Atlantic Canada Opportunities Agency Quarterly Financial Report for the quarter ended December 31, 2016

Statement Outlining Results, Risks and Significant Changes in Operations, Personnel and Programs

INTRODUCTION

This quarterly financial report should be read in conjunction with the Main Estimates. It has been prepared by management as required by Subsection 65.1 of the Financial Administration Act (FAA) and in the form and manner prescribed by the Treasury Board. This quarterly report has not been subjected to an external audit or review.

A summary description of the Atlantic Canada Opportunities Agency (ACOA) program activities can be found in the 2016-2017 Part II of the Main Estimates.

Basis of Presentation

This quarterly financial report has been prepared by management using an expenditure basis of accounting and a special purpose financial reporting framework designed to meet financial information needs with respect to the total authorities available for use. The accompanying Statement of Authorities is consistent with the Main Estimates for the 2016-2017 fiscal year and includes ACOA’s total authorities available for use as granted by Parliament and those used by the Agency during this quarter. Authorities available for use are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory authorities for specific purposes. The authority of Parliament is required before monies can be spent by the government.

When Parliament is dissolved for the purposes of a general election, Section 30 of the FAA authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

As part of the departmental performance reporting process, the Agency prepares its annual departmental financial statements on a full accrual basis in accordance with Treasury Board accounting policies. However, the total authorities available for use voted by Parliament remain on an expenditure basis of accounting.

ACOA Financial Structure

ACOA manages its expenditures under two votes:

Costs under Statutory Authorities, which represent payments made under legislation approved previously by Parliament and which are not part of the annual appropriation bills, include such items as the employer’s share of the employee benefits plan and other minor items.

HIGHLIGHTS OF FISCAL QUARTER AND FISCAL YEAR-TO-DATE RESULTS

The following section highlights significant changes to the fiscal quarter results as of December 31, 2016.

Statement of Authorities: Vote 1 – Net Operating Expenditures

Total authorities available for fiscal year 2016-2017 are $67.1 million compared to $67.2 million as of December 31, 2015. There are no significant variances in total authorities available compared to the previous fiscal year.

Vote 1 authorities used year-to-date at quarter-end is similar to last fiscal year with a total of $44.4 million. There are no significant variances in total authorities used year-to-date compared to the previous fiscal year.

Graph 1 illustrates the total authorities available for use for the year as well as the amount used year-to-date at quarter-end.

Graph 1: Comparison of Net Budgetary Authorities and Expenditures for Vote 1 as of December 31, 2015-2016 and 2016-2017.

(in thousands of dollars)

qfr-q3-2017-image001
(D)

Statement of Authorities: Vote 5 – Grants and Contributions

Total authorities available for use for the year ending March 31, 2017, amount to $245.1 million, an increase of $19.5 million compared to the $225.6 million available for use as of December 31, 2015. The increase of $19.5 million, or 8.6%, is explained by the following:

A total increase of $24.3 million in Vote 5 authorities available for use:

The increase is offset by a total decrease of $4.8 million in Vote 5 authorities available for use, mainly related to the planned cash flow fluctuation of specific projects in the province of New Brunswick as per Budget 2014.

Vote 5 authorities used have increased from $105.2 million last fiscal year to $118.7 million this fiscal year. This $13.5 million increase in authorities used, or 12.8%, is due in part to new funding received in support of CIP 150 and the timing of contribution payments compared to the previous fiscal year.

Graph 2 illustrates the total authorities available for use for the year, as well as the amount used year-to-date at quarter-end.

Graph 2: Comparison of Net Budgetary Authorities and Expenditures for Vote 5 as of December 31, 2015-2016 and 2016-2017.

(in thousands of dollars)

qfr-q3-2017-image002
(D)

Statement of Authorities: Budgetary Statutory Authorities

Budgetary statutory authorities available for use for the year ending March 31, 2017, have increased by $0.2 million, or 0.2%, to $8.8 million, compared to the previous fiscal year at the same time. The increase is due to the regular yearly adjustments to the employee benefit plan to correctly reflect planned requirements.

There are no significant variances in net budgetary statutory authorities used year-to-date at quarter-end compared to the previous fiscal year, with an amount of $6.6 million used.

Graph 3 illustrates the total authorities available for use for the year, as well as the amount used year-to-date at quarter-end.

