FedDev Ontario Financial Statements (Unaudited) – For the Year Ended March 31, 2012
Federal Economic Development Agency for Southern Ontario
Statement of Management Responsibility
Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2012, and of all information contained in these statements rests with the management of the Federal Economic Development Agency for Southern Ontario. Management prepared these financial statements using the Government's accounting policies, which are based on Canadian public sector accounting standards.
Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgement and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the Federal Economic Development Agency for Southern Ontario's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada and included in the Federal Economic Development Agency for Southern Ontario's Departmental Performance Report is consistent with these statements.
Management is also responsible for maintaining an effective system of internal control over financial reporting (ICFR) designed to provide reasonable assurance that financial information is reliable, assets are safeguarded, and transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities, and policies.
Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training, and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the Federal Economic Development Agency for Southern Ontario; and through annual risk-based assessments of the effectiveness of the system of ICFR.
The system of ICFR is designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, assess effectiveness of associated key controls, and make any necessary adjustments. The system of internal control over financial reporting is designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments. During the year, the Agency developed and documented its system of internal control over financial reporting according to the fundamentals established in the Policy on Internal Control. The Agency will be testing the adequacy of its system of internal control in fiscal year 2012–13.
The financial statements of the Federal Economic Development Agency for Southern Ontario have not been audited.
B. A. (Bruce) Archibald, PhD
President
Signed at Kitchener, Ontario
August 29th, 2012
Linda Cousineau, PhD
Chief Financial Officer
| 2012 | 2011 | |
|---|---|---|
FootnotesFootnote * The accompanying notes form an integral part of these financial statements. ( Return to footnote * referrer) |
||
|
Restated
(note 11) |
||
| Liabilities | ||
| Accounts payable and accrued liabilities (note 4) | $ 109,130 | $ 187,228 |
| Vacation pay and compensatory leave | 784 | 688 |
| Employee future benefits (note 5) | 2,433 | 2,854 |
| Total gross liabilities | 112,347 | 190,770 |
| Total net liabilities | 112,347 | 190,770 |
| Financial assets | ||
| Due from Consolidated Revenue Fund | 108,604 | 187,155 |
| Accounts receivable and advances (note 6) | 615 | 1,139 |
| Loans (note 7) | 84,217 | 81,264 |
| Total gross financial assets | 193,436 | 269,558 |
| Financial assets held on behalf of Government Footnote * | ||
| Loans receivable (note 7) | (84,217) | (81,264) |
| Total financial assets held on behalf of Government | (84,217) | (81,264) |
| Total net financial assets | 109,219 | 188,294 |
| Departmental net debt | (3,128) | (2,476) |
| Non-financial assets | ||
| Tangible capital assets (note 9) | 183 | 176 |
| Total non-financial assets | 183 | 176 |
| Departmental net financial position | $ (2,945) | $ (2,300) |
B. A. (Bruce) Archibald, PhD
President
Signed at Kitchener, Ontario
August 29th, 2012
Linda Cousineau, PhD
Chief Financial Officer
| 2012 | 2012 | 2011 | |
|---|---|---|---|
|
Segmented information (note 11) The accompanying notes form an integral part of these financial statements. |
|||
|
Planned
Results |
Restated
(note 11) |
||
| Expenses | |||
| Business and Innovation Development | $ 134,470 | $ 139,873 | $ 251,302 |
| Economic Regional Development and Infrastructure | 68,803 | 58,265 | 68,590 |
| Policy, Advocacy and Coordination | 2,056 | 3,019 | 2,145 |
| Internal Services | 18,971 | 15,782 | 19,661 |
| Expenses incurred on behalf of Government | 0 | (20,948) | 0 |
| Total Expenses | 224,300 | 195,991 | 341,698 |
| Revenues | |||
