Future-Oriented Statement of Operations 2015-16

Canadian Institutes of Health Research
Future-oriented Statement of Operations
For the Year Ended March 31

(in thousands of dollars)
The accompanying notes are an integral part of the future-oriented statement of operations.
Investigator-Initiated Health Research $ 700,920 $ 703,757
Priority-Driven Health Research 315,234 307,855
Internal Services 14,239 13,702
Total expenses 1,030,393 1,025,314
Investigator-Initiated Health Research 171 189
Priority-Driven Health Research 11,229 12,411
Total revenues 11,400 12,600
Net cost of operations $ 1,018,993 $ 1,012,714

1. Methodology and Significant Assumptions

The future-oriented statement of operations has been prepared on the basis of the government priorities and departmental plans as described in the Report on Plans and Priorities.

The information in the estimated results for the fiscal year 2014-15 is based on actual results as at December 10, 2014 and forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2015-16 fiscal year.

The main assumptions underlying the forecasts are as follows:

  1. CIHR's activities will remain substantially the same as for the previous year;
  2. Expenses and revenues, including the determination of amounts internal and external to the government, are based on experience. The general historical pattern is expected to continue.

These assumptions are adopted as at December 10, 2014.

2. Variations and Changes to the Forecast Financial Information

While every attempt has been made to forecast final results for the remainder of 2014-15 and for 2015-16, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing this future-oriented statement of operations, CIHR has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Factors that could lead to material differences between the future-oriented statement of operations and the historical statement of operations include the following:

  1. The timing and amounts of acquisitions and disposals of property, plant and equipment may affect gains/losses and amortization expense.
  2. Implementation of new collective agreements.
  3. Economic conditions may affect the amount of revenue earned.
  4. Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.

Once the Report on Plans and Priorities is presented, CIHR will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

3. Summary of Significant Accounting Policies

The future-oriented statement of operations has been prepared using the Government's accounting policies that came into effect for the 2014-15 fiscal year, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

(a) Expenses

Expenses are recorded on an accrual basis. Expenses for the Department's operations are recorded when goods are received or services are rendered, including services provided without charge for accommodation, employee contributions to health and dental insurance plans, legal services and worker's compensation, which are recorded as expenses at their estimated cost. Vacation pay and compensatory leave, as well as severance benefits, are accrued and expenses are recorded as the benefits are earned by employees under their terms of employment.

Grants and awards (transfer payments) are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the future-oriented statement of operations.

(b) Revenues

Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in which the related expenses are incurred.

Funds that have been received are recorded as deferred revenue, provided CIHR has an obligation to other parties for the provision of goods, services, or the use of assets in the future.

Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

4. Parliamentary Authorities

CIHR is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to CIHR do not parallel financial reporting according to generally accepted accounting principles because authorities are primarily based on cash flow requirements. Items recognized in the future-oriented statement of operations in one year may be funded through parliamentary authorities in prior, current, or future years. Accordingly, CIHR has different net cost 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 requested authorities

(in thousands of dollars)

Net cost of operations $ 1,018,993 $ 1,012,714
Adjustments for items affecting net cost of operations but not affecting authorities:
Services provided without charge by other government departments (6,620) (6,670)
Refunds of previous years' expenses 3,514 3,340
Increase in vacation pay and compensatory leave (40) (41)
Decrease in employee future benefits 240 240
Amortization of tangible capital assets (178) (250)
(3,084) (3,381)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets 405 605
Increase (decrease) in prepaid expenses  392 (51)
797 554
Requested authorities $ 1,016,706 $ 1,009,887

(b) Authorities requested

(in thousands of dollars)

Vote 1 - Operating expenditures $ 50,809 $ 48,864
Vote 5 - Grants 960,201 955,287
Statutory - Contributions to employee benefit plan 5,696 5,736
Requested authorities $ 1,016,706 $ 1,009,887
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