Graph 3: Comparison of Net Budgetary Authorities and Expenditures for Statutory Authorities as of December 31, 2015-2016 and 2016-2017.

(in thousands of dollars)

qfr-q3-2017-image003
(D)

Statement of the Agency’s Budgetary Expenditures by Standard Object

The Agency’s budgetary expenditures by Standard Object for the quarter ended December 31, 2016, were $169.7 million, which reflects an increase of $13.4 million, or 8.6%, from the $156.3 million in overall expenditures for the quarter ended December 31, 2015. The variance by Standard Object relates mainly to transfer payments. The variance is explained in the Statement of Authorities: Vote 5 – Grants and Contributions.

Risks and Uncertainties

ACOA conducts an annual risk assessment process to update its corporate risk profile. The key corporate risks identified for 2016-2017 do not have a direct impact on financial reporting. However, ACOA is managing the regular financial risks associated with running the organization and has implemented appropriate mitigation measures. The financial risks are mitigated in large part by the implementation of strong internal controls over financial reporting. These include the periodic assessment of entry-level controls, general computer controls and controls in ACOA’s key business processes such as payments on grants and contributions, regular operating expenses and accounts receivable.

Strategies have been put into place to allow ACOA to manage increases in salary costs as the collective bargaining agreements currently being negotiated are finalized.

Furthermore, ACOA manages its budgetary and allocation processes through a well-defined framework supported by a series of automated financial controls. Periodic forecasts are required and analyses are done regularly to ensure that funds are properly managed.

Approval by Senior Officials

Approved by:

Paul J. LeBlanc
Deputy Head
Moncton, New Brunswick

Date : February 9, 2017

Denise Frenette, CA
Chief Financial Officer
Moncton, New Brunswick

Date : February 8, 2017

Statement of Authorities (unaudited)

Fiscal year 2016-2017 (in thousands of dollars)

Authorities Total available for use for the year ending March 31, 2017* Used during the quarter ended December 31, 2016 Year-to-date used at quarter-end
Vote 1 - Net operating expenditures 67,084 15,048 44,400
Vote 5 - Grants and contributions 245,139 53,364 118,718
Budgetary statutory authorities 8,847 2,208 6,615
Total authorities 321,070 70,620 169,733

Fiscal year 2015-2016 (in thousands of dollars)

Authorities Total available for use for the year ending March 31, 2016* Used during the quarter ended December 31, 2015 Year-to-date used at quarter-end
Vote 1 - Net operating expenditures 67,220 15,146 44,601
Vote 5 - Grants and contributions 225,574 48,654 105,244
Budgetary statutory authorities 8,634 2,153 6,466
Total authorities 301,428 65,953 156,311

*Includes only Authorities available for use and granted by Parliament at quarter-end.

Agency's budgetary expenditures by Standard Object (unaudited)

Fiscal year 2016-2017 (in thousands of dollars)

Expenditures Planned expenditures for the year ending March 31, 2017* Expended during the quarter ended December 31, 2016 Year-to-date expended at quarter-end
Personnel 60,062 14,546 44,628
Transportation and communications 3,482 633 1,555
Information 435 85 221
Professional and special services 8,394 843 2,588
Rentals 1,748 384 1,029
Repair and maintenance 540 28 213
Utilities, materials and supplies 392 69 235
Acquisition of machinery and equipment 1,371 198 561
Transfer payments 245,138 53,364 118,719
Other subsidies and payments (492) 470 (16)
Total net budgetary expenditures 321,070 70,620 169,733

Fiscal year 2015-2016 (in thousands of dollars)

Expenditures Planned expenditures for the year ending March 31, 2016* Expended during the quarter ended December 31, 2015 Year-to-date expended at quarter-end
Personnel 59,859 15,176 44,870
Transportation and communications 4,557 645 1,610
Information 206 61 166
Professional and special services 9,122 1,033 2,132
Rentals 1,665 323 899
Repair and maintenance 319 182 352
Utilities, materials and supplies 424 74 238
Acquisition of machinery and equipment 363 107 693
Transfer payments 225,574 48,653 105,243
Other subsidies and payments (661) (304) 107
Total net budgetary expenditures 301,428 65,953 156,311

*Includes only Authorities available for use and granted by Parliament at quarter-end.

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