Quarterly Financial Report — Quarter ended September 30, 2016

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 2016–17 Main Estimates and Supplementary Estimates A. 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 2009 to support economic growth in southern Ontario through the delivery of federal programs and services. 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 prosperity.

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

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 and Supplementary Estimates A for the 2016–17 fiscal year. This quarterly report has been prepared using a special-purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before moneys can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.

FedDev Ontario uses the full accrual method of accounting to prepare and present its annual financial statements that are part of its performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

2. Highlights of Fiscal Quarter and Fiscal Year-to-Date (YTD) Results

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, 2016.

2.1 Authorities Analysis

Planned departmental spending in fiscal year 2016–17 totals $257.8 million, a $41.2 million increase over that available at the close of the second quarter in the 2015–16 fiscal year. This comprises a $41.4 million increase in program authorities and a decrease of $0.2 million in operating authorities.

The $41.4 million increase in program authorities is the result of the introduction of funding for the Canada 150 Community Infrastructure Program ($44.4 million), an adjustment to the Southern Ontario Prosperity Initiatives ($3.0 million decrease and $8.6 million transfer to other government departments), a decrease to the Advanced Manufacturing Fund ($1.0 million) and an additional $9.6 million for the grant for the City of Brantford to support the Brantford Greenwich-Mohawk Brownfield Remediation project.

Figure: Total authorities available for use for the year ending , compared to total authorities available for use for the year ending (in millions of dollars)
Bar chart of Total authorities available for use for the year ending March 31, 2017, compared to total authorities available for use for the year ending March 31, 2016 (in millions of dollars) (the long description is located below the image)
Description of Figure
Total authorities available for use for the year ending March 31, 2017, compared to total authorities available for use for the year ending March 31, 2016 (in millions of dollars)
Type of authorities  Fiscal Year
(in millions of dollars)
2015-16 2016-17
Operating Spending Authorities 30.3 30.1
Program Spending Authorities 186.2 227.7

2.2 Expenditure Analysis

Used during the Quarter

In the second quarter of the 2016–17 fiscal year, total budgetary expenditures were $28.7 million compared to $36.0 million reported in the same period of 2015–16. This represents a year-over-year decrease of $7.3 million (or 20 percent).

Quarterly spending includes $20.6 million on programs and $8.1 million on operating expenditures, representing a decrease of $8.2 million in programs and increase of $0.9 million in operating expenditures over fiscal year 2015–16.

Year-to-Date Analysis

On a year-to-date basis, as of the end of the second quarter of fiscal year 2016–17, total budgetary expenditures were $66.5 million, compared to $57.1 at the end of the same period for 2015–16. This represents a year-over-year increase of $9.4 million (or 16 percent). This increase is primarily attributed to higher expenditures in grants and contributions during the current fiscal year as projects progressed, resulted in many project-related claims being submitted and reimbursed.

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 $20.6 million in the second quarter of 2016–17, compared to $28.8 million in the same quarter of 2015–16.

Personnel-related expenditures totaled $5.7 million, displaying minimal change from the $5.8 million in the same period in 2015–16. This small change is primarily attributed to efficiencies gained through the alignment of all regional development agencies under the Innovation, Science and Economic Development portfolio in the fall of 2015.

During the second quarter of 2016–17, other operating expenditures totaled $2.4 million, an increase of $0.9 million from the same period in 2015–16. This increase was mainly driven by a timing difference for the Agency's memorandum of understanding with the Department of Innovation, Science and Economic Development for Information Technology services. Variance in expenditures on Transportation and Telecommunications (−$67,000), Utilities, Materials and Supplies (−$25,000) and Acquisition of Machinery and Equipment (−$105,000) were also noted based on the timing of 2015–16 invoicing related to the headquarters relocation to Waterloo. Spending on other standard objects displayed non-material changes ranging from +$19,000 to -$9,000.

