Annual Report 2010-2011

Moving Forward

[ Table of Contents ]

Financial Statement Discussion and Analysis
March 31, 2011

Disclaimer

This Financial Statement Discussion and Analysis (FSD&A) should be read in conjunction with the Canadian Institutes of Health Research (CIHR) annual audited financial statements for the year ended March 31, 2011 and accompanying notes. The FSD&A and audited financial statements have been reviewed and approved by the CIHR Governing Council.

Financial Highlights

Financial Analysis

CIHR is financed by the Government of Canada through Parliamentary authorities. In 2010-11, CIHR was provided with $1,029.9 million of Parliamentary authorities, an increase of $42.2 million (or 4.3%) as compared to 2009-10. The Government of Canada provided CIHR with additional Parliamentary authorities as part of Budget 2010, as follows:

CIHR also received additional Parliamentary authorities to increase funding for several key programs and initiatives, including:

The foregoing increases in Parliamentary authorities have resulted in corresponding increases in total Parliamentary authorities used by CIHR (4.4%), grants and awards expenses (4.3%) and the net cost of operations (4.3%). Total operating expenses increased by 6.1% primarily due to increased employee salaries and benefits, as CIHR increased its human resource capacity to enable the effective administration of new and expanded grants and awards programs.

The following graphic indicates how 2010-11 grants and awards expenses were allocated by CIHR's four program activities.

Grants and Awards Expenses by Program Activity
(in thousands of dollars)

Grants and Awards Expenses by Program Activity (in thousands of dollars)

*Figures do not include refunds on previous year’s grants and awards

Long description

As displayed in the graphic above, the two largest increases were to the Health Knowledge and to the Health and Health Services Advances program activities. Expenses under the Health Knowledge program activity increased by approximately $15.7 million. This increase was a result of increased expenses incurred via CIHR's Open Operating Grant Program which funds the best project ideas submitted by researchers from all areas of health research. The Health and Health Services Advances program activity expenses increased by approximately $23.9 million largely as a result of funding for new strategic initiatives such as the Strategy for Patient-Oriented Research, the International Collaborative Research Initiative on Alzheimer's Disease Research, the Medical Isotopes Initiative and the expanded Drug Safety and Effectiveness Network.

Trend Analysis

CIHR Net Cost of Operations and Grants and Awards Expenses
(in millions of dollars)

CIHR Net Cost of Operations and Grants and Awards Expenses (in millions of dollars)

Long description

CIHR Operating Expenses
(in millions of dollars)

CIHR Operating Expenses (in millions of dollars)

Long description

Risk and Uncertainties

CIHR understands the importance of risk management and is committed to ensuring that risk management considerations are integrated into its strategic and operational planning, business processes and decision making. CIHR has a Risk Management Framework that sets out how CIHR identifies, assesses and mitigates risk.

As reported in its 2010-11 Report on Plans and Priorities, CIHR has identified three primary risks, as follows:

Health Research Roadmap

CIHR's Strategic Plan, the Health Research Roadmap, sets out an ambitious agenda that will enable the agency to realize its full mandate in all its complexity, show leadership within the wider health research community and demonstrate accountability and results to the people of Canada. There is a risk that CIHR will be unable to fully deliver on the strategic directions outlined in the Health Research Roadmap within the defined timeframe, including risks that internal and external stakeholders will not understand or support the proposed changes and that ongoing operational requirements and competing priorities may prevent the required human and financial resources from being able to focus on the implementation of the strategy.

CIHR management has implemented several strategies to mitigate these risks, including:

Knowledge Translation

There is a risk that CIHR may not be able to support the synthesis, dissemination, exchange and ethically sound application of knowledge at the levels required to achieve the Knowledge Translation (KT) component of its mandate and to improve the health of Canadians. The importance of achieving these objectives has been strongly emphasized in CIHR's Health Research Roadmap. Funding opportunities and other mechanisms for advancing KT require time, human resource expertise and resources at levels that CIHR has yet to achieve.

CIHR management has taken the following steps to mitigate risk associated with potentially not achieving its KT mandate:

Results Management

There is a risk that CIHR will be unable to evaluate and report on the results of CIHR's funded research inputs, outputs and impacts.

To mitigate this risk, CIHR management has implemented or is in the process of completing the following mitigation strategies:

Future Financial Outlook: 2011-12

On June 6, 2011, Minister of Finance James Flaherty tabled in Parliament the Government budget for fiscal year 2011-12. Budget 2011 lays out a plan for new investments into the key drivers of economic growth - innovation, investment, education and training - and seeks to foster an environment in which all Canadians contribute to and benefit from a stronger economy. In doing so, the Government will reinforce Canada's comparative advantages. More specifically, Budget 2011 includes significant investments in innovation which will likely impact CIHR's future outlook, as follows:

CIHR is expected to continue to remain in good financial position as the Government of Canada continues to make significant investments in health research and innovation to preserve Canada's comparative advantages. CIHR management anticipates that once all new funding initiatives are approved, its total Parliamentary authorities will once again reach $1 billion in 2011-12.

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