Annual Report 2008-2009

Research with Impact

[ Table of Contents ]

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, 2009 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 communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the organization.

The CIHR Audit Committee, selected jointly by the President and the Comptroller General and appointed by the Treasury Board, provides independent, objective advice, guidance, and assurance on the adequacy of the CIHR control and accountability processes. In accordance with the Treasury Board Directive on Departmental Audit Committees, the Audit Committee has reviewed the financial statements with management and external auditors and discussed any significant issues and findings from the audit prior to recommending acceptance of the financial statements to the President and Governing Council.

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

Alain Beaudet, MD, PhD
President

Ottawa, Canada
May 29, 2009

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, 2009 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, 2009 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 29, 2009

Statement of Operations for the Year Ended March 31

(in thousands of dollars)

2009 2008

Expenses (Note 4)
Advances in health knowledge 635,264 547,858
People and research capacity 277,009 317,424
Knowledge translation and commercialization 70,932 143,060

Total Expenses 983,205 1,008,342

Revenues (Note 5)
Advances in health knowledge 6,697 5,099
People and research capacity 2,920 2,954
Knowledge translation and commercialization 748 1,332

Total Revenues 10,365 9,385

Net Cost of Operations 972,840 998,957

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

Statement of Financial Position as at March 31

(in thousands of dollars)

2009 2008

Assets
Financial assets
Due from the Consolidated Revenue Fund 15,612 36,371
Accounts receivable:
Other Federal Government departments 216 296
External parties 218 465
Advances 190 196

Total financial assets 16,236 37,328
Non-financial assets
Prepaid expenses 150 82
Tangible capital assets (Note 6) 3,753 3,134

Total non-financial assets 3,903 3,216

Total Assets 20,139 40,544
Liabilities
Accounts payable and accrued liabilities
Other Federal Government departments 1,460 465
External parties 4,002 3,894
Gairdner Foundation grant (Note 7) 20,000
Vacation pay and compensatory leave 1,123 1,316
Deferred revenue (Note 8) 10,151 12,011
Employee severance benefits (Note 9) 7,591 6,573

Total Liabilities 24,327 44,259

Equity of Canada (4,188) (3,715)

Total Liabilities and Equity of Canada 20,139 40,544

Contingent liabilities (Note 10)
Contractual obligations (Note 11)

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

Approved by Governing Council:

Alain Beaudet, MD, PhD
President

Approved by Management:

James Roberge, CMA
Chief Financial Officer

Statement of Equity for the Year Ended March 31

(in thousands of dollars)

2009 2008

Equity of Canada, Beginning of Year (3,715) (740)
Net cost of operations (972,840) (998,957)

Net cash provided by Government 986,771 969,803
Change in Due from the Consolidated Revenue Fund (20,759) 20,620
Services provided without charge by other
Government departments (Note 12)
6,355 5,559

Equity of Canada, End of Year (4,188) (3,715)

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)

2009 2008

Operating Activities
Net cost of operations 972,840 998,957
Non-cash items:
Amortization of tangible capital assets (696) (1,868)
Services provided without charge by other Government departments (6,355) (5,559)

(7,051) (7,427)
Variations in Statement of Financial Position:
(Decrease) in accounts receivable and advances (333) (312)
Increase (decrease) in prepaid expenses 68 (363)
Decrease (increase) in liabilities 19,932 (22,150)

19,667 (22,825)

Cash Used by Operating Activities 985,456 968,705
Capital Investment Activities
Acquisitions of tangible capital assets 1,315 1,098

Cash Used by Capital Investment Activities 1,315 1,098

Financing Activities
Net Cash Provided by Government of Canada 986,771 969,803

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

Notes to The Financial Statements for the Year Ended March 31, 2009

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 advances in health knowledge, achieved by funding excellent and ethical health research across all disciplines that are relevant to health. The second strategic outcome is people and research capacity, achieved by providing funding to develop and sustain health researchers in vibrant, innovative and stable research environments. The third strategic outcome is knowledge translation and commercialization, 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 3–10 years
Office equipment 10 years
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 reported 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)

2009 2008

Net Cost of Operations 972,840 998,957
Adjustments for items affecting net cost of
operations but not affecting appropriations:
Add (Less):
Services provided without charge (6,355) (5,559)
Gairdner Foundation grant (Note 7) (20,000)
Refunds of previous years' expenses 2,901 3,087
Employee severance benefits (1,018) (1,325)
Amortization of tangible capital assets (696) (1,868)
Vacation pay and compensatory leave 193 (206)
Other adjustments 168 249

(4,807) (25,622)
Adjustments for items not affecting net cost
of operations but affecting appropriations:
Add (Less):
Acquisitions of tangible capital assets 1,315 1,098
Prepaid expenses 68 (363)

Current Year Appropriations Used 969,416 974,070

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

2009 2008

Parliamentary appropriations provided
Vote 20 – Operating expenditures 51,032 45,060
Less:
Lapsed appropriation (3,794) (2,333)

47,238 42,727

Vote 25 – Grants 917,670 943,967
Less:
Lapsed appropriation (794) (17,251)

