Canadian Space Agency issues 2019 Q3 financial report

On February 24 the Canadian Space Agency (CSA) posted its third quarter financial report for the fiscal year 2019-20. Quarterly Financial Report (QFR) introduction Since this is the first time SpaceQ has published a story on the Canadian Space Agency Quarterly Financial Report (QFR) an introduction is in order. And note, the Q3 QFR is available to read below the article. The Financial Administration Act requires federal departments and agencies to publish quarterly reports for the first three quarters of each fiscal year. The CSA describes the reports as follows; "The CSA's Quarterly Financial Reports make in-year spending at the Agency level available to Parliamentarians and Canadians. These reports supplement existing year-end reporting. Each quarterly financial report includes spending authorities granted through the Main and Supplementary Estimates as well as any allotment transfers approved by Treasury Board that have become available for use at the end of the quarter." Furthermore the report states "The Statement of Authorities annexed to this report includes the CSA's spending authorities granted by Parliament and those used by the CSA, consistent with the Main Estimates and Supplementary estimates voted as at December 31 for fiscal year 2019-2020 compared to 2018-2019. " The Act states the report include the following information; A financial statement for the fiscal quarter and the period from the start of the fiscal year to the end of that fiscal quarter;Comparative financial information for the preceding fiscal year; andA statement outlining the results, risks and significant changes in relation to operations, personnel and programs. These reports can be pretty dry and possibly confusing to new readers. They however do provide some useful information which we'll pass along as each report is published. Q3 report: Did the CSA budget just get bigger? So did the CSA budget just get bigger? Well, yes and no. One item that immediately caught our attention was the increase in available authorities (available funding) from the budgeted $328.9 million for fiscal year 2919-20 to $372.3 million. We queried the CSA on this change to understand what it meant. Was the CSA the recipient of extra funding? We didn't think but best to ask. The answer is no. The CSA told SpaceQ by email that "the variance is the result of funds carried-forward from FY 18-19 to FY 19-20." Simple enough. But what happens to the funds? Well, the CSA representative said the funds "will not be spending all of 2019-20 voted authorities in the current Fiscal Year (FY)." They will be "re-profile(d)" or "carry-forward(ed)" to the following year. In other words, yes there's officially extra funds available, but no they won't be used this year. It's a government accounting method that can be confusing. Interestingly, the CSA representative also added that the funds "should not result in any lapsed authority (i.e. funds will be available for the space sector in future FYs)." On the surface that's good news. Programs move at varying speeds and change so funds don't get used and are re-profiled or carried forward. However, as we've written about before, while the authority might not lapse, as in the funds are available to be used in future years, if you don't spend the funds, well you're not spending the funds. And if you don't spend the funds again the following years, well you're still not spending the funds. This is why in the last few years we've begun to track what was actually spent during a given year as opposed to what the budget said would be spent. So what's changed in Q3? Let's start with what's been spent to date through Q3 2019-20. The CSA reports that it spent $71 million in the quarter and $187 million through the first three quarters. The expenditures to date are in-line with previous spending as a percentage compared to the previous years. And while that figure may seem low, there's a reason. It has to do with how the funds are accounting for. The CSA puts it this way. "This situation presents no concerns since the cumulative expenditures will be restored at year-end when the accruals are recorded, in accordance with the full accrual method of accounting, combined with the deferral of budgets to the following year." Here's the Significant Changes in the Authorities (Total Votes Available for Use) between fiscal years 2019-2020 and 2018-2019: The increase of $9.9 million in Vote 1 - Operating expenditures is mainly explained by the following items: An increase of $9.4 million as a result of additional funding received to extend Canada's participation in the International Space Station (ISS) mission from 2021 to 2024.An increase of $2.3 million as a result of funding received from Treasury Board for collective agreements ratification.A decrease of $1.8 million due to different needs according to the progress of Quantum Encryption and Science Satellite (QEYSSat) project related activities. The decrease of $61.9 million in Vote 5 - Capital expenditures is mainly explained by the following items: A decrease of $54.5 million due to different cash flow requirements for Radarsat Constellation Mission (RCM) project related activities.A decrease of $3.9 million due to different cash flow requirements for Life Science Research System (LSRS) project related activities.A decrease of $2.6 million due to different cash flow requirements for Surface Water & Ocean Topography (SWOT-C) project related activities.An increase of $5.2 million due to additional funding obtained for Quantum Encryption and Science Satellite (QEYSSat) project.The residual difference consists of multiple variations inherent to the Canadian Space Program (CSP) Resource Management. They result from the fact that budgetary requirements by vote are not linear from one year to the next, requiring vote transfers or fund carry forwards to another fiscal year. The increase of $2.3 million in Vote 10 - Grants and Contributions expenditures is mainly explained by the following items: An increase of $2.6 million due to different anticipated cash flow requirements for the Contribution Program under the Canada-European Space Agency (ESA) Cooperation Agreement.The residual difference consists of multiple variations inherent to the Canadian Space Program (CSP) Resource Management. They result from the fact that budgetary requirements by vote are not linear from one year to the next, requiring vote transfers or fund carry forwards to another fiscal year. Now here's the Significant Changes in the Quarterly and Year-to-Date Expenditures (Votes Used) between fiscal years 2019-2020 and 2018-2019: The 2019-2020 quarterly and year-to-date expenditures in Vote 1 – Operating expenditures are essentially the same as in 2018-2019 fiscal year. The decrease of $6.6 million in the quarterly expenditures and the increase of $11.0 million in the year to date expenditures in Vote 5 - Capital expenditures, are mainly explained by the following: Expenditures variations due to the payment schedules for the RADARSAT Constellation Mission (RCM). The decrease of $6.8 million in the quarterly expenditures and the decrease of $9.5 million in the year to date expenditures in Vote 10 - Grants and contributions, are mainly explained by the following: The variations in the payment schedules to the European Space Agency (ESA). Last question - What about Lunar Exploration Accelerator Program funding? We also asked the CSA if any funds had been spent in Q3 on the Lunar Exploration Accelerator Program (LEAP). The answer was that none had been spent yet. However, as we know now the first LEAP contracts began to be awarded in January, or Q4 of the CSA's fiscal year. Note: You can follow our budget coverage from these tags; CSA Quarterly Financial ReportsBudget 2020Budget 2019Budget 2018Budget 2017Budget 2016 CSA 2019-2020 Quarterly Financial Report for the Quarter Ended December 31, 2019