Future-Oriented Financial Statements for Fiscal Year 2013–14
- Statement of Management Responsibility
- Notes to the Future-Oriented Financial Statements (Unaudited)
- 1. Authority and objectives
- 2. Methodology and significant assumptions
- 3. Variations and changes to the forecasted financial information
- 4. Summary of significant accounting policies
- 5. Parliamentary Authorities
- 6. Accounts payable and accrued liabilities
- 7. Employee future benefits
- 8. Accounts receivable and advances
- 9. Loans receivable
- 10. Tangible capital assets
- 11. Contractual obligations
- 12. Related party transactions
- 13. Segmented Information
Statement of Management Responsibility
Agency management is responsible for these future-oriented financial statements, including responsibility for the appropriateness of the assumptions on which these statements are prepared. These statements are based on the best information available and assumptions adopted as at March 12, 2013 and reflect the plans described in the 2013-14 Report on Plans and Priorities.
Linda Cousineau,
Chief Financial Officer
B.A. (Bruce) Archibald, PhD,
Deputy Head
|
Estimated
Results 2013 |
Planned
Results 2014 |
|
|---|---|---|
|
Information for the year ended March 31, 2013, includes actual amounts from April 1, 2012, to August 31, 2012. Contractual obligations (note 11) The accompanying notes form an integral part of these future-oriented financial statements. |
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| Liabilities | ||
| Accounts payable and accrued liabilities (note 6) | $99,127 | $81,369 |
| Vacation pay and compensatory leave | 894 | 1,019 |
| Employee future benefits (note 7) | 1,393 | 732 |
| Total gross liabilities | 101,414 | 83,120 |
| Total net liabilities | 101,414 | 83,120 |
| Financial Assets | ||
| Due from Consolidated Revenue Fund | 98,623 | 80,865 |
| Accounts receivable (note 8) | 508 | 508 |
| Loans receivable (note 9) | 122,027 | 144,155 |
| Total gross financial assets | 221,158 | 225,528 |
| Financial assets held on behalf of Government | ||
| Loans receivable (note 9) | (122,027) | (144,155) |
| Total financial assets held on behalf of Government | (122,027) | (144,155) |
| Total net financial assets | 99,131 | 81,373 |
| Departmental net debt | (2,283) | (1,747) |
| Non-financial assets | ||
| Prepaid expenses | 11 | 0 |
| Tangible capital assets (note 10) | 193 | 246 |
| Total non-financial assets | 204 | 246 |
| Departmental net financial position | $(2,079) | $(1,501) |
|
Estimated
Results 2013 |
Planned
Results 2014 |
|
|---|---|---|
|
Information for the year ended March 31, 2013, includes actual amounts from April 1, 2012, to August 31, 2012. Segmented information (note 13) The accompanying notes form an integral part of these future-oriented statements. |
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| Expenses | ||
| Business Development | $73,362 | $54,679 |
| Technological Innovation | 62,712 | 63,380 |
| Community Economic Development | 59,706 | 55,688 |
| Internal Services | 28,676 | 16,285 |
| Expenses incurred on behalf of Government | (19,728) | (8,715) |
| Total expenses | 204,728 | 181,317 |
| Revenues | ||
| Amortization of discounts | 1,427 | (2,666) |
| Revenues earned on behalf of Government | (1,427) | (2,666) |
| Total revenues | 0 | 0 |
| Net cost of operations before government funding and transfers | 204,728 | 181,317 |
| Government funding and transfers | ||
| Net cash provided by Government | 212,009 | 196,100 |
| Change in due from Consolidated Revenue Fund | (9,981) | (17,758) |
| Services provided without charge by other government departments (note 12) | 3,567 | 3,553 |
| Transfer of assets and other liabilities to other government departments | (1) | 0 |
| Net cost of operations after government funding and transfers | 866 | 578 |
| Departmental net financial position — Beginning of year | (2,945) | (2,079) |
| Departmental net financial position — End of year | $(2,079) | $(1,501) |
| 2013 | 2014 | |
|---|---|---|
|
The accompanying notes form an integral part of these financial statements. |
||
| Net cost of operations after government funding and transfers | $866 | $578 |
| Change due to tangible capital assets | ||
| Acquisition of tangible capital assets | 70 | 110 |
| Amortization of tangible capital assets | (43) | (57) |
| Proceeds from disposal of tangible capital assets | (9) | 0 |
| Net loss on disposal of tangible capital assets | (7) | 0 |
| Transfer to other government departments | (1) | 0 |
| Total change due to tangible capital assets | 10 | 53 |
| Change due to prepaid expenses | 11 | (11) |
| Net increase in departmental net debt | 845 | 536 |
| Departmental net debt — Beginning of year | 3,128 | 2,283 |
