Quarterly Financial Report — Quarter ended September 30, 2017

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 theFinancial 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 2017–18 Main Estimates. This quarterly report has not been subject to an external audit or review.

1.1 Authority, Mandate and Program Activities

The Federal Economic Development Agency for Southern Ontario (FedDev Ontario) is mandated to "strengthen southern Ontario's economic capacity for innovation, entrepreneurship and collaboration; and promote the development of a strong and diversified southern Ontario economy.”

Further details on FedDev Ontario’s authorities, mandate and program activities can be found in Part II of the Main Estimates and FedDev Ontario’s Departmental Plan for 2017–18.

1.2 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 2017–18 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.

1.3. FedDev Ontario's Financial Structure

FedDev Ontario manages its expenditures under two votes:

  • Vote 1—Net operating expenditures include the Agency’s authorities related to personnel costs, operation and maintenance expenditures; and
  • Vote 5—Grants and contributions include all authorities related to transfer payments.

Expenses under budgetary statutory authorities, for which payments are made under a law previously approved by Parliament and which are not part of the annual appropriations bills, include items such as employer’s portion of the employee benefit plan.

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, 2017.

2.1 Authorities Analysis

Total authorities available for use and planned expenditures increased to $270.6 million for fiscal year 2017–18; compared to $257.8 million for fiscal year 2016–17, as illustrated in the "Statement of Authorities" table. The net increase of $12.8 million (or 5 percent) relates to:

  • $1.2 million decrease in Vote 1 (Operating Authorities);
  • $14.5 million increase in Vote 5 (Grants and Contributions Authorities); and
  • $0.5 million decrease in Statutory Authorities.

Vote 1 – Operating Authorities

Total Operating Authorities available for use for the year ending March 31, 2018 amount to $25.7 million, compared to $26.9 million for fiscal year 2016–17. The net decrease of $1.2 million (or 4 percent) in funding is the result of:

  • The sun-setting of authorities transferred to FedDev Ontario for the delivery of the Building Canada Fund ($1.2 million); 
  • Targeted savings identified in Budget 2016 ($0.1 million); and
  • Increased Operating Budget Carry-Forward in 2017–18 ($0.1 million).

Vote 5 – Grants and Contributions

Total Vote 5 Grants and Contributions Authorities available for use for the year ending March 31, 2018 amount to $242.2 million, compared to $227.7 million for fiscal year 2016–17. The net increase of $14.5 million (or 6 percent) in funding is the result of:

  • An increase of $24.4 million in funding for the Canada 150 Community Infrastructure Program; brought forward from 2016–17;
  • A net decrease of $9.2 million in grants to the City of Brantford to support the Brantford Greenwich-Mohawk Brownfield Remediation project and Mohawk Lake Remediation project;
  • A decrease of $3 million in funding for the Southern Ontario Prosperity Initiatives, reflecting funding transferred to other departments for strategic projects; and
  • An increase of $2.3 million to the Advanced Manufacturing Fund, re-profiled from previous years.

Budgetary Authorities Available
(in millions of dollars)

Bar chart illustrating the Budgetary Authorities Available (the long description is located below the image)
Description of graph
Budgetary Authorities Available
  Vote 1–Net Operating Expenditures
($ millions)
Vote 5–Grants and Contributions
($ millions)
Statutory Authorities
($ millions)
2016–17 26.9 227.7 3.2
2017–18 25.7 242.2 2.8
Budgetary Authorities Available
for 2016-17 and 2017-18
Fiscal Year
(in millions of dollars)
2016–17 2017–18
Operating Spending Authorities  26.9 25.7
Program Spending Authorities  227.7 242.2
Statutory Authorities 3.2 2.8

2.2 Expenditure Analysis

Year-to-date expenditures as of September 30, 2017 totaled $84.9 million, an increase of $18.4 million (27.7 percent) compared to $66.5 million at the same point in 2016. The variance is related primarily to an increase in transfer payment expenditures of $18.1 million, attributed to the accelerated spending in the Southern Ontario Prosperity Initiatives and Advanced Manufacturing Fund as the programs reach the fourth year of the five-year program cycle.

Year-to-Date Expenditures
as of September 30, 2017

Bar chart representing Year-to-Date Expenditures as of September 30, 2017 (the long description is located below the image)
Description of graph
Year-to-Date Expenditures as of September 30, 2017
  Vote 1 - Net Operating Expenditures
($ millions)
Vote 5 - Grants and Contributions
($ millions)
Statutory Authorities
($ millions)
2016–17 12.1 52.8 1.6
2017–18 12.6 71.0 1.4
Spending authorities
Fiscal Year
(in millions of dollars)
2016–17 2017–18
Operating Spending Authorities 12.1 12.6
Program Spending Authorities 52.8 71
Statutory Authorities 1.6 1.4

Budgetary expenditures in the second quarter 2017–18 totaled $45.3 million, compared to $28.7 million for the same period in 2016–17, as illustrated in the "Departmental Budgetary Expenditures by Standard Object" tables. The net increase of $16.6 million (58 percent) relates to:

  • $0.6 million decrease in Vote 1 (Operating) expenditures;
  • $17.3 million increase in Vote 5 (Grants and Contributions) expenditures; and
  • $0.1 million decrease in Statutory expenditures.

