Archived — FedDev Ontario Financial Statements (Unaudited) —
For the year ended March 31, 2016

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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 March 31, 2016, 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 is subject to periodic Core Control Audits performed by the Office of the Comptroller General and uses the results of such audits to comply with the Treasury Board Policy on Internal Control.

A Core Control Audit was performed in 2015-16 by the Office of the Comptroller General of Canada (OCG). The Audit Report and related Management Action Plan are posted on the departmental web site at http://www.feddevontario.gc.ca/eic/site/723.nsf/eng/h_02352.html.

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

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Nancy Horsman, Deputy Head
Signed at Waterloo, Canada

August 31, 2016
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Kei Moray, Acting Chief Financial Officer
Signed at Waterloo, Canada

August 31, 2016
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Federal Economic Development Agency for Southern Ontario
Statement of Financial Position (Unaudited)
As at March 31, 2016
(in thousands of dollars)
2016 2015
Liabilities
Accounts payable and accrued liabilities (note 4) 34,373 28,708
Vacation pay and compensatory leave 914 975
Employee future benefits (note 5) 284 400
Total liabilities 35,571 30,083
Financial assets
Due from Consolidated Revenue Fund 34,278 28,584
Accounts receivable and advances (note 6) 7,774 6,625
Loans receivable (note 7) 161,789 126,635
Total financial assets 203,841 161,844
Financial assets held on behalf of Government
Accounts receivable and advances (note 6) (7,769) (6,618)
Loans receivable (note 7) (161,789) (126,635)
Total financial assets held on behalf of Government (169,558) (133,253)
Total net financial assets 34,283 28,591
Departmental net debt 1,288 1,492
Non-financial assets
Prepaid expenses 10 220
Tangible capital assets (note 10) 91 137
Total non-financial assets 101 357
Departmental net financial position (1,187) (1,135)

Contractual obligations (note 8)

Contingent liabilities (note 9)

The accompanying notes form an integral part of these financial statements.

Space to insert signature
Nancy Horsman, Deputy Head
Signed at Waterloo, Canada

August 31, 2016
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Kei Moray, Acting Chief Financial Officer
Signed at Waterloo, Canada

August 31, 2016
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Federal Economic Development Agency for Southern Ontario
Statement of Operations and Departmental Net Financial Position (Unaudited)
As at March 31 2016
(in thousands of dollars)
2016
Planned
Results
2016 2015
Expenses
Technological Innovation 31,358 34,591 6,939
Business Development 52,787 27,773 34,831
Community Economic Development 41,265 46,364 24,450
Internal Services 19,591 19,676 19,045
Expenses incurred on behalf of Government 9,284 (12,093) (6,230)
Total expenses 154,285 116,311 79,035
Revenues
Amortization of discounts 3,081 3,203 7,457
Gains on disposal of assets 0 0 0
Other revenue 0 55 149
Revenues earned on behalf of Government (3,081) (3,258) (7,606)
Total revenues 0 0 0
Net cost of operations before funding and transfers 154,285 116,311 79,035
Government funding and transfers
Net cash provided by Government 106,665 124,215
Change in due from Consolidated Revenue Fund 5,694 (48,315)
Services provided without charge by other government departments (note 11) 3,903 3,886
Transfer of the transition payments for implementing salary payments in arrears (note 12) (3) (658)
Transfer of assets from other government departments 0 5
Net cost of operations after government funding and transfers 52 (98)
Departmental net financial position – Beginning of year (1,135) (1,233)
Departmental net financial position – End of year (1,187) (1,135)

Segmented information (note 13)

The accompanying notes form an integral part of these financial statements.

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Federal Economic Development Agency for Southern Ontario
Statement of Change in Departmental Net Debt (Unaudited)
As at March 31 2016
(in thousands of dollars)
2016 2015
Net cost of operations after government funding 52 (98)
Change due to tangible capital assets
Acquisition of tangible capital assets (note 10) 0 0
Amortization of tangible capital assets (note 10) (46) (60)
Net gain (loss) on disposal of tangible capital assets 0 (11)
Proceeds from disposal of tangible capital assets 0 0
Transfer from other government departments 0 5
Total change due to tangible capital assets (46) (66)
Change due to prepaid expenses (210) 220
Net increase (decrease) in departmental net debt (204) 56
Departmental net debt – Beginning of year 1,492 1,436
Departmental net debt – End of year 1,288 1,492

The accompanying notes form an integral part of these financial statements.

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Federal Economic Development Agency for Southern Ontario
Statement of Cash Flows (Unaudited)
As at March 31 2016
(in thousands of dollars)
2016 2015
Operating activities
Net cost of operations before government funding and transfers 116,311 79,035
Non cash items:
Amortization of tangible capital assets (note 10) (46) (60)
Gain (loss) on disposal of tangible capital assets 0 (11)
Services provided without charge by other government departments (note 11) (3,903) (3,886)
Transition payments for implementing salary payments in arrears (note 12) 3 658
Variations in Statement of Financial Position
Increase (decrease) in accounts receivable and advances (2) 3
Increase (decrease) in prepaid expenses (210) 220
Decrease (increase) in accounts payable and accrued liabilities (5,665) 48,263
Decrease (increase) in vacation pay and compensatory leave 61 101
Decrease (increase) in future employee benefits 116 (108)
Cash used in operating activities 106,665 124,215
Capital investing activities
Acquisitions of tangible capital assets (note 10) 0 0
Proceeds from sale of tangible capital assets 0 0
Cash used in capital investing activities 0 0
Net cash provided by the Government of Canada 106,665 124,215

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)
As at March 31 2016

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 2015-16 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, while strengthening its profile as a willing and capable partner in economic development.

Budget 2013 renewed FedDev Ontario's core funding for a five-year period and 2014-15 marked the first year of this renewed mandate. As a result, 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 renewal of the Eastern Ontario Development Program, the Economic Development Initiative and other ongoing programs 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 creating 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 by strengthening linkages between the region's businesses especially small- and medium-sized enterprises (SMEs) and its postsecondary institutions. These are the elements necessary to improve the region's productivity, accelerate economic growth and maintain and enhance 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 creation of start-up companies, helping existing businesses expand and helping companies improve their productivity. Transfer payments in support of this program are made through the administration of contribution agreements with businesses, not-for-profit organizations and post-secondary institutions through a variety of initiatives under SOPI, including Investing in Business Innovation (IBI), Investing in Business Growth and Productivity (IBGP), and Investing in Regional Diversification (IRD).

Community Economic Development

This program supports the 288 communities (small, large, rural, urban, Francophone and Indigenous) 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 the Canadians public sector account standards.

Significant accounting policies are as follows:

  1. Parliamentary authorities — The Federal Economic Development Agency for Southern Ontario (FedDev Ontario) is 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 2015-16 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 2015-16 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 or to 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:

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

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

    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 in reduction of the entity's gross revenues.

    The changes in fair value of the repayable loans receivable creates the unamortized discount; of which a portion of it is amortized and recorded as amortization of discounts revenue reflecting the increase in value of outstanding loans receivable. The majority of FedDev Ontario's revenue results from the recognition of the amortization of discounts on the repayable loans receivable.

  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 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. Accounts and loans receivable are stated at the lower of cost and net recoverable value. However, when the terms of the loans are concessionary, such as those provided with a low or no interest clause, they are recorded at their estimated present value. A portion of the unamortized discount is recorded as revenue each year to reflect the change in the present value of the loans outstanding. Transfer payments that are unconditionally repayable are recognized as loans receivable. The loans receivable portfolio 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 loans. A valuation allowance is recorded for loans receivable where recovery is considered uncertain. Defaulted loans receivable where recovery is considered certain are sent to advanced collections and represented as accounts receivable for external parties with no allowance for uncollectibility.
  8. Contingent liabilities — Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or if an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.
  9. 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:

    Amortization of tangible capital assets
    Asset class Amortization period
    Computer hardware 10 years
    Machinery and equipment 10 years
    Vehicles 3 to 7 years
  10. 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 doubtful accounts, the unamortized discount related to unconditional repayable transfer payments, 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
2016 2015
(in thousands of dollars)
Net cost of operations before government funding and transfers 116,311 79,035
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (46) (60)
Gain (loss) on disposal of tangible capital assets 0 (11)
Services provided without charge by other government departments (3,903) (3,886)
Increase (decrease) in vacation pay and compensatory leave 61 101
Decrease (increase) in employee future benefits 116 (108)
Unamortized discount (6,038) (2,537)
Refund of prior years expenditures 5,557 468
Refunds of previous year's accounts payable 717 4,371
Total items affecting net cost of operations but not affecting authorities (3,536) (1,662)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets 0 0
Increase (decrease) in prepaid expenses (210) 220
Increase (decrease) in advances (2) 3
Loans issued on behalf of Government 77,231 25,849
Transition payments for implementing salary payments in arrears 3 658
Total items not affecting net cost of operations but affecting authorities 77,022 26,730
Current year authorities used 189,797 104,103

b) Authorities provided and used

Authorities provided and used
2016 2015
(in thousands of dollars)
Authorities provided:
Vote 1 – Operating 27,161 27,319
Vote 5 – Contributions 182,240 177,632
Statutory amounts 3,214 3,090
Less:
Authorities available for future years 0 0
Lapsed: Operating (458) (659)
Lapsed: Contributions (22,360) (103,245)
Lapsed: Proceeds from the disposal of crown assets 0 (34)
Current year authorities used 189,797 104,103

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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
2016 2015
(in thousands of dollars)
Accounts payable – Other government departments and agencies 225 160
Accounts payable – External parties 32,604 27,155
Total accounts payable 32,829 27,315
Accrued liabilities 1,544 1,393
Total accounts payable and accrued liabilities 34,373 28,708

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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 December 31, 2012 and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.

The 2015-16 expense amounts to $2,850,015 ($2,702,643 in 2014-15). For Group 1 members, the expense represents approximately 1.25 times (1.41 times in 2014-15) the employee contributions and, for Group 2 members, approximately 1.24 times (1.39 times in 2014-15) 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
2016 2015
(in thousands of dollars)
Accrued benefit obligation – Beginning of year 400 292
Expense for the year 248 239
Benefits paid during the year (364) (131)
Accrued benefit obligation – End of year 284 400

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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
2016 2015
(in thousands of dollars)
Receivables – Other government departments and agencies 81 124
Receivables – External parties 7,688 6,494
Employee advances 5 7
Gross accounts receivable and advances 7,774 6,625
Accounts receivable held on behalf of government (7,769) (6,618)
Net accounts receivable and advances 5 7

7. Loans receivable

The following table presents details of FedDev Ontario's loans and transfer payments recoverable balances:

Loans receivable
2016 2015
(in thousands of dollars)
Loans receivable 226,731 182,281
Less: Unamortized discount (9,537) (6,702)
Subtotal 217,194 175,579
Less: Allowance for uncollectibility (55,405) (48,944)
Gross loans receivable 161,789 126,635
Loans held on behalf of Government (161,789) (126,635)
Net loans receivable 0 0

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a) Loans receivable from unconditionally repayable contributions

The loans receivable portfolio consists of 269 non-interest bearing loans issued in the years from 2009 to 2016 with prescribed annual repayment terms. The loans are recorded at their discounted net present values using market interest rates at the time of the loans. An allowance of $55,405,114 ($48,944,146 in 2014-15) has been recorded.

Unconditionally repayable contributions relate to contributions made to outside parties that must be repaid without qualification.