| Departmental net debt — End of year | $(2,283) | $(1,747) |
| 2013 | 2014 | |
|---|---|---|
|
The accompanying notes form an integral part of these financial statements. |
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| Operating activities | ||
| Net cost of operations before government funding and transfers | $204,728 | $181,317 |
| Non-cash items: | ||
| Amortization of tangible capital assets | (43) | (57) |
| Loss on disposal of tangible capital assets | (7) | 0 |
| Services provided without charge by other government departments (note 12) | (3,567) | (3,553) |
| Variations in Statement of Financial Position: | ||
| Decrease in accounts receivable and advances | (107) | 0 |
| Decrease in accounts payable and accrued liabilities | 10,003 | 17,758 |
| Increase in vacation pay and compensatory leave | (110) | (125) |
| Decrease in future employee benefits | 1040 | 661 |
| Increase in prepaid expenses | 11 | (11) |
| Cash used in operating activities | 211,948 | 195,990 |
| Capital investing activities | ||
| Acquisition of tangible capital assets | 70 | 110 |
| Proceeds from disposal of tangible capital assets | (9) | 0 |
| Cash used in capital investing activities | 61 | 110 |
| Net cash provided by Government of Canada | $212,009 | $196,100 |
Federal Economic Development Agency for Southern Ontario
Notes to the Future-Oriented Financial Statements
(Unaudited)
For the Year Ended March 31
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, not-for-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 launched the Southern Ontario Advantage initiatives in 2011 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. 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. This 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.
2. Methodology and significant assumptions
The future-oriented financial statements have been prepared on the basis of the government priorities and plans of the Agency as described in the 2012-13 Report on Plans and Priorities.
The information in the estimated results for fiscal year 2012-13 is based on actual results as at November 30, 2012, and on forecasts for the remainder of the fiscal year. Estimated year-end information for 2012-13 is used as the opening position for the 2013-14 planned results, and forecasts have been made for the planned results for the 2013-14 fiscal year.
The main assumptions underlying the forecasts are as follows:
- The Agency's activities will remain substantially the same as for the previous year.
- Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.
- These assumptions are adopted as at March 12, 2013.
3. Variations and changes to the forecasted financial information
While every attempt has been made to forecast final results for the remainder of 2012-13 and for 2013-14, actual results achieved for both fiscal years are likely to vary from the forecast information presented, and this variation could be material.
In preparing these future-oriented financial statements, FedDev Ontario has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Factors that could lead to material differences between the future-oriented financial statements and the historical financial statements include the following:
- The timing and amounts of acquisitions and disposals of property, plant, and equipment may affect gains/losses and amortization expense.
- The implementation of new collective agreements may affect operating expenditures.
- Economic conditions may affect both the amount of revenue earned and the collectability of loans receivables.
- Interest rates in effect at the time of issue will affect the net present value of non-interest bearing loans.
- Additional initiatives or technical adjustments later in the year will affect the operating budget.
Once the 2013-14 Report on Plans and Priorities is presented, the Federal Economic Development Agency for Southern Ontario will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the 2013-14 Departmental Performance Report.
4. Summary of significant accounting policies
The future-oriented financial statements have been prepared in accordance with the Treasury Board Accounting Standards in effect for the preparation of the 2011-12 financial statements and subsequent years.
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.
- Net cash provided by the 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 the government is the difference between all cash receipts and all cash disbursements, including transactions between departments and agencies of the government.
- Amounts due from or to the CRF — 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 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.
