2016-2017 Departmental Results Report - financial statements

Statement of management responsibility, including internal control over financial reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2017, and all information contained in these statements rests with the management of the Atlantic Canada Opportunities Agency. These financial statements have been prepared by management using the Government's accounting policies, which are based on Canadian public sector accounting standards.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgment, and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the Agency's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Agency’s Departmental Performance Report, is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting (ICFR) designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the Agency; and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.

The system of ICFR is designed to mitigate risks to a reasonable level based on an on-going process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

The Agency is subject to periodic Core Control Audits performed by the Office of the Comptroller General and uses the results of such audits to comply with the Treasury Board Policy on Internal Control.

A Core Control Audit was performed in 2014-15 by the Office of the Comptroller General of Canada (OCG). The Audit Report and related Management Action Plan are posted on the Agency’s web site.

The financial statements of the Agency have not been audited.

Approved by Senior Officials
Approved by:

Atlantic Canada Opportunities Agency
Statement of Financial Position (Unaudited)
As at March 31 (in thousands of dollars)

	2017	2016
Liabilities
Accounts payable and accrued liabilities (note 4)	64,321	62,713
Vacation pay and compensatory leave	2,532	2,019
Other liabilities (note 5)	286	150
Employee future benefits (note 6)	2,687	3,522
Total gross liabilities	69,826	68,404
Liabilities held on behalf of Government
Accounts payable and accrued liabilities (note 4)	(8,826)	(7,344)
Total liabilities held on behalf of Government	(8,826)	(7,344)
Total net liabilities	61,000	61,060
Financial assets
Due from Consolidated Revenue Fund	54,499	53,306
Accounts receivable and advances (note 7)	1,455	2,125
Loans receivable (note 8)	259,694	246,718
Investments (note 9)	3,581	3,577
Total gross financial assets	319,229	305,726
Financial assets held on behalf of Government
Accounts receivable and advances (note 7)	(365)	(162)
Loans receivable (note 8)	(259,694)	(246,718)
Investments (note 9)	(3,581)	(3,577)
Total financial assets held on behalf of Government	(263,640)	(250,457)
Total net financial assets	55,589	55,269
Agency net debt	5,411	5,791
Non-financial assets
Prepaid expenses	0	0
Tangible capital assets (note 10)	1,062	695
Total non-financial assets	1,062	695
Agency net financial position	(4,349)	(5,096)

For information on contractual obligations, see note 11.

The accompanying notes form an integral part of these financial statements.

Approved by Senior Officials
Approved by:

Atlantic Canada Opportunities Agency
Statement of Operations and Departmental Net Financial Position (Unaudited)
For the Year Ended March 31 (in thousands of dollars)

	2017 Planned Results	2017	2016
Expenses
Enterprise Development	135,879	116,886	126,933
Community Development	99,493	108,176	92,925
Internal Services	27,604	27,051	29,194
Policy, Advocacy and Coordination	12,348	15,677	12,838
Expenses incurred on behalf of Government	(23,943)	(17,255)	(30,668)
Total expenses	251,381	250,535	231,222
Revenues
Revenue from amortization of discount on assistance loans	5,192	3,798	3,972
Interest on overdue loans	404	528	483
Interest on bank deposits	-	10	14
Gain on disposal of tangible capital and non-capital assets	17	23	17
Miscellaneous revenues	38	7	2
Revenues earned on behalf of Government	(5,634)	(4,343)	(4,471)
Total revenues	17	23	17
Net cost of operations	251,364	250,512	231,205
Net cost of operations before government funding and transfers	250,512	231,205
Government funding and transfers
Net cash provided by Government	241,446	226,339
Change in due from Consolidated Revenue Fund	1,193	(3,807)
Services provided without charge by other government departments (note 12)	8,628	8,035
Transfer of Accounts Receivable to Public Services and Procurement Canada (note 13)	(8)	(14)
Net cost of operations after government funding and transfers	(747)	652
Departmental net financial position – Beginning of year	(5,096)	(4,444)
Departmental net financial position – End of year	(4,349)	(5,096)

For information on segmented information, see note 15.

The accompanying notes form an integral part of these financial statements.

Atlantic Canada Opportunities Agency
Statement of Change in Departmental Net Debt (Unaudited)
For the Year Ended March 31 (in thousands of dollars)

	2017	2016
Net cost of operations after government funding and transfers	(747)	652
Change due to tangible capital assets
Acquisition of tangible capital assets	581	159
Amortization of tangible capital assets	(214)	(256)
Proceeds from disposal of tangible capital assets	(23)	(17)
Net gain on disposal of tangible capital assets, including adjustments	23	17
Total change due to tangible capital assets	367	(97)
Change due to prepaid expenses	0	(16)
Net increase (decrease) in departmental net debt	(380)	539
Agency net debt – Beginning of year	5,791	5,252
Agency net debt – End of year	5,411	5,791

The accompanying notes form an integral part of these financial statements.

Atlantic Canada Opportunities Agency
Statement of Cash Flows (Unaudited)
For the Year Ended March 31 (in thousands of dollars)

	2017	2016
Operating activities
Net cost of operations before government funding and transfers	250,512	231,205
Non-cash items:
Amortization of tangible capital assets	(214)	(256)
Gain on disposal of tangible capital assets	23	17
Services provided without charge by other government departments (note 12)	(8,628)	(8,035)
Transition payments for implementing salary payments in arrears (note 13)	8	14
Variations in Statement of Financial Position:
Increase (decrease) in prepaid expenses	0	(16)
Increase (decrease) in accounts receivable and advances	(873)	1,654
Decrease (increase) in accounts payable and accrued liabilities	(126)	1,904
Decrease (increase) in vacation pay and compensatory leave	(513)	(681)
Decrease (increase) in other liabilities	(136)	206
Decrease (increase) in employee future benefits	835	185
Cash used in operating activities	240,888	226,197
Capital investing activities
Acquisition of tangible capital assets (note 10)	581	159
Proceeds from disposal of tangible capital assets	(23)	(17)
Cash used in capital investing activities	558	142
Net cash provided by Government of Canada	241,446	226,339

The accompanying notes form an integral part of these financial statements.

Atlantic Canada Opportunities Agency
Notes to the Financial Statements (Unaudited)
For the Year Ended March 31

1. Authority and objectives

The Atlantic Canada Opportunities Agency (ACOA) operates under the authority of the Atlantic Canada Opportunities Agency Act, R.S.C., 1985, c. 41, 4th Supp.

The Agency’s mandate is to increase opportunity for economic development in Atlantic Canada and, more particularly, to enhance the growth of earned incomes and employment opportunities in that region.

• Enterprise Development – ACOA works in partnership with Atlantic Canadian businesses, stakeholders, industry and institutions to improve the growth and productivity of Atlantic Canada’s economy, leading to increased competitiveness, earned incomes and job creation. ACOA works to improve the capacity of Atlantic Canada’s rural and urban areas for economic growth through a variety of strategically focused mechanisms, which include the following: assisting businesses, particularly small and medium-sized enterprises (SMEs), to start, expand or modernize, and to establish and expand export activities; partnering with universities and other institutions to increase the region’s research and development (R&D) capacity, commercialization and productivity; and promoting and participating in the region’s transition to a knowledge-based economy.
• Community Development – ACOA focuses targeted efforts and strategies toward community development and also aims to provide and maintain quality public infrastructure. ACOA develops and delivers programming that meets the unique economic development needs of rural areas in Atlantic Canada and that contributes to a stronger region. The Agency also aims to support research and analysis that assesses the specific needs of these diverse areas, enabling them to capitalize on emerging opportunities such as shipbuilding and energy. ACOA works in co-operation with other levels of government, other federal government departments, non-government organizations and community groups to leverage support, coordinate economic development, and react to economic challenges across the region. This requires a flexible, balanced approach based on the realities of a given community’s capacities, strengths and challenges. Community development is a multi-stakeholder process that helps to develop the tools, resources and initiatives that support the development of a particular area.
• Policy, Advocacy and Coordination – The Agency’s Policy, Advocacy and Coordination (PAC) program is central to identifying and effectively responding to opportunities and challenges facing the regional economy. PAC provides intelligence, analysis and well-grounded advice on a broad range of issues and topics, and it informs and supports Agency and ministerial decision making. PAC helps carry the Agency’s agenda forward and ensure that ACOA overall remains relevant and responsive to the opportunities and challenges in Atlantic Canada by offering strategic, researched policy positions that reflect the region’s potential, by influencing national policies and programs that affect Atlantic Canada's development and interests, and in coordinating other policies and programs within the region to form integrated approaches to development.
• Internal Services – Internal Services are groups of related activities and resources administered to support the needs of programs and other corporate obligations of an organization. These activities and resources include the following: management and oversight services, communications services, legal services, human resources management services, financial management services, information management services, information technology services, real property services, materiel services, acquisition services, and travel and other administrative services.

2. Summary of significant accounting policies

These financial statements have been prepared using the Government’s accounting policies, stated below, 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) Parliamentary authorities – The Agency is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the Agency do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. The planned results amounts in the Statement of Operations are the amounts reported in the future-oriented financial statements included in the 2016-2017 Report on Plans and Priorities.

(b) Net cash provided by Government – The Agency operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Agency is deposited to the CRF and all cash disbursements made by the Agency are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements, including transactions between departments of the Government.

(c) Amounts due from the CRF – These amounts are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that the Agency is entitled to draw from the CRF without further authorities to discharge its liabilities.

(d) Revenues – 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.

The majority of the revenues results from the recognition of the amortization of discount on assistance loans.

With the exception of gain on disposal of tangible capital assets, revenues are earned on behalf of Government and are not available to discharge the Agency’s liabilities. While the Deputy Head (DH) is expected to maintain accounting control, he has no authority regarding the disposition of these revenues. Therefore, they are presented in reduction of the entity’s gross revenues.

(e) Expenses – Expenses are recorded on the accrual basis:

Transfer payments such as grants, conditionally repayable contributions and non-repayable contributions are recorded as expenses when authorization for the payment is approved as a legitimate expense under the applicable transfer payment program. Transfer payments that become repayable as a result of conditions specified in the contribution agreement are recorded as a reduction in transfer payment expense and are reclassified as a receivable.

Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.

Services provided without charge by other government departments for accommodations, employer contributions to the health and dental insurance plans, legal services and workers’ compensation are recorded as operating expenses at their estimated cost.

Expenses related to the loan and accounts receivable portfolio are expenses incurred on behalf of Government. While the DH 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.

(f) Employee future benefits

i) Pension benefits – Eligible employees participate in the Public Service Pension Plan, a multi-employer plan administered by the Government of Canada. The Agency’s contributions to the Plan are charged to expenses in the year incurred and represent the total Agency obligation to the Plan. The Agency’s responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan’s sponsor.

(ii) Severance benefits – Certain employee groups are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees of the Agency is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government of Canada as a whole.

(g) Accounts and loans receivable – These are stated at the lower of cost and net recoverable value. A valuation allowance is recorded for accounts and loans receivable where recovery is considered appropriate and uncertain.

(i) Unconditionally repayable contributions – Transfer payments that are unconditionally repayable are recognized as loans receivable. These contributions must be repaid without condition, and the loans have significant concessionary terms as they include a no-interest clause. Furthermore, they have various repayment terms. The modified effective rate method is used to discount the loans receivable.

(ii) Conditionally repayable contributions – Transfer payments that are conditionally repayable are reclassified as accounts receivable when conditions specified in the contribution agreement come into effect or in the event of default.

(h) Allowance for impaired loans and accounts receivable – Loans and accounts receivable are classified as impaired when, in the opinion of management, there is reasonable doubt as to the timely collection of the full amount of principal and, where applicable, interest. A specific allowance is established to reduce the recorded value of the loan to its estimated net realizable value.

(i) Contingent liabilities – Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

(j) Tangible capital assets – All tangible capital assets having an initial cost of $10,000 or more are recorded at their acquisition cost. The Agency does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian reserves, and museum collections.

Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:

Asset Class	Amortization Period
Vehicles	5 years
Computer equipment	3 years
In-house-developed software	5 years
Other equipment	5 years
Machinery and equipment	15 years

(k) Measurement uncertainty – The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items for which estimates are used are contingent liabilities, the liability for employee severance benefits, the unamortized discount on assistance loans, and the useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management’s estimates are reviewed periodically, and as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3. Parliamentary authorities

The Agency receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Departmental Net Financial Position and the Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, the Agency has different net results 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 current year authorities used

(in thousands of dollars)

	2017	2016
Net cost of operations before government funding and transfers	250,512	231,205
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets	(214)	(256)
Gain (loss) on disposal of tangible capital assets	23	17
Services provided without charge by other government departments	(8,628)	(8,035)
Decrease (increase) in vacation pay and compensatory leave	(513)	(681)
Decrease (increase) in employee future benefits	835	185
Refund of prior year’s expenditures	408	116
Prepaid expenses recognized	0	(16)
Conditions met on contributions	8,125	19,382
Adjustments to prior years’ accruals	639	1,721
Correction to assistance type from repayable contribution to non-repayable	(165)	(77)
Outstanding recovery of operating expenses	77	(20)
Total items affecting net cost of operations but not affecting authorities	587	12,336
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets	581	159
Assistance loans issued on behalf of Government	80,677	57,895
Transition payments for implementing salary payments in arrears	8	14
Total items not affecting net cost of operations but affecting authorities	81,266	58,068
Current year authorities used	332,365	301,609

(b) Authorities provided and used

(in thousands of dollars)

	2017	2016
Authorities provided:
Vote 1 – Operating expenditures	67,442	67,652
Vote 5 – Grants and contributions	262,479	230,746
Statutory amounts	7,928	7,842
Less:
Total lapsed	(5,464)	(4,627)
Authorities available for future years	(20)	(4)
Current year appropriations used	332,365	301,609

4. Accounts payable and accrued liabilities

The following table presents details of the Agency’s accounts payable and accrued liabilities:

(in thousands of dollars)

	2017	2016
Accounts payable - Other payables to other government departments and agencies	402	328
Accounts payable – External parties	11,250	14,690
Accrued salaries and wages	4,063	4,238
Contractor’s holdback	580	654
	16,295	19,910
Accrued liabilities	48,026	42,803
Gross accounts payable and accrued liabilities	64,321	62,713
Accrued liabilities held on behalf of Government	(8,826)	(7,344)
Net accounts payable and accrued liabilities	55,495	55,369

Accrued liabilities associated with the loans receivable are considered accrued liabilities held on behalf of Government. While the DH is expected to maintain accounting control over loans receivable, he has no authority regarding their disposition; therefore, liabilities related to the loans receivable are presented in reduction of the entity’s gross accounts payable and accrued liabilities.

5. Other liabilities

The Agency enters into agreements with provincial governments to fund various transfer payment projects. The Agency records deposits from these provincial governments for their share of costs under various projects. Monies are distributed on behalf of contributors as projects are undertaken. Unused funds are returned to the provincial governments. Activity during the year is as follows:

(in thousands of dollars)

	2017	2016
Opening liability	150	356
Deposits	480	260
Payments	(344)	(466)
Closing liability	286	150

6. Employee future benefits

(a) Pension benefits – The Agency’s employees participate in the Public Service Pension Plan (the “Plan”), which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 per cent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Quebec Pension Plan benefits and they are indexed to inflation.

Both the employees and the Agency contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Canada’s Economic Action Plan 2012, employee contributors have been divided into two groups – Group 1 relates to existing plan members as of December 31, 2012, and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.

The 2016-2017 expense amounts to $5,504,063 ($5,383,019 in 2015-2016). For Group 1 members, the expense represents approximately 1.12 times (1.25 times in 2015-2016) the employee contributions and, for Group 2 members, approximately 1.08 times (1.24 times in 2015-2016) the employee contributions.

The Agency’s responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan’s sponsor.

(b) Severance benefits – The Agency provides severance benefits to its employees based on eligibility, years of service and salary at termination of employment. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, measured as at March 31, is as follows:

(in thousands of dollars)

	2017	2016
Accrued benefit obligation – Beginning of year	3,522	3,707
Expenses for the year	(414)	182
Benefits paid during the year	(421)	(367)
Accrued benefit obligation – End of year	2,687	3,522

7. Accounts receivable and advances

The following table presents details of the Agency’s accounts receivable and advances balances:

(in thousands of dollars)