| Amortization of discounts | - | 23 | - |
| Gains on disposal of assets | - | 3 | - |
| Revenues earned on behalf of Government (note 11) | - | (23) | - |
| Total Revenues | 3 | ||
| Net cost of operations before funding and transfers | 224,300 | 195,988 | 341,698 |
| Government funding and transfers | |||
| Net cash provided by Government | 270,676 | 249,239 | |
| Change in due from Consolidated Revenue Fund | (78,551) | 87,821 | |
|
Services provided without charge by other
government departments (note 10) |
3,218 | 3,269 | |
| Net cost of operations after government funding and transfers | 645 | 1,369 | |
| Departmental net financial position — Beginning of year | (2,300) | (931) | |
| Departmental net financial position — End of year | $ (2,945) | $ (2,300) | |
B. A. (Bruce) Archibald, PhD
President
Signed at Kitchener, Ontario
August 29th, 2012
Linda Cousineau, PhD
Chief Financial Officer
| 2012 | 2011 | ||
|---|---|---|---|
| Net cost of operations after government funding | $ 645 | $ 1,369 | |
| Change due to tangible capital assets | |||
| Acquisition of tangible capital assets | 50 | 84 | |
| Amortization of tangible capital assets | (43) | (36) | |
| Net gain on disposal of tangible capital assets including adjustments | 3 | - | |
| Proceeds | (3) | - | |
| Total change due to tangible capital assets | 7 | 48 | |
| Net decrease in departmental net debt | 652 | 1,417 | |
| Departmental net debt — Beginning of year | 2,476 | 1,059 | |
| Departmental net debt — End of year | $ 3,128 | $ 2,476 | |
| 2012 | 2011 | |
|---|---|---|
| Operating activities | ||
| Net cost of operations before government funding and transfers | $ 195,988 | $ 341,698 |
| Non cash items: | ||
| Amortization of tangible capital assets | (43) | (36) |
| Gain (loss) on disposal of capital assets | 3 | - |
| Services provided without charge by other government departments | (3,218) | (3,269) |
| Variations in Statement of Financial Position | ||
| Increase in accounts receivable and advances | (524) | 1,139 |
| Decrease in accounts payable and accrued liabilities | 78,098 | (87,894) |
| Increase in vacation pay and compensatory leave | (96) | (624) |
| Decrease in future employee benefits | 421 | (1,859) |
| Cash used in operating activities | 270,629 | 249,155 |
| Capital investing activities | ||
| Acquisitions of tangible capital assets | 50 | 84 |
| Proceeds from sale of tangible capital assets | (3) | |
| Cash used in capital investing activities | 47 | 84 |
| Net cash provided by the Government of Canada | $ 270,676 | $ 249,239 |
Federal Economic Development Agency for Southern Ontario
Notes to the Financial Statements (Unaudited)
For the Year Ended March 31, 2012
1. Authority and Objectives
The Federal Economic Development Agency for Southern Ontario (FedDev Ontario) was established in August 2009 as a separate organization under Schedule I.1 of the Financial Administration Act.
FedDev Ontario was established with a five-year mandate to help respond to Ontario's economic challenges, to help restore the province to its cycle of prosperity, and to help position southern Ontario as an important economic driver in building a stronger economy and a stronger Canada.
To fulfill its mandate, FedDev Ontario supports the competitiveness, innovation, and diversification of southern Ontario's economy by delivering strategic investments to businesses, non-profit organizations, and communities; establishing and strengthening collaborative partnerships with key economic stakeholders; and representing the region's interests at the national level.
FedDev Ontario has launched a series of initiatives to address short-term realities while setting in place the conditions to strengthen the economy for the future. These initiatives are reflected within the program activities for 2011–12. By investing in people, businesses, and communities, the Agency will create the conditions for prosperity and provide new opportunities for jobs and economic growth in southern Ontario. Building a Southern Ontario Advantage is FedDev Ontario's approach to returning southern Ontario to a cycle of prosperity. It will help attract new businesses and new national and foreign investors, while also supporting existing businesses and making sure they stay here in southern Ontario.
