Atlantic Canada Opportunities Agency – Quarterly Financial Report for the quarter ending June 30, 2020

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 2020-2021 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 2020-2021 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

This section highlights significant changes to the fiscal quarter results as of June 30, 2020.

Statement of Authorities: Vote 1 – Net Operating Expenditures

Total authorities available for fiscal year 2020-2021 are $51.8 million compared to $66.0 million as of June 30, 2019. The decrease of $14.2 million, or 21.5%, is explained by:

A total decrease of $17.1 million in Vote 1 authorities available for use related to the reduced supply, which represents 9/12th of the Main Estimates. ACOA is expected to receive full supply for the 2020-2021 Main Estimates in December 2020. Due to the COVID-19 pandemic and limited sessions in the spring for Parliament to study supply, the Standing Orders of the House of Commons were amended to extend the study period to the fall.

The decrease is offset by a total increase of $2.9 million in Vote 1 authorities available for use related to:

Vote 1 authorities used year-to-date have decreased from $15.9 million at the end of the first quarter in 2019-2020 to $14.8 million this fiscal year. This $1.1 million decrease in authorities used, or 6.7%, is mainly due to the significant impact the COVID-19 pandemic has had on travel expenses.

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 June 30, 2019-2020 and 2020-2021.

(in thousands of dollars)

Long description - Graph 1

For the year ending March 31, 2020, total authorities available for use for Vote 1 is $65,988 in thousands of dollars, while year to date authorities used for Vote 1 is $15,880 in thousands of dollars.

For the year ending March 31, 2021, total authorities available for use for Vote 1 is $51,795 in thousands of dollars, while year to date authorities used for Vote 1 is $14,816 in thousands of dollars.

Statement of Authorities: Vote 5 – Grants and Contributions

Total authorities available for use for the year ending March 31, 2021, amount to $237.4 million, a decrease of $30.6 million compared to the $268.0 million available for use as of June 30, 2019. The decrease of $30.6 million, or 11.4%, is explained by:

A total decrease of $102.7 million in Vote 5 authorities available for use related to:

This decrease is offset by a total increase of $72.1 million in Vote 5 authorities available for use related to:

Vote 5 authorities used have increased from $33.3 million last fiscal year to $52.4 million this fiscal year. This $19.1 million increase in authorities used, or 57.3%, is due to the amount of contribution payments expended with regards to the Regional Relief and Recovery Fund.

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 June 30, 2019-2020 and 2020-2021.

(in thousands of dollars)

Long description - Graph 2 

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 $33,284 in thousands of dollars.

For the year ending March 31, 2021, total authorities available for use for Vote 5 is $237,377 in thousands of dollars, while year to date authorities used for Vote 5 is $52,369 in thousands of dollars.

Statement of Authorities: Budgetary Statutory Authorities

Budgetary statutory authorities available for use for the year ending March 31, 2021, have increased by $78.3 million, or 913.6%, to $86.9 million compared to the previous fiscal year at the same time. The increase is explained by funding received to provide financing support pursuant to the Public Health Events of National Concern Payments Act. These authorities were provided via statutory authorities to ACOA. This amount can be broken down as follows:

Statutory authorities used have increased from $2.1 million last fiscal year to $21.3 million this fiscal year. This $19.2 million increase in authorities used, or 897.1%, is due to the amount of contribution payments expended with regards to the Regional Relief and Recovery Fund.

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 June 30, 2019-2020 and 2020-2021.

(in thousands of dollars)

Long description - Graph 3 

For the year ending March 31, 2020, total authorities available for use for Statutory authorities is $8,573 in thousands of dollars, while year to date authorities used for Statutory authorities is $2,137 in thousands of dollars.

For the year ending March 31, 2021, total authorities available for use for Statutory authorities is $86,892 in thousands of dollars, while year to date authorities used for Statutory authorities is $21,308 in thousands of dollars.

Statement of the Agency’s Budgetary Expenditures by Standard Object

The Agency’s budgetary expenditures by Standard Object for the quarter ended June 30, 2020, were $88.5 million, which reflects an increase of $37.2 million, or 72.5%, from the $51.3 million in overall expenditures for the quarter ended June 30, 2019. The variance by Standard Object relates mainly to transfer payments. The variance is explained in the Statement of Authorities: Vote 5 – Grants and Contributions and in the Statement of Authorities: Budgetary Statutory Authorities.

Risks and Uncertainties

ACOA conducts an annual risk assessment process to update its overarching corporate risk profile. The key corporate risks being used for 2020-2021 were established prior to the COVID-19 pandemic. Despite this, it is plausible that the eventual review of internal corporate risks may have an impact on certain operational aspects of the Agency, while not necessarily having a direct impact on financial reporting, as ACOA manages financial risks through a set of 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

In March 2020, the World Health Organization declared a global pandemic following the outbreak of a novel strain of the coronavirus (COVID-19). For the protection of personnel and that of communities right across the country, efforts were made to take all public health precautions to prevent the further spread of COVID-19. As a result of COVID-19, the following significant changes occurred in relation to operations, personnel and programs during the first quarter:

Approval by Senior Officials

Approved by:

Francis P. McGuire
Deputy Head
Moncton, Canada

Date : July 27, 2020

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

Date : July 24, 2020

Statement of Authorities (unaudited)

Fiscal year 2020-2021 (in thousands of dollars)

Authorities Total available for use for the year ending March 31, 2021* Used during the quarter ended June 30, 2020 Year-to-date used at quarter-end
Vote 1 - Net operating expenditures 51,795 14,816 14,816
Vote 5 - Grants and contributions 237,377 52,369 52,369
Budgetary statutory authorities 86,892 21,308 21,308
Total authorities 376,064 88,493 88,493

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 June 30, 2019 Year-to-date used at quarter-end
Vote 1 - Net operating expenditures 65,988 15,880 15,880
Vote 5 - Grants and contributions 268,045 33,284 33,284
Budgetary statutory authorities 8,573 2,137 2,137
Total authorities 342,606 51,301 51,301

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

Agency's budgetary expenditures by Standard Object (unaudited)

Fiscal year 2020-2021 (in thousands of dollars)

Expenditures Planned expenditures for the year ending March 31, 2021* Expended during the quarter ended June 30, 2020 Year-to-date expended at quarter-end
Personnel 52,839 16,034 16,034
Transportation and communications 2,123 14 14
Information 379 104 104
Professional and special services 2670 193 193
Rentals 1,244 605 605
Repair and maintenance 98 6 6
Utilities, materials and supplies 392 10 10
Acquisition of machinery and equipment 483 31 31
Transfer payments 315,517 71,520 71,520
Other subsidies and payments 319 (24) (24)
Total net budgetary expenditures 376,064 88,493 88,493

Fiscal year 2019-2020 (in thousands of dollars)

Expenditures Planned expenditures for the year ending March 31, 2020* Expended during the quarter ended June 30, 2019 Year-to-date expended at quarter-end
Personnel 64,500 15,468 15,468
Transportation and communications 2,368 741 741
Information 496 206 206
Professional and special services 4,060 355 355
Rentals 1,553 854 854
Repair and maintenance 315 171 171
Utilities, materials and supplies 341 38 38
Acquisition of machinery and equipment 921 23 23
Transfer payments 268,045 33,284 33,284
Other subsidies and payments 7 161 161
Total net budgetary expenditures 342,606 51,301 51,301

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

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