Archived — FedDev Ontario Financial Statements (Unaudited) - For the Year Ended March 31, 2011

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Table of Contents


Statement of Management Responsibility

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2011 and all information contained in these statements rests with the management of the Federal Economic Development Agency for Southern Ontario (FedDev Ontario). These financial statements have been prepared by management in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgment, and gives due consideration to materiality. To fulfil its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of FedDev Ontario's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in FedDev Ontario's Departmental Performance Report is consistent with these financial statements.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout FedDev Ontario.

The financial statements of FedDev Ontario have not been audited.

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Dr. B.A. Archibald, Deputy Head
Signed at Kitchener, ON
August 31, 2011

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Linda Cousineau, Chief Financial Officer
Signed at Kitchener, ON
August 31, 2011


Table A.  Statement of Financial Position (as of March 31, 2011) (in thousands of dollars)
  2011 2010

The accompanying notes form an integral part of these financial statements.
Contractual Obligations (note 9)

Assets
Financial assets
Due from Consolidated Revenue Fund 187,155 99,334
Accounts receivable and advances (note 4) 1,139  
Loans Receivable 81,264 14,455
Non-financial assets
Tangible capital assets (note 6) 177 129
Total Assets 269,735 113,918
Liabilities and Equity of Canada
Accounts payable and accrued liabilities (note 7) 187,228 99,334
Vacation pay and compensatory leave 688 64
Employee future benefits (note 8) 2,854 995
Total Liabilities 190,770 100,393
Equity of Canada 78,965 13,525
Total Liabilities and Equity of Canada 269,735 113,918
Table B.  Statement of Operations (in thousands of dollars)
  2011
Planned Results
2011 2010
Expenses

The accompanying notes form an integral part of these financial statements.
Segmented Information (note 11)

Community and Business Development 395,000 217,538 201,986
Infrastructure 98,400 104,499  
Internal Services 13,600 19,661 8,011
Total expenses 507,000 341,968 209,997
Revenues 0 0 0
Net Cost of Operations 507,000 341,968 209,997
Table C.  Statement of Equity of Canada (in thousands of dollars)
  2011 2010

The accompanying notes form an integral part of these financial statements.

Equity of Canada, beginning of year (13,525)  
Net cost of operations 341,698 209,907
Net cash provided by Government (316,048) (124,001)
Change in Due from the Consolidated Revenue Fund (87,821) (99,334)
Services provided without charge by other government departments (note 10a) (3,269) (1,172)
Transfer of Assets & Liabilities from Industry Canada (note 12)   985
Equity of Canada, end of year (78,965) (13,525)
Table D.  Statement of Cash Flow (in thousands of dollars)
  2011 2010

The accompanying notes form an integral part of these financial statements.

Operating activities:
Net cost operations 341,698 209,997
Non-cash items:
Amortization of tangible capital assets (36) (13)
Services provided without charge by other government departments (note 10a) (3,269) (1,172)
Variations in Statement of Financial Position:
Increase (decrease) in receivables, loans  and advances 67,948 14,455
Decrease (increase) in accounts payable and accrued liabilities (87,894) (99,334)
Decrease (increase) in vacation pay and compensatory leave (624) (64)
Decrease (increase) in employee future benefits (1,859) (995)
Transfer of Operations from Industry Canada   985
Cash used by operating activities 315,964 123,934
Capital investment activities:
Net acquisition of tangible capital assets (note 6) 84 68
Cash used by capital investment activities 84 68
Net cash provided by Government of Canada 316,048 124,002

1. Authority and Objectives

The Federal Economic Development Agency for Southern Ontario (FedDev Ontario) was established in August 2009 as a separate organization under Schedule I.1 of the Financial Administration Act.

The mandate of FedDev Ontario is to promote the development of a strong and diversified southern Ontario economy. FedDev Ontario was created as part of Canada's Economic Action Plan (EAP) to address the region's distinct economic needs for tailored economic development.

FedDev Ontario was established with a five-year mandate to help respond to Ontario's economic challenges, to help restore the province to its cycle of prosperity and to help position southern Ontario as an important economic driver to building a stronger economy and a stronger Canada.

To fulfill its mandate, FedDev Ontario supports the competitiveness, innovation, and diversification of southern Ontario's economy by: delivering strategic investments to businesses, non-profit organizations and communities; establishing and strengthening collaborative partnerships with key economic stakeholders; and representing and advocating for the region's interests at the federal and national level. These efforts reflect FedDev Ontario's sole strategic outcome for 2010–11, which is that the economy of southern Ontario is competitive and diversified. It delivers this outcome through two program activities and internal services as described below.