Business and Innovation Development
FedDev Ontario will support communities and businesses in southern Ontario, particularly those affected by structural economic change, by making the southern Ontario economy more competitive, innovative, and diversified. FedDev Ontario works to improve the region's capacity for economic growth by helping businesses, particularly small- and medium-sized enterprises, enhance their productivity and improve their competitiveness and by strengthening innovation capacity and the commercialization of knowledge. Through this program, FedDev Ontario delivers and administers contributions with businesses, not-for-profit organizations, and other levels of government. Transfer payments in support of this program are made under the authority of the Southern Ontario Development Program (SODP).
Economic Regional Development and Infrastructure
FedDev Ontario will support southern Ontario communities, particularly those most affected by changes in the economy and those whose economies are less diversified or rely on single employers. It will assist communities in transforming and diversifying their economies through investments that stimulate economic development, promote conditions that foster sustainable communities, increase economic opportunities, and increase communities' capacity to respond to challenges. Through this program, FedDev Ontario delivers and administers contributions with not-for-profit organizations, other levels of government, businesses, and business associations. These funds are used to support community economic planning, development, and diversification initiatives. Transfer payments in support of this program are made under the authority of the SODP, the Eastern Ontario Development Program (EODP), and the Community Futures Program. FedDev Ontario also works with Infrastructure Canada and the provinces to oversee the flow of federal funds allocated to Ontario through various infrastructure funding streams.
Policy, Advocacy and Coordination
FedDev Ontario's Policy, Advocacy and Coordination (PAC) program activity is central to identifying and effectively responding to opportunities and challenges facing the southern Ontario economy. PAC provides intelligence, analysis, and well-grounded advice on a broad range of issues and topics, and it informs and supports decision-making by the Agency and the Minister of State. By offering strategic, researched policy positions that reflect the region's potential, by influencing national policies and programs that affect southern Ontario's development and interests, and by coordinating other policies and programs within the region to form integrated approaches to development, PAC helps carry the Agency's agenda forward and helps ensure that FedDev Ontario remains relevant and responsive to the opportunities and challenges in southern Ontario.
Internal Services
Internal Services are groups of related activities and resources that support the needs of programs and other corporate obligations of FedDev Ontario. These groups are Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Material Services; Acquisition Services; and Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not those provided specifically to a program.
2. Summary of significant accounting policies
These financial statements have been prepared using the Government's accounting policies stated below, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from the Canadian public sector accounting standards.
Significant accounting policies are as follows:
- Parliamentary authorities — FedDev Ontario is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to FedDev Ontario does not parallel financial reporting according to generally accepted accounting principles, since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Departmental Net Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. The "Planned Results" amounts in the Statement of Operations and Departmental Net Financial Position are those reported in the future-oriented financial statements included in the 2011–12 Report on Plans and Priorities.
- Net cash provided by Government — FedDev Ontario operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by FedDev Ontario is deposited to the CRF, and all cash disbursements made by FedDev Ontario are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements, including transactions between departments of the Government.
- Amounts due from or to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that FedDev Ontario is entitled to draw from the CRF without further appropriations to discharge its liabilities.
- Revenues:
- Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.
- Revenues that are non-respendable are not available to discharge FedDev Ontario's liabilities. While the Deputy Head is expected to maintain accounting control, he or she has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of the entity's gross revenues.
- Expenses — Expenses are recorded on the accrual basis:
- Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.
- Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.
- Services provided without charge by other government departments for accommodation, as well as employer contributions to the health and dental insurance plans, are recorded as operating expenses at their estimated cost.
- Employee future benefits:
- Pension benefits: Eligible employees participate in the Public Service Pension Plan (Public Service Superannuation Act), a multi-employer plan administered by the Government. FedDev Ontario's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. FedDev Ontario's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.
- Severance benefits: Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.