	2017	2016
Receivables from contributions
Conditionally repayable conditions met	18	0
Defaulted conditionally repayable contributions	5,985	9,411
Defaulted non-repayable contributions	524	468
Overpayments to be recovered	81	22
Receivables from other federal government departments and agencies	1,087	1,961
Receivables from external parties	1,543	1,517
Employee advances	2	2
	9,240	13,381
Allowance for doubtful accounts on receivables from external parties	(7,785)	(11,256)
Gross accounts receivable	1,455	2,125
Accounts receivable held on behalf of Government	(365)	(162)
Net accounts receivable	1,090	1,963

Conditionally repayable contributions – These contributions relate to contributions made to outside parties, all or part of which become repayable if conditions specified in the contribution agreement come into effect. In 2016-2017, an allowance of $5,827,734 ($9,289,742 in 2015-2016) relating to these loans was recorded.

In 2016-2017, collections on conditionally repayable contributions amounted to $7,419,536 ($6,360,497 in 2015-2016).

In 2016-2017, the Agency wrote off $4,040,918 ($7,212,535 in 2015-2016) for accounts (including defaulted non repayable contributions) deemed uncollectible and where all possible avenues of collection have been exhausted. The write-off of a Crown debt is a bookkeeping action only and does not eliminate the obligation of a debtor to make payment, nor does it affect the right of the Crown to enforce collections. Payments received on loans that were written off were valued at $125,517 ($311,097 in 2015-2016).

Accounts receivable are considered financial assets held on behalf of Government and are not available to discharge the department’s liabilities. While the DH is expected to maintain accounting control, he has no authority regarding the disposition of repayments received. Therefore, accounts receivable and advances are presented as a reduction to the entity’s gross accounts receivable.

8. Loans receivable

The following table presents details of the Agency’s loans balances:

(in thousands of dollars)

	2017	2016
Loans receivable	348,859	339,128
Less: Unamortized discount on assistance loans	(21,523)	(15,836)
	327,336	323,292
Less: Allowance for uncollectibility	(67,642)	(76,574)
Gross loans receivable	259,694	246,718
Loans receivable held on behalf of Government	(259,694)	(246,718)
Net loans receivable	-	-

These loans relate to unconditionally repayable contributions made to outside parties that must be repaid without qualification. An allowance of $67,641,814 ($76,574,189 in 2015-2016) relating to these loans was recorded.

The loans receivable portfolio consists of approximately 2,025 non-interest-bearing unconditionally repayable contributions issued, for the most part, from 2010 to 2017 with prescribed annual repayment terms. The loans are recorded at their discounted net present values using market interest rates at the time of the loans.

In 2016-2017, collections on unconditionally repayable contributions amounted to $54,811,934 ($56,595,205 in 2015-2016). The Agency wrote off $16,174,902 ($9,386,233 in 2015-2016) for accounts deemed uncollectible and where all possible avenues of collection have been exhausted. The write-off of a Crown debt is a bookkeeping action only and does not eliminate the obligation of a debtor to make payment, nor does it affect the right of the Crown to enforce collections. Payments received on loans that were written off were valued at $36,678 ($240,839 in 2015-2016).

Loans receivable are considered a financial asset held on behalf of Government and are not available to discharge the department’s liabilities. While the DH is expected to maintain accounting control, he has no authority regarding the disposition of repayments received. Therefore, loans receivable are presented as a reduction to the entity’s gross loans receivable.

9. Investments

The following table presents details of the Agency’s investments balances:

(in thousands of dollars)

	2017	2016
Preferred shares	11,354	11,359
Redemption of preferred shares	(2)	(5)
	11,352	11,354
Less: Allowance for write-down	(7,771)	(7,777)
Gross Investment	3,581	3,577
Investments held on behalf of Government	(3,581)	(3,577)
Net Investments	-	–

In order to help fulfill its mandate to promote economic development in the Cape Breton Region of Nova Scotia, the former Enterprise Cape Breton Corporation (ECBC) had taken equity interests in several companies in an effort to assist firms expand or innovate.