916,876 926,716
Statutory contributions to employee benefit plans 5,302 4,627

Current Year Appropriations Used 969,416 974,070

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

2009 2008

Net cash provided by Government 986,771 969,803
Refunds of previous years' expenses 2,901 3,087

989,672 972,890

Change in net position in the Consolidated Revenue Fund
Variation in accounts receivable and advances 333 312
Variation in accounts payable and accrued liabilities 1,103 1,338
Variation in deferred revenue (1,860) (719)
Variation in Gairdner Foundation grant (20,000) -
Other adjustments 168 249

(20,256) 1,180

Current Year Appropriations Used 969,416 974,070

4. Expenses

(in thousands of dollars)

2009 2008

Grants and Awards
Open competitions 541,216 516,541
Strategic initiatives 243,453 210,842
Gairdner Foundation grant (Note 7) 20,000
Institute support grants 13,000 13,000
Knowledge translation 9,607 8,224
Canada Research Chairs 87,683 86,482
Networks of Centres of Excellence 27,837 27,500
Centres of Excellence in Commercialization and Research 4,442 73,512

Total grants and awards 927,238 956,101
Less: Refunds of previous years' grants and awards (2,901) (3,087)

924,337 953,014

Operations and Administration
Salaries and employee benefits 40,589 36,551
Professional and special services 5,838 5,300
Travel 3,854 3,696
Accommodation 3,386 3,399
Furniture, equipment and software 1,733 1,813
Other 1,688 1,262
Communication 1,084 1,439
Amortization of tangible capital assets 696 1,868

Total operations and administration 58,868 55,328

Total Expenses 983,205 1,008,342

5. Revenues

The following are the revenues recognized for the year:

(in thousands of dollars)

2009 2008

Donations for health research 10,213 9,235
Cost sharing agreements with other Government departments 150 150
Endowments for health research 2

Total Revenues 10,365 9,385

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
2009
Net Book
Value
2008
Net Book
Value
Informatics hardware 2,070 491 2,561 1,715 159 1,874 687 355
Informatics software 8,733 767 26 9,526 6,190 498 6,688 2,838 2,543
Office
equipment
345 57 402 158 34 192 210 187
Vehicles 32 32 9 5 14 18 23
Work-in-
progress
26 (26) 26
Total 11,206 1,315 12,521 8,072 696 8,768 3,753 3,134

Amortization expense (in thousands of dollars) for the year ended March 31, 2009 is $696 (2008 – $1,868). During 2008–09, CIHR had a change in accounting estimate relating to the useful life of internally developed informatics software, which resulted in a decrease to amortization expense of $1,954 in 2008–09.

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. Since the endowment had not been paid out as of March 31, 2008, an accrual was made on the financial statements. The endowment has since been paid out and no such accrual exists as at March 31, 2009.

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)

2009 2008

Donations for Health Research
Balance, beginning of the year 12,005 12,726
Add:
Donations received 8,151 8,049
Interest earned 200 465
Less:
Grants expensed 10,213 9,235

Balance, End of the Year 10,143 12,005

Interest on Endowments for Health Research
Balance, beginning of the year 6 4
Add:
Interest earned 2 3
Less:
Miscellaneous expenses 1

Balance, End of the Year 8 6

Total Deferred Revenue 10,151 12,011

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 percent 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 expense for the year ended March 31, 2009 represents approximately 2.0 times (2.1 in 2008) 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)

2009 2008

CIHR's contributions 3,827 3,373
Employees' contributions 1,911 1,584

(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)

2009 2008

Accrued benefit obligation, beginning of year 6,573 5,248
Expense for the year 1,125 1,624
Benefits paid during the year (107) (299)

Accrued Benefit Obligation, End of Year 7,591 6,573

10. Contingent Liabilities

CIHR may be subject to legal claims in the normal course of business. In management's view, there are currently no such claims with a material impact on the financial statements and consequently, no provision has been made.

During the 2008–09 fiscal year, the legal suit initiated by the Public Service Alliance of Canada for employment equity against her Majesty the Queen, which was disclosed in the 2007–08 CIHR financial statements, was withdrawn and no further legal action has been taken.

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)

2010 2011 2012 2013 2014 and
thereafter
Total

Grants and Awards 759,191 576,202 368,558 219,198 110,538 2,033,687
Operating 2,497 44 6 2,547

Total 761,688 576,246 368,564 219,198 110,538 2,036,234

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 at prices and terms comparable to other suppliers, except as shown below. Transactions with the entities below were entered into in the normal course of business and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

(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)

2009 2008

Accommodation provided by Public Works and Government Services Canada 3,386 3,399
Employer's contribution to the health and dental insurance plans provided by Treasury Board Secretariat 2,746 2,027
Audit services provided by the Office of the Auditor General of Canada 223 133

Total Services Provided Without Charge by Other Government Departments 6,355 5,559

(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 ($150,000 in 2008) 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 $91,189,579 in funds for grants and awards ($91,061,335 in 2008), 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.

Date modified: