Archived — Federal Economic Development Agency for Southern Ontario — Quarterly Financial Report — Quarter ended September 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.

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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 and Supplementary 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 the 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

During the second quarter of 2013–14, FedDev Ontario spent $29.8 million, which is $0.9 million (or 3.1 percent) higher than what was spent during the same time period in 2012–13. This can be attributed to increases in grants and contributions spending and increases in spending on machinery and equipment, offset by decreases in transportation and communications, professional services and rental costs.

At the end of second quarter 2013–14, FedDev Ontario has spent $50.8 million year to date (or 22.6 percent of its available authorities) as compared to $42.8 million year to date (or 19.0 percent of its available authorities) in 2012–13. This increase is mainly due to an 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 $224.5 million, a $0.5 million decrease over that available at the close of the second quarter in 2012–13. This comprises a $1.0 million increase in program authorities, offset by a $1.5 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 second quarter in 2012–13, as well as the timing of the provision of funding for new, or extended programs. In 2012–13, the funding for the Community Infrastructure Improvement Fund (CIIF) and the extension of the grant for the Corporation of the City of Brantford was granted in Supplementary Estimates (B), whereas these items were a part of the Main Estimates during 2013–14. In addition, the Budget 2012 reductions of $10.3 million for 2012–13 were not applied until Supplementary Estimates (B) were released, whereas the budget reduction of $20.0 million for 2013–14 was incorporated in the Main Estimates.

The $1.5 million decrease in operating authorities is mainly from the implementation of Budget 2012 measures ($1.3 million decrease), an increase in the transfer to Shared Services Canada for IT infrastructure support and telecommunications services ($0.4 million decrease), and a timing difference in when the Operating Carry-Forward was received ($1.3 million decrease). The first two factors are reflected in the 2013–14 Main Estimates, but are not reflected in the authorities available at the end of the second quarter in 2012–13. Partially offsetting these budget decreases is a budget transfer of $1.5 million from Industry Canada to FedDev Ontario for the operations of Canada Business Ontario.

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)
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) (the long description is located below the image)
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 29.6 194.9
Program Spending Authorities 31.1 193.9

2.2 Expenditure Analysis

Statement of Authorities
Used During the Quarter

In the second quarter of the 2013–14 fiscal year, total budgetary expenditures were $29.8 million compared to $28.9 million reported in the same period of 2012–13. This represents a year-over-year increase of $0.9 million (or 3 percent).

Quarterly spending is composed of $23.2 million on programs and $6.6 million on operating expenditures. Quarterly spending in grants and contributions has increased $1.3 million (or 6 percent) year-over-year, while quarterly operating spending has decreased $0.4 million (or 6 percent) year-over-year. 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. The decrease in quarterly operating expenditures is mainly due to lower quarterly spending on transportation and communications, professional services and rental costs.

Year to Date Analysis

On a year to date basis, as of the end of the second quarter of fiscal year 2013–14, total budgetary expenditures were $50.8 million, compared to $42.8 million at the end of the same period for 2012–13. This represents a year-over-year increase of $8.0 million (or 19 percent). This increase can be attributed to an increase in spending in grants and contributions and salary, which is partially offset by declines in transportation and communications, professional services and rental costs.

Statement of Departmental Budgetary Expenditures by Standard Object

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

Used During the Quarter

The transfer payment spending (or program spending) of $23.2 million in the second quarter of 2013–14 is composed of $16.0 million in claims paid on projects under the Southern Ontario Advantage (SOA) initiatives; $1.7 million in claims paid on projects under the CIIF; and $5.5 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 for the SOA initiatives and CIIF, given that projects are targeted to be completed by March 31, 2014.

There is a year-over-year increase in quarterly spending related to personnel costs ($153,000 or 3 percent). This can be attributed to salary adjustments resulting from collective bargaining agreements.

There is a year-over-year increase in quarterly spending related to the acquisition of machinery and equipment ($56,000 or 133 percent) which is related to the timing of the purchase of IT equipment. During 2012–13, most new IT equipment was purchased during the first quarter. These purchases were made in line with the Agency's greening initiatives and as part of the IT equipment life cycle renewal.

There is a year-over-year decrease to quarterly expenditures related to rentals ($72,000 or 79 percent). This variance is attributed to the reduced number of leases for office space. This reduction has been driven by the Agency's move to a more efficient and improved office structure, in line with Public Works and Government Services Canada's (PWGSC) Workplace 2.0 initiative.

