Archived — FedDev Ontario Financial Statements (Unaudited) —
For the year ended March 31, 2015

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Table of Contents


Federal Economic Development Agency for Southern Ontario

Statement of Management Responsibility Including Internal Control Over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended , and all information contained in these statements rests with the management of the Federal Economic Development Agency for Southern Ontario. These financial statements have been prepared by management using the Government's accounting policies, which are based on Canadian public sector accounting standards.

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 judgement, and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the Federal Economic Development Agency for Southern Ontario's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Federal Economic Development Agency for Southern Ontario's Departmental Performance Report, is consistent with these statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting (ICFR) designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded, and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

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 the Federal Economic Development Agency for Southern Ontario; and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.

The system of ICFR is designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

The Federal Economic Development Agency for Southern Ontario will be subject to periodic Core Control Audits performed by the Office of the Comptroller General and will use the results of such audits to adhere to the Treasury Board Policy on Internal Control.

In the interim, the Federal Economic Development Agency for Southern Ontario has initiated a risk-based assessment of the system of ICFR in the year ended , in accordance with Treasury Board Policy on Internal Control, and the action plan is summarized in Annex A.

The financial statements of the Federal Economic Development Agency for Southern Ontario have not been audited.

Original signed by

space to insert Nancy Horsman' signature
Nancy Horsman, Deputy Head
Waterloo, Canada

Original signed by

space to insert Susan Anzolin's signature
Susan Anzolin, Chief Financial Officer

Federal Economic Development Agency for Southern Ontario
Statement of Financial Position (Unaudited)
As at
(in thousands of dollars)
empty cell 2015 2014
Restated
(note 14)
Liabilities
Accounts payable and accrued liabilities (note 4) 28,708 76,971
Vacation pay and compensatory leave 975 1,076
Employee future benefits (note 5) 400 292
Total liabilities 30,083 78,339
Financial assets
Due from Consolidated Revenue Fund 28,584 76,899
Accounts receivable and advances (note 6) 6,625 2,175
Loans receivable (note 7) 126,635 124,132
Total financial assets 161,844 203,206
Financial assets held on behalf of Government
Accounts receivable and advances (note 6) (6,618) (2,171)
Loans receivable (note 7) (126,635) (124,132)
Total financial assets held on behalf of Government (133,253) (126,303)
Total net financial assets 28,591 76,903
Departmental net debt 1,492 1,436
Non-financial assets
Prepaid expenses 220 0
Tangible capital assets (note 9) 137 203
Total non-financial assets 357 203
Departmental net financial position
Contractual obligations (note 8)
(1,135) (1,233)
The accompanying notes form an integral part of these financial statements.

Original signed by

space to insert Nancy Horsman' signature
Nancy Horsman, Deputy Head
Waterloo, Canada

Original signed by

space to insert Susan Anzolin's signature
Susan Anzolin, Chief Financial Officer

Federal Economic Development Agency for Southern Ontario
Statement of Operations and Departmental Net Financial Position (Unaudited)
For the year ended
(in thousands of dollars)
empty cell 2015
Planned
Results
2015 2014
Restated
(note 14)
Expenses
Technological Innovation 59,172 6,939 54,253
Business Development 32,020 34,831 63,994
Community Economic Development 34,103 24,450 73,703
Internal Services 19,550 19,045 19,863
Expenses incurred on behalf of Government 8,672 (6,230) (7,190)
Total expenses 153,517 79,035 204,623
Revenues
Amortization of discounts 3,801 7,457 73
Other revenue 0 149 66
Revenues earned on behalf of Government (3,801) (7,606) (117)
Total revenues 0 0 22
Net cost of operations before funding and transfers 153,517 79,035 204,601
Government funding and transfers
Net cash provided by Government 124,215 243,972
Change in due from Consolidated Revenue Fund (48,315) (40,933)
Services provided without charge by other government departments (note 10)
3,886 3,756
Transfer of the transition payments for implementing salary payments in arrears (note 11)
(658) 0
Transfer of assets to other government departments (note 12) 5 0
Net cost of operations after government funding and transfers (98) (2,194)
Departmental net financial position – Beginning of year (1,233) (3,427)
Departmental net financial position – End of year (1,135) (1,233)
Segmented information (note 13)
The accompanying notes form an integral part of these financial statements.
Federal Economic Development Agency for Southern Ontario
Statement of Change in Departmental Net Debt (Unaudited)
For the year ended
(in thousands of dollars)
empty cell 2015 2014
Restated
(note 14)
Net cost of operations after government funding (98) (2,194)
Change due to tangible capital assets
Acquisition of tangible capital assets (note 9) 0 76
Amortization of tangible capital assets (note 9) (60) (48)
Net gain (loss) on disposal of tangible capital assets (11) 21
Proceeds from disposal of tangible capital assets 0 (34)
Transfer from other government departments (note 12) 5 0
Total change due to tangible capital assets (66) 15
Change due to prepaid expenses 220 (13)
Net increase (decrease) in departmental net debt 56 (2,192)
Departmental net debt – Beginning of year 1,436 3,628
Departmental net debt – End of year 1,492 1,436
The accompanying notes form an integral part of these financial statements.
Federal Economic Development Agency for Southern Ontario
Statement of Cash Flows (Unaudited)
For the year ended
(in thousands of dollars)
empty cell 2015 2014
Restated
(note 14)
Operating activities
Net cost of operations before government funding and transfers 79,035 204,601
Non cash items:
Amortization of tangible capital assets (note 9) (60) (48)
Gain (loss) on disposal of tangible capital assets (11) 21
Services provided without charge by other government departments (note 10)
(3,886) (3,756)
Transition payments for implementing salary payments in arrears (note 11) 658 0
Variations in Statement of Financial Position
Increase (decrease) in accounts receivable and advances 3 (1)
Increase (decrease) in prepaid expenses 220 (13)
Decrease in accounts payable and accrued liabilities 48,263 41,384
Decrease (increase) in vacation pay and compensatory leave 101 (167)
Decrease (increase) in future employee benefits (108) 1,909
Cash used in operating activities 124,215 243,930
Capital investing activities
Acquisitions of tangible capital assets (note 9) 0 76
Proceeds from sale of tangible capital assets 0 (34)
Cash used in capital investing activities 0 42
Net cash provided by the Government of Canada 124,215 243,972
The accompanying notes form an integral part of these financial statements.

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Federal Economic Development Agency for Southern Ontario
Notes to the Financial Statements (Unaudited)
For the year ended

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.

FedDev Ontario is responsible for responding to southern Ontario's economic challenges to help restore the region to a position of prosperity and place southern Ontario as an important driver in building a stronger Canadian economy.

To fulfill its mandate, FedDev Ontario supports 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.

FedDev Ontario focused its efforts in 2014–15 on four program areas: technological innovation; business development; community economic development; and internal services. Through these program areas, FedDev Ontario continued to deliver key programs and services to individuals, businesses, communities, and other key stakeholders across southern Ontario and strengthened its profile as a willing and capable partner in economic development.

Economic Action Plan 2013 renewed FedDev Ontario's funding for a five-year period and 2014–15 marked the first year of this renewed mandate. As a result of this, several new initiatives were launched to respond more effectively to the economic circumstances facing southern Ontario. Projects funded under the new Southern Ontario Prosperity Initiatives (Investing in Business Innovation, Investing in Business Growth and Prosperity, Investing in Commercialization Partnerships, and Investing in Regional Diversification), the Advanced Manufacturing Fund, the ongoing Community Futures Program, the renewal of the Eastern Ontario Development Program and the Economic Development Initiative, and continued support for infrastructure programming are taken into account in this year's financial statements.

Technological Innovation

This program area supports the southern Ontario economy to be more innovative by supporting the creation of new products, services, processes and markets so as to contribute to the region's competitiveness objectives. This is achieved by: encouraging the region's labour force to be more innovative; focusing on key emerging sectors; and strengthening linkages between the region's businesses, especially small- and medium-sized enterprises (SMEs), and post-secondary institutions. These are important elements necessary for improving the region's productivity, accelerating economic growth and maintaining and enhancing the region's living standards in the context of a global knowledge-based economy. Transfer payments in support of this program area are made through the administration of contribution agreements under the Investing in Commercialization Partnerships (ICP) initiative, an initiative under the Southern Ontario Prosperity Initiatives (SOPI), and the Advanced Manufacturing Fund (AMF).

Business Development

This program supports the 360,000 businesses (especially SMEs) in southern Ontario in their efforts to drive competitiveness by providing funding for the support of start-up companies, helping existing businesses expand and helping companies improve their productivity domestically and globally. Transfer payments in support of this program are made through the administration of contribution agreements with businesses and not-for-profit organizations through a variety of initiatives under the Southern Ontario Prosperity Initiatives (SOPI), including Investing in Business Innovation (IBI), Investing in Business Growth and Productivity (IBGP), and Investing in Regional Diversification (IRD).

As part of its convening and championing role, activities under this program include FedDev Ontario's Industrial Technology Benefits (ITB) team, which provides support to the southern Ontario aerospace and defence sector, and Canada Business Ontario, which is part of the Canada Business Network and is a source for information on government services for business.

Community Economic Development

This program supports the 288 communities (small, large, rural, urban, Francophone and Aboriginal) in southern Ontario that are home to more than 12 million residents. These communities play a key role in enhancing southern Ontario's economic competitiveness and the long-term prosperity of the region. Southern Ontario depends on communities that can attract the best talent and compete for investment as dynamic centres of commerce and learning, and in turn, strong communities contribute to a prosperous southern Ontario. Through this program, FedDev Ontario supports communities and regions throughout southern Ontario to identify local solutions to local challenges and opportunities. Strong, safe and modern communities are essential building blocks for the region's competitiveness and long-term prosperity. FedDev Ontario continues to work with others, including Infrastructure Canada, the Province of Ontario and communities to support infrastructure needs within southern Ontario.

Transfer payments in support of this program are made through a variety of initiatives under the authority of Community Futures Program (CFP), Economic Development Initiative (EDI), Eastern Ontario Development Program (EODP) and infrastructure programming like the Building Canada Fund. FedDev Ontario supports this program through the administration of contribution agreements with businesses, not-for-profit organizations, post-secondary institutions and municipalities.

Internal Services

Internal Services are groups of related enabling functions, activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. 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 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.

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2. Summary of significant accounting policies

These financial statements have been prepared using the Government's accounting policies stated below, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

  1. Parliamentary authorities — FedDev Ontario is mostly 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 Departmental Net Financial Position and in 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 "Expenses" and "Revenues" sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-oriented Statement of Operations included in the 2014–15 Report on Plans and Priorities. Planned results are not presented in the "Government funding and transfers" section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2014–15 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 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 FedDev Ontario is entitled to draw from the CRF without further appropriations to discharge its liabilities.
  4. Revenues:

    FedDev Ontario records its loans receivable related to unconditionally repayable contributions at face value on the date of issue adjusted by a discount amount to determine the net present value. This discount factor is amortized annually to account for the adjustment in the net realizable value with the amortized discount being recognized as revenue. The amortization of loan discounts is the primary source of revenue for FedDev Ontario.

    Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

    Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.

    Revenues that are non-respendable are not available to discharge FedDev Ontario's liabilities. While the Deputy Head is expected to maintain accounting control, she has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented as a reduction of the entity's gross revenues.

  5. Expenses — Expenses are recorded on the accrual basis:

    Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses 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 financial statements. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a loan receivable.

    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. 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: Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. 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. Loans receivable consists of non-interest bearing loans issued with prescribed annual repayment terms. The loans receivable are recorded at their discounted net present values using market interest rates at the time of the issuance of the loans. A portion of the unamortized discount is recorded as revenue each year to reflect the change in the present value of the loans receivable outstanding. An allowance for uncollectibility is recorded for loans receivable where recovery is considered uncertain and adjusted annually.

    Accounts receivable for external parties are primarily comprised of defaulted loans receivable where recovery is considered uncertain and have been sent to advanced collections and are reported at either the face value of the loan or the portion of the loan that is in arrears.

  8. Tangible capital assets — All tangible capital assets 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:

    Estimated useful life of the asset
    Asset class Amortization period
    Computer hardware 10 years
    Machinery and Equipment 10 years
    Vehicles 5 to 7 years
  9. 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 allowances for uncollectibility, the unamortized discount related to unconditional repayable contributions, the liability for employee future 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.

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3. Parliamentary authorities

FedDev Ontario receives most of its funding through annual Parliamentary authorities. Items recognized in the Statement of Operations and Departmental Net Financial Position 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:

a) Reconciliation of net cost of operations to current year authorities used

Reconciliation of net cost of operations to current year authorities used
empty cell 2015 2014
(in thousands of dollars)
Net cost of operations before government funding and transfers 79,035 204,601
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (60) (48)
Gain (loss) on disposal of tangible capital assets (11) 21
Services provided without charge by other government departments
(3,886) (3,756)
Decrease (increase) in vacation pay and compensatory leave 101 (167)
Decrease (increase) in employee future benefits (108) 1,909
Unamortized discount on issuance of loans (2,537) (7,791)
Refund of prior years expenditures 468 593
Refunds of previous year's accounts payable 4,371 5,594
Total items affecting net cost of operations but not affecting authorities (1,662) (3,645)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets 0 76
Increase (decrease) in prepaid expenses 220 (13)
Increase (decrease) in advances 3 (2)
Loans issued on behalf of government 25,849 33,263
Transition payments for implementing salary payments in arrears
658 0
Total items not affecting net cost of operations but affecting authorities 26,730 33,324
Current year authorities used 104,103 234,280

b) Authorities provided and used

Authorities provided and used
empty cell 2005 2014
(in thousands of dollars)
Authorities provided:
Vote 1 — Operating Expenditures 27,319 28,733
Vote 5 — Contributions 177,632 214,718
Statutory amounts  3,090 3,257
Less:
Authorities available for future years 0 (34)
Lapsed: Operating (659) (1,845)
Lapsed: Contributions (103,245) (10,549)
Lapsed: Proceeds from the disposal of crown assets (34) 0
Current year authorities used 104,103 234,280

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4. Accounts payable and accrued liabilities

The following table presents details of FedDev Ontario's accounts payable and accrued liabilities:

Accounts payable and accrued liabilities
empty cell 2015 2014
(in thousands of dollars)
Accounts payable — Other government departments and agencies 160 228
Accounts payable — External parties 27,155 76,548
Total accounts payable 27,315 76,776
Accrued liabilities 1,393 195
Total accounts payable and accrued liabilities 28,708 76,971

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5. Employee future benefits

a) Pension benefits

FedDev Ontario's employees participate in the Public Service Pension Plan (the "Plan"), which is sponsored and administered by the Government of Canada. 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 FedDev Ontario contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Canada's Economic Action Plan 2012, employee contributors have been divided into two groups – Group 1 relates to existing plan members as of and Group 2 relates to members joining the Plan as of . Each group has a distinct contribution rate.

The 2014–15 expense amounts to $2,702,643 ($2,886,053 in 2013–14). For Group 1 members, the expense represents approximately 1.41 times (1.6 times in 2013–14) the employee contributions and, for Group 2 members, approximately 1.39 times (1.5 times in 2013–14) the employee contributions.

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.

b) Severance benefits

FedDev Ontario provides severance benefits to its employees based on eligibility, years of service and salary at termination. 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:

As part of collective agreement negotiations with certain employee groups, and changes to conditions of employment for executives and certain non-represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.

Severance benefits
empty cell 2015 2014
(in thousands of dollars)
Accrued benefit obligation — Beginning of year 292 2,201
Expense for the year 239 (833)
Benefits paid during the year (131) (1,076)
Accrued benefit obligation — End of year 400 292

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6. Accounts receivable and advances

The following table presents details of FedDev Ontario's accounts receivable and advances balances:

Accounts receivable and advances
empty cell 2015 2014
Restated
(note 14)
(in thousands of dollars)
Receivables — Other government departments and agencies 124 67
Receivables — External parties 6,494 2,104
Employee advances 7 4
Gross accounts receivable and advances 6,625 2,175
Accounts receivable held on behalf of government (6,618) (2,171)
Net accounts receivable and advances 7 4

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7. Loans receivable

The following table presents details of FedDev Ontario's loans receivable:

Loans receivable
empty cell 2015 2014
(in thousands of dollars)
Loans receivable 182,281 178,897
Less: Unamortized discount (6,702) (11,622)
Subtotal 175,579 167,275
Less: Allowance for uncollectibility (48,944) (43,143)
Subtotal 126,635 124,132
Loans receivable held on behalf of Government (126,635) (124,132)
Net loans receivable 0 0

a) Loans receivable from unconditionally repayable contributions

The loans receivable portfolio consists of 260 non-interest bearing loans from unconditionally repayable contributions issued between 2009 and 2015 with prescribed annual repayment terms. Unconditionally repayable contributions relate to contributions made to outside parties that must be repaid without qualification. The loans are recorded at their discounted net present values using market interest rates at the time of the loans. An allowance of $48,944,146 ($43,143,385 in 2013–14) has been recorded.

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8. 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:

Contractual Obligations
2016 2017 2018 2019 Total
(in thousands of dollars)
Transfer payments 101,659 73,923 41,159 28,189 244,930
Goods and services 1,321 0 0 0 1,321
Total 102,980 73,923 41,159 28,189 246,251

The contractual obligations for transfer payments for 2016 and beyond are related to new projects under the Southern Ontario Prosperity Initiatives and the Advanced Manufacturing Fund, as well as ongoing commitments under the Community Futures Program, Eastern Ontario Development Program, the Economic Development Initiative – Official Languages, and the Brantford Brownfield Remediation project.

The contractual obligation for goods and services for 2016 is primarily a contract for call center services and for the FedDev Ontario headquarters relocation to Waterloo, Ontario.

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9. Tangible capital assets

Tangible Capital Assets (in thousands of dollars)
empty cell Cost
(in thousands of dollars)
Accumulated Amortization
(in thousands of dollars)
Net Book Value
(in thousands of dollars)
Capital Asset
Class
Opening
Balance
Transfers Disposals
and
Write-Offs
Closing
Balance
Opening
Balance
Amorti-
zation
Transfers Disposals
and
Write-Offs
Closing
Balance
2015 2014
Computer hardware 0 10 0 10 0 0 5 0 5 5 0
Machinery and
Equipment
41 0 (16) 25 12 3 0 (5) 10 15 29
Vehicles 389 33 (103) 319 215 57 33 (103) 202 117 174
Total 430 43 (119) 354 227 60 38 (108) 217 137 203

FedDev Ontario received from Industry Canada a vehicle with a net book value of $0 effective , and computer hardware with a net book value of $5,329 effective .

This transfer is included in the Transfers columns (refer to note 12 for further details on the transfer).

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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 Industry Canada related to the provision of finance and administration services. During the year, FedDev Ontario received common services that were obtained without charge from other government departments as disclosed below.

(a) 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 Operations and Departmental Net Financial Position as follows:

Common services provided without charge by other government departments
empty cell 2015 2014
(in thousands of dollars)
Employer's contributions to the health and dental insurance plan 1,518 1,511
Accommodation 2,368 2,245
Total 3,886 3,756

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 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 FedDev Ontario's Statement of Operations and Departmental Net Financial Position.

(b) Administration of programs on behalf of other government departments

Under a Memorandum of Understanding signed with Infrastructure Canada on , FedDev Ontario administers four programs. During 2014–15, FedDev Ontario incurred expenses of $13,717,901 ($15,280,266 in 2013–14) on behalf of Infrastructure Canada. These expenses are reflected in the financial statements of Infrastructure Canada and are not recorded in these financial statements.

Administration of programs on behalf of other government departments
empty cell 2015 2014
(in thousands of dollars)
Canada-Ontario Municipal Rural Infrastructure Fund — Infrastructure Canada 0 108
Municipal Rural Infrastructure Fund — Infrastructure Canada 0 30
Building Canada Fund — Infrastructure Canada 13,718 15,142
Total 13,718 15,280

(c) Other transactions with related parties

Other transactions with related parties
empty cell 2015 2014
(in thousands of dollars)
Expenses – Other government departments and agencies 6,474 7,185

Expenses and revenues disclosed in (c) exclude common services provided without charge, which are already disclosed in (a).

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11. Transfer of the transition payments for implementing salary payments in arrears

The Government of Canada implemented salary payments in arrears in 2014–15. As a result, a one-time payment was issued to employees and will be recovered from them in the future. The transition to salary payments in arrears forms part of the transformation initiative that replaces the pay system and also streamlines and modernizes the pay processes. This change to the pay system had no impact on the expenses of FedDev Ontario. However, it did result in the use of additional spending authorities by FedDev Ontario. Prior to year end, the transition payments for implementing salary payments in arrears were transferred to a central account administered by Public Works and Government Services Canada, who is responsible for the administration of the Government pay system.

12. Transfers from other government departments

Effective , FedDev Ontario was transferred the responsibility of the Minister's office from Industry Canada in accordance with the conclusion of a memorandum of understanding, including the stewardship responsibility for assets and liabilities related to the Minister's office. Accordingly, FedDev Ontario received the following assets and liabilities related to the Minister's office from Industry Canada on and :

Transfers from other government departments
empty cell 2015
(in thousands of dollars)
Assets:
  Tangible capital assets (net book value) (note 9) 5
Total 5
Adjustment to the departmental net financial position 5

13. Segmented Information (in thousands of dollars)

Presentation by segment is based on FedDev Ontario's Program Alignment Architecture (PAA). 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 programs, by major object of expense and by major type of revenue. The segment results for the period are as follows:

Segmented Information (in thousands of dollars)
Expenses Technological
Innovation
Business
Development
Community
Economic
Development
Internal
Services
2015
Total
2014
Total
Transfer payments
Transfers to non-profit organizations
3,848 20,561 19,765 0 44,174 140,150
Transfers to Industry 245 2,246 0 0 2,491 2,760
Transfer to other levels of government
0 0 (335) 0 (335) 30,004
Total transfer payments 4,093 22,807 19,430 0 46,330 172,914
Operating expenses
Salaries and employee benefits
1,896 5,419 4,067 12,243 23,625 23,082
Bad debt expense 682 5,223 325 0 6,230 7,190
Professional and special services
26 582 182 3,241 4,031 5,042
Accommodation 196 546 391 1,235 2,368 2,245
Travel 42 93 42 633 810 780
Furniture and equipment
0 2 1 582 585 341
Communication 0 110 1 291 402 337
Rental 0 3 0 389 392 373
Other operating expenses 0 5 1 277 283 (679)
Utilities, materials and supplies
4 16 10 65 95 121
Amortization 0 0 0 60 60 48
Equipment repair and maintenance 0 25 0 29 54 19
Expenses incurred on behalf of Government
(682) (5,223) (325) 0 (6,230) (7,190)
Total operating expenses 2,164 6,801 4,695 19,045 32,705 31,709
Total expenses 6,257 29,608 24,125 19,045 79,035 204,623
Revenues
Amortization of discounts
0 7,008 449 0 7,457 73
Other revenue 0 0 (11) 160 149 66
Revenues earned on behalf of Government
0 (7,008) (438) (160) (7,606) (117)
Total revenues 0 0 0 0 0 22
Net cost of operations before government funding and transfers 6,257 29,608 24,125 19,045 79,035 204,601

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14. Accounting changes

In producing FedDev Ontario's Financial Statements for the year ended , it was determined that FedDev Ontario's accounts receivable are not available to discharge FedDev Ontario's liabilities. In accordance with Treasury Board Accounting Standard 1.2 – Departmental and Agency Financial Statements, these accounts receivable should be presented as financial assets held on behalf of government in the Statement of Financial Position (see Note 6 Accounts Receivable and Advances). These changes have been applied retroactively, and comparative information for 2013–14 has been restated. The effects of the adjustments are presented in the table below.

Accounting changes
empty cell 2014
As previously stated
Effect of Change 2014
Restated
(in thousands of dollars)
Statement of Financial Position:
Financial assets held on behalf of Government:
  Accounts receivable and advances (note 6) 0 (2,171) (2,171)
Total financial assets held on behalf of Government (124,132) (2,171) (126,303)
Total net financial assets 79,074 (2,171) 76,903
Departmental net debtFootnote 1 (735) 2,171 1,436
Departmental net financial position 938 (2,171) (1,233)
Statement of Operations and Net Financial Position:
Government funding and transfers:
Net cash provided by government 244,862 (890) 243,972
Net cost of operations after government funding and transfers (3,084) 890 (2,194)
Departmental net financial position – Beginning of year (2,146) (1,281) (3,427)
Departmental net financial position – End of year 938 (2,171) (1,233)
Statement of Change in Departmental Net Debt:
Net cost of operations after government funding (3,084) 890 (2,194)
Net increase (decrease) in departmental net debt (3,082) 890 (2,192)
Departmental net debt – Beginning of year 2,347 1,281 3,628
Departmental net debt – End of year (735) 2,171 1,436
Statement of Cash Flows:
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances 889 (890) (1)
Cash used in operating activities 244,820 (890) 243,930
Net cash provided by the Government of Canada 244,862 (890) 243,972

15. Comparative Information

Comparative figures have been reclassified to conform to the current year's presentation.

Annex A: Internal Control over Financial Reporting (ICFR) System Assessment

1. Introduction

In support of an effective system of internal control, the Federal Economic Development Agency for Southern Ontario (FedDev Ontario) annually assesses the performance of its financial controls to ensure that:

FedDev Ontario will leverage the results of the periodic core control audits performed by the Office of the Comptroller General. Below is a summary of the results of the assessment conducted during fiscal year 2014–15.

2. Assessment results during fiscal year 2014–15

FedDev Ontario performed an audit to test the Agency's operating effectiveness of internal controls in key areas as follows:

Other cycles were also examined, including entity level controls, payroll and information technology (general and business controls).

For the most part, controls related to payment for goods and services and payment authority were functioning well and form an adequate basis for FedDev Ontario's system of internal control. Some adjustments to reinforce segregation of duties and information management were identified and addressed during the fiscal year.

3. Assessment plan

FedDev Ontario will continue to monitor the performance of its system of internal control, with a focus on the core controls related to financial transactions.

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