Archived — Quarterly Financial Report — Quarter ended September 30, 2015

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


1. Introduction

This quarterly report 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 report should be read in conjunction with the 2015–16 Main Estimates. This quarterly report has not been subject to an external audit or review.

Authority, Mandate & Program Activities

As Canada's most populous region—home to more than 12.8 million residents living in 288 communities—southern Ontario is a key contributor to the Canadian economy. The Government of Canada created the Federal Economic Development Agency for Southern Ontario (FedDev Ontario) in Budget 2009. FedDev Ontario works with communities, businesses and not-for-profit organizations in southern Ontario to actively promote the region and build a strong foundation of investment and partnerships to help secure Canada's long-term economic growth.

Through the support of businesses and organizations, FedDev Ontario is able to advance innovative technologies and leverage community capacity to develop regionally-based economic solutions. FedDev Ontario works as a co-investor, convener, champion and delivery agent and intentionally directs its resources to activities with the greatest regional impacts.

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

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 2015–16 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 money 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

This section highlights the significant items that contributed to the net increase or decrease in authorities available for the year and actual expenditures for the quarter ended September 30, 2015.

2.1 Authorities Analysis

Planned departmental spending in fiscal year 2015–16 totals $216.6 million, an $8.7 million increase over that available at the close of the second quarter in the 2014–15 fiscal year. This comprises an $8.6 million increase in program authorities and a $0.1 million increase in operating authorities.

The $8.6 million increase in program authorities is the result of an increase to the Advanced Manufacturing Fund ($12.0 million) and decrease to the Southern Ontario Prosperity Initiatives ($3.4 million), both representing funding that was reprofiled from 2014–15 to 2015–16.

More than 85 percent of FedDev Ontario's planned spending is allocated to program authorities (grants and contributions). The remaining 15 percent is used to fund internal support services, such as communications, policy development, finance and human resources. This funding is also used to support FedDev Ontario's efforts as a convener and champion within southern Ontario.

Figure : Total authorities available for use for the year ending March 31, 2016 compared to total authorities available for use for the year ending March 31, 2015 (in millions of dollars)

Bar graph of total authorities available for use for the year ending March 31, 2016 compared to total authorities available for use for the year ending March 31, 2015 (in millions of dollars) (the long description is located below the image)
Description of Figure 5
Total authorities available for use for the year ending March 31, 2016 compared to total authorities available for use for the year ending March 31, 2015 (in millions of dollars)
type of authorities  Fiscal Year
(in millions of dollars)
2014–15 2015–16
Operating Spending Authorities 30.2 30.3
Program Spending Authorities 177.6 186.2

2.2 Expenditure Analysis

Used During the Quarter

In the second quarter of the 2015–16 fiscal year, total budgetary expenditures were $36.0 million compared to $17.6 million reported in the same period of 2014–15. This represents a year-over-year increase of $18.4 million, or 105 percent.

Quarterly spending includes $28.8 million on transfer payments and $7.2 million on operating expenditures. Spending on operating costs has increased slightly compared to $6.3 million for the same period in 2014–15 and transfer payment expenditures have increased by $17.6 million.

Year-to-Date Analysis

On a year-to-date basis, as of the end of the second quarter of fiscal year 2015–16, total budgetary expenditures were $57.1 million compared to $24.1 million at the end of the same period for 2014–15. This represents a year-over-year increase of $33.0 million (or 137 percent). This increase can be attributed to higher expenditures in grants and contributions during the current fiscal year as projects progressed, resulting in greater activities and eligible costs incurred.

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

Spending on transfer payments was $28.8 million in the second quarter of 2015–16, compared to $11.3 million in the same quarter of 2014–15. The reason for the variance is that the first half of 2014–15 was the beginning of the Agency's second mandate: the project intake cycle for the new suite of funding initiatives had just opened and there were very few applicants that had been approved for funding and that had submitted expenditure claims by the mid-point of the fiscal year. The higher level of expenditures recorded in the second quarter of 2015–16 reflects the steady growth in the number of approved applications, for which many project-related expense claims were submitted this quarter.

Personnel-related expenditures totaled $5.8 million; an increase of $0.4 million (or 7 percent) from the same period in 2014–15.

The following Standard Objects have relatively low expenditures, so small variances in the dollar value of spending will result in large percentage variances. This is anticipated to normalize during the annual cycle.

There is a year-over-year increase in expenditures related to rentals ($7,000 or 44 percent), which is related to the timing of the billing cycle and should normalize in future quarters. There are increases to expenditures for acquisition of machinery and equipment ($133,000 or 1,663 percent), and utilities and materials ($20,000 or 111 percent), which are primarily attributed to the relocation of FedDev Ontario's headquarters to Waterloo and the costs associated with fitting up the new office space.

Professional and special services has increased ($445,000 or 82 percent) which is related to billing for Memorandum of Understanding with other government departments providing services to FedDev Ontario, as well as costs associated with the office relocation.

During the second quarter of 2015–16, expenditures decreased for repair and maintenance ($71,000 or 74 percent), other subsidies and payments ($5,000 or 63 percent) and transportation and communications ($38,000 or 18 percent).

Year-to-Date Analysis

Transfer payment spending has increased by $32.7 million year-over-year, which is attributed to the higher expenditures in grants and contributions during the current fiscal year as projects progressed and incurred eligible costs.

Spending has decreased in the areas of transportation and communications ($40,000 or 12 percent) and repair and maintenance ($37,000 or 36 percent), which are largely related to the timing of payments occurring earlier in the previous fiscal year.

Spending has increased in the areas of professional and special services ($572,000 or 81 percent), acquisition of machinery and equipment ($195,000 or 1,393 percent) and utilities, materials and supplies ($24,000 or 89 percent). These increases are primarily attributed to the relocation of FedDev Ontario's headquarters.

Other subsidies and payments expenditures have decreased by $654,000 or 100 percent, due to increased previous year spending related to the implementation of pay in arrears by the Government of Canada.

3. Risks and Uncertainties

FedDev Ontario is actively managing the risks identified in the previous year related to the expenditure of transfer payment authorities. For example, a strong system of budgeting, forecasting and controls is in place to help mitigate financial risks relating to the Agency's funding authorities.

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

On July 14, 2015 FedDev Ontario officially opened its new headquarters in Waterloo, where the Agency was recognized with the Silver Accreditation award from Public Works and Government Services Canada for their successful implementation of the Workplace 2.0 office fit-up standard.

Significant changes to personnel include the appointment of Nancy Horsman as FedDev Ontario's President on August 10, 2015.

Approval by Senior Officials

Original signed by

space to insert Nancy Horsman' signature
Nancy Horsman
President
Waterloo, Canada

Original signed by

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


Statement of Authorities (unaudited)

Statement of Authorities (unaudited)
Fiscal Year 2015–16
(in thousands of dollars)
Fiscal Year 2014–15
(in thousands of dollars)
Total available for use for the year ending March 31, 2016Footnote 1 Used during the quarter ended September 30, 2015 Year to date used at quarter-end Total available for use for the year ending March 31, 2015Footnote 1 Used during the quarter ended September 30, 2014 Year to date used at quarter-end
Vote 50—Net Operating Expenditures 27,161 6,393 11,516 27,123 5,573 11,192
Vote 55—Grants and Contributions 186,240 28,808 44,022 177,632 11,254 11,333
Budgetary statutory authorities:
Employee benefit plans 3,151 788 1,576 3,093 774 1,547
Minister of State—car allowance 2 - 1 2 - 1
Total budgetary authorities 216,554 35,989 57,115 207,850 17,601 24,073
Non-budgetary authorities - - - - - -
Total authorities 216,554 35,989 57,115 207,850 17,601 24,073

Table 1: Departmental budgetary expenditures by Standard Object (unaudited)

Table 1: Departmental budgetary expenditures by Standard Object (unaudited)
Fiscal Year 2015-16
(in thousands of dollars)
Fiscal Year 2014-15
(in thousands of dollars)
Planned expenditures for the year ending March 31, 2016Footnote 1 Used during the quarter ended September 30, 2015 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2015Footnote 1 Used during the quarter ended September 30, 2014 Year to date used at quarter-end
Expenditures:
PersonnelFootnote 2 22,893 5,758 11,108 21,842 5,434 10,835
Transportation and communications 985 172 282 847 210 322
Information 240 36 70 164 17 48
Professional and special services 4,658 985 1,280 5,671 540 708
Rentals 388 23 29 164 16 31
Repair and maintenance 596 25 66 131 96 103
Utilities, materials and supplies 130 38 51 74 18 27
Acquisition of land, buildings, and works 38 - - 5 - -
Acquisition of machinery and equipment 365 141 209 200 8 14
Transfer payments 186,240 28,808 44,022 177,632 11,254 11,333
Other subsidies and payments 22 3 (2) 1,120 8 652
Total budgetary expenditures 216,554 35,989 57,115 207,850 17,601 24,073
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