- Accounts and loans receivable are stated at the lower of cost and net recoverable value. However, when the terms of the loans are concessionary, such as those provided with a low or no interest clause, they are recorded at their estimated present value. A portion of the unamortized discount is recorded as revenue each year to reflect the change in the present value of the loans outstanding. Transfer payments that are unconditionally repayable are recognized as loans receivable. A valuation allowance is recorded for accounts and loans receivable where recovery is considered uncertain.
- Contingent liabilities — Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.
- Tangible capital assets — All tangible capital assets having an initial cost of $10,000 or more are recorded at their acquisition cost. FedDev Ontario does not capitalize intangibles; works of art and historical treasures that have cultural, aesthetic, or historical value; and assets located on Indian Reserves and in museum collections. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:
Table 2k. Tangible capital assets Asset class Amortization period Informatics hardware 4 years Machinery and equipment 10 years Vehicles 3–7 years - Measurement uncertainty — The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are the liability for employee future benefits and the useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically, and as adjustments become necessary, they are recorded in the financial statements in the year they become known.
3. Parliamentary authorities
FedDev Ontario receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Departmental Net Financial Position and the Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current, or future years. Accordingly, FedDev Ontario has different net results of operations for the year on a government funding basis than on an accrual basis. The differences are reconciled in the following tables:
a) Reconciliation of net cost of operations to current year authorities used
| 2012 | 2011 | |
|---|---|---|
| (in thousands of dollars) | ||
| Net cost of operations before government funding and transfers | $ 195,988 | $ 341,698 |
| Adjustments for items affecting net cost of operations but not affecting authorities: | ||
| Amortization of tangible capital assets | (43) | (36) |
| Gain (loss) on disposal of tangible capital assets | 3 | 0 |
| Services provided without charge by other government departments | (3,218) | (3,269) |
| Increase in vacation pay and compensatory leave | (96) | (624) |
| Decrease in employee future benefits | 421 | (1,859) |
| Unamortized discount | (14,317) | |
| Refund of prior year's expenditures | 841 | 70 |
| Refunds of previous year's accounts payable | 9,488 | 2,699 |
| Other | 98 | 8 |
| Total items affecting net cost of operations but not affecting authorities | (6,823) | (3,011) |
| Adjustments for items not affecting net cost of operations but affecting authorities: | ||
| Acquisition of tangible capital assets | 50 | 84 |
| Loans issued on behalf of government | 41,245 | 66,832 |
| Total items not affecting net cost of operations but affecting authorities | 41,295 | 66,916 |
| Current year authorities used | $ 230,460 | $ 405,603 |
b) Authorities provided and used
| 2012 | 2011 | |
|---|---|---|
| (in thousands of dollars) | ||
| Authorities provided: | ||
| Vote 55 — Operating Expenditures | $ 31,304 | $ 37,666 |
| Vote 60 — Contributions | 244,568 | 510,611 |
| Statutory amounts | ||
| Employee Benefit Plan | 2,854 | 2,374 |
| Community Adjustment Fund | 42,495 | |
| Less: | ||
| Authorities available for future years | (3) | (8,077) |
| Lapsed: Operating | (3,800) | (179,466) |
| Lapsed: Contributions | (44,463) | |
| Current year authorities used | $ 230,460 | $ 405,603 |
4. Accounts payable and accrued liabilities
The following table presents details of FedDev Ontario's accounts payable and accrued liabilities:
| 2012 | 2011 | |
|---|---|---|
| (in thousands of dollars) | ||
| Accounts payable — Other government departments and agencies | $ 461 | $ 1,052 |
| Accounts payable — External parties | 108,560 | 186,129 |
| Total accounts payable | 109,021 | 187,181 |
| Accrued liabilities | 109 | 47 |
| Total accounts payable and accrued liabilities | $ 109,130 | $ 187,228 |
5. Employee future benefits
a) Pension benefits
FedDev Ontario's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government. Pension benefits accrue up to a maximum period of 35 years at a rate of two percent per year of pensionable service times the average of the best 5 consecutive years of earnings. The benefits are integrated with Canada/Quebec Pension Plans benefits and are indexed to inflation.
