Archived — Quarterly Financial Report — Quarter ended June 30, 2014 — Revised
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Statement Outlining Results, Risks and Significant Changes in Operations, Personnel and Programs
- Highlights of Fiscal Quarter and Fiscal Year to Date (YTD) Results
- Risks and Uncertainties
- Significant Changes in Relation to Operations, Personnel and Programs
- Budget 2012 Implementation
- Final Remarks
- Statement of Authorities (unaudited)
- Table 1: Departmental budgetary expenditures by Standard Object (unaudited)
This report has been restated and should be read in conjunction with the following erratum section.
This quarterly report should be read in conjunction with the Main Estimates, 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. This quarterly report 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.
Basis of Presentation
This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes FedDev Ontario's spending authorities granted by Parliament and those used by FedDev Ontario—consistent with the Main Estimates for the 2014–15 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.
FedDev Ontario uses the full accrual method of accounting to prepare and present its annual financial statements that are part of its performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.
2. Highlights of Fiscal Quarter and Fiscal Year to Date (YTD) Results
On , FedDev Ontario began the first year of its second five-year mandate (as announced in Budget 2013). At the end of the first quarter of 2014–15, FedDev Ontario spent $6.5 million (or 3.1 percent of its available authorities) as compared to $21.3 million (or 9.6 percent of its available authorities) in 2013–14. The decrease in spending was fully anticipated as a new suite of initiatives was introduced to better respond to the economic needs and interests of southern Ontario. This likely resulted in potential clients requiring additional time to adjust to programming changes and the new streamlined application process. Nonetheless, FedDev Ontario received and is processing applications for consideration, and this activity will be reflected in the increased rate of expenditures over subsequent quarters.
2.1 Authorities Analysis
Planned departmental spending in fiscal year 2014–15 totals $206.8 million, a $16 million decrease over that available at the close of the first quarter in the 2013–14 fiscal year. This comprises a $1.3 million increase in operating authorities, offset by a $17.3 million decrease in program authorities.
The $1.3 million increase in operating authorities is the net result of increases related to the transfer of Canada Business Ontario to FedDev Ontario and the funding provided to deliver the Economic Development Initiative, and is partially offset by the continued implementation of Budget 2012 budget reductions.
The $17.3 million decrease in program authorities is the result of the end of the Community Infrastructure Improvement Fund ($24.8 million) and a break in the grant to the Corporation of the City of Brantford ($1.5 million), and is partially offset by increased authorities for the support of the revitalization of Massey Hall ($8.0 million) and the Economic Development Initiative ($1.0 million).
As in 2013–14, planned spending on program authorities represents over 85 percent of FedDev Ontario's total authorities.
2.2 Expenditure Analysis
Statement of Authorities
In the first quarter of the 2014–15 fiscal year, total budgetary expenditures were $6.5 million compared to $21.3 million reported in the same period of 2013–14. This represents a year-over-year decrease of $14.8 million (or 69.5 percent). The decrease in program expenditures is primarily due to the early stages in the lifecycle of program spending in the first year of FedDev Ontario's renewed mandate.
Quarterly spending comprises $0.1 million on programs and $6.4 million on operating expenditures. Spending in both these areas has decreased in 2014–15 by $14.7 million (or 93 percent) in transfers and $0.2 million (or 3.0 percent) in operating expenditures respectively over the first quarter of 2013–14. The variance in operating expenditures relates primarily to the increased previous year expenses from 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.
Used During the Quarter
The transfer payment spending (or program spending) of $0.1 million in the first quarter of 2014–15 comprises $0.1 million of claims paid on projects under the Community Futures Program. The decrease in year-over-year expenditures is primarily due to the early stages in the lifecycle of new programming associated with the launch of FedDev Ontario's renewed mandate as of .
Personnel-related expenditures totaled $5.4 million, representing a decrease of $0.6 million (or 10 percent) year-over-year. This decrease is mainly due to increased previous year expenditures related to salary adjustments resulting from collective bargaining agreements.
The following Standard Objects have relatively low expenditures so small variances in the dollar value of spending will result in large percentage variances, which should normalize in future quarters.
There are year-over-year decreases to expenditures related to rentals ($4,000 or 21 percent) and the acquisition of machinery and equipment ($1,000 or 16 percent). These variances are mainly related to the early timing of equipment acquisitions in previous years and changes to the timing of the billing cycle for ongoing rental requirements.
Transportation and communications expenditures have year-over-year decreases of $99,000 (or 47 percent). This is mostly related to the early timing of previous year expenditures relating to relocation costs and other travel-related costs that occurred early in the prior fiscal year.
Repair and maintenance costs have decreased by $42,000 (or 86 percent), which is largely related to the timing difference in the billing cycle for an Memorandum of Understanding (MOU) that was charged in the first quarter of the previous year.Other subsidies and payments have increased by $646,000 (or 323 percent), which is due to a one-time transition payment of $642,000 for implementing salary payment in arrears by the Government of Canada.
3. Risks and Uncertainties
April 1, 2014 marked the beginning of FedDev Ontario's second mandate and the challenge of launching and delivering a new programming suite (the Southern Ontario Prosperity Initiatives and the Advanced Manufacturing Fund) and the renewal of two programs (the Eastern Ontario Development Program and the Economic Development Initiative) alongside the delivery of ongoing programs, such as the Community Futures Program. FedDev Ontario is exposed to increased risk that it will not be able to expend its full program authorities during this fiscal year (2014–15) due to expected lifecycle challenges related to the launch.
