Atlantic Canada Opportunities Agency – Quarterly Financial Report for the quarter ending December 31, 2019

Atlantic Canada Opportunities Agency

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 2019-2020 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 2019-2020 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:

Vote 1 – Net operating expenditures includes the Agency’s authorities related to personnel costs (e.g. salaries) and operation and maintenance expenditures (e.g. travel).
Vote 5 – Grants and contributions includes all authorities related to transfer payments.

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

This section highlights significant changes to the fiscal quarter results as of December 31, 2019.

Statement of Authorities: Vote 1 – Net Operating Expenditures

Total authorities available for fiscal year 2019-2020 are $71.6 million with no significant variance compared to $70.4 million as of December 31, 2018.

Vote 1 authorities used year-to-date have increased to $49.4 million at the end of the third quarter this fiscal year with no significant variance compared to $47.2 million as of December 31, 2018.

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, 2018-2019 and 2019-2020.

(in thousands of dollars)

Long description - Graph 1

For the year ending March 31, 2019, total authorities available for use for Vote 1 is $70,412 in thousands of dollars, while year to date authorities used for Vote 1 is $47,163 in thousands of dollars.

For the year ending March 31, 2020, total authorities available for use for Vote 1 is $71,607 in thousands of dollars, while year to date authorities used for Vote 1 is $49,422 in thousands of dollars.

Statement of Authorities: Vote 5 – Grants and Contributions

Total authorities available for use for the year ending March 31, 2020, amount to $268.0 million, a decrease of $19.3 million compared to the $287.3 million available for use as of December 31, 2018. The decrease of $19.3 million, or 6.7%, is explained by:

A total decrease of $40.6 million in Vote 5 authorities available for use related to:

$34.5 million decrease in temporary funding announced in Budget 2017 to promote and advance an innovative and knowledge-based economy in Atlantic Canada;
$4.1 million decrease in funding announced in Budget 2018 (resulting in a transfer of funds to Natural Resources Canada) related to Protecting Jobs in Eastern Canada’s Forestry Sector;
$1.0 million decrease due to the termination of funding in support of specific projects in innovation, commercialization and community development in New Brunswick;
$0.6 million decrease related to collections from repayable contributions;
$0.3 million decrease related to the amount transferred from the Department of National Defence in support of the Halifax International Security Forum (2018-2019); and
$0.1 million decrease in various adjustments.

The decrease is offset by a total increase of $21.3 million in Vote 5 authorities available for use:

$12.5 million increase related to a reprofile of funds as a result of project/contracting delays;
$6.8 million increase in temporary funding in support of the Regional Economic Growth through Innovation (REGI) program – Supporting Small and Medium-Sized Enterprise Users of Steel and Aluminum Initiative; and
$2.0 million increase in temporary funding announced in Budget 2019 related to Launching a Federal Strategy on Jobs and Tourism.

Vote 5 authorities used year-to-date have increased from $130.0 million last fiscal year to $145.8 million this fiscal year. This $15.8 million increase in authorities used, or 12.1%, is mainly 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 December 31, 2018-2019 and 2019-2020.

(in thousands of dollars)^[1]

Long description - Graph 2

For the year ending March 31, 2019, total authorities available for use for Vote 5 is $287,337 in thousands of dollars, while year to date authorities used for Vote 5 is $130,042 in thousands of dollars.

For the year ending March 31, 2020, total authorities available for use for Vote 5 is $268,045 in thousands of dollars, while year to date authorities used for Vote 5 is $145,809 in thousands of dollars.

Note: Total authorities available for use in 2018-19 include an amount of $12.5 million that was reprofiled to fiscal year 2019-20 due to client projects delays. This overstates the Total authorities available for use in 2018-19. Actual Total authorities available for use as of December 31, 2018 were of $274.5 million. This compares to $268.0 million in Total authorities available for use as of December 31, 2019.

Statement of Authorities: Budgetary Statutory Authorities

Budgetary statutory authorities available for use for the year ending March 31, 2020, have increased by $0.3 million, or 3.9%, to $8.6 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.

Net budgetary statutory authorities used year-to-date at quarter-end have also increased by 4.6% when compared to the previous fiscal year, with approximately $6.4 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, 2018-2019 and 2019-2020.

(in thousands of dollars)

Long description - Graph 3

For the year ending March 31, 2019, total authorities available for use for Statutory authorities is $8,287 in thousands of dollars, while year to date authorities used for Statutory authorities is $6,126 in thousands of dollars.

For the year ending March 31, 2020, total authorities available for use for Statutory authorities is $8,614 in thousands of dollars, while year to date authorities used for Statutory authorities is $6,411 in thousands of dollars.

Statement of the Agency’s Budgetary Expenditures by Standard Object

The Agency’s budgetary expenditures by Standard Object for the year-to-date at quarter-end were $201.6 million, which reflects an increase of $18.3 million, or 10%, from the $183.3 million^[2] in overall expenditures for the quarter ended December 31, 2018. The variance by Standard Object relates mainly to transfer payments. The variance is explained in the Statement of Authorities: Vote 5 – Grants and Contributions.

Planned personnel expenditures for the year ending March 31, 2020 have increased by $5.6 million, or 8.8%, when compared to planned personnel expenditures for the year ending March 31, 2019. The variance is mainly due to increased authorities from revised collective agreements and the operating budget carry forward from 2018-2019 that was partially allocated as personnel authorities. The operating budget carry forward will be re-allocated as Operating via the 2019-20 year-end closing processes.

Risks and Uncertainties

ACOA conducts an annual risk assessment process to update its corporate risk profile. The key corporate risks identified for 2019-2020 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.

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.

Significant changes in relation to operations, personnel and programs

There have been no significant changes in relation to operations, personnel and programs impacting the results of this quarter.

Approval by Senior Officials

Approved by:

Francis P. McGuire
Deputy Head
Moncton, Canada

Date : February 25, 2020

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

Date : February 21, 2020

Statement of Authorities (unaudited)

Fiscal year 2019-2020 (in thousands of dollars)

Authorities	Total available for use for the year ending March 31, 2020*	Used during the quarter ended December 31, 2019	Year-to-date used at quarter-end
Vote 1 - Net operating expenditures	71,607	18,110	49,422
Vote 5 - Grants and contributions	268,045	58,274	145,809
Budgetary statutory authorities	8,614	2,137	6,411
Total authorities	348,266	78,521	201,642

Fiscal year 2018-2019 (in thousands of dollars)

Authorities	Total available for use for the year ending March 31, 2019*	Used during the quarter ended December 31, 2018	Year-to-date used at quarter-end
Vote 1 - Net operating expenditures	70,412	16,863	47,163
Vote 5 - Grants and contributions	287,337	59,455	130,042
Budgetary statutory authorities	8,287	2,042	6,126
Total authorities	366,036	78,360	183,331

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

Agency's budgetary expenditures by Standard Object (unaudited)