- 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 the 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 — 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 or historical treasures that have cultural, aesthetic, or historical value; or assets located on Indian reserves or 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
5. Parliamentary Authorities
The Agency 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, the Agency has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:
- Reconciliation of forecasted net cost of operations to authorities used
Reconciliation of forecasted net cost of operations to authorities used 2013 2014 Reconciliation of net cost of operations to current year authorities used $204,728 $181,317 Adjustments for items affecting net cost of operations
but not affecting authorities:Amortization of tangible capital assets (43) (57) Loss on disposal of tangible capital assets (7) 0 Services provided without charge by other government departments (3,567) (3,553) Decrease in vacation pay and compensatory leave 110 125 Decrease in employee future benefits (1,040) (661) Refund of prior years' expenditures 500 500 Total items affecting net cost of operations but not affecting authorities (4,047) (3,646) Adjustments for items not affecting net cost of operations
but affecting authorities:Acquisition of tangible capital assets 70 110 Proceeds from disposal of tangible capital assets (9) 0 Loans issued on behalf of government 63,220 45,043 Increase in prepaid expenses 11 (11) Total items affecting net cost of operations but not affecting authorities 63,292 45,142 Forecasted authorities used $263,973 $222,813 - Authorities provided and forecasted use
Authorities provided and forecasted use 2013 2014 Authorities provided Vote 50 — Operating Expenditures $28,736 $24,775 Vote 55 — Contributions 231,948 194,888 Statutory amounts 3,289 3,150 Forecasted authorities provided and used $263,973 $222,813
6. Accounts payable and accrued liabilities
The following table presents details of the Agency's forecasted accounts payable and accrued liabilities:
| 2013 | 2014 | |
|---|---|---|
| Accounts payable — Other government departments and agencies | $60 | $50 |
| Accounts payable — External parties | 98,019 | 80,894 |
| Total accounts payable | 98,079 | 80,944 |
| Accrued liabilities | 1,048 | 425 |
| Total accounts payable and accrued liabilities | $99,127 | $81,369 |
7. Employee future benefits
- Pension benefits:
The Agency'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 2 per cent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Quebec Pension Plan benefits and are indexed to inflation.
Both the employees and the Agency contribute to the cost of the plan. The forecasted expense amounts to $260,000 for 2012-13 and $260,000 for 2013-14, which represents approximately 1.9 times the contributions by employees.
The Agency'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:
The Agency provides severance benefits to its employees based on eligibility, years of service, and salary at termination of employment. 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, as well as 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 to 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.
| 2013 | 2014 | |
|---|---|---|
| Employee future benefits | ||
| Accrued benefit obligation | $2,433 | $1,393 |
| Expense for the year | 260 | 260 |
| Benefits paid for the year | (1,300) | (921) |
| Accrued benefit obligation | $1,393 | $732 |
8. Accounts receivable and advances
The following table presents details of the Agency's forecasted accounts receivable and advances balances:
| 2013 | 2014 | |
|---|---|---|
| Receivables — Other government departments and agencies | $504 | $504 |
| Receivables — External parties | 0 | 0 |
| Employee advances | 4 | 4 |
| Net accounts receivable | $508 | $508 |
9. Loans receivable
The following table presents details of the Agency's forecasted loans and transfer payments recoverable balances
| 2013 | 2014 | |
|---|---|---|
| Loans receivable | $173,720 | $204,792 |
| Less: Unamortized discount | 11,017 | 12,585 |
| Subtotal | 162,703 | 192,207 |
| Less: Allowance for uncollectibility | (40,676) | (48,052) |
| Total loans receivable | $122,027 | $144,155 |
The loans receivable portfolio is forecasted to consist of 219 non-interest-bearing loans issued in the years from 2009 to 2013 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 is estimated at $48,052,000 in 2013-14 ($40,676,000 in 2012-13).
Unconditionally repayable contributions relate to contributions made to outside parties that must be repaid without qualification.
10. Tangible capital assets
| Cost | Accumulated Amortization | Net Book Value | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tangible Asset Class | Opening Balance | Acquisitions | Adjustments | Disposals and Write-offs | Closing Balance | Opening Balance | Amortization | Adjustments | Disposals and Write-offs | Closing Balance | 2014 | 2013 |
|
Machinery & equipment |
$41 | $0 | $0 | $0 | $41 | $8 | $4 | $0 | $0 | $12 | $29 | $33 |
| Vehicles | 303 | 60 | 0 | 0 | 363 | 143 | 50 | 0 | 0 | 193 | 170 | 160 |
| Computer hardware | 0 | 50 | 0 | 0 | 50 | 0 | 3 | 0 | 0 | 3 | 47 | 0 |
| Total | $344 | $110 | $0 | $0 | $454 | $151 | $57 | $0 | $0 | $208 | $246 | $193 |
11. Contractual obligations
The nature of the Agency's activities can result in some large multi-year contracts and obligations whereby the Agency 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 | |
|---|---|---|---|---|---|---|
| Transfer payments | $231,948 | $194,888 | $0 | $0 | $0 | $426,836 |
| Total | $231,948 | $194,888 | $0 | $0 | $0 | $426,836 |
12. Related party transactions
The Agency is related as a result of common ownership to all government departments, agencies, and Crown corporations. The Agency enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, the Agency has an agreement with the Department of Industry related to the provision of finance, administrative, and information management services. During the year, the Agency received common services obtained without charge from other government departments as disclosed below.
