medical Research Council of Canada. It is listed in Schedule II to the Financial Administration Act as a departmental corporation.

CIHR's objective is to excel, according to international standards of scientific excellence, in the creation of new knowledge, and its translation into improved health, more effective health services and products, and a strengthened Canadian health care system. CIHR achieves these objectives through three strategic outcomes. The first strategic outcome is outstanding research, achieved by funding excellent and ethical health research across all disciplines that are relevant to health. The second strategic outcome is outstanding researchers in innovative environments, achieved by providing funding to develop and sustain health researchers in vibrant, innovative and stable research environments. The third strategic outcome is transforming health research into action, achieved by CIHR's knowledge translation activities and funding aimed to accelerate the transformation of research results into health benefits for Canadians and an improved health care system as well as helping to move new research breakthroughs toward potential commercial applications.

CIHR is led by a President who is the Chairperson of a Governing Council of not more than nineteen other members appointed by the Governor in Council. The Governing Council sets overall strategic direction, goals and policies and oversees programming, resource allocation, ethics, finances, planning and accountability.

CIHR has thirteen Institutes that focus on identifying the research needs and priorities for specific health areas, or for specific populations, then developing strategic initiatives to address those needs. Each Institute is led by a Scientific Director who is guided by an Institute Advisory Board, which strives to include representation of the public, researcher communities, research funders, health professionals, health policy specialists and other users of research results.

CIHR's grants, awards, and operating expenditures are funded by budgetary authorities. Employee benefits are funded by statutory authorities.

2. Significant Accounting Policies

These financial statements have been prepared in accordance with Treasury Board accounting policies and year-end instructions issued by the Office of the Comptroller General, which are consistent with Canadian generally accepted accounting principles for the public sector. The most significant accounting policies are as follows:

(a) Parliamentary appropriations - CIHR is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to CIHR do not parallel financial reporting according to generally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the statement of operations and the statement of financial position are not necessarily the same as those provided through appropriations from Parliament. Note 3 provides a high-level reconciliation between the bases of reporting.

(b) Net cash provided by government - CIHR operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by CIHR is deposited to the CRF and all cash disbursements made by CIHR are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the Federal Government.

(c) Due from the Consolidated Revenue Fund represents the amount of cash that CIHR is entitled to draw from the Consolidated Revenue Fund without further appropriations, in order to discharge its liabilities.

(d) Revenues

(e) Expenses - Expenses are recorded on the accrual basis:

(f) Refunds of previous years' expenses - These amounts include the return of grants and awards funds to CIHR in the current fiscal year for expenses incurred in previous fiscal years due to cancellations; refunds of previous years' expenses related to goods or services; and adjustments of previous years' accounts payable. These refunds and adjustments are recorded as expenses in the financial statements but are recorded as revenue on an appropriation basis and therefore are excluded when determining current year appropriations used.

(g) Employee future benefits

  1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer defined benefit plan administered by the Government of Canada. CIHR's contributions to the Plan are charged to expenses in the year incurred and represent the total obligation of CIHR to the Plan. Current legislation does not require CIHR to make contributions for any actuarial deficiencies of the Plan.

  2. Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

(h) Accounts receivable - These are stated at amounts expected to be ultimately realized.
A provision for doubtful accounts is made for any amounts where recovery is considered uncertain.

(i) Contingent liabilities - Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense is recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

(j) Tangible capital assets - All tangible capital assets having an individual initial cost of $5,000 or more are recorded at their acquisition cost. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the capital asset as follows:

Asset Class Amortization Period
Informatics hardware 3-5 years
Informatics software 3 years
Office equipment 10 years
Motor vehicles 5 years

Amounts included in work-in-progress are uncompleted capital projects which are transferred to the appropriate asset class upon completion, and are then amortized according to CIHR's policy.

(k) Measurement uncertainty - The preparation of these financial statements in accordance with Treasury Board accounting policies and year-end instructions issued by the Office of the Comptroller General, which are consistent with Canadian generally accepted accounting principles for the public sector, requires management to make estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are contingent liabilities, the liability for vacation pay and compensatory leave, employee severance benefits, the useful life of tangible capital assets, and services provided without charge. Actual results could differ significantly from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3. Parliamentary Appropriations

CIHR receives most of its funding through annual parliamentary appropriations. Items recognized in the statement of operations and the statement of financial position in one year may be funded through parliamentary appropriations in prior, current or future years. Accordingly, CIHR has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

(a) Reconciliation of net cost of operations to current year appropriations used
(in thousands of dollars)