Vote 1 (Operating Expenditures)

Second quarter expenditures for personnel increased by $0.8 million (or 14 percent) compared to the same period in the previous fiscal year, primarily a result of retroactive salary payments made in 2017–18 related to the settlement of public service collective agreements. Professional and Special Services decreased by $1.5 million as a result of the timing of invoicing for services provided by other government departments. Transportation and telecommunications has seen a notable increase, with year-to-date spending of $0.4 million (104 percent increase over the same period in 2016–17) and second quarter spending of $0.2 million (130 percent increase over the same period in 2016–17), influenced by increased costs related to employee relocation.

Expenditures in other standard objects decreased by $0.1 million for the quarter and the year, and did not see significant fluctuations, with individual variances ranging between  -$51,000 and +$1,000 in the quarter, and -$39,000 and + $7,000 year-to-date.

Vote 5 (Grants and Contributions)

Spending on transfer payments in the second quarter accelerated, both year-to-date and compared to the second quarter of 2016, with expenditures of $71 million year-to-date. This is attributed to the grants and contributions life cycle, seeing a typical ramp-up in spending as projects enter year four of the Agency’s five-year mandate.

(For additional information on expenditures, see the Departmental Budgetary Expenditures by Standard Object table in the Appendix.)

Second Quarter Budgetary Expenditures

Bar chart representing Second Quarter Budgetary Expenditures (the long description is located below the image)
Description of graph
Second Quarter Budgetary Expenditures
  Vote 1 - Net Operating Expenditures
($ millions)
Vote 5 - Grants and Contributions
($ millions)
Statutory Authorities
($ millions)
2016–17 7.3 20.6 0.8
2017–18 6.8 37.8 0.7
Second Quarter Budgetary Expenditures
Fiscal Year
(in millions of dollars)
2016–17 2017–18
Operating Spending Authorities 7.3 6.8
Program Spending Authorities 20.6 37.8
Statutory Authorities 0.8 0.7

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.

FedDev Ontario’s Departmental Plan for 2017–18 highlights the following key risks to achieving its plans and results, and corresponding risk response strategy: evolving economic context, managing information and Human Resource management.

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

FedDev Ontario has no significant changes to report for the second quarter of 2017–18

Approved by Senior Officials:

Space to insert signature
James Meddings
President

Space to insert signature
Michael Hammond, CPA CGA
Chief Financial Officer

Ottawa, Canada
November 29, 2017

Federal Economic Development Agency for Southern Ontario
Quarterly Financial Report 
For the quarter ended

Statement of Authorities (unaudited)

Fiscal Year 2017–18
(in thousands of dollars) Total available for use for the year ending
March 31, 2018Note 1
Used during the quarter ended
September 30, 2017
Year to date used at quarter-end
Vote 1 – Net Operating expenditures 25,682 6,755 12,602
Vote 5 – Grants and Contributions 242,199 37,829 70,957
Budgetary statutory authorities 2,755 689 1,378
Total authorities 270,636 45,273 84,937
Fiscal Year 2016–17
(in thousands of dollars) Total available for use for the year ending
March 31, 2017Note 1
Used during the quarter ended
September 30, 2016
Year to date used at quarter-end
Vote 1 – Net Operating Expenditures 26,870 7,299 12,113
Vote 5 – Grants and Contributions 227,680 20,557 52,816
Budgetary statutory authorities 3,214 804 1,607
Total authorities 257,764 28,660 66,536

Federal Economic Development Agency for Southern Ontario
Quarterly Financial Report 
For the quarter ended

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

Fiscal Year 2017–18
(in thousands of dollars) Planned expenditures for the year ending March 31, 2018Note 1 Expended during the quarter ended September 30, 2017 Year to date used at quarter-end
Expenditures:
PersonnelNote 2 21,593 6,562 12,509
Transportation and communications
766 242 397
Information 414 4 40
Professional and special services 5,077 599 911
Rentals 167 20 34
Repair and maintenance 168 (7) 22
Utilities, materials and supplies 107 14 26
Acquisition of land, buildings and works
-   -   -  
Acquisition of machinery and equipment
54 7 36
Transfer payments 242,198 37,829 70,957
Other subsidies and payments 92 3 4
Total budgetary expenditures 270,636 45,273 84,936
Fiscal Year 2016–17
(in thousands of dollars) Planned expenditures for the year ending March 31, 2017Note 1 Expended during the quarter ended September 30, 2016 Year to date used at quarter-end
Expenditures:
PersonnelNote 2 23,018 5,745 10,929
Transportation and communications
997 105 195
Information 494 55 79
Professional and special services 4,418 2,090 2,373
Rentals 172 30 36
Repair and maintenance 316 16 36
Utilities, materials and supplies 301 13 19
Acquisition of land, buildings and works
-   -   -  
Acquisition of machinery and equipment
350 36 37
Transfer payments 227,680 20,557 52,816
Other subsidies and payments 18 13 16
Total budgetary expenditures 257,764 28,660 66,536
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