Archived — Future-Oriented Statement of Operations for the Year Ending March 31, 2013
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Statement of Management Responsibility
Responsibility for the compilation, content, and presentation of the accompanying future-oriented Statement of Operations for the year ending March 31, 2013 and the accompanying notes rests with the management of the Federal Economic Development Agency for Southern Ontario (FedDev Ontario). The future-oriented Statement of Operations has been prepared by management in accordance with Treasury Board accounting policies, which are based on generally accepted Canadian accounting principles for the public sector. The future-oriented financial information is submitted in Part III of the Estimates (Report on Plans and Priorities) and will be used in the Departmental Performance Report to compare with actual results.
Management is responsible for the integrity and objectivity of the future-oriented financial information. This includes the underlying assumptions and estimates which are based on information available and known to management as at March 5, 2012. Management assumes a continuation of current governmental priorities and consistency in FedDev Ontario's mandate and strategic objectives. This future-oriented financial information is based on these assumptions, best estimate, and judgment and gives due consideration to materiality. At the time of preparation of this statement, management believes the estimates and assumptions to be fair and reasonable. However, as with all such estimates and assumptions, there is a measure of uncertainty.
Actual results for the fiscal years covered in the accompanying future-oriented financial information may vary from the information presented and these variations could be material.
Chief Financial Officer
|Due from Consolidated Revenue Fund||48,989||7,742|
|Accounts receivable and advances (Note 5)||4||5|
|Loans Receivable (Note 6)||144,952||246,189|
|Total financial assets||193,945||253,936|
|Tangible capital assets (Note 7)||299||344|
|Total non-financial assets||299||344|
|Total of Non-financial assets||194,244||254,280|
|LIABILITIES AND EQUITY OF CANADA|
|Accounts payable and accrued liabilities (Note 8)||47,446||22,352|
|Vacation pay and compensatory leave||688||688|
|Employee future benefits (Note 9)||4,730||6,477|
|Total of Liabilities||52,864||29,517|
|Equity of Canada||141,380||224,763|
The accompanying notes form an integral part of the future-oriented financial statements. Contractual obligations (Note 10).
|Community economic development||69,116||33,244|
|Total expenses (Note 11)||161,638||124,294|
|Net Cost of Operations||161,638||124,294|
The accompanying notes form an integral part of these future-oriented statements. Segmented information (Note 12).
|Equity of Canada, beginning of year||78,965||141,380|
|Net cost of operations||(161,638)||(124,294)|
|Net cash provided by Government||358,782||245,523|
|Change in due to/from the Consolidated Revenue Fund||(138,166)||(41,247)|
|Services provided without charge by other government departments (Note 13)||3,437||3,401|
|Equity of Canada, end of year||141,380||224,763|
The accompanying notes form an integral part of these future-oriented financial statements.
|Net cost of operations||161,638||124,294|
|Variations in Future-oriented Statement of Financial Position:|
|Cash used in operating activities||358,622||245,428|
|Capital investing activities:|
|Cash used in capital investing activities||160||95|
|Financing activities :||-||-|
|Net cash provided by Government of Canada||358,782||245,523|
The accompanying notes form an integral part of these future-oriented financial statements.
Federal Economic Development Agency for Southern Ontario
Notes to Future-oriented Financial Statements
1. Authority and Objectives
The Federal Economic Development Agency for Southern Ontario (FedDev Ontario or the Agency) was established in August 2009 as a separate organization under Schedule I.1 of the Financial Administration Act.
The global economic recession had a significant impact in every region of Canada, including southern Ontario. As Canada's most populous region, home to more than 12 million residents living in 288 communities, southern Ontario's economy is a key contributor to the health of the Canadian economy as a whole. As a result, the Government of Canada created FedDev Ontario in 2009 with a five-year mandate. 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 the region's interests at the federal and national level.
2. Methodology and Significant Assumptions
The future-oriented financial statements have been prepared on the basis of the government priorities and the plans of the Agency as described in the Report on Plans and Priorities.
The main assumptions are as follows:
- The Agency's activities will remain substantially the same as for the previous year.
- Expenses and revenues, including the determination of amounts internal and external to the government, are based on assumptions made by management.
- Estimated year end information for 2011-12 is used as the opening position for the 2012-13 planned results.
These assumptions are adopted as at March 5, 2012.
3. Variations and Changes to the Forecast Financial Information
While every attempt has been made to forecast final results for the remainder of 2011-12 and for 2012-13, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.
