Quarterly Financial Report — For the Quarter Ended June 30, 2019

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. This report should be read in conjunction with the 2019–20 Main Estimates. This quarterly report has not been subject to an external audit or review.

1.1 Authority, Mandate and Core Responsibility

The Federal Economic Development Agency for Southern Ontario (FedDev Ontario) is mandated to "strengthen southern Ontario's capacity for innovation, economic development and growth."

Details and additional information on FedDev Ontario's authorities, mandate and core responsibility can be found in Part II of the Main Estimates and FedDev Ontario's Departmental Plan for 2019–20.

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 2019–20 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 the Government of Canada'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 June 30, 2019.

2.1 Authorities Analysis (Vote 1 – Operating and Vote 5 – Grants and Contributions)

Total authorities available for use and planned expenditures increased to $261.5 million for fiscal year 2019–20, compared to $187.1 million at the same point in fiscal year 2018–19, as illustrated in the "Statement of Authorities" table. The net increase of $74.4 million (or 40 percent) relates to:

Vote 1 – Operating Authorities

Total Vote 1 Operating Authorities available for use for the year ending March 31, 2020 amount to $29.3 million, compared to $25.2 million for fiscal year 2018–19. The net increase of $4.2 million (or 17 percent) in operating funding is attributed to the increased funding provided to the Agency for the delivery of the Regional Economic Growth through Innovation Program.

Vote 5 – Grants and Contributions

Total Vote 5 Grants and Contributions Authorities available for use for the year ending March 31, 2020 amount to $228.6 million, compared to $159.2 million for fiscal year 2018–19. The net increase of $69.4 million (or 44 percent) in funding is explained by:

Budgetary Authorities Available
(in millions of dollars)
Budgetary Authorities Available - (in millions of dollars)
Description of graph
Budgetary Authorities Available
Fiscal Year (in millions of dollars)
2018–19 2019–20
Operating Spending Authorities 25.2 29.3
Program Spending Authorities 159.2 228.6
Statutory Authorities 2.8 3.6
First Quarter Budgetary Expenditures
Fiscal Year
(in millions of dollars)
2018–19 2019–20
Operating Spending Authorities  25.2 29.3
Program Spending Authorities 159.2 228.6
Statutory Authorities 2.8 3.6

2.2 Expenditure Analysis

Budgetary expenditures in the first quarter of 2019–20 totaled $29.1 million, compared to $40.1 million for the same period in 2018–19, as illustrated in the "Departmental Budgetary Expenditures by Standard Object" tables. The net decrease of $11 million (27 percent) relates to:

Vote 1 (Operating Expenditures)

First quarter expenditures for personnel increased by $0.9 million (or 17 percent) compared to the same period in the previous fiscal year. The increase in personnel expenditures aligns with the increased operating authorities voted for 2019–20 to support the delivery of the Regional Economic Growth through Innovation Program.

Expenditures in other standard objects did not see significant fluctuations.

Vote 5 (Grants and Contributions)

Spending on transfer payments (or program spending) was $22.1 million in the first quarter of 2019–20, compared to $34.0 million in the same quarter of 2018–19. The decrease of 35 percent in year-over-year expenditures is primarily due to the early stages in the lifecycle of new programming associated with the launch of FedDev Ontario's renewed mandate as of April 1, 2019. The higher level of expenditures recorded in the first quarter of 2018–19 was associated with increased claims submissions due to the final year of programming under the Agency’s second mandate.

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

First Quarter Budgetary Expenditures
(Year-to-Date)
Bar chart illustrating First Quarter Budgetary Expenditures
Description of graph
First Quarter Budgetary Expenditures
(Year-to-Date)
Fiscal Year (in millions of dollars)
2018–19 2019–20
Operating Spending Expenditures 5.3 6.1
Program Spending Expenditures 34.0 22.1
Statutory Expenditures 0.7 0.9
First Quarter Budgetary Expenditures
Fiscal Year
(in millions of dollars)
2018–19 2019–20
Operating Spending Authorities  5.3 6.1
Program Spending Authorities 34.0 22.1
Statutory Authorities 0.7 0.9

3. Risks and Uncertainties

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

FedDev Ontario manages the risks by conducting risk assessment exercises and reviews of its internal control framework.  Financial risks are mitigated by strong entity-level controls, general systems controls and key business process controls such as the contribution payments and regular operating expenses and receivables.  The Agency also 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

FedDev Ontario entered the first year of its renewed mandate in 2019─20 with a focus on delivering the Regional Economic Growth through Innovation Program launched in fall 2018–19. This newly designed program is supported by Innovation, Science and Economic Development Canada and the regional development agencies.

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)Table note 1
(in thousands of dollars) Fiscal Year 2019–20 Fiscal Year 2018–19
Total available for use for the year ending March 31, 2020Table note 2 Used during the quarter ended June 30, 2019 Year to date used at quarter-end Total available for use for the year ending March 31, 2019Table note 2 Used during the quarter ended June 30, 2018 Year to date used at quarter-end 
Vote 1–Net Operating Expenditures 29,351 6,130 6,130 25,158 5,349 5,350
Vote 5–Grants and Contributions 228,565 22,108 22,108 159,188 34,026 34,026
Budgetary statutory authorities: 3,566 883 883 2,789 697 697
Total authorities 261,482 29,121 29,121 187,135 40,072 40,073
Departmental budgetary expenditures by Standard Object (unaudited)Table note 1
(in thousands of dollars) Fiscal Year 2019–20 Fiscal Year 2018–19
Planned expenditures for the year ending March 31, 2020Table note 2 Used during the quarter ended June 30, 2019 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2019Table note 2 Used during the quarter ended June 30, 2018 Year to date used at quarter-end
Expenditures:
PersonnelTable note 3 26,773 6,441 6,441 21,134 5,498 5,498
Transportation and communications 821 150 150 813 133 133
Information 307 61 61 329 36 36
Professional and special services 4,534 310 310 5,023 322 322
Rentals 122 17 17 135 27 27
Repair and maintenance 71 6 6 166 7 7
Utilities, materials and supplies 83 13 13 106 10 10
Acquisition of land, buildings and works - - - - - -
Acquisition of machinery and equipment 158 15 15 169 14 14
Transfer payments 228,565 22,108 22,108 159,188 34,026 34,026
Other subsidies and payments 48 - - 71 (1) (1)
Total budgetary expenditures 261,482 29,121 29,121 187,134 40,072 40,072
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