Future-oriented statement of operations (unaudited) for the year ending March 31 (in thousands of dollars)
| 2016-17 Estimated Results |
2017-18 Planned Results |
|
| Expenses | ||
|---|---|---|
| Enterprise Development | 126,556 | 140,294 |
| Community Development | 101,040 | 106,325 |
| Internal Services | 29,149 | 29,533 |
| Policy, Advocacy and Coordination | 14,156 | 12,168 |
| Expenses incurred on behalf of government | (11,921) | (29,188) |
| Total expenses | 258,980 | 259,132 |
| Revenues | ||
| Revenue from amortization of discount on assistance loans | 4,405 | 5,320 |
| Interest on overdue loans | 510 | 475 |
| Gain on disposal of tangible capital and non-capital assets | 13 | 18 |
| Miscellaneous revenues | 5 | 27 |
| Revenues earned on behalf of government | (4,920) | (5,822) |
| Total revenues | 13 | 18 |
| Net cost of operations | 258,967 | 259,114 |
The accompanying notes form an integral part of the future-oriented statement of operations.
Notes to the Future-Oriented Statement of Operations (Unaudited)
1. Methodology and Significant Assumptions
The future-oriented statement of operations has been prepared on the basis of government priorities and the plans of the Agency as described in the Departmental Plan.
The information in the estimated results for fiscal year 2016-17 is based on actual results as at November 30, 2016, and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2017-18 fiscal year.
The main assumptions underlying the forecasts are as follows:
- The Agency’s activities will remain substantially the same as in the previous year.
- Expenses and revenues, including the determination of amounts internal and external to the government, are based on experience. The general historical pattern is expected to continue.
- Allowances for uncollectibility are based on historical experience. The general historical pattern is expected to continue.
- Interest rates used in the valuation of loans and the recognition of revenues remain constant with a slight increase for 2017-18.
These assumptions are adopted as at November 30, 2016.
2. Variations and Changes to the Forecast Financial Information
While every attempt has been made to forecast final results for 2016-17 and 2017-18, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.
In preparing this future-oriented statement of operations, the Atlantic Canada Opportunities Agency 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 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 statement of operations and the historical statement of operations include the following:
- The implementation of new collective agreements.
- Economic conditions, which may affect both the amount of revenue earned and the collectability of loans receivable.
- Interest rates in effect at the time of issue, which will affect the net present value of non-interest-bearing loans.
- Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.
Once the Departmental Plan is presented, the Atlantic Canada Opportunities Agency will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Results Report.
3. Summary of Significant Accounting Policies
The future-oriented statement of operations has been prepared using government accounting policies that came into effect for the 2016-17 fiscal year, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.
Significant accounting policies are as follows:
(a) Expenses
Expenses are recorded on an accrual basis. Expenses for the Agency’s operations are recorded when goods are received or services are rendered, including services provided without charge for accommodation, employer contributions to health and dental insurance plans, legal services and worker’s compensation, which are recorded as expenses at their estimated cost. Vacation pay and compensatory leave, as well as severance benefits, are accrued, and expenses are recorded as the benefits are earned by employees under their terms of employment.
Transfer payments such as grants, conditionally repayable contributions, and non-repayable contributions are recorded as expenses when the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.
Expenses also include provisions to reflect changes in the value of assets, including provisions for bad debt on accounts receivable, provisions for valuation on loans, investments and advances, and inventory obsolescence or liabilities, including contingent liabilities and environmental liabilities to the extent the future event is likely to occur and a reasonable estimate can be made.
Expenses also include amortization of tangible capital assets, which are capitalized at their acquisition cost. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset.
Expenses related to the loans and accounts receivable portfolio are expenses incurred on behalf of the Government. While the Deputy Head is expected to maintain accounting control over loans and accounts receivable, he has no authority regarding their disposition; therefore, related expenses are presented in reduction of the entity’s gross expenses.
(b) Revenues
Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.
Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in which the related expenses are incurred.
Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.
The majority of the revenues results from the amortization of discount on assistance loans to reflect the change in the present value of the loans outstanding.
Revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues, except for interest income on overdue loans, which is only recognized when received due to the uncertainty as to ultimate collection.
Revenues that are non-respendable are not available to discharge the Agency's liabilities. While the Deputy Head is expected to maintain accounting control, he has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of the entity's gross revenues.
4. Parliamentary Authorities
The Agency is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the Agency does not parallel financial reporting according to generally accepted accounting principles because authorities are primarily based on cash flow requirements. Items recognized in the future-oriented statement of operations in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, the Agency has different net cost of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:
(a) Reconciliation of net cost of operations to requested authorities (in thousands of dollars)
| 2016-17 Estimated Results | 2017-18 Planned Results | |
| Net cost of operations before government funding and transfers | 258,967 | 259,114 |
|---|---|---|
| Adjustments for items affecting net cost of operations but not affecting authorities: | ||
| Amortization of tangible capital assets | (223) | (289) |
| Gain on disposal of tangible capital assets | 10 | 17 |
| Services provided without charge by other government departments | (8,216) | (8,433) |
| Decrease in vacation pay and compensatory leave | (193) | (14) |
| Increase in employee future benefits | (42) | 8 |
| Conditions met on contributions | 9,212 | 13,604 |
| Total of items affecting net cost of operations but not affecting authorities | 548 | 4,893 |
| Adjustments for items not affecting net cost of operations but affecting authorities: | ||
| Acquisition of tangible capital assets | 93 | 125 |
| Assistance loans issued on behalf of Government | 66,669 | 61,995 |
| Total of items not affecting net cost of operations but affecting authorities | 66,762 | 62,120 |
| Forecast current year lapse | 3,683 | 2,000 |
| Forecast authorities available | 329,960 | 328,127 |
(b) Authorities requested (in thousands of dollars)
| 2016-17 Estimated Results |
2017-18 Planned Results |
|
| Authorities requested: | ||
|---|---|---|
| Vote 1 – Operating expenditures | 64,840 | 67,035 |
| Vote 5 – Grants and contributions | 256,306 | 253,122 |
| Statutory amounts – employee benefit plans | 8,814 | 7,970 |
| Forecast authorities available | 329,960 | 328,127 |
Authorities presented reflect current forecasts of statutory items, approved initiatives included and expected to be included in Estimates documents, and, when reasonable estimates can be made, estimates of amounts to be allocated from Treasury Board central votes.