Both the employees and the Department contribute to the cost of the Plan. The 2011–12 expense amounts to $251,352 ($1,985,112 in 2010–11), which represents approximately 1.8 times (1.9 times in 2010–11) the contributions by employees.
The Department's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.
b) Severance benefits
The Department provides severance benefits to its employees based on eligibility, years of service, and final salary. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, measured as at March 31, is as follows:
As part of collective agreement negotiations with certain employee groups and changes to conditions of employment for executives and certain non-represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.
| 2012 | 2011 | |
|---|---|---|
| (in thousands of dollars) | ||
| Accrued benefit obligation — Beginning of year | $ 2,854 | $ 995 |
| Expense for the year | 251 | 1,986 |
| Benefits paid during the year | (672) | (127) |
| Accrued benefit obligation — End of year | $ 2,433 | $ 2,854 |
6. Accounts receivable and advances
The following table presents details of FedDev Ontario's accounts receivable and advances balances:
| 2012 | 2011 | |
|---|---|---|
| (in thousands of dollars) | ||
| Restated (note 18) |
||
| Receivables — Other government departments and agencies | $ 524 | $ 1,136 |
| Receivables — External parties | 87 | 1 |
| Employee advances | 4 | 2 |
| Subtotal | 615 | 1,139 |
| Net accounts receivable | $ 615 | $ 1,139 |
7. Loans receivable
The following table presents details of FedDev Ontario's loans and transfer payments recoverable balances:
| 2012 | 2011 | |
|---|---|---|
| (in thousands of dollars) | ||
| Restated (note 18) |
||
| Loans receivable | $ 119,459 | $ 81,264 |
| Less: Unamortized discount | (14,294) | 0 |
| Subtotal | 105,165 | 81,264 |
| Less: Allowance for uncollectibility | (20,948) | 0 |
| Gross loans receivable | $ 84,217 | $ 81,264 |
| Loans held on behalf of Government | (84,217) | (81,264) |
| Net loans receivable | $0 | $0 |
a) Loans receivable from unconditionally repayable contributions
The loans receivable portfolio consists of 170 non-interest-bearing loans issued in the years from 2009 to 2012 with prescribed annual repayment terms. The loans are recorded at their discounted net present values using market interest rates at the time of the loans. An allowance of $20,948,114 has been recorded.
Unconditionally repayable contributions relate to contributions made to outside parties that must be repaid without qualification.
8. Contractual Obligations
The nature of FedDev Ontario's activities can result in some large multi-year contracts and obligations whereby FedDev Ontario will be obligated to make future payments in order to carry out its transfer payment programs or when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:
| 2013 | 2014 | 2015 | 2016 | 2017 and thereafter | Total (in thousands of dollars) |
|
|---|---|---|---|---|---|---|
| Transfer payments | $174,504 | $161,975 | $336,479 | |||
| Total | $174,504 | $161,975 | $336,479 |
9. Tangible Capital Assets
(in thousands of dollars)
| Cost | Accumulated Amortization | Net Book Value | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Capital Asset Class | Opening balance | Acquisitions | Adjustments | Disposals and Write-Offs | Closing balance | Opening balance | Amortization | Adjustments | Disposals and Write-Offs | Closing balance | 2012 | 2011 |
FootnotesFootnote 1 Opening balance has been adjusted for rounding variance reported in 2010–11 (Return to footnote 1 referrer) |
||||||||||||
| Machinery and equipment | $ 41 | $ 0 | $ 0 | $ 0 | $ 41 | $ 0 | $ 4 | $ 0 | $ 0 | $ 4 | $ 37 | $ 41 |
| Vehicles | 285 Footnote 1 | 50 | 0 | 25 | 310 | 153 | 38 | 0 | 25 | 166 | 144 | 132 |
| Computer hardware | 10 | 0 | 0 | 0 | 10 | 7 | 1 | 0 | 0 | 8 | 2 | 3 |
| Total | $ 336 | $ 50 | $ 0 | $ 25 | $ 361 | $ 160 | $ 43 | $ 0 | $ 25 | $ 178 | $ 183 | $ 176 |
10. Related party transactions
FedDev Ontario is related, as a result of common ownership, to all government departments, agencies, and Crown corporations. FedDev Ontario enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, FedDev Ontario has an agreement with the Department of Industry regarding the provision of finance and administration services. During the year, FedDev Ontario received common services that were obtained without charge from other government departments as disclosed below.
