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

Archived information

Information identified as archived on the Web is for reference, research or recordkeeping purposes. It has not been altered or updated after the date of archiving. Web pages that are archived on the Web are not subject to the Government of Canada Web Standards. As per the Communications Policy of the Government of Canada, you can request alternate formats on the "Contact Us" page.

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.

space to insert signature
Dr. B.A. Archibald, Deputy Head
Signed at Kitchener, ON
August 31, 2011

space to insert signature
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.

3. Parliamentary Appropriations

FedDev Ontario receives its funding through annual Parliamentary authorities. Items recognized in the statement of operations and the statement of financial position in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, FedDev Ontario has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

  1. Reconciliation of net cost of operations to current year authorities used (in thousands of dollars)
    Table 3a.  Reconciliation of net cost of operations to current year authorities used (in thousands of dollars)
      2011 2010
    Net cost of operations 341,698 209,997
    Adjustments for items affecting net cost of operations but not affecting authorities:
    Amortization of tangible capital assets (36) (13)
    Services provided without charge by other government departments (3,269) (1,172)
    Increase in vacation pay and compensatory leave (624) (64)
    Increase in employee future benefits (1,859) (995)
    Refunds of previous year's expenditures 70 -
    Adjustment of previous year's Accounts Payable 2,699 -
    Repayment of conditionally repayable Contributions 8  
      338,687 207,753
    Adjustments for items not affecting net cost of operations but affecting authorities:
    Acquisitions of tangible capital assets 84 68
    Increase in advances 66,832 14,456
    Authorities used to transfer in from Industry Canada   222,277
    Current year authorities used 405,603 444,554
  2. Authorities provided and used
    Table 3b.  Authorities provided and used (in thousands of dollars)
      2011 2010
    Vote 55 – Operating Expenditures 37,666  
    Vote 60 – Contributions 510,611  
    Statutory Amounts    
    Employee Benefit Plan 2,374  
    Community Adjustment Fund 42,495  
    Less:    
    Lapsed Appropriations:    
    Operating (8,077)  
    Contributions (179,466)  
    Current year authorities used 405,603 0

4. Accounts receivable and advances

Table 4.  Accounts receivable and advances (in thousands of dollars)
  2011 2010
Receivables from other government departments and agencies 1,136  
Receivables from external parties 1  
Employee advances 2  
Total 1,139  

(Return to reference 4)

5. Loans Receivable

Table 5.  Loans Receivable (in thousands of dollars)
  2011 2010
Repayable Contributions 81,264 14,456
Total 81,264 14,456

Repayable Contributions relate to Contributions made to outside parties which are repayable based on the recipient having met certain conditions.

6. Tangible Capital Assets

Table 6.  Tangible Capital Assets (in thousands of dollars)
Cost 2011 Accumulated amortization 2011    
Capital asset class Opening balance Acquisitions Disposals and write-offs Closing balance Opening balance Amortization Disposal and write-offs Closing balance 2011 Net book value 2010 Net book value
Machinery and equipment   41 - 41     -   41  
Vehicles 243 43 - 286 118 35 - 153 133 125
Computer hardware 10   - 10 6 1 - 7 3 4
Total 253 84 - 337 124 36 - 160 177 129

(Return to reference 6)

7. Accounts payable and accrued liabilities

Table 7.  Accounts payable and accrued liabilities (in thousands of dollars)
  2011 2010
Payables to other government departments and agencies 1,052 8,525
Payables to external parties 186,129 90,809
Accrued Liabilities 47  
Total 187,228 99,334

(Return to reference 7)

8. Employee future benefits

  1. Pension benefits:

    FedDev Ontario's employees participate in the Public Service Pension Plan, which is sponsored and administered by the government. Pension benefits accrue up to a maximum period of 35 years at a rate of two percent per year of pensionable service times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plans benefits and they are indexed to inflation.

    Both the employees and FedDev Ontario contribute to the cost of the plan. The 2010–11 expense amounts to $1,985,112 ($995,199 in 2009–10), which represents approximately 1.9 times (1.9 in 2009–10) the contributions by employees.

    FedDev Ontario's responsibility with regard to the plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the plan's sponsor.

  2. Severance benefits

    FedDev Ontario provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, measured as at March 31, is as follows:

    Table 8b.  Severance benefits (in thousands of dollars)
      2011 2010
    Accrued benefit obligation, beginning of year 995  
    Expense for the year 1,986  
    Benefits paid during year (127)  
    Adjustment for transfer from Industry Canada   995
    Accrued benefit obligation, end of year 2,854 995

    (Return to reference 8)

9. Contractual Obligations

The nature of FedDev Ontario's activities can result in some large multi-year contracts and obligations whereby FedDev Ontario will be obligated to make future payments in order to carry out its transfer payment programs or when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

Table 9.  Significant contractual obligations that can be reasonably estimated (in thousands of dollars)
  2012 2013 2014 2015 2016 and thereafter Total
Transfer Payments 98,000 61,000 19,000     178,000
Total 98,000 61,000 19,000     178,000

10.  Related party transactions

FedDev Ontario is related as a result of common ownership to all government departments, agencies, and Crown corporations. FedDev Ontario enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, FedDev Ontario has an agreement with the Department of Industry related to the provision of finance and administration services. During the year, FedDev Ontario received common services which were obtained without charge from other gGovernment departments as disclosed below.

