Quarterly Financial Report — For the Quarter Ended December 31, 2018

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 2018–19 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 2018–19.

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 2018–19 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.

1.3 FedDev Ontario's Financial Structure

FedDev Ontario manages its expenditures under two votes:

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 December 31, 2018.

2.1 Authorities Analysis

As of this quarter, the total authorities available for use and planned expenditures decreased to $242.6 million for fiscal year 2018–19, compared to $271.4 million for fiscal year 2017–18, as illustrated in the "Statement of Authorities" table. The net decrease of $28.8 million (or 11 percent) relates to:

Vote 1 – Operating Authorities

Total Vote 1 Operating Authorities available for use for the year ending March 31, 2019 amount to $27.6 million, compared to $26.5 million for fiscal year 2017–18, representing a net increase of $1.2 million (or 5 percent) as a result of an increase in operating budget to support the delivery of the Women's Entrepreneurship Strategy and economic growth in communities under Regional Economic Growth through Innovation.

Vote 5 – Grants and Contributions

Total Vote 5 Grants and Contributions Authorities available for use for the year ending March 31, 2019 amount to $212.0 million, compared to $242.2 million for fiscal year 2017–18. The net decrease of $30.2 million (or 12 percent) in funding is primarily the result of:

Budgetary Authorities Available
(in millions of dollars)
Description of graph
Budgetary Authorities Available
Fiscal Year (in millions of dollars)
2017–18 2018–19
Operating Spending Authorities 26.5 27.6
Program Spending Authorities 242.2 212
Statutory Authorities 2.8 3
Total 271.4 Table note * 242.6 Table note *

2.2 Expenditure Analysis

Year-to-date expenditures as of December 31, 2018, totaled $110.3 million, a decrease of $27.8 million (20 percent) compared to $138.1 million at the same point in 2017. The variance is primarily related to a decrease in transfer payment expenditures and a decrease in net operating expenditures.

Year to date expenditures as of December 31, 2018
Description of graph
Year to date expenditures as of December 31, 2018
Fiscal Year (in millions of dollars)
2017–18 2018–19
Operating Spending Expenditures 18.5 17.9
Program Spending Expenditures 117.6 90.3
Statutory Expenditures 2.1 2.1
Total 138.1 110.3

Budgetary expenditures in the third quarter of 2018–19 totaled $40.5 million, compared to $53.2 million for the same period in 2017–18, as illustrated in the "Departmental Budgetary Expenditures by Standard Object" tables. The net decrease of $12.7 million (24 percent) primarily relates to:

Vote 1 (Operating Expenditures)

Third quarter expenditures for operating increased by $0.5 million (or 8 percent) compared to the same period in the previous fiscal year, primarily as a result of the timing of invoicing for the Agency's Memorandum of Understanding with the Department of Innovation, Science and Economic Development for Information Technology Services.

Expenditures in other standard objects did not see significant fluctuations.

Vote 5 (Grants and Contributions)

Spending on transfer payments in the third quarter decreased $13.2 million (or 28 percent) over the previous year, primarily due to the sun setting of the Canada 150 Community Infrastructure Program.

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

Third quarter budgetary expenditures
Description of graph
Third quarter budgetary expenditures
Fiscal Year (in millions of dollars)
2017–18 2018–19
Operating Spending Expenditures 5.9 6.4
Program Spending Expenditures 46.6 33.4
Statutory Expenditures 0.7 0.7
Total 53.2 40.5

3. Risks and Uncertainties

FedDev Ontario maintains a governance structure for oversight of financial management and a strong system of internal controls and well-defined framework of accountabilities, policies and procedures, including its Framework on Internal Control over Financial Reporting. The Agency mitigates financial risk through monitoring the impact of fluctuations in cash flows for multi-year projects and reallocation of funding to priority initiatives as needed.

FedDev Ontario also completes an annual risk assessment exercise and maintains a service level agreement with the Office of the Comptroller General for the delivery of internal audit services to provide independent advice on risk management, control and governance processes.

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

On December 10, 2018, Colette Downie was appointed as Vice-President, Business Innovation and Economic Development, and on October 29, 2018, Raquel Fragoso joined the Agency as Acting/Director General, Human Resources.

Approval by Senior Officials

space to insert James Meddings' signature
James Meddings
President

Ottawa, Canada

Space to insert Lisa St-Amour's signature
Lisa St-Amour
A/Chief Financial Officer

Statement of Authorities (unaudited)
(in thousands of dollars) Fiscal Year 2018—19 Fiscal Year 2017—18
Total available for use for the year ending March 31, 2019 Table note 1 Used during the quarter ended December 31, 2018 Year to date used at quarter-end Total available for use for the year ending March 31, 2018 Table note 1 Used during the quarter ended December 31, 2017 Year to date used at quarter-end
Vote 1—Net Operating Expenditures 27,608 6,368 17,956 26,482 5,874 18,475
Vote 5—Grants and Contributions 212,009 33,407 90,254 242,199 46,624 117,581
Budgetary statutory authorities: 2,992 697 2,091 2,755 689 2,067
Total authorities 242,609 40,472 110,301 271,436 53,187 138,123
Departmental budgetary expenditures by Standard Object (unaudited)
(in thousands of dollars) Fiscal Year 2018—19 Fiscal Year 2017—18
Planned expenditures for the year ending March 31, 2019 Table note 1 Used during the quarter ended December 31, 2018 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2018 Table note 1 Used during the quarter ended December 31, 2017 Year to date used at quarter-end
Expenditures:
Personnel Table note 2 23,788 5,960 16,830 22,392 5,631 18,140
Transportation and communications 813 171 457 766 220 617
Information 329 113 221 414 66 106
Professional and special services 5,023 666 2,273 5,077 588 1,499
Rentals 135 21 73 167 16 50
Repair and maintenance 166 5 13 168 6 28
Utilities, materials and supplies 106 17 38 107 16 42
Acquisition of land, buildings and works - - - - - -
Acquisition of machinery and equipment 169 104 124 54 21 57
Transfer payments 212,009 33,407 90,254 242,199 46,624 117,581
Other subsidies and payments 71 8 18 92 (1) 3
Total budgetary expenditures 242,609 40,472 110,301 271,436 53,187 138,123
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