Northern Pipeline Agency Quarterly Financial Report (unaudited) For the Quarter Ended September 30, 2011

Statement outlining results, risks and significant changes in operations, personnel and program

Introduction

This quarterly financial report should be read in conjunction with the Main Estimates. 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.

Authority, Mandate and Program Activities

The Northern Pipeline Agency (hereinafter referred to as “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 by Foothills Pipe Lines Limited.  The pipeline is to carry natural gas from Prudhoe Bay, Alaska, to the lower 48 states.  Foothills Ltd. is now owned by TransCanada PipeLines.

Further details on the Agency’s authority, mandate and program activities are available in Part II of the Main Estimates.

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 for the 2011-2012 fiscal year and Operating Budget Carry Forward.  This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before moneys 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.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

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. However, the spending authorities voted by Parliament remain on an expenditure basis of accounting.

Highlights of the First Fiscal Quarter and Comparative Results

The following identifies and explains the results and significant variances between the second quarter of the current fiscal year and the second quarter of the previous fiscal year, as reported in the Statement of Authorities and the Budgetary Expenditures by Standard Objects tables at the end of this report. 

Authorities Available for Use and Planned Spending for the Year

Total authorities available for the year and planned spending for the year have increased by $54,900 compared to the same quarter of the previous year.  The changes are due to an increase in EBP of $6,950 and an increase in Operating Budget Carry Forward (OBCF) of $47,950.

Authorities Used and Amounts Expended During the Quarter

During the second quarter, the agency spent $313,189, or 22.6% of the total funding available, compared to $160,610 during the same quarter in 2010-11, representing 12.1% of total funding available.  Personnel expenditures increased by $150,391 between the second quarter of 2010-11 ($132,993) to 2011-12 ($283,384) due to  increased FTEs on assignment with the Agency and the accrual of related salary costs  to reflect NPA’s personnel costs accurately and on a timely basis.

The Agency’s activities are dictated by the timing and pace of the planning and construction of the pipeline.  In concert with other federal government departments, the Agency continued to develop regulatory processes which accommodate modern environmental practices and takes into account the interests of Aboriginal communities, and territorial and provincial governments.

Risks and Uncertainties

This Departmental Quarterly Financial Report (QFR) reflects the results of the current fiscal period in relation to the Main Estimates and Operating Budget Carry Forward for which full supply was released.

The challenge for the Agency is to plan for an efficient and effective review and regulation of the project taking into account changes since the Northern Pipeline Act came into force and the pipeline was certificated in the late 1970s. Some of the changes in Yukon include new environmental legislation, devolution of some federal responsibilities, and settlement of most of the First Nations land claims along the pipeline route.

The Agency also faces the ongoing challenge of keeping pace with project development, i.e., to carry out its responsibilities and to make the necessary preparations.

Failure to make timely preparations could jeopardize the Government of Canada’s performance of its responsibilities under the 1977 Canada-US Agreement and the Northern Pipeline Act, and pursuant to TransCanada’s rights related to its existing certificates of Public Convenience and Necessity, and its existing pipeline easement in the Yukon.

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, the Agency will ramp up activities and human resource levels in anticipation of Stage Two of the Project in Canada.

Significant Changes in Relation to Operations, Personnel and Programs

There have been no significant changes in relation to operations and programs during this quarter.  A new Assistant Commissioner, Chrystia Chudczak, was appointed in September 2011.

Approved by:

 

November 22, 2011
Date Signed
Ottawa, Canada

Table 1: Statement of Authorities (Unaudited)

(in dollars)	Fiscal year 2011-2012			Fiscal year 2010-2011
	Total available for use for the year ending *	Used during the quarter ended	Year-to-date used at	Total available for use for the year ending*	Used during the quarter ended	Year-to-date used at
Budgetary Authorities	March 31, 2012	September 30, 2011	quarter-end	March 31, 2011	September 30, 2010	quarter-end
Net Operating expenditures - Vote 30	1,263,150	250,639	350,621	1,215,200	140,918	202,387
Statutory Authority - Employee Benefit Plans	125,100	62,550	93,825	118,150	19,692	49,229
Total Budgetary Authorities	1,388,250	313,189	444,446	1,333,350	160,610	251,616

 * Includes only Authorities available for use and granted by Parliament at quarter-end: Main Estimates and Operating Budget Carry Forward.

Table 2: Budgetary Expenditures by Standard Object (Unaudited)

(in dollars)	Fiscal year 2011-2012			Fiscal year 2010-2011
	Planned expenditures for the year ending*	Expended during the quarter ended	Year-to-date used at	Planned expenditures for the year ending*	Expended during the quarter ended	Year-to- date used at
Expenditures:	March 31, 2012	September 30, 2011	quarter-end	March 31, 2011	September 30, 2010	quarter- end
Personnel	820,100	283,384	388,375	813,150	132,993	192,597
Transportation and communication	145,393	22,584	38,438	133,122	22,164	42,548
Information	2,237	-	-	2,048	98	282
Professional and special services	350,061	1,326	6,066	320,517	624	5,863
Rentals	13,421	6,045	10,492	12,288	4,395	8,230
Repair and maintenance	2,237	-	-	2,048	-	-
Utilities, materials and supplies	4,474	(150)	1,075	4,096	336	2,081
Acquisition of machinery and equipment	-	-	-	-	-	-
Other subsidies and payments	50,327	-	-	46,081	-	15
Total net budgetary expenditures	1,388,250	313,189	444,446	1,333,350	160,610	251,616

 * Includes only Authorities available for use and granted by Parliament at quarter-end: Main Estimates and Operating Budget Carry Forward.