  2008
2007
Net cost of operations 998,957 847,204
Adjustments for items affecting net cost of operations
but not affecting appropriations:
  Add (Less):
  Services provided without charge (5,559) (5,224)
  Gairdner Foundation grant (Note 7) (20,000) -
  Gain on disposal of capital assets - 4
  Refunds of previous years' expenses 3,087 2,432
  Employee severance benefits (1,325) (615)
  Amortization of tangible capital assets (1,868) (1,498)
  Vacation pay and compensatory leave (206) (200)
  Other adjustments 249
(94)
    (25,622) (5,195)
Adjustments for items not affecting net cost of operations
but affecting appropriations
  Add (Less):
  Acquisitions of tangible capital assets 1,098 1,358
  Prepaid expenses (363)
(97)
Current year appropriations used 974,070
843,270

(b) Appropriations provided and used
(in thousands of dollars)

  2008
2007
Parliamentary appropriations provided:    
Vote 15 - Operating expenditures 45,060 43,021
Less:    
Lapsed appropriation (2,333)
(3,657)
  42,727
39,364
Vote 20 - Grants 943,967 816,183
Less:    
Lapsed appropriation (17,251)
(16,536)
  926,716 799,647
Statutory contributions to employee benefit plans 4,627
4,259
Current year appropriations used 974,070
843,270

(c) Reconciliation of net cash provided by Government to Parliamentary appropriations used
(in thousands of dollars)

  2008
2007
Net cash provided by Government 969,803 844,170
Refunds of previous years' expenses 3,087 2,432
Cash proceeds on disposal of capital assets -
9
  972,890
846,611
Change in net position in the Consolidated Revenue Fund
Variation in accounts receivable and advances 312 (358)
Variation in accounts payable and accrued liabilities 1,338 (1,273)
Variation in deferred revenue (719) (1,616)
Other adjustments 249
(94)
1,180
(3,341)
Current year appropriations used 974,070
843,270

4. Expenses
(in thousands of dollars)

  2008
2007
Grants and awards
Open competitions 516,541 487,917
Strategic initiatives 210,842 195,762
Gairdner Foundation grant (Note 7) 20,000 -
Institute support grants 13,000 13,000
Knowledge translation 8,224 3,864
Canada Research Chairs 86,482 82,205
Networks of Centres of Excellence 27,500 27,500
Centres of Excellence in Commercialization and Research 73,512
-
Total grants and awards 956,101 810,248
Less: Refunds of previous years' grants and awards (3,087)
(1,972)
  953,014
808,276
Operations and administration
Salaries and employee benefits 36,551 31,683
Professional and special services 5,300 4,845
Travel 3,696 3,425
Accommodation 3,399 3,314
Amortization of tangible capital assets 1,868 1,498
Furniture, equipment and software 1,813 1,998
Communication 1,439 1,450
Other 1,262
1,322
Total operations and administration 55,328
49,535
Total Expenses 1,008,342
857,811

5. Revenues
(in thousands of dollars)

The following are the revenues recognized for the year:

  2008
2007
Donations for health research 9,235 9,362
Cost sharing agreements with other Government departments 150 1,240
Gain on disposal of capital assets - 4
Endowments for health research -
1
Total Revenues 9,385
10,607

6. Tangible Capital Assets
(in thousands of dollars)

  Cost Accumulated amortization  
Capital asset class Opening balance Acquisitions Transfers,
disposals
and
write-offs
Closing balance Opening balance Amortization Transfers,
disposals
and
write-offs
Closing balance 2008
Net
Book
Value
2007
Net
Book
Value
Informatics hardware 1,928 142 - 2,070 1,546 169 - 1,715 355 382
Informatics software 7,780 953 - 8,733 4,531 1,659 - 6,190 2,543 3,249
Office equipment 345 - - 345 123 35 - 158 187 222
Vehicles 32 - - 32 4 5 - 9 23 28
Work-in-progress 23 3 - 26 - - - - 26 23
Total 10,108 1,098 - 11,206 6,204 1,868 - 8,072 3,134 3,904

Amortization expense (in thousands of dollars) for the year ended March 31, 2008 is $1,868 (2007 - $1,498).

7. Gairdner Foundation Grant

On March 31, 2008, CIHR entered into a funding agreement with the Gairdner Foundation, a not-for-profit, independent organization devoted to the recognition of outstanding achievement in health research worldwide. CIHR agreed to provide the Gairdner Foundation with a grant at the requisition of the Minister of Health in the amount of $20,000,000. The purpose of the endowment is to support and enhance the Gairdner International Awards, which are among the world's most respected health prizes. The Gairdner Foundation has proposed to use the investment proceeds from the endowment to increase the value of each Gairdner International Award to $100,000 in keeping with their stature. The endowment will also be used to establish a new individual award for global health to be named the "Canada Gairdner Global Health Award". After the endowment is disbursed, the Gairdner International Awards will be renamed the "Canada Gairdner International Awards".

