Archived — Federal Economic Development Agency for Southern Ontario — Quarterly Financial Report — Quarter ended June 30, 2013

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Statement outlining results, risks and significant changes in operations, personnel, and programs

  1. Introduction
  2. Highlights of Fiscal Quarter and Fiscal Year to Date (YTD) Results
  3. Risks and Uncertainties
  4. Significant Changes in Relation to Operations, Personnel and Programs
  5. Budget 2012 Implementation

1. Introduction

This quarterly report should be read in conjunction with the Main Estimates and Supplementary Estimates A, as well as Canada's Economic Action Plan 2012 (Budget 2012). It reflects results in relation to this funding. It has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board Accounting Standard 1.3. It has not been subject to an external audit or review.

Authority, Mandate & Program Activities

The Federal Economic Development Agency for Southern Ontario (FedDev Ontario) was created to support the competitiveness, innovation and diversification of southern Ontario's economy by delivering strategic investments to businesses, not-for-profit organizations and communities; establishing and strengthening collaborative partnerships with key economic stakeholders; and representing the region's interests at the national level.

Further details on FedDev Ontario's authorities, mandate and program activities can be found in the Report on Plans and Priorities, Part II of the Main Estimates, and Supplementary Estimates.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Agency's spending authorities granted by Parliament and those used by the Agency consistent with the Main Estimates for the 2013-14 fiscal year. This quarterly report has been prepared using a special-purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before moneys can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.

The Agency uses the full accrual method of accounting to prepare and present its annual financial statements that are part of the Agency's performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year. Budget 2012 was tabled in Parliament on March 29, after the tabling of the Main Estimates on February 28, 2012. As a result, the measures announced in Budget 2012 could not be reflected in the 2012-13 Main Estimates.

In fiscal year 2012-13, frozen allotments were established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012. In 2013-14, the changes to departmental authorities were reflected in the 2013-14 Main Estimates tabled in Parliament.

Additional funding was sought by FedDev Ontario through the 2012-13 Supplementary Estimates (A) and (B). The Agency received this additional authority net of the planned savings and other amounts transferred by Treasury Board authority to a frozen allotment.

2. Highlights of Fiscal Quarter and Fiscal Year to Date (YTD) Results

At the end of first quarter 2013-14, FedDev Ontario has spent $21.1 million (or 9.4 percent of its available authorities) as compared to $14.0 million (or 6.2 percent of its available authorities) in 2012-13. This increase is mainly due to increased volume of contribution claims received due to their targeted completion date of March 31, 2014, which aligns with the end of the Agency's first mandate.

2.1 Authorities Analysis

Planned departmental spending in fiscal year 2013-14 totals $222.8 million, a $1.0 million decrease over that available at the close of the first quarter in 2012-13. This comprises a $1.0 million increase in program authorities, offset by a $2.0 million decrease in operating authorities.

The $1.0 million increase in program authorities results from timing differences in the net effects of Budget 2012 on FedDev Ontario's authorities between what was reported in the 2013-14 Main Estimates and the authorities available at the end of the first quarter in 2012-13. FedDev Ontario's Budget 2012 target savings ($10.3 million in 2012-13 and $20.0 million in 2013-14) have been offset in each of these two fiscal years by net increases to program authorities. These include $24.8 million in each of these fiscal years for the Community Infrastructure Improvement Fund (CIIF), a $23.0 million one-time top-up to the Southern Ontario Development Program (SODP) in 2012-13, and the extension of the grant to the Corporation of the City of Brantford.

The $2.0 million decrease in operating authorities is mainly from the implementation of Budget 2012 measures, along with an increase in the transfer to Shared Services Canada for IT infrastructure support and telecommunications services. Both of these factors are reflected in the 2013-14 Main Estimates, but are not reflected in the authorities available at the end of the first quarter in 2012-13.

As in 2012-13, planned spending on program authorities represents over 85 percent of the Agency's total authorities.