Quarterly transportation and communications expenditures have decreased by $229K (or 74 percent) year-over-year. This is partially attributable to the increased use of travel alternatives such as teleconferencing, reductions in travel related to training activities outside of headquarters and reduced relocation costs.

Quarterly spending on professional services have decreased by $317,000 (or 42 percent) year-over-year. This comes as a result of timing differences for professional service contracts between fiscal years.

Year to Date Analysis

The $7.5 million (or 25 percent) increase in grants and contributions spending year-over-year can be attributed to an increase in claim volumes for the SOA initiatives and CIIF given that projects are targeted to be completed by March 31, 2014.

The $1.1 million (or 10 percent) increase in salary costs can be attributed to salary adjustments resulting from collective bargaining agreements.

The $56,000 (or 560 percent) increase in repair and maintenance costs can be attributed to a timing difference in the billing cycle for services related to the Agency's information systems.

There were year-over-year decreases in spending in the areas of transportation and communications ($180,000 or 38 percent) and rentals ($171,000 or 81 percent). These decreases can be partially attributed to reduced relocation costs and reduced office leases. The year-over-year decline in professional services costs ($309,000 or 32 percent) can be attributed to timing differences of professional services contracts.

3. Risks and Uncertainties

March 31, 2014 marks the end of FedDev Ontario’s first mandate. The Southern Ontario Development Program (SODP), along with its seven SOA initiatives, the Eastern Ontario Development Program (EODP) and CIIF will sunset on March 31, 2014.

The Agency is handling a number of pressures in operating authorities:

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

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

Going forward, uncertainty remains over the timing of the consolidation of back office systems, including the 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

On August 12, 2013, Karen Ellis was appointed President of FedDev Ontario.

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 business 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 Southern Ontario Development Program (SODP) and Community Futures Program (CFP);
  • Integrating program delivery in 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 as it consolidated office space to support Public Works and Government Services Canada (PWGSC) in achieving its savings targets; and
  • Adopting Shared Services Canada's "Cost Effective Telephone Services" 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. This completion deadline aligns with the end of the Agency's first mandate and the 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 the implementation of its Budget 2012 savings measures, including the adoption of more environmentally friendly office practices. The timing of these investments, however, will vary year-over-year and is a contributing factor to the quarterly spending variance seen during the second quarter for this Standard Object. The rental Standard Object is 81 percent lower in 2013–14 when compared to 2012–13 at the end of the second 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. 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
November 29, 2013

Original signed by David Schwindt on behalf of Linda Cousineau, PhD, Chief Financial Officer

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

Statement of Authorities (unaudited)

FedDev Ontario
Quarterly Financial Report
For the quarter ended September 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 September 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 September 30, 2012 Year to date used at quarter-end
Vote 50—Net Operating Expenditures 26,237 5,779 11,253 27,839 6,163 10,687
Vote 55—Grants and Contributions 194,888 23,190 37,982 193,934 21,878 30,484
Budgetary statutory authorities:
Employee benefit plans 3,323 788 1,575 3,289 822 1,644
Total Budgetary authorities 224,448 29,757 50,810 225,062 28,863 42,815
Non-budgetary authorities - - - - - -
Total authorities Footnote 3 224,448 29,757 50,810 225,062 28,863 42,815

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

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

FedDev Ontario
Quarterly Financial Report
For the quarter ended September 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 September 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 September 30, 2012 Year to date used at quarter-end
Expenditures:
Personnel Footnote 6 22,290 5,866 11,585 21,975 5,713 10,488
Transportation and communications 1,151 82 293 1,150 311 473
Information 276 25 57 290 44 72
Professional and special services 4,191 434 644 5,443 751 953
Rentals 248 19 39 396 91 210
Repair and maintenance 89 16 66 49 5 10
Utilities, materials and supplies 97 17 29 121 24 41
Acquisition of land, buildings, and works - 1 3 - - -
Acquisition of machinery and equipment 420 98 105 314 42 79
Transfer payments 194,888 23,190 37,982 193,934 21,878 30,484
Other subsidies and payments 798 9 7 1,390 4 5
Total budgetary expenditures Footnote 7 224,448 29,757 50,810 225,062 28,863 42,815

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

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