Year-to-Date Analysis

Transfer payment spending has increased by $8.8 million (or 20 percent) 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. Expenditures are in line with the Agency's planned spending for the fiscal year.

Operating expenditures have increased by $0.6 million (or 5 percent). This change reflects the net impact of both spending increases and decreases across the Agency's activities.

Spending in the area of Professional and Special Services has increased ($1.1 million) reflecting the timing difference of payments for Memorandums of Understanding for services from other government departments. Minor increases ranging from $7,000 to $18,000 were also noted in the areas of Information, Rentals and other Subsidies and Payments.

Spending has decreased in the areas of personnel (−$179,000), Transportation and Telecommunications (−$87,000), repair and maintenance (−$30,000), Utilities, Materials and Supplies (−$32,000) and machinery and equipment (−$172,000), which is mainly related to the costs incurred in 2015–16 for expenditures related to the relocation of the Agency's headquarters.

3. Risks and Uncertainties

FedDev Ontario maintains a Corporate Risk Profile, which identifies and assesses risks that could impact the objectives of the agency. To minimize potential financial impact, FedDev Ontario maintains a strong system of budgeting, forecasting and internal controls, helping to mitigate financial risks related to the Agency's funding authorities.

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

In Budget 2016, the Government of Canada committed an additional $150 million over two years to the Canada 150 Community Infrastructure Program, doubling the annual contributions from FedDev Ontario to $44.4 million in fiscal years 2016–17 and 2017-18.

Subsequent to the quarter-end, James Meddings was appointed as FedDev Ontario’s President, effective October 31, 2016.

Approval by Senior Officials

Original signed by

space to insert Nancy Horsman' signature
James Meddings
President
Ottawa, Canada
November 29,

Original signed by

Space to insert Kei Moray's signature
Kei Moray
Acting Chief Financial Officer
Ottawa, Canada

Statement of Authorities (unaudited)

Table: Statement of Authorities (unaudited)
(in thousands of dollars) Fiscal Year 2016–17 Fiscal Year 2015–16
Total available for use for the year ending March 31, 2017Footnote 1 Used during the quarter ended September 30, 2016 Year to date used at quarter-end Total available for use for the year ending March 31, 2016 Used during the quarter ended September 30, 2015 Year to date used at quarter-end
Vote 1–Net Operating Expenditures 26,870 7,299 12,113 27,161 6,393 11,516
Vote 5–Grants and Contributions 227,680 20,557 52,816 186,240 28,808 44,022
Budgetary statutory authorities:
Employee benefit plans 3,214 804 1,607 3,151 788 1,576
Minister of State—car allowance 2 1 1
Total budgetary authorities 257,764 28,660 66,536 216,554 35,989 57,115
Non-budgetary authorities
Total authorites 257,764 28,660 66,536 216,554 35,989 57,115

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

Departmental budgetary expenditures by Standard Object (unaudited)
(in thousands of dollars) Fiscal Year 2016–17 Fiscal Year 2015–16
Planned expenditures for the year ending March 31, 2017Footnote 1 Used during the quarter ended September 30, 2016 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2016 Used during the quarter ended June 30, 2015 Year to date used at quarter-end
Expenditures:
Personnel Footnote 2 23,018 5,745 10,929 22,893 5,758 11,108
Transportation and communications 997 105 195 985 172 282
Information 494 55 79 240 36 70
Professional and special services 4,418 2,090 2,373 4,658 985 1,280
Rentals 172 30 36 388 23 29
Repair and maintenance 316 16 36 596 25 66
Utilities, materials and supplies 301 13 19 130 38 51
Acquisition of land, buildings and works 0 0 0 38
Acquisition of machinery and equipment 350 36 37 365 141 209
Transfer payments 227,680 20,557 52,816 186,240 28,808 44,022
Other subsidies and payments 18 13 16 22 3 (2)
Total budgetary expenditures 257,764 28,660 66,536 216,554 35,989 57,115
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