Total authorities available for use for the year ending March 31, 2014 compared to total authorities available for use for the year ending March 31, 2013 (in millions of dollars)
Bar graph: Total authorities available for use for the year ending March 31, 2014 compared to total authorities available for use for the year ending March 31, 2013 (in millions of dollars)
Description of figure
Total authorities available for use for the year ending March 31, 2014 compared to total authorities available for use for the year ending March 31, 2013 (in millions of dollars)
Fiscal Year
(in millions of dollars)
2013-14 2012-13
Operating Spending Authorities 27.9 29.9
Program Spending Authorities 194.9 193.9

2.2 Expenditure Analysis

Statement of Authorities

In the first quarter of the 2013-14 fiscal year, total budgetary expenditures were $21.1 million compared to $14.0 million reported in the same period of 2012-13. This represents a year-over-year increase of $7.1 million (or 51 percent).

Quarterly spending is composed of $14.8 million on programs and $6.3 million on operating expenditures. Spending in both these areas has increased in 2013-14 by $6.2 million (or 72 percent) and $0.9 million (or 17 percent) respectively, over the first quarter of 2012-13. The increase in program spending is mainly due to an increase in the volume of contribution claims received due to the targeted completion of projects by March 31, 2014. This project completion date aligns with the end of the Agency's first mandate, while the increase in operating expenditures is due mainly to salary adjustments resulting from collective bargaining agreements.

Statement of Departmental Budgetary Expenditures by Standard Object

The following provides additional analysis of key variances at the Standard Object level.

The transfer payment spending (or program spending) of $14.8 million in the first quarter of 2013-14 is comprised of $9.0 million in claims paid on projects under the Southern Ontario Advantage (SOA) initiatives, $1.3 million in claims paid on projects under the CIIF, and $4.5 million in claims paid for projects under remaining programs delivered by FedDev Ontario (e.g., Community Futures Program, Eastern Ontario Development Program). The growth in year-over-year expenditures is mainly due to an increase in claims volumes in SOA initiatives and CIIF given that projects are targeted to be completed by March 31, 2014.

Personnel-related expenditures totalled $5.7 million, an increase of $0.9 million (or 20 percent) year-over-year. This increase is mainly due to salary adjustments resulting from collective bargaining agreements.

There are year-over-year decreases to expenditures related to rentals ($99,000 or 83 percent) and the acquisition of machinery and equipment ($30,000 or 81 percent). These variances are attributed to the implementation of the Agency's Budget 2012 savings measures. In August 2012, the Agency consolidated its presence in Toronto allowing it to terminate its lease for additional office space acquired to support Canada's Economic Action Plan (EAP) programs through the first three fiscal years of its mandate, which led to rental savings year-over-year in the first quarter. In the first quarter of 2012-13, the Agency invested in tablet and laptop computers as part of its initiative to implement environmentally friendly office practices. The difference in savings is due to the date of implementation as the Agency plans to acquire additional machinery and equipment later in the fiscal year, including continuing to replace desktop computers with more energy efficient laptops, as part of the lifecycle management of these assets.

Transportation and communications expenditures are $49,000 (or 30 percent) higher in 2013-14. Travel related expenditures are on par, however relocation expenditures are higher. This is due to the difference in date of implementation year-over-year related to employee relocations and the timing of the reimbursement of relocation-related expenditures.

Repair and maintenance costs have increased by $44,000 (or 880 percent) year-over-year, mainly due to a timing difference in the billing cycle for an Memorandum of Understanding (MOU) related to the Agency's new document management system known as GCDOCS. This MOU was charged during the second quarter of the previous fiscal year.

3. Risks and Uncertainties

March 31, 2014 marks the end of FedDev Ontario's first mandate. The SODP, along with its seven SOA initiatives, the Eastern Ontario Development Program (EODP) and CIIF will sunset on March 31, 2014. Given the renewal of the Agency in Budget 2013, the Agency anticipates pressure from its clients to extend projects beyond the March 31, 2014, deadline. The Agency is maintaining pressure on clients and employing various risk mitigation strategies. In addition, it anticipates it will be under increased pressure regarding the details of the programs to be launched, especially given the consultations with stakeholders that took place in May 2013.

The Agency's operating authorities are under strain from several sources:

  • Managing three programs with an end date of March 31, 2014;
  • Continuing to deliver the CIIF program within existing authorities;
  • Preparing for the launch of new programs under its renewed mandate;
  • Reallocating resources to support other Government of Canada departments and agencies with their change initiatives;
  • Integrating the Canada Business Ontario into its operations; and
  • Budget 2012 implementation measures.

The Agency is relying on its budget monitoring and forecasting regime to support achievement of its priorities, as well as those of the Government of Canada, within its authorities.

Going forward, there is continued uncertainty over the timing of the consolidation of back office systems, including cost to be borne by departments and agencies to support implementation and change management plans. The Agency continues to actively participate in Government of Canada community meetings to stay abreast of developments in this area and inform future plans.

4. Significant Changes in Relation to Operations, Personnel and Programs

FedDev Ontario's renewal was announced in Budget 2013, extending the Agency's mandate by another five years beginning April 1, 2014, and ending March 31, 2019. Consultations were held with stakeholders in May 2013 to seek input on the suite of programs that would support a competitive southern Ontario.

On June 6, 2013, Canada Business Ontario became a part of FedDev Ontario as per Order-In-Council 2013-0639 dated June 5, 2013. Previously under Industry Canada, Canada Business Ontario provides business information and services from both the federal and provincial governments, through a centralized service centre located in Toronto.

5. Budget 2012 Implementation

This section provides an overview of the savings measures announced in Budget 2012 that will be implemented to refocus government and programs, make it easier for Canadians and businesses to deal with their government, and modernize and reduce the back office.

In 2012-13, FedDev Ontario started to implement several measures to achieve its savings targets of $10.4 million in 2012-13, $21.3 million in 2013-14 and an ongoing $22.1 million by 2014-15. These include:

  • Reductions to the SODP and Community Futures Program (CFP);
  • Integrating program delivery into one branch and consolidating office space;
  • Adopting environmentally friendly office practices;
  • Transferring internal audit services to Treasury Board Secretariat; and
  • Collaborating with other regional development agencies (RDAs) to achieve savings and efficiencies across various internal services areas.

While implementing the above, FedDev Ontario has supported other Government of Canada departments and agencies in achieving their savings targets, including:

  • Implementing the new Workplace 2.0 standard in its headquarters in Kitchener, consolidating office space to support Public Works and Government Services Canada (PWGSC) in achieving its savings targets; and
  • Adopting Shared Services Canada's "cut the cord" initiative, which has supported operational savings by reducing the number of telecommunications devices per person.

In 2013-14, FedDev Ontario's authorities have been reduced by $21.3 million. This includes $20.0 million to program authorities and $1.3 million to operating authorities. Though year-to-date 2013-14 spending has been strong relative to its authorities, this is mainly due to an increase in volume of contribution claims received due to the targeted completion of projects by March 31, 2014, which aligns with the end of the Agency's first mandate, and salary adjustments resulting from collective bargaining agreements, as explained above.

Throughout 2013-14, FedDev Ontario plans to continue to invest in the acquisition of machinery and equipment to support implementation of its Budget 2012 savings measures, including supporting the adoption of more environmentally friendly office practices. The timing, however, of these investments will vary year-over-year and is a contributing factor to the variance seen at the end of the first quarter for this Standard Object. The rental Standard Object is also 83 percent lower in 2013-14 than in 2012-13 at the end of the first quarter. As explained above, this is due to the Agency having consolidated its operations in 2012-13.

As FedDev Ontario continues to implement its Budget 2012 savings measures, it is imperative that it maintains a strong system of budgetary controls and a strong monitoring and forecasting regime. The Agency was provided with a conservative level of operating authorities when it was first established in 2009. Budgetary pressures resulting from factors outside of its direct control coupled with the factors identified in Section 3 could impact outcomes in 2013-14 and ongoing.

Approved by:

Original signed by Karen Ellis, President

Karen Ellis
President
Kitchener, Ontario, Canada
August 29, 2013

Original signed by Linda Cousineau, PhD, Chief Financial Officer

Linda Cousineau, PhD,
Chief Financial Officer
Kitchener, Ontario, Canada
August 29, 2013

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Statement of Authorities (unaudited)

FedDev Ontario
Quarterly Financial Report
For the quarter ended June 30, 2013

Statement of Authorities (unaudited)
Fiscal Year 2013-14
(in thousands of dollars)
Fiscal Year 2012-13
(in thousands of dollars)
Total available for use for the year ending March 31, 2014 Footnote 1 Used during the quarter ended June 30, 2013 Year to date used at quarter end Total available for use for the year ending March 31, 2013
Footnote 1  Footnote 2
Used during the quarter ended June 30, 2012 Year to date used at quarter end

Footnotes

Footnote 1

Includes approved estimates documents as at quarter end.

Return to footnote 1 referrer

Footnote 2

Total available for use did not reflect measures announced in Budget 2012.

Return to footnote 2 referrer

Footnote 3

Non-salary expenditures for the Ontario Federal Council are refunded at the end of each fiscal year through levies charged to other government departments. Therefore, all Ontario Federal Council-related non-salary expenditures are excluded from the financial statements.

Return to footnote 3 referrer

Vote 50 — Net operating expenditures 24,775 5,471 5,471 26,588 4,524 4,524
Vote 55 — Grants and contributions 194,888 14,792 14,792 193,934 8,606 8,606
Budgetary statutory authorities:
Employee benefit plans 3,150 787 787 3,289 822 822
Total budgetary authorities 222,813 21,050 21,050 223,811 13,952 13,952
Non-budgetary authorities - - - - - -
Total authorities Footnote 3 222,813 21,050 21,050 223,811 13,952 13,952

Table 1: Departmental Budgetary Expenditures by Standard Object (unaudited)

FedDev Ontario
Quarterly Financial Report
For the quarter ended June 30, 2013

Table 1: Departmental budgetary expenditures by Standard Object (unaudited)
Fiscal Year 2013-14
(in thousands of dollars)
Fiscal Year 2012-13
(in thousands of dollars)
Planned expenditures for the year ending March 31, 2014 Footnote 4 Used during the quarter ended June 30, 2013 Year to date used at quarter end Planned expenditures for the year ending March 31, 2013
Footnote 4  Footnote 5
Used during the quarter ended June 30, 2012 Year to date used at quarter end

Footnotes

Footnote 4

Includes approved estimates documents as at quarter end.

Return to footnote 4 referrer

Footnote 5

Planned expenditures did not reflect measures announced in Budget 2012.

Return to footnote 5 referrer

Footnote 6

Includes employee benefit plan (EBP) expenses.

Return to footnote 6 referrer

Footnote 7

Non-salary expenditures for the Ontario Federal Council are refunded at the end of each fiscal year through levies charged to other government departments. Therefore, all Ontario Federal Council-related non-salary expenditures are excluded from the financial statements.

Return to footnote 7 referrer

Expenditures:
Personnel Footnote 6 21,252 5,719 5,719 21,975 4,775 4,775
Transportation and communications 1,151 211 211 1,150 162 162
Information 276 32 32 290 28 28
Professional and special services 4,191 210 210 5,443 202 202
Rentals 248 20 20 396 119 119
Repair and maintenance 89 49 49 49 5 5
Utilities, materials and supplies 97 11 11 121 17 17
Acquisition of land, buildings, and works - 1 1 - - -
Acquisition of machinery and equipment 420 7 7 314 37 37
Transfer payments 194,888 14,792 14,792 193,934 8,606 8,606
Other subsidies and payments 201 (2) (2) 139 1 1
Total budgetary expenditures Footnote 7 222,813 21,050 21,050 223,811 13,952 13,952
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