In preparing these future-oriented financial statements, FedDev Ontario has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Factors that could lead to material differences between the future-oriented financial statements and the historical financial statements include:
- The timing and amounts of acquisitions and disposals of property, plant and equipment may affect gains/losses and amortization expense.
- Implementation of new collective agreements, whether known or unknown at the time.
- Economic conditions may affect both the amount of revenue earned and the collectability of loan receivables.
- Interest rates in effect at the time of issue will affect the net present value of non-interest bearing loans.
- Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.
Once the Report on Plans and Priorities is presented, FedDev Ontario will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the 2012-13 Departmental Performance Report.
4. Summary of Significant Accounting Policies
The future-oriented financial statements have been prepared in accordance with the Treasury Board accounting policies in effect for the 2012-2013 fiscal year. These accounting policies, stated below, 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:
- Parliamentary authorities - The Agency is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Agency 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 future-oriented Statement of Operations and the future-oriented Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 11(b) provides a reconciliation between the bases of reporting.
- Net Cash Provided by Government – The Agency operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Agency is deposited to the CRF and all cash disbursements made by the Agency 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 and agencies of the government.
- 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 the Agency is entitled to draw from the CRF without further parliamentary expenditure authorities to discharge its liabilities.
- Expenses – Are recorded on an accrual basis:
- Grants are recognized in the year in which the conditions for payment are met. In the case of grants which do not form part of an existing program, the expense is recognized when the government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the future-oriented financial statements;
- 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 under the respective terms of employment.
- Services provided without charge by other government departments include accommodation and the employer's contribution to the health and dental insurance plans.
- Employee future benefits:
- (i) Pension benefits: Eligible employees participate in the Public Service Pension Plan administered by the government. The Agency's contributions to the Plan are charged to expenses in the year incurred and represent the total Agency obligation to the Plan. Current legislation does not require the Agency to make contributions for any actuarial deficiencies of the Plan.
- (ii) 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.
- Accounts and loans receivables are stated at the lower of cost and net recoverable value.
- Repayable contributions are contributions where the recipient is expected to repay the amount advanced without qualification. Normally, these contributions are provided with a low or no interest clause.
- 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 future-oriented financial statements.
- 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 Agency becomes aware of the contamination and is obligated, or is likely to be obligated to incur such costs. If the likelihood of the Agency's obligation to incur these costs is not determinable, or if an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the future-oriented financial statements.
- 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. The Agency 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:
Amortization of tangible capital assets Asset Class Amortization Period Vehicles 3 to 7 years Computer hardware 4 years Computer software 3 to 10 years Leasehold improvements Lesser of over term of lease or useful life Furniture and Equipment 10 years
- Measurement uncertainty - The preparation of these future-oriented financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the future-oriented financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. Actual results could significantly differ from those estimated.
5. Accounts Receivable and Advances
The following table presents details of the Agency's accounts receivable and advances balances:
|Receivables from other government departments and agencies||-||-|
|Allowance for doubtful accounts on receivables from external parties||-||-|
6. Loans Receivable
The following table presents details of the Agency's loans and repayable contributions receivable balances:
|Less: Allowance for uncollectables||-||-|
|Less: Unamortized discount||-||-|
- Repayable contributions
Management has deemed that there was no need for an allowance for doubtful repayable contributions.
7. Tangible Capital Assets
|Cost||Accumulated Amortization||Net Book Value|
|Capital asset class||Opening balance||Acqui-sitions||Disposals and write-offs||Closing balance||Opening balance||Amortiza-tion||Disposals and write-offs||Closing balance||2012||2013|
|Furniture & equip||41||-||-||41||4||4||-||8||37||33|
8. Accounts Payable and Accrued Liabilities
The following table presents details of the Agency's accounts payable and accrued liabilities:
|Accounts payable to other government departments and agencies||-||-|
|Accounts payable to external parties||47,445||22,352|
9. Employee Future Benefits
- Pension benefits:
The Agency'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 2 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 the Agency contribute to the cost of the Plan. The forecast expenses are $2,012,000 in 2011-12 and $1,875,000 in 2012-13, representing approximately 1.9 times the contributions of employees.
The Agency'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.