- Common services provided without charge by other government departments
During the year, the Agency received services without charge from certain common service organizations; these services were related to accommodation and the employer's contribution to health and dental insurance plans. Services provided without charge have been recorded in the Agency's Statement of Operations and Departmental Net Financial Position as follows:
Common services provided without charge by other government departments 2013 2014 Employer's contribution to the health and dental insurance plans $1,462 $1,372 Accommodation 2,105 2,181 Total $3,567 $3,553 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 so that one department performs 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 the Agency's Statement of Operations and Departmental Net Financial Position.
- Administration of programs on behalf of other government department(s)
Under a memorandum of understanding signed with Infrastructure Canada on August 9, 2009, the Agency administers the Canada-Ontario Municipal Rural Infrastructure Fund, the Municipal Rural Infrastructure Fund, and the Building Canada Fund in Ontario. During the year, the Agency expects to incur expenses of $60,874,000 for 2012-13 and $45,000,000 in 2013-14 on behalf of Infrastructure Canada. These expenses are reflected in the financial statements of Infrastructure Canada and are not recorded in these future-oriented financial statements.
Administration of programs on behalf of other government department(s) 2013 2014 Canada-Ontario Municipal Rural Infrastructure Fund $1,565 $0 Municipal Rural Infrastructure Fund 1,309 0 Building Canada Fund — Infrastructure Canada 58,000 45,000 Total $60,874 $45,000
13. Segmented Information
| 2013 | 2014 |
Total 2014 |
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|---|---|---|---|---|---|---|
|
Business Development |
Community Economic Development |
Technological Innovation |
Internal Services |
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FootnotesFootnote * Adjustment for rounding ( Return to first footnote * referrer) |
||||||
| Transfer payments: | $168,228 | $41,802 | $50,246 | $57,297 | $0 | $149,345 |
| Total transfer payments | 168,228 | 41,802 | 50,246 | 57,297 | 0 | 149,345 |
| Operating expenses | ||||||
| Salaries & employee benefits | 23,073 | 2,919 | 3,817 | 4,266 | 11,448 | 22,450 |
| Transportation & communications | 1,763 | 149 | 195 | 222 | 581 | 1,147 |
| Information | 460 | 40 | 52 | 58 | 167 | 317 |
| Professional & special services | 5,693 | 482 | 629 | 702 | 1,894 | 3,707 |
| Rentals | 487 | 41 | 54 | 60 | 162 | 317 |
| Purchases, repair, & maintenance | 2,049 | 172 | 225 | 251 | 675 | 1,323 |
| Accommodation | 2,105 | 284 | 371 | 414 | 1,112 | 2,181 |
| Utilities, materials, & supplies | 166 | 14 | 18 | 20 | 55 | 107 |
| Acquisition of land, building, & works | 99 | 8 | 11 | 12 | 33 | 64 |
| Acquisition of machinery & equipment | 416 | 41 | 54 | 60 | 51 | 206 |
| Amortization | 43 | 0 | 0 | 0 | 57 | 57 |
| Other subsidies & payments | 146 | 12 | 16 | 18 | 49 | 95 |
| Expenses incurred on behalf of government | 19,728 | 8,715 | 0 | 0 | 0 | 8,715 |
| Total operating expenses | 56,228 | 12,877 | 5,442 | 6,083 | 16,284 | 40,687Footnote * |
| Total expenses | 224,456 | 54,679 | 55,688 | 63,380 | 16,284 | 190,032 |
| Revenues | ||||||
| Amortization of discounts | 1,427 | 2,271 | 395 | 0 | 0 | 2,666 |
| Revenues earned on behalf of government | (1,427) | (2,271) | (395) | 0 | 0 | (2,666) |
| Total revenues | 0 | 0 | 0 | 0 | 0 | 0 |
| Net cost from continuing operations | $224,456 | $54,679 | $55,688 | $63,380 | $16,284 | $190,032 |
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