  1. Common services provided without charge by other government departments

    During the year FedDev Ontario received services without charge from certain common service organizations, related to accommodation services and the employer's contribution to the health and dental insurance plans. These services provided without charge have been recorded in FedDev Ontario's Statement of Operation as follows:

    Table 10a.  Common services provided without charge by other government departments (in thousands of dollars)
      2011 2010
    Employer's contribution to the health and dental insurance plan 1,320 645
    Accommodation 1,949 527
    Total 3,269 1,172

    (Return to reference 10a)

    The government has centralized some of its administrative activities for efficiency and cost-effectiveness purposes and economic delivery of programs to the public. As a result, the government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as the payroll and cheque issuance services provided by Public Works and Government Services Canada, are not included as an expense in FedDev Ontario's Statement of Operations.

  2. Administration of programs on behalf of other government departments

    Under a memorandum of understanding signed with Infrastructure Canada on August 9, 2009, FedDev Ontario administers four programs. During the year, the agency incurred expenses of $198,470,150 on behalf of Infrastructure Canada. These expenses are reflected in the financial statements of Infrastructure Canada and are not recorded in these financial statements.

    Table 10b.  Administration of programs on behalf of other government departments (in thousands of dollars)
      2011 2010
    Canada Strategic Infrastructure Fund – Infrastructure Canada $ 50,670 -
    Canada-Ontario Municipal Rural Infrastructure Fund – Infrastructure Canada 24,000  
    Municipal Rural Infrastructure Fund – Infrastructure Canada 22,800  
    Building Canada Fund – Infrastructure Canada 101,000  
    Total 198,470  

11. Segmented information

Presentation by segment is based on the department's program activity architecture. The presentation by segment is based on the same accounting policies as described in the summary of significant accounting policies in note 2. The following table presents the expenses incurred and revenues generated for the main program activities, by major object of expenses. The segment results for the period are as follows:

Table 11.  Segmented information (in thousands of dollars)
  Community and Business Development Infrastructure Internal services 2011 Total 2010 Total

Note — numbers may not match exactly due to rounding

Transfer Payments
Economic Action Plan 200,138 98,233 - 298,371 96,768
Non-Economic Action Plan 3,807 1,869 - 5,676 95,537
Total transfer payments 203,946 100,102 - 304,047 192,305
Operating Expenses
Salaries and employee benefits 8,559 3,483 9,647 21,690 8,279
Professional and special services 3,789 481 3,802 8,072 4,447
Accommodation 775 313 861 1,949 645
Travel 299 55 1,596 1,950 749
Amortization of tangible capital assets - 9 27 36 13
Communication 67 22 443 532 317
Furniture and equipment 21 3 1,133 1,157 814
Equipment repair and maintenance 8 8 1,665 1,681 86
Rentals 5 0 204 209 56
Utilities, materials and supplies 57 18 146 221 437
Postage 12 2 48 62 108
Other   3 88 92 1,740
Total operating expenses 13,592 4,398 19,660 37,650 17,692
Net cost from continuing operations 217,539 104,499 19,661 341,698 209,997

(Return to reference 11)

12.  Transfers from/ to other government departments

Effective August 13, 2009, the FedDev Ontario assumed responsibility for the Southern Ontario Regional Economic Development Branch from Industry Canada, in accordance with Order-in-Council P.C. 2009–1411, including the stewardship responsibility for the assets and liabilities related to the program. Due to the timing and the logistical requirements for creating a new department, the Federal Economic Development Agency for Southern Ontario remained consolidated within Industry Canada financial records for the purpose of Public Accounts reporting until April 1, 2010. Fiscal year 2009–10 as reported in these financial statements and accompanying notes has been restated to reflect the transfer of assets and liabilities to FedDev Ontario as at August 13, 2009.

Table 12.  Transfers from/ to other government departments (in thousands of dollars)
Assets
Tangible capital assets (net book value) 75
Total Assets 75
Liabilities
Vacation pay and compensatory leave 64
Employee future benefits 995
Total Liabilities 1,059
Adjustment to Equity of Canada (984)

(Return to reference 12)

In addition, the 2010 comparative figures have been reclassified on the Statement of Operations to present the revenues and expenses of the transferred operations

Date modified: