2017-2018 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, 2018, 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:

Francis P. McGuire, Deputy Head
Moncton, Canada
Date: September 5, 2018

Stéphane Lagacé, CPA-CMA, Chief Financial Officer
Moncton, Canada
Date: September 5, 2018

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

  2018 2017
Liabilities    
    Accounts payable and accrued liabilities (note 4) 62,166 64,321
    Vacation pay and compensatory leave 3,378 2,532
    Other liabilities (note 5) 392 286
    Employee future benefits (note 6) 2,687 2,687
Total gross liabilities 68,623 69,826
     
Liabilities held on behalf of Government    
    Accounts payable and accrued liabilities (note 4) (9,042) (8,826)
Total liabilities held on behalf of Government (9,042) (8,826)
     
Total net liabilities 59,581 61,000
     
Financial assets    
    Due from Consolidated Revenue Fund 52,987 54,499
    Accounts receivable and advances (note 7) 1,783 1,455
    Loans receivable (note 8) 267,692 259,694
    Investments (note 9) 3,492 3,581
Total gross financial assets 325,954 319,229
     
Financial assets held on behalf of Government    
    Accounts receivable and advances (note 7) (1,520) (365)
    Loans receivable (note 8) (267,692) (259,694)
    Investments (note 9) (3,492) (3,581)
Total financial assets held on behalf of Government (272,704) (263,640)
     
Total net financial assets 53,250 55,589
     
Agency net debt 6,331 5,411
     
Non-financial assets    
    Prepaid expenses
    Tangible capital assets (note 10) 1,553 1,062
Total non-financial assets 1,553 1,062
     
Agency net financial position (4,778) (4,349)

For information on contractual obligations, see note 11.

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

Francis P. McGuire, Deputy Head
Moncton, Canada
Date: September 5, 2018

Stéphane Lagacé, CPA-CMA, Chief Financial Officer
Moncton, Canada
Date: September 5, 2018

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

  2018
Planned
Results
2018 2017
 Expenses      
    Enterprise Development 140,294 130,977 116,886
    Community Development 106,325 117,345 108,176
    Internal Services 29,533 29,146 27,051
    Policy, Advocacy and Coordination 12,168 15,539 15,677
    Expenses incurred on behalf of Government (29,188) (24,822) (17,255)
Total expenses 259,132 268,185 250,535
Revenues      
    Revenue from amortization of discount on assistance loans 5,320 5,874 3,798
    Interest on overdue loans 475 802 528
    Return on investments - 7 10
    Gain on disposal of tangible capital and non-capital assets 18 - 23
    Miscellaneous revenues 27 5 7
    Revenues earned on behalf of Government (5,822) (6,688) (4,343)
Total revenues 18 - 23
Net cost of operations 259,114 268,185 250,512
       
Net cost of operations before government funding and transfers   268,185 250,512
Government funding and transfers      
    Net cash provided by Government   260,699 241,446
    Change in due from Consolidated Revenue Fund   (1,512) 1,193
    Services provided without charge by other government departments (note 12)   8,569 8,628
    Transfer of Accounts Receivable to Public Services and Procurement Canada (note 13)   - (8)
    Net cost of operations after government funding and transfers   429 (747)
Departmental net financial position – Beginning of year   (4,349) (5,096)
Departmental net financial position – End of year   (4,778) (4,349)

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)

  2018 2017
Net cost of operations after government funding and transfers 429 (747)
Change due to tangible capital assets    
    Acquisition of tangible capital assets 696 581
    Amortization of tangible capital assets (195) (214)
    Proceeds from disposal of tangible capital assets (5) (23)
    Net gain (loss) on disposal of tangible capital assets, including adjustments (5) 23
    Total change due to tangible capital assets 491 367
     
Change due to prepaid expenses - -
     
Net increase (decrease) in departmental net debt 920 (380)
     
Agency net debt – Beginning of year 5,411 5,791
     
Agency net debt – End of year 6,331 5,411

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)

  2018 2017
Operating activities    
    Net cost of operations before government funding and transfers 268,185 250,512
    Non-cash items:    
      Amortization of tangible capital assets (195) (214)
      Gain on disposal of tangible capital assets (5) 23
      Services provided without charge by other government departments (note 12) (8,569) (8,628)
      Transition payments for implementing salary payments in arrears (note 13) - 8
     
    Variations in Statement of Financial Position:    
      Increase (decrease) in accounts receivable and advances (827) (873)
      Decrease (increase) in accounts payable and accrued liabilities 2,371 (126)
      Decrease (increase) in vacation pay and compensatory leave (846) (513)
      Decrease (increase) in other liabilities (106) (136)
      Decrease (increase) in employee future benefits - 835
      Cash used in operating activities 260,008 240,888
     
Capital investing activities    
Acquisition of tangible capital assets (note 10) 696 581
      Proceeds from disposal of tangible capital assets (5) (23)
      Cash used in capital investing activities 691 558
     
Net cash provided by Government of Canada 260,699 241,446

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.

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 2017-2018 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 – The accumulation of severance benefits for voluntary departures ceased for applicable employee groups. The remaining obligation for employees who did not withdraw benefits is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government 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 Agency 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)

  2018 2017
Net cost of operations before government funding and transfers 268,185 250,512
Adjustments for items affecting net cost of operations but not affecting authorities:    
    Amortization of tangible capital assets (195) (214)
    Gain (loss) on disposal of tangible capital assets (5) 23
    Services provided without charge by other government departments (8,569) (8,628)
    Decrease (increase) in vacation pay and compensatory leave (846) (513)
    Decrease (increase) in employee future benefits - 835
    Refund of prior year’s expenditures 35 408
    Conditions met on contributions 17,624 8,125
    Adjustments to prior years’ accruals 1,173 639
    Correction to assistance type from repayable contribution to non-repayable 1,510 (165)
    Outstanding recovery of operating expenses 40 77
    Adjustments to investment account (82) 0
    Total items affecting net cost of operations but not affecting authorities 10,685 587
Adjustments for items not affecting net cost of operations but affecting authorities:    
    Acquisitions of tangible capital assets 696 581
    Assistance loans issued on behalf of Government 79,420 80,677
    Transition payments for implementing salary payments in arrears - 8
    Total items not affecting net cost of operations but affecting authorities 80,116 81,266
Current year authorities used 358,986 332,365

(b) Authorities provided and used

(in thousands of dollars)

  2018 2017
Authorities provided:    
    Vote 1 – Operating expenditures 69,939 67,442
    Vote 5 – Grants and contributions 283,971 262,479
    Statutory amounts 8,036 7,928
Less:    
    Total lapsed (2,933) (5,464)
    Authorities available for future years (27) (20)
Current year appropriations used 358,986 332,365

4.  Accounts payable and accrued liabilities

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

(in thousands of dollars)

  2018 2017
Accounts payable - Other payables to other government departments and agencies 309 402
Accounts payable – External parties 16,133 11,250
Accrued salaries and wages 4,349 4,063
Contractor’s holdback 865 580
  21,656 16,295
Accrued liabilities 40,510 48,026
Gross accounts payable and accrued liabilities 62,166 64,321
Accrued liabilities held on behalf of Government (9,042) (8,826)
Net accounts payable and accrued liabilities 53,124 55,495

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)

  2018 2017
Opening liability 286 150
Deposits 2,954 480
Payments (2,848) (344)
Closing liability 392 286

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 2017-2018 expense amounts to $5,453,945 ($5,504,063 in 2016-2017). For Group 1 members, the expense represents approximately 1.01 times (1.12 times in 2016-2017) the employee contributions and, for Group 2 members, approximately 1.00 times (1.08 times in 2016-2017) 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)

  2018 2017
Accrued benefit obligation – Beginning of year 2,687 3,522
Expenses for the year 280 (414)
Benefits paid during the year (280) (421)
Accrued benefit obligation – End of year 2,687 2,687

7.  Accounts receivable and advances

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

(in thousands of dollars)

  2018 2017
Receivables from contributions    
    Conditionally repayable conditions met 1 18
    Defaulted conditionally repayable contributions 6,365 5,985
    Defaulted non-repayable contributions 292 524
    Overpayments to be recovered 77 81
Receivables from other federal government departments and agencies 261 1,087
Receivables from external parties 1,391 1,543
Employee advances 2 2
  8,389 9,240
Allowance for doubtful accounts on receivables from external parties (6,606) (7,785)
Gross accounts receivable 1,783 1,455
Accounts receivable held on behalf of Government (1,520) (365)
Net accounts receivable 263 1,090

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 2017-2018, an allowance of $6,319,613 ($5,827,734 in 2016-2017) relating to these loans was recorded.

In 2017-2018, collections on conditionally repayable contributions amounted to $12,015,445 ($7,419,536 in 2016-2017).

In 2017-2018, the Agency wrote off $5,430,342 ($4,040,918 in 2016-2017) 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 $1,425 ($125,517 in 2016-2017).

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 unconditionally repayable contributions balances:

(in thousands of dollars)

  2018 2017
Loans receivable 360,261 348,859
    Less: Unamortized discount on assistance loans (32,755) (21,523)
  327,506 327,336
    Less: Allowance for uncollectibility (59,814) (67,642)
Gross loans receivable 267,692 259,694
Loans receivable held on behalf of Government (267,692) (259,694)
Net loans receivable - -

Unconditionally repayable contributions relate to contributions made to outside parties which are repayable based on conditions specified in the contribution agreement that have come into being. An allowance of $59,813,812 ($67,641,814 in 2016-2017) has been recorded.

The unconditionally repayable contributions portfolio consists of approximately 2,000 non-interest-bearing contributions issued, for the most part, from 2010 to 2017 with prescribed annual repayment terms. The unconditionally repayable contributions are recorded at their discounted net present values using market interest rates at the time of issue.

In 2017-2018, collections on unconditionally repayable contributions amounted to $59,148,013 ($54,811,934 in 2016-2017). The Agency wrote off $9,797,417 ($16,174,902 in 2016-2017) 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 $10,810 ($36,678 in 2016-2017).

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)

  2018 2017
Preferred shares 6,818 11,354
Redemption of preferred shares (6) (2)
  6,212 11,352
    Less: Allowance for write-down (3,320) (7,771)
Gross Investment 3,492 3,581
Investments held on behalf of Government (3,492) (3,581)
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 to 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 900 334 2,637 131 500 4,502
Acquisitions 107 - 551 38 - 696
Disposals and write-offs (20) - - - - (20)
Closing balance 987 334 3,188 169 500 5,178
Accumulated amortization
Opening balance 690 334 1,954 35 427 3,440
Amortization 89 - 95 11 - 195
Disposals and write-offs (10) - - - - (10)
Closing balance 769 334 2,049 46 427 3,625
2018 Net book value 218 - 1,139 123 73 1,553
2017 Net book value 210 - 683 96 73 1,062

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)

  2019 2020 2021 2022 Total
Transfer payments 275,690 105,861 24,253 8,873 414,677
Operations and maintenance 6,805 459 75 36 7,375
Total 282,495 106,320 24,328 8,909 422,052

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 Agency Net Financial Position as follows:

(in thousands of dollars)

  2018 2017
Employer’s contribution to the health and dental insurance plans 4,727 4,682
Accommodation 3,634 3,623
Legal services 197 279
Workers’ compensation 11 44
Total 8,569 8,628

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 Agency Net Financial Position.

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)

  Enterprise Development Community Development Policy Advocacy
and Coordination
Internal
Services
2018
Total
2017
Transfer Payments            
Conditionally repayable            
    Industry 23,718 - - - 23,718 26,638
    Conditions met (17,624) - - - (17,624) (8,125)
Total conditionally repayable 6,094 - - - 6,094 18,513
Non-repayable            
    Industry 6,557 - - - 6,557 8,684
    Non-profit organizations 63,756 82,864 4,368 - 150,988 126,233
    Other levels of Government 662 21,116 - - 21,778 20,412
Total non-repayable 70,975 103,980 4,368 - 179,323 155,329
Adjustments to prior year’s accruals on transfer payments (1,173) - - - (1,173) (639)
Loan discount portion on assistance loans 7,716 - - - 7,716 9,485
Provision for impaired loans and accounts receivable 17,106 - - - 17,106 7,770
Expenses incurred on behalf of Government (24,822)       (24,822) (17,255)
Total transfer payments 75,896 103,980 4,368 - 184,244 173,203
             
Operating expenses            
Personnel 26,987 11,943 9,238 21,905 70,073 64,018
Professional services 762 377 684 2,279 4,102 4,207
Transportation and telecommunications 1,156 347 403 613 2,519 2,119
Accommodations 1,400 619 479 1,136 3,634 3,622
Rental 75 84 82 1,880 2,121 1,955
Equipment (less than $10,000 per item) 2 1 3 433 439 471
Information 94 19 126 299 538 457
Utilities, material, supplies 12 12 119 227 370 407
Purchased repair and maintenance - 5 2 336 343 300
Amortization of tangible capital assets - - - 195 195 214
Miscellaneous expenses (229) (42) 35 (157) (393) (438)
Total operating expenses 30,259 13,365 11,171 29,146 83,941 77,332
Total expenses 106,155 117,345 15,539 29,146 268,185 250,535
Revenues            
Revenue from amortization of discount on assistance loans 5,874 - - - 5,874 3,798
Interest on overdue loans 802 - - - 802 528
Return on investments 7 - - - 7 10
Gain on disposal of tangible capital and non-capital assets - - - - - 23
Miscellaneous revenues 4 - - 1 5 7
Revenues earned on behalf of Government (6,687) - - (1) (6,688) (4,343)
Total revenues - - - - - 23
Net cost of operations 106,155 117,345 15,539 29,146 268,185 250,512

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