10. Tangible capital assets

(in thousands of dollars)

	Vehicles	Computer equipment	In-house-developed software	Machinery and equipment	Other equipment	Total
Cost
Opening balance	965	334	2,160	98	500	4,057
Acquisitions	71	0	477	33	0	581
Disposals and write-offs	(135)	0	0	0	0	(135)
Closing balance	901	334	2,637	131	500	4,503
Opening balance	725	331	1,851	28	427	3,362
Amortization	101	3	103	7	0	214
Disposals and write-offs	(135)	0	0	0	0	(135)
Closing balance	691	334	1,954	35	427	3,441
2017 Net book value	210	0	683	96	73	1,062
2016 Net book value	240	3	309	70	73	695

11. Contractual obligations

The nature of the Agency’s activities results in multi-year contracts whereby the Agency is obligated to make future payments in order to carry out its transfer payment programs or when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

(in thousands of dollars)

	2018	2019	2020	2021	2022	Total
Transfer payments	270,269	56,275	20,973	3,834	760	352,111
Loans and Advances	3,863	3,863
Operations and maintenance	12,105	1,120	597	56	33	13,911
Total	286,237	57,395	21,570	3,890	793	369,885

12. Related-party transactions

The Agency is related as a result of common ownership to all government departments, agencies and Crown corporations. The Agency enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the Agency received common services, which were obtained without charge from other government departments, as disclosed below.

(a) Common services provided without charge by other government departments

During the year, the Agency received services without charge from certain common service organizations related to accommodations, legal services, the employer’s contribution to the health and dental insurance plans, and workers’ compensation coverage. These services provided without charge have been recorded in the Agency’s Statement of Operations and Departmental Net Financial Position as follows:

(in thousands of dollars)

	2017	2016
Employer’s contribution to the health and dental insurance plans	4,682	4,160
Accommodation	3,623	3,796
Legal services	279	37
Workers’ compensation	44	42
Total	8,628	8,035

The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all departments and agencies without charge. The costs of these services, such as the payroll and cheque issuance services provided by Public Services and Procurement Canada and audit services provided by the Office of the Auditor General, are not included as an expense in the Agency’s Statement of Operations and Departmental Net Financial Position.

(b) Administration of programs on behalf of other government departments

Part of the Agency’s mandate is to coordinate federal economic activities in Atlantic Canada. In this regard, the Agency delivers programs on behalf of other federal departments and agencies. The following is a list of programs valued at greater than $1 million in federal contributions administered by the Agency over the last two fiscal years. These expenses are reflected in the financial statements of Infrastructure Canada (INFC) and not those of the Agency.

(in thousands of dollars)

	2017	2016
Canada Strategic Infrastructure Fund – Infrastructure Canada	-
Building Canada Fund – Communities Component – Regular	7,445

ACOA is the delivery partner of INFC for the administration of infrastructure programs in Atlantic Canada. Administrative agreements such as a memorandum of understanding and a service-level agreement were signed with INFC to deliver the Canada Strategic Infrastructure Fund and the Building Canada Fund – Communities Component.

In addition, ACOA receives operating funds through the estimates processes to cover expenditures charged to its own operating vote. These funds are reflected in ACOA’s operating expenses and the Agency incurred expenses in the delivery of the infrastructure programming.

(c) Other transactions with related parties

(in thousands of dollars)

	2017	2016
Expenses – Other government departments and agencies	-

Expenses disclosed in (c) exclude common services provided without charge, which are already disclosed in (a).

13. Transfer of the transition payments for implementing salary payments in arrears

The Government of Canada implemented salary payments in arrears in 2014-2015. As a result, a one-time payment was issued to employees and will be recovered from them in the future. Employees that were on leave without pay when the initial one-time transition payments were issued will receive the transition payment shortly after their return to work from their leave without pay.The transition to salary payments in arrears forms part of the transformation initiative that replaces the pay system and also streamlines and modernizes the pay processes. This change to the pay system had no impact on the expenses of the Agency. However, it did result in the use of additional spending authorities by the Agency. Prior to year end, the transition payments for implementing salary payments in arrears were transferred to a central account administered by Public Services and Procurement Canada, who is responsible for the administration of the Government pay system.

14. Segmented information

Presentation by segment is based on the Agency’s program alignment architecture and on the same accounting policies as described in Note 2, Summary of Significant Accounting Policies. The following table presents the expenses incurred and revenues generated for the main programs, by major object of expenses and by major type of revenue. The segmented results for the period are as follows:

(in thousands of dollars)