Community and Business Development

The Community and Business Development program supports communities and businesses in southern Ontario by making the southern Ontario economy and its communities more competitive, innovative and diversified. This will be achieved by increasing economic opportunities, increasing community and business capacity to respond to challenges, stimulating economic development, and promoting conditions that foster competitive businesses and sustainable communities. Through this program, FedDev Ontario delivers and administers grants and contributions with not-for-profit organizations, other levels of governments and businesses. The funds are used to: enhance business productivity and competitiveness; provide entrepreneurs and small and medium-sized enterprises with improved access to capital and business development information and services; and support community economic planning, development and diversification initiatives. This program benefits businesses and communities in southern Ontario by providing them with opportunities, support, and guidance, to which they would not have access without this program.

Infrastructure

FedDev Ontario delivers infrastructure programming in Ontario to ensure that communities have good quality and dependable infrastructure in place in the areas of water, sewage and transportation, and that residents benefit from access to this infrastructure. Community infrastructure is an essential building block for community development, and strategic infrastructure investments can be a catalyst for a community to grow and prosper. Through this program, FedDev Ontario delivers and administers contribution agreements with municipalities or contractors, that use these funds to create, renew, or enhance Ontario communities' infrastructure. This program benefits residents of Ontario by contributing to the development and maintenance of infrastructure in Ontario, thereby helping Ontario residents have access to quality infrastructure, meaning for example, access to water that is safe to drink, and roads that are safe to drive on.

Internal Services

Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of FedDev Ontario. These groups are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Material Services; Acquisition Services; and Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

2. Summary of Significant Accounting Policies

The financial statements have been prepared in accordance with the Treasury Board accounting policies stated below, which are based on Canadian generally accepted accounting principles for the public sector. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian generally accepted accounting principles.

Significant accounting policies are as follows:

  1. Parliamentary authorities — FedDev Ontario is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to FedDev Ontario do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. The planned results amounts in the Statement of Operations are the amounts reported in the future-oriented financial statements included in the 2010–11 Report on Plans and Priorities.
  2. Net Cash Provided by Government — FedDev Ontario operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by FedDev Ontario is deposited to the CRF and all cash disbursements made by FedDev Ontario are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the Government.
  3. Amounts due from/to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that INFC is entitled to draw from the CRF to discharge its liabilities without further appropriations.
  4. Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.

    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 the department has an obligation to other parties for the provision of goods, services or the use of assets in the future.

  5. Expenses — Expenses are recorded on the accrual basis: Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement, provided that the transfer is authorized and a reasonable estimate can be made.

    Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment. Services provided without charge by other government departments for accommodation, and employer contributions to the health and dental insurance plans are recorded as operating expenses at their estimated cost.

  6. Employee future benefits:
    1. Pension benefits: Eligible employees participate in the Public Service Pension Plan (Public Service Superannuation Act), a multi-employer plan administered by the Government. FedDev Ontario's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Current legislation does not require FedDev Ontario to make contributions for any actuarial deficiencies of the Plan.
    2. Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the government as a whole.
  7. Accounts and loans receivable are stated at the lower of cost and net recoverable value; a valuation allowance is recorded for receivables where recovery is considered uncertain.
  8. Repayable contributions are contributions where the recipient is expected to repay the amount advanced. Depending on their nature, they are classified as either unconditionally repayable or conditionally repayable and are accounted for accordingly.
    1. Unconditionally repayable contributions are contributions that must be repaid without qualification. Normally, these contributions are provided with a low or no interest clause. Due to their concessionary nature, they are recorded on the Statement of Financial Position as loans at their estimated present value. A portion of the unamortized discount is recorded as revenue each year to reflect the change in the present value of the contributions outstanding. An estimated allowance for uncollectibility is recorded where appropriate.
    2. Conditionally repayable contributions are contributions that, all or part of which become repayable, if conditions specified in the contribution agreement come into effect. Accordingly, they are not recorded on the Statement of Financial Position until such time as the conditions specified in the agreement come into effect at which time, they are recorded as a receivable and a reduction in transfer payment expenses. An estimated allowance for uncollectibility is recorded where appropriate.
  9. Contingent liabilities — Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.
  10. Environmental liabilities — Environmental liabilities reflect the estimated costs related to the management and remediation of environmentally contaminated sites. Based on management's best estimates, a liability is accrued and an expense recorded when the contamination occurs or when the department becomes aware of the contamination and is obligated, or is likely to be obligated to incur such costs. If the likelihood of the department's obligation to incur these costs is not determinable, or if an amount cannot be reasonably estimated, the costs are disclosed as contingent liabilities in the notes to the financial statements.
  11. Tangible capital assets — All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. FedDev Ontario does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:
    Table 2k.  Tangible capital assests
    Asset class Amortization period
    Informatics Hardware 5 to 10 years
    Informatics Software – Purchased 3 years
    Informatics Software – Developed 7 years
    Leasehold improvements period of lease
  12. Measurement uncertainty — The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are the liability for employee severance benefits and the useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.
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