Quarterly Financial Report — Quarter ended December 31, 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 B. 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 B 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 December 31, 2016.

2.1 Authorities Analysis

Planned departmental spending in fiscal year 2016–17 totals $257.8 million, a $41.2 million increase over authorities available at the close of the third quarter in the 2015–16 fiscal year. This is comprised of 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 approval of an additional $44.4 million in funding for the Canada 150 Community Infrastructure Program, an adjustment to the Southern Ontario Prosperity Initiatives ($3.0 million decrease and $8.6 million transfer to other government departments), a decrease of $1.0 million to the Advanced Manufacturing Fund and an additional $9.6 million for the grant for the City of Brantford to support the Brantford Greenwich-Mohawk Brownfield Remediation project.

Total authorities
(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
(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 third quarter of the 2016–17 fiscal year, total budgetary expenditures were
$51.6 million compared to $47.0 million reported in the same period of 2015–16. This represents a year-over-year increase of $4.6 million (or 10 percent).

Expenditures for the Agency are primarily driven by spending in the areas of grants and contributions, and personnel. For the quarter, spending includes $45.1 million on programs and $6.5 million on operating expenditures, representing an increase of $5.0 million in programs and a decrease of $0.4 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 third quarter of fiscal year 2016–17, total budgetary expenditures were $118.1 million, compared to $104.1 at the end of the same period for 2015–16. This represents a year-over-year increase of $14.0 million (or 13 percent). This increase is mainly attributed to higher expenditures in the Agency's grants and contributions for new programming under the Canada 150 Community Infrastructure Program, and increased spending under the Southern Ontario Prosperity Initiatives and Advanced Manufacturing Fund, which reflects the maturity of projects and increases in claim reimbursement.

Statement of Departmental Budgetary Expenditures by Standard Object

The following provides additional analysis of key expenditure variances by Standard Object:

Used during the Quarter

Spending on transfer payments was $45.1 million in the third quarter of 2016–17, compared to $40.1 million in the same quarter of 2015–16. The increase is due to the current suite of programs having committed funding against a portfolio of projects that are currently underway, resulting in increased submissions of eligible costs for reimbursement.

Personnel-related expenditures totaled $5.5 million, a decrease of $400,000 from the $5.9 million reported in the same period for 2015–16. This change is attributable to efficiencies gained through the alignment of all regional development agencies under the Innovation, Science and Economic Development portfolio in the fall of 2015, and the time involved in recruiting qualified staff to fill positions across the Agency.

Year-to-Date Analysis

Transfer payment spending has increased by $13.8 million (or 16 percent) year-over-year, which is attributed to the higher expenditures in grants and contributions during the current fiscal year as projects progressed to maturity and incurred more eligible costs.

Operating expenditures have increased by $0.2 million (or 1 percent). This minor change reflects the net impact of both spending increases and decreases across the Agency to align with current year activities.

Spending in the area of professional and special services has increased by $1.1 million reflecting the timing difference of payments for Memorandums of Understanding for services from other government departments.

Spending has decreased by $524,000 in personnel, resulting from both the savings from alignment under the Minister, ISED portfolio and the time required to staff positions arising from regular turnover. Transportation and telecommunications, and machinery and equipment have also decreased by $120,000 and $198,000 respectively, which is attributed to the timing of invoicing associated with office relocation projects. In 2015–16 FedDev Ontario relocated its headquarters to Waterloo. While regional office relocations are taking place in 2016–17, invoices have yet to be received for these activities.

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.

With respect to personnel changes, on January 4, 2017, Alexia Touralias was named acting Vice-President, Business Innovation and Community Development.

Additionally, in advance of publishing quarter-end results, on February 1, 2017 Michael Hammond was appointed as acting Chief Financial Officer.

Approval by Senior Officials

Original signed by

space to insert Nancy Horsman' signature
James Meddings
President

Ottawa, Canada

Original signed by

Space to insert Kei Moray's signature
Michael Hammond, CPA CGA
Chief Financial Officer

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 December 31, 2016 Year to date used at quarter-end Total available for use for the year ending March 31, 2016Footnote 1 Used during the quarter ended December 31, 2015 Year to date used at quarter-end
Vote 1–Net Operating Expenditures 26,870 5,688 17,801 27,161 6,118 17,633
Vote 5–Grants and Contributions 227,680 45,112 97,928 186,240 40,086 84,108
Budgetary statutory authorities:
Employee benefit plans 3,214 804 2,411 3,153 787 2,364
Total budgetary authorities 257,764 51,604 118,140 216,554 46,991 104,105
Non-budgetary authorities - - - - - -
Total authorites 257,764 51,604 118,140 216,554 46,991 104,105

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 December 31, 2016 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2017Footnote 1 Used during the quarter ended December 31, 2015 Year to date used at quarter-end
Expenditures:
Personnel Footnote 2 23,018 5,525 16,454 22,893 5,871 16,978
Transportation and communications 997 165 360 985 198 480
Information 494 47 126 240 58 128
Professional and special services 4,418 717 3,090 4,658 667 1,947
Rentals 172 8 44 388 20 49
Repair and maintenance 316 2 38 596 24 90
Utilities, materials and supplies 301 12 31 130 24 75
Acquisition of land, buildings and works 0 0 0 38 - -
Acquisition of machinery and equipment 350 15 52 365 41 250
Transfer payments 227,680 45,112 97,928 186,240 40,086 84,108
Other subsidies and payments 18 1 17 22 2 -
Total budgetary expenditures 257,764 51,604 118,140 216,554 46,991 104,105
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