(a) Common services provided without charge by other government departments
During the year, FedDev Ontario received services without charge from certain common service organizations, related to accommodation services and the employer's contribution to the health and dental insurance plans. These services provided without charge have been recorded in FedDev Ontario's Statement of Operations and Departmental Net Financial Position as follows:
| 2012 | 2011 | |
|---|---|---|
| Employer's contributions to the health and dental insurance plan | 1,412 | 1,320 |
| Accommodation | 1,806 | 1,949 |
| Total | 3,218 | 3,269 |
The Government has centralized some of its administrative activities for efficiency, cost-effectiveness, and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations to perform services for all other departments and agencies without charge. The costs of these services, such as payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General, are not included in FedDev Ontario's Statement of Operations and Departmental Net Financial Position.
(b)Administration of programs on behalf of other government departments
Under a Memorandum of Understanding signed with Infrastructure Canada on August 9, 2009, FedDev Ontario administers four programs. During the year, the agency incurred expenses of $195,117,738 on behalf of Infrastructure Canada. These expenses are reflected in the financial statements of Infrastructure Canada and are not recorded in these financial statements.
| 2012 | 2011 | |
|---|---|---|
| Canada Strategic Infrastructure Fund — Infrastructure Canada | 35,378 | 50,670 |
| Canada–Ontario Municipal Rural Infrastructure Fund — Infrastructure Canada | 8,000 | 24,000 |
| Municipal Rural Infrastructure Fund — Infrastructure Canada | 6,500 | 22,800 |
| Building Canada Fund — Infrastructure Canada | 145,240 | 101,000 |
| Total | 195,118 | 198,470 |
11. Segmented Information
(in thousands of dollars)
Presentation by segment is based on FedDev Ontario's program activity architecture. The presentation by segment is based on the same accounting policies as described in the summary of significant accounting policies in note 2. The following table presents the expenses incurred and revenues generated for the main program activities, by major object of expense and by major type of revenue. The segment results for the period are as follows:
| Business and Innovation Development | Economic Regional Development and Infrastructure | Policy, Advocacy and Coordination | Internal Service | 2012 Total | 2011 Total | |
|---|---|---|---|---|---|---|
| Expenses | ||||||
| Transfer Payments | ||||||
| Economic Action Plan | $0 | $29,831 | $0 | $0 | $29,831 | $298,371 |
| Non — Economic Action Plan | $130,539 | 2,772 | 0 | 0 | 133,311 | 5,676 |
| Total Transfer Payments | 130,539 | 32,603 | 0 | 0 | 163,142 | 304,047 |
| Operating expenses | ||||||
| Salaries and employee benefits | 7,659 | 3,365 | 2,310 | 9,290 | 22,624 | 21,690 |
| Professional and special services | 967 | 846 | 452 | 3,728 | 5,993 | 8,072 |
| Accommodation | 591 | 261 | 190 | 765 | 1,807 | 1,949 |
| Travel | 49 | 222 | 65 | 640 | 976 | 1,950 |
| Amortization | 9 | 9 | 0 | 25 | 43 | 36 |
| Communication | 7 | 2 | 1 | 389 | 399 | 532 |
| Furniture and equipment | 21 | 3 | 7 | 141 | 172 | 1,157 |
| Equipment repair and maintenance | 0 | 0 | 0 | 160 | 160 | 1,681 |
| Rental | 5 | 0 | 0 | 784 | 789 | 209 |
| Utilities, materials and supplies | 28 | 6 | 5 | 148 | 187 | 221 |
