The accompanying notes form an integral part of this Future-Oriented Statement of Operations.

The Natural Sciences and Engineering Research Council (NSERC) was established in 1978 by the Natural Sciences and Engineering Research Council Act, and is a departmental corporation named in Schedule II to the Financial Administration Act. NSERC’s purpose is to help make Canada a country of discoverers and innovators for the benefit of all Canadians, by supporting students, postdoctoral fellows, university professors and university-industry research partnerships. NSERC delivers its objectives under two Core Responsibilities which are described in the Departmental Plan.

NSERC’s grants, scholarships and operating expenditures are annually funded by voted budgetary authorities. Employee benefits are funded by statutory authorities.

The Future-Oriented Statement of Operations has been prepared based on government priorities and departmental plans as described in the Departmental Plan.

The information in the forecast results for fiscal year 2023–24 is based on actual results as at December 31, 2023 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for fiscal year 2024–25.

The main assumptions underlying the forecasts are as follows:

• NSERC’s activities will remain substantially the same as in the previous year, except for a decrease from Budget 2023 in professional services and travel expenditures. These reductions will be offset by an increase in funding for the Lab to Market grants from Budget 2022 to launch a new national program to help students and researchers take their work to market.
• 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 made as at December 31, 2023.

Although every attempt has been made to forecast final results for the remainder of 2023–24 and for 2024–25, actual results achieved for both years are likely to differ from the forecast information presented, and this variation could be material.

In preparing this Future-Oriented Statement of Operations, NSERC has made estimates and assumptions about the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, and are continually evaluated.

Factors that could lead to material differences between the Future-Oriented Statement of Operations and the historical statement of operations include:

• the timing and the amount of acquisitions and disposals of property, plant and equipment, which may affect gains, losses and amortization expense;
• the implementation of new collective agreements;
• economic conditions, which may affect both the amount of revenue earned and the collectability of loan receivables;
• interest rates in effect at the time of issue, which will affect the net present value of non interest bearing loans; and
• other changes to the operating budget, such as new initiatives or technical adjustments later in the fiscal year.

After the Departmental Plan is tabled in Parliament, NSERC will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Results Report.

The Future-Oriented Statement of Operations has been prepared using the Government of Canada’s accounting policies in effect for fiscal year 2023–24 and is 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:

1. a) Expenses

   Grants and scholarships (transfer payments) are recognized as an expense in the year in which the entitlement of the recipient has been established, the transfer is authorized and all eligibility criteria have been met.

   Other expenses are generally recorded when goods are received or services are rendered and include expenses related to personnel, professional and special services, repair and maintenance, utilities, materials and supplies, as well as amortization of tangible capital assets. Provisions to reflect changes in the value of assets or liabilities, such as provisions for bad debts, loans, investments and advances and inventory obsolescence, as well as utilization of inventories and prepaid expenses, and other are also included in other expenses.

   Expenses also include provisions to reflect changes in the value of assets, including provisions for bad debt on accounts receivable and amortization of tangible capital assets which is done on a straight-line basis over the estimated useful life of the asset as follows:

   Asset Class	Amortization Period
   Computer hardware	3 years
   Computer purchased and developed software	5 years
   Machinery and equipment	5 years
   Other equipment (including furniture)	7 years
   Motor vehicles	7 years
   Leasehold improvements	Lesser of the remaining term of lease or useful life of the improvement

2. b) Revenues

   Revenues are recognized in the period in which the related transactions or the event that gives rise to the revenues occurred. Respendable revenues are revenues provided under a revolving fund or a net-voting authority and are netted against the costs of operations.

   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.

   Deferred revenue consists of amounts received prior to the provision of goods or services that will be recognized as revenue in a subsequent fiscal year as the performance obligations are met.

   Other revenues are recognized in the period the event giving rise to the revenues occurred and future economic benefits are expected to be received.

   Revenues that are non-respendable are not available to discharge the department’s liabilities. Although the deputy head is expected to maintain accounting control, he or she has no authority over the disposition of non-respendable revenues. As a result, non respendable revenues are earned on behalf of the Government of Canada and are therefore presented as a reduction of the department’s gross revenues.

NSERC is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to NSERC differs from financial reporting according to generally accepted accounting principles because authorities are based mainly 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, NSERC 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)

  	Forecast results 2023-24	Planned results 2024-25
  Net cost of operations before government funding and transfers	1,382,442	1,391,894
  Adjustments for items affecting net cost of operations but not affecting authorities:
  Revenues	203	203
  Amortization of tangible capital assets	(626)	(626)
  Services provided without charge by other government departments	(11,134)	(11,887)
  Increase in vacation pay and compensatory leave	(378)	(111)
  Decrease in employee future benefits	114	109
  Refund of previous years’ expenditures	4,107	4,107
  Total items affecting net cost of operations but not affecting authorities	(7,714)	(8,205)
  Adjustments for items not affecting net cost of operations but affecting authorities:
  Acquisitions of tangible capital assets	145	145
  Decrease in prepaid expenses	(766)	-
  Total items not affecting net cost of operations but affecting authorities	(621)	145
  Requested authorities	1,374,107	1,383,834

• b) Authorities Requested
  (in thousands of dollars)

  	Forecast results 2023-24	Planned results 2024-25
  Authorities requested:
  Vote 5 – Grants and scholarships	1,310,954	1,318,172
  Vote 1 – Operating expenditures	58,709	58,597
  Statutory amounts:
  Contributions to the employee benefit plan	6,841	6,862
  Spending of revenues pursuant to subsection 4(2) of the NSERC Act	203	203
  	1,376,707	1,383,834
  Less:
  Lapsed: Operating	(2,600)	-
  Total authorities requested	1,374,107	1,383,834