For example, FedDev Ontario's expenditure rate is dependent on the number of applications it receives, and the Agency's low-level expenditure rate during this period reflects the impact that the launch and streamlined application process has had on submissions. Another factor to help explain the low rate of programmatic expenditures is that the new programming targets large, multi-partnered and complex projects that require extensive preliminary work as part of the application process.
FedDev Ontario also faces a capacity risk to deliver on its programming. Although operating authorities have marginally increased from the previous year, the transfer of Canada Business Ontario to FedDev Ontario has resulted in greater operating pressures and responsibilities. To ensure that the Agency continues to provide excellent service to its clients, FedDev Ontario seeks to identify ways to achieve greater efficiencies, including partnering with other organizations. Moreover, FedDev Ontario will continue to rely 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.
In addition to the above-mentioned efforts, FedDev Ontario will be undergoing an organizational review during the 2014–15 fiscal year to determine the optimal structure aligning resources and continuing to deliver on organizational priorities.
4. Significant Changes in Relation to Operations, Personnel and Programs
On , FedDev Ontario began its second five-year mandate and officially launched its new suite of programming, including the four initiatives that make up the Southern Ontario Prosperity Initiatives (Investing in Business Innovation, Investing in Business Growth and Prosperity, Investing in Commercialization Partnerships and Investing in Regional Diversification) and the new Advanced Manufacturing Fund for all of Ontario. FedDev Ontario also renewed two programs for five years: the Eastern Ontario Development Program and the Economic Development Initiative.
To support its new suite of programming, FedDev Ontario implemented a new process for assessing proposals. The "Business Model Canvas" is a powerful, simple tool for understanding business models and determining the impacts of proposed projects, focusing on key client segments, value propositions, resources and risks.With respect to personnel changes, FedDev Ontario stabilized a number of senior executive positions as important steps to launch its new mandate. On , Alain Beaudoin joined FedDev Ontario as the Vice President – Policy, Partnership and Performance Management.
5. Budget 2012 Implementation
This section provides an overview of the savings measures announced in Budget 2012 that are being implemented in order to refocus government and programs, make it easier for Canadians and businesses to deal with 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 and Community Futures Program;
- 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 to achieve savings and efficiencies across various internal services areas.
While implementing the above, FedDev Ontario has supported other Government of Canada departments 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 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 overall budget authorities were reduced by $21.3 million. This includes $20 million to program authorities and $1.3 million to operating authorities. FedDev Ontario continues 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 and seeking ways to benefit from the adoption of enterprise-wide information technology systems.
In 2014–15, FedDev Ontario has had its funding renewed and authorities were granted to reflect the final implementation of Budget 2012 savings, including a final $0.6 million reduction in operating authorities.
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. FedDev Ontario was provided with a stable 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 2014–15 and ongoing.
6. Final Remarks
FedDev Ontario continues to strive to respond to the economic challenges and opportunities that face southern Ontario. It will do so by working within its operating environment. Developing and maintaining partnerships will be an important and efficient mechanism by FedDev Ontario to help achieve its outcomes.
Despite low expenditures marking this first quarter, there is a persistent need for regionally-tailored measures. This is evident by the continued demand for support by the private sector, the not-for-profit sector and the other orders of government for the types of programs and services offered by FedDev Ontario. As of , FedDev Ontario had received 138 applications seeking $557 million in funding.
Kitchener, Ontario, Canada
Chief Financial Officer
Kitchener, Ontario, Canada
Statement of Authorities (unaudited)
|Fiscal Year 2014–15
(in thousands of dollars)
|Fiscal Year 2013–14
(in thousands of dollars)
|Total available for use for the year ending Footnote 1||Used during the quarter ended||Year to date used at quarter-end||Total available for use for the year ending Footnote 1||Used during the quarter ended||Year to date used at quarter-end|
|Vote 50—Net Operating Expenditures||26,037||5,619||5,619||24,775||5,769||5,769|
|Vote 55—Grants and Contributions||177,632||79||79||194,888||14,792||14,792|
|Budgetary statutory authorities:|
|Employee benefit plans||3,093||773||773||3,150||787||787|
|Minister of State—car allowance||2||1||1||no data||no data||no data|
|Total Budgetary authorities||206,764||6,472||6,472||222,813||21,348||21,348|
Table 1: Departmental Budgetary Expenditures by Standard Object (unaudited)
|Fiscal Year 2014–15
(in thousands of dollars)
|Fiscal Year 2013–14
(in thousands of dollars)
|Planned expenditures for the year ending Footnote 1||Used during the quarter ended||Year to date used at quarter-end||Planned expenditures for the year ending Footnote 1||Used during the quarter ended||Year to date used at quarter-end|
|Transportation and communications||847||112||112||1,151||211||211|
|Professional and special services||5,671||168||168||4,191||210||210|
|Repair and maintenance||131||7||7||89||49||49|
|Utilities, materials and supplies||74||9||9||97||11||11|
|Acquisition of land, buildings, and works||5||-||-||-||1||1|
|Acquisition of machinery and equipment||200||6||6||420||7||7|
|Other subsidies and payments||34||644||644||201||(2)||(2)|
|Total budgetary expenditures||206,764||6,472||6,472||222,813||21,348||21,348|
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