8. Deferred Revenue

Monies received as donations from various organizations and individuals for health research as well as interest on endowments are recorded as deferred revenue until such time as they are disbursed in accordance with agreements between the contributor and CIHR or in accordance with the terms of the endowments.

The transactions relating to these accounts are as follows:
(in thousands of dollars)

  2008
2007
Donations for health research
Balance, beginning of the year 12,726 14,344
  Add:
  Donations received 8,049 7,191
  Interest earned 465 553
  Less:
  Grants expensed 9,235
9,362
Balance, end of the year 12,005
12,726
Interest on endowments for health research
Balance, beginning of the year 4 2
  Add:
  Interest earned 3 3
  Less:
  Miscellaneous expenses 1
1
Balance, end of the year 6
4
Total deferred revenue 12,011
12,730

9. Employee Benefits

Employees of CIHR are entitled to specific benefits on or after termination or retirement, as provided for under various collective agreements or conditions of employment.

(a) Pension benefits: CIHR's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2% per year of pensionable service, multiplied by the average of the best five consecutive years of earnings. The benefits are integrated with the Canada/Quebec Pension Plans benefits and they are indexed to inflation. Both the employees and CIHR contribute to the cost of the Plan. CIHR's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

The 2007-08 expense represents approximately 2.1 times (2.3 in 2006-07) the contributions by employees.

CIHR's and employees' contributions to the Public Service Pension Plan for the year were as follows:
(in thousands of dollars)

  2008
2007
CIHR's contributions 3,373 3,139
Employees' contributions 1,584 1,378

(b) Severance benefits: CIHR provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future appropriations. Information about the severance benefits, measured as at March 31, is as follows:
(in thousands of dollars)

  2008
2007
Accrued benefit obligation, beginning of year

5,248

4,633
Expense for the year 1,624 898
Benefits paid during the year (299)
(283)
Accrued benefit obligation, end of year 6,573
5,248

10. Contingent Liabilities

A legal suit for employment equity was initiated by the Public Service Alliance of Canada against Her Majesty the Queen naming certain separate employer organizations of the Government of Canada, including the Canadian Institutes of Health Research (CIHR), as defendants. The amount of this claim, as it relates to CIHR, is estimated to be $747,000. In management's opinion, the outcome of this litigation is not presently determinable and no estimated liability has been accrued or expense recorded in the financial statements.

CIHR may be subject to other claims in the normal course of business. In management's view, these claims do not have any material impact on the financial statements and consequently, no provision has been made for these claims.

11. Contractual Obligations

CIHR is committed to disburse grants and awards in future years subject to the appropriation of funds by Parliament. In addition, the nature of CIHR's operating activities result in some multi-year contracts whereby CIHR will be committed to make some future payments when the goods or services are rendered. Future year contractual obligations are as follows:

(in thousands of dollars) 2009 2010 2011 2012 2013 and thereafter Total
Grants and awards 739,175 537,309 363,679 197,477 119,781 1,957,421
Operating 2,091 418   2   -   - 2,511
Total 741,266 537,727 363,681 197,477 119,781 1,959,932

12. Related Party Transactions

CIHR is related in terms of common ownership to all Government of Canada departments, agencies, and Crown Corporations. CIHR enters into transactions with these entities in the normal course of business and on normal trade terms.

(a) Services provided without charge by other Government departments

During the year, CIHR received services which were obtained without charge from other Government departments. The estimated costs of these services have been included as an expense in the department's Statement of Operations in the following amounts:
(in thousands of dollars)

  2008
2007
Accommodation provided by Public Works
and Government Services Canada
3,399 3,314
Employer's contribution to the health and dental
insurance plans provided by Treasury Board Secretariat
2,027 1,772
Audit services provided by the Office of the Auditor
General of Canada
133
138
Total services provided without charge
by other Government departments
5,559
5,224

(b) Administration of programs on behalf of other Government departments

CIHR administers funds received from other federal departments and agencies to issue grants, awards and related payments on their behalf. During the year, CIHR administered $150,000 ($1,239,838 in 2007) in funds for grants and awards. These amounts are reflected in CIHR's Statement of Operations as both revenues and expenses.

(c) Administration of CIHR funds by other Government departments

Other federal departments and agencies administer funds on behalf of CIHR to issue grants, awards and related payments. During the year, other federal departments and agencies administered $91,061,335 ($87,331,623 in 2007) in funds for grants and awards, primarily pertaining to the Canada Research Chairs program. These amounts are reflected in CIHR's Statement of Operations as expenses.

13. Financial Instruments

The fair values of financial assets and liabilities approximate the carrying amounts of these instruments due to the short period to maturity.

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