- Severance benefits:
The Agency 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, estimated as at the date of these statements, is as follows:
Severance benefits (in thousands of dollars) Estimated Results
Accrued benefit obligation, beginning of year 2,854 4,730 Expense for the year 2,012 1,875 Expected benefits payments during the year (136) (128) Accrued benefit obligation, end of year 4,730 6,477
10. Contractual Obligations
The nature of the Agency's activities can result in some large multi-year contracts and obligations whereby the Agency will be obligated to make future payments when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:
|2012||2013||2014||2015||2016 and thereafter||Total|
11. Parliamentary Authorities
The Agency receives most of its funding through expenditure authorities provided by Parliament. Items recognized in the future-oriented Statements of Operations and Financial Position in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, the Agency 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:
- Authorities requested
Authorities requested (in thousands of dollars) Estimated
- Vote 50
- Vote 55
- Statutory amounts
3,114 3,289 Forecast authorities available 279,287 218,811
Authorities presented reflect current forecasts of statutory items, approved initiatives included and expected to be included in Estimates documents and, when reasonable estimates can be made, estimates of amounts to be allocated from Treasury Board central votes.
- Reconciliation of net cost of operations to requested authorities:
Reconciliation of net cost of operations to requested authorities (in thousands of dollars) Estimated
Net cost of operations 161,638 124,294 Adjustments for items affecting net cost of operations but not affecting authorities:
- Services provided without charge by other government departments
- Amortization of tangible capital assets
- Bad debt expense
- Increase in employee future benefits
(1,617) (3,364) Total 156,546 117,479 Adjustments for items not affecting net cost of operations but affecting authorities:
- Acquisitions of tangible capital assets
- Increase in loan receivables
63,688 101,237 Total 220,394 218,811 Forecast current year lapse 58,893 - Forecast authorities available 279,287 218,811
12. Segmented Information
Presentation by segment is based on the Agency'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 4 (i.e. items recognized in the future-oriented Statement of Operations and the future-oriented Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament). The following table presents the forecasted expenses incurred and forecasted revenues generated for the main program activities, by major object of expenses and by major type of revenues. The segment results for the period are as follows:
|Total||Technological Innovation||Business Development||Community Economic Development||Internal services||Total|
|Total transfer payment||127,785||16,464||49,238||25,264||-||90,966|
|Total operating expenses||33,853||2,262||3,806||7,980||19,280||33,328|
|Net Cost of Operations||161,638||18,726||53,044||33,244||19,280||124,294|
13. Related Party Transactions
The Agency is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The Agency enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, the Agency has an agreement with The Treasury Board related to the provision of finance and administration services. During the year, the Agency received (and provided if applicable) common services which were obtained without charge from other government departments as disclosed below:
Common services provided without charge by other government departments
During the year the Agency receives services without charge from certain common service organizations related to accommodation, legal services, the employer's contribution to the health and dental insurance plans and workers' compensation coverage. These services provided without charge have been recorded in the Agency's future-oriented Statement of Operations as follows:
Common services provided without charge by other government departments in thousands of dollars) Estimated Results
Employer's contribution to the health and dental insurance plans 1,631 1,555 Accommodation 1,806 1,846 Legal services - - Workers' Compensation - - Total 3,437 3,401
The government has centralized some of its administrative activities for efficiency, 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 and audit services provided by the Office of the Auditor General are not included in the Agency's future-oriented Statement of Operations.
Administration of programs on behalf of other government departments
Under a memorandum of understanding signed with Infrastructure Canada on August 9, 2009, the Agency administers four programs. At the date of these future-oriented financial statements, the Agency plans to incur expenses of $194,001,792 in transfer payments on behalf of Infrastructure Canada. Forecast and incurred expenses are reflected in the future-oriented financial statements of Infrastructure Canada and not those of the Agency.
Administration of programs on behalf of other government departments (in thousands of dollars) Estimated Results
Canada Strategic Infrastructure Fund 34,262 - Canada Ontario Municipal Rural Infrastructure Fund 8,000 1,300 Municipal Rural Infrastructure Fund 6,500 1,300 Building Canada Fund - Communities Component 145,240 50,000 Total 194,002 52,600
14. Adoption of New Accounting Policies
Management will evaluate and anticipates adopting the following enhancement to its Repayable Contribution accounting policy:
- Repayable contributions - Repayable contributions are contributions the recipient is expected to repay without qualification. Normally, these contributions are provided with a low or no interest clause. They are recorded on the Statement of Financial Position as loans at their estimated present value, if they contain significant concessionary terms (defined to be when the grant portion is greater than 25% of the contribution). Otherwise, they are recorded at the face value of the loan. A portion of the unamortized discount is brought into income each year to reflect the change in the present value of the contributions outstanding. Appropriate allowances for uncollectible amounts are also established based on an individual appraisal of accounts.
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