| Postage | 1 | 0 | 0 | 27 | 28 | 62 |
| Bad debt expense | 0 | 20,948 | 0 | 0 | 20,948 | 0 |
| Other operating expenses | (3) | 0 | (11) | (315) | (329) | 92 |
| Expenses incurred on behalf of Government | 0 | (20948) | 0 | 0 | (20,948) | 0 |
| Total operating expenses | 9,334 | 4,714 | 3,019 | 15,782 | 32,849 | 37,651 |
| Total expenses | 139,873 | 37,317 | 3,019 | 15,782 | 195,991 | 341,698 |
| Revenues | ||||||
| Amortization of discounts | 0 | 0 | 0 | 23 | 23 | 0 |
| Gains on disposal of assets | 0 | 3 | 0 | 0 | 3 | 0 |
| Revenues earned on behalf of Government | 0 | 0 | 0 | (23) | (23) | 0 |
| Total Revenues | 0 | 3 | 0 | 0 | 3 | 0 |
| Net cost from continuing operations | $139,873 | $37,314 | $3,019 | $15,782 | $195,988 | $341,698 |
12. Accounting changes
During 2011, amendments were made to Treasury Board Accounting Standard 1.2 — Departmental and Agency Financial Statements to improve financial reporting by government departments and agencies. The amendments are effective for financial reporting of fiscal years ending March 31, 2012, and later. The significant changes to FedDev Ontario's financial statements are described below. These changes have been applied retroactively, and comparative information for 2010–11 has been restated.
Net debt (calculated as liabilities less financial assets) is now presented in the Statement of Financial Position. Accompanying this change, FedDev Ontario now presents a Statement of Change in Net Debt and no longer presents a Statement of Equity.
Revenue and related accounts receivable are now presented net of non-respendable amounts in the Statement of Operations and Departmental Net Financial Position and the Statement of Financial Position. The effect of this change was to decrease total financial assets by $113,443,000 for 2012 ($82,403,000 for 2011).
Government funding and transfers, as well as the credit related to services provided without charge by other government departments, are now recognized in the Statement of Operations and Departmental Net Financial Position below "Net cost of operations before government funding and transfers". In previous years, FedDev Ontario recognized these transactions directly in the Statement of Equity of Canada. The effect of this change was to decrease the net cost of operations after government funding and transfers by $203,373,000 for 2012 ($339,190,000 for 2011).
| 2011 | 2011 | ||
|---|---|---|---|
| (in thousands of dollars) | |||
| As previously stated | Effect of change | Restated | |
FootnotesFootnote 2 Correction for rounding variance reported in 2010–11 (Return to footnote 2 referrer) |
|||
| Statement of Financial Position | |||
| Liabilities held on behalf of Government | 0 | 0 | |
| Assets held on behalf of Government | 0 | (81,264) | (81,264) |
| Departmental financial position | 78,964 Footnote 2 | (81,264) | (2,300) |
| Statement of Operations and Departmental Net Financial Position | |||
| Government funding and transfers | |||
| Net cash provided by Government | 0 | 249,239 | 249,239 |
| Change in due from Consolidated Revenue Fund | 0 | 87,821 | 87,821 |
| Services provided without charge by other government departments | 0 | 3,269 | 3,269 |
|
Transfer of assets and liabilities from
(to) other government departments |
0 | 0 | 0 |
13. Comparative information
Comparative figures have been reclassified to conform to the current year's presentation.
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