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
2017 2018 2019 2020 Total
(in thousands of dollars)
Transfer payments 140,374 95,438 62,737 0 298,549
Total 140,374 95,438 62,737 0 298,549

The contractual obligations for transfer payments for 2017 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.

9. Contingent liabilities

In the normal course of its operations, FedDev Ontario becomes involved in various legal actions. Some of these potential liabilities may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability has been identified. As at March 31, 2016, FedDev Ontario has one contingent liability based on the legal assessment carried out by Justice Canada of potential liability. The existence and amount of liability depend upon the future outcome of this claim, which are not currently determinable.

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10. Tangible capital assets

Tangible capital assets
Cost
(in thousands of dollars)
Accumulated Amortization
(in thousands of dollars)
Net Book Value
(in thousands of dollars)
Capital Asset Class Opening Balance Acquisitions, Transfers and Adjustments Disposals and Write-Offs Closing Balance Opening Balance Amortization Acquisitions, Transfers and Adjustments Disposals and Write-Offs Closing Balance 2016 2015
Computer hardware 10 0 0 10 5 0 0 0 5 5 5
Machinery and equipment 25 0 0 25 10 2 0 0 12 13 15
Vehicles 319 0 0 319 202 44 0 0 246 73 117
Total 354 0 0 354 217 46 0 0 263 91 137

11. 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 the Department of Innovation, Science and Economic Development 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
2016 2015
(in thousands of dollars)
Employer's contributions to the health and dental insurance plan 1,645 1,518
Accommodation 2,258 2,368
Total 3,903 3,886

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 Services and Procurement 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 August 9, 2009, FedDev Ontario administers four programs. Three of the four programs (Canada Strategic Infrastructure Fund, Canada-Ontario Municipal Rural Infrastructure Fund, and the Municipal Rural Infrastructure Fund) have been completed. During 2015-16, FedDev Ontario incurred expenses of $18,000,000 ($13,717,901 in 2014-15) 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
2016 2015
(in thousands of dollars)
Building Canada Fund – Infrastructure Canada 18,000 13,718
Total 18,000 13,718

(c) Other transactions with related parties

Other transactions with related parties
2016 2015
(in thousands of dollars)
Expenses – Other government departments and agencies 7,920 6,474

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

12. 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 Services and Procurement Canada, who is responsible for the administration of the Government pay system.

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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 2016 Total 2015 Total
Transfer payments
Transfers to non-profit organizations 21,558 12,558 42,441 0 76,557 44,174
Transfers to Industry 2,824 3,107 0 0 5,931 2,491
Transfer to other levels of government 0 0 0 0 0 (335)
Total transfer payments 24,382 15,665 42,441 0 82,488 46,330
Operating expenses
Salaries and employee benefits 2,495 5,445 4,021 13,148 25,109 23,625
Bad debt expense 7,338 5,376 (621) 0 12,093 6,230
Professional and special services 38 559 120 3,631 4,348 4,031
Accommodation 227 489 351 1,191 2,258 2,368
Travel 89 120 42 404 655 810
Furniture and equipment 5 3 1 395 404 585
Communication 0 92 0 519 611 402
Rental 1 4 0 179 184 392
Other operating expenses 3 0 3 19 25 283
Utilities, materials and supplies 13 10 6 99 128 95
Amortization 0 0 0 46 46 60
Equipment repair and maintenance 0 10 0 45 55 54
Expenses incurred on behalf of Government (7,338) (5,376) 621 0 (12,093) (6,230)
Total operating expenses 2,871 6,732 4,544 19,676 33,823 32,705
Total expenses 27,253 22,397 46,985 19,676 116,311 79,035
Revenues
Amortization of discounts 892 2,167 144 0 3,203 7,457
Other revenue 0 0 0 55 55 149
Revenues earned on behalf of Government (892) (2,167) (144) (55) (3,258) (7,606)
Total revenues 0 0 0 0 0 0
Net cost from continuing operations 27,253 22,397 46,985 19,676 116,311 79,035

14. Comparative information

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

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