Atlantic Canada Opportunities Agency 2017-2018
Quarterly Financial Report for the quarter ended September 30, 2017

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 section 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 2017-2018 Part II of the Main Estimates.

Basis of Presentation

This quarterly financial report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities is consistent with the Main Estimates for the 2017-2018 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 results reporting process, the Agency prepares its annual departmental financial statements on a full accrual basis in accordance with Treasury Board accounting policies. However, the spending authorities 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 September 30, 2017.

Statement of Authorities: Vote 1 – Net Operating Expenditures

Total authorities available for fiscal year 2017-2018 are $66.6 million compared to $67.4 million as of September 30, 2016. The decrease of $0.8 million, or 1.3%, is explained by the following:

Vote 1 authorities used year-to-date at quarter-end have increased from $31.5 million in 2016-2017 to $35.6 million this fiscal year. This $4.1 million, or 12.9% increase in authorities used, is mainly explained by an increase in personnel costs due to retroactive payments resulting from revised collective agreements.

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 September 30, 2016-2017 and 2017-2018

(in thousands of dollars)

qfr-q2-2018-image001

(D)

Statement of Authorities: Vote 5 – Grants and Contributions

Total authorities available for use for the year ending March 31, 2018, amount to $240.2 million, a decrease of $3.3 million compared to the $243.5 million available for use as of September 30, 2016. The decrease of $3.3 million, or 1.4%, is explained by:

A total decrease of $5.7 million in Vote 5 authorities available for use:

The decrease is offset by a total increase of $2.4 million in Vote 5 authorities available to support the spruce budworm outbreak intervention program, as announced in Budget 2014.

Vote 5 authorities used year-to-date at quarter-end have increased from $65.4 million last fiscal year to $69.4 million this fiscal year. This $4.0 million increase in authorities used, or 5.9%, is due to 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 September 30, 2016-2017 and 2017-2018.

(in thousands of dollars)

qfr-q2-2018-image002

(D)

Statement of Authorities: Budgetary Statutory Authorities

Budgetary statutory authorities available for use for the year ending March 31, 2018, have decreased by $0.8 million, or 9.3%, to $8.0 million compared to the previous fiscal year at the same time. The decrease is due to the regular yearly adjustments to the employee benefit plan to correctly reflect planned requirements.

The budgetary statutory authorities used year-to-date at quarter-end were just under $4.0 million, which is $0.4 million, or 10.6%, less than the $4.4 million used last fiscal year at the same time and is related to the adjustments explained in the previous paragraph.

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 September 30, 2016-2017 and 2017-2018.

(in thousands of dollars)

qfr-q2-2018-image003

(D)

Statement of the Agency’s Budgetary Expenditures by Standard Object

The Agency’s budgetary expenditures by Standard Object for the quarter ended September 30, 2017, were $68.3 million, which reflects an increase of $6.3 million, or 10.1%, from the $62.0 million in overall expenditures for the quarter ended September 30, 2016. The variance by Standard Object relates mainly to transfer payments and personnel costs. The variance is explained in the Statement of Authorities: Vote 5 – Grants and Contributions and the Statement of Authorities: Vote 1 – Net Operating Expenditures.

Risks and Uncertainties

ACOA conducts an annual risk assessment process to update its corporate risk profile. The key corporate risks identified for 2017-2018 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 entity-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.

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. Furthermore, ACOA manages its financial risks and uncertainties related to Phoenix by adopting strategies to mitigate the risks. There are a number of actions that ACOA has taken to date to help stabilize the pay system, and ensure employees are paid accurately and on time. As one of the Departments whose accounts have not yet migrated to the Pay Centre, compensation services remain on site. The compensation team, which fluctuates to meet demand, monitors closely for payroll inaccuracies and communicates directly with employees to provide clarification and to take swift action to rectify issues, if needed. The team also participates actively in the various working groups and other forums led by the Pay Centre. Beyond this, finance staff regularly perform salary reconciliations to monitor and correct expense variances.

Approval by Senior Officials

Approved by:

Francis P. McGuire Deputy Head Moncton, Canada

Date : November 22, 2017

Stéphane Lagacé, CPA-CMA A/Chief Financial Officer Moncton, Canada

Date : November 22, 2017

Statement of Authorities (unaudited)

Fiscal year 2017-2018 (in thousands of dollars)

Authorities Total available for use for the year ending March 31, 2018* Used during the quarter ended September 30, 2017 Year-to-date used at quarter-end
Vote 1 - Net operating expenditures 66,563 19,693 35,578
Vote 5 - Grants and contributions 240,223 46,579 69,432
Budgetary statutory authorities 8,005 1,993 3,985
Total authorities 314,791 68,265 108,995

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 September 30, 2016 Year-to-date used at quarter-end
Vote 1 - Net operating expenditures 67,442 14,451 31,499
Vote 5 - Grants and contributions 243,461 45,335 65,355
Budgetary statutory authorities 8,829 2,204 4,407
Total authorities 319,732 61,990 101,261

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

Agency's budgetary expenditures by Standard Object (unaudited)

Fiscal year 2017-2018 (in thousands of dollars)

Expenditures Planned expenditures for the year ending March 31, 2018 Expended during the quarter ended September 30, 2017 Year-to-date expended at quarter-end
Personnel 58,738 19,618 35,861
Transportation and communications 2,905 547 1,110
Information 542 72 144
Professional and special services 5,967 928 1,253
Rentals 2,273 380 648
Repair and maintenance 1,847 19 186
Utilities, materials and supplies 532 79 178
Acquisition of machinery and equipment 1,658 199 475
Transfer payments 240,223 46,579 69,432
Other subsidies and payments 106 (156) (292)
Total net budgetary expenditures 314,791 68,265 108,995

Fiscal year 2016-2017 (in thousands of dollars)

Expenditures Planned expenditures for the year ending March 31, 2017* Expended during the quarter ended September 30, 2016 Year-to-date expended at quarter-end
Personnel 60,062 15,071 32,232
Transportation and communications 3,575 396 922
Information 447 94 136
Professional and special services 8,619 1,018 1,745
Rentals 1,743 341 645
Repair and maintenance 539 42 186
Utilities, materials and supplies 391 129 166
Acquisition of machinery and equipment 1,368 98 363
Transfer payments 243,461 45,335 65,355
Other subsidies and payments (473) (534) (488)
Total net budgetary expenditures 319,732 61,990 101,262

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

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