Quarterly Financial Report for FCAC for the quarter ended June 30, 2017
Introduction
This Quarterly Financial Report (QFR) has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board.
The Financial Consumer Agency of Canada (FCAC) Act outlines FCAC’s functions and administration and enforcement powers, and lists the sections of federal laws and regulations under its supervision. A description of its program activities can be found in FCAC’s Business Plan 2017-18.
The QFR has not been subjected to an external audit or review.
Basis of Presentation
The Financial Consumer Agency of Canada is a federal government agency that recovers its costs mainly through asset-based, premium-based or transaction-based assessments on the financial entities it supervises.
In addition to its revenues from assessments, FCAC receives an annual statutory expenditure of a maximum of $5 million to support, collaborate and coordinate its activities and efforts with stakeholders to improve the financial literacy of Canadians.
The Agency uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process.
Highlights of the fiscal quarter and the fiscal year-to-date (YTD) results
FCAC’s total expenses for the three months ended June 30, 2017 totalled $4,138,860 or 85.50% of its budgeted expenses for the period, compared to 88.94% for the same period last year. The variance to budget as at June 30, 2017 of $702,084 is primarily due to delays in staffing vacant positions and in the implementation of projects for which professional services expenses are incurred.
When compared to the previous year, FCAC’s total expenses for the three months ended June 30, 2017 were $4,138,860, a $361,954 increase or 9.58% from the same period last year. This increase is primarily due to increases in Professional Services, Personnel costs and Transportation and Communication expenses.
Professional services expenses increased by $226,113 or 48.55% compared to the previous year due to a number of factors. Professional services expenses were incurred as a result of FCAC’s adoption and transition to Public Sector Accounting Standards effective April 1, 2017. Additional legal expenses were incurred to assist with the industry review of bank sales practices initiative, an FCAC priority for fiscal year 2017-18.
Personnel costs increased by $96,448 or 3.36% when compared to the same period last year due to planned growth in employees’ compensation in accordance with terms and conditions of employment, including economic increases.
The increase in Transportation and Communication expenses of $14,767 or 13.65% is largely due to travel expenses for increased participation at financial literacy events and conferences attended by FCAC’s supervision and promotion employees.
Government Funding
For the three months ended June 30, 2017, expenses in the amount of $842,528 were funded through the annual statutory expenditure (2017 - $752,783), and the balance was funded through assessments from the financial entities FCAC supervises.
Risks and uncertainties
Business risks and financial statement implications
Business risks result from conditions, events, circumstances, actions or inactions that could adversely affect FCAC’s ability to achieve its objectives and execute its strategies. A business risk is broader than the risk of material misstatement of financial reports and statements. Business risks may have potential financial consequences and, as a result, affect financial reports and statements.
Enterprise risk management
The environment in which FCAC operates carries an array of risks to the achievement of its mandate and objectives. While many of these challenges are always present, the extent to which they pose a risk to FCAC’s objectives varies, depending on economic and financial conditions, and the financial industry environment and its impact on financial consumers. FCAC’s ability to achieve its mandate depends on the timeliness and effectiveness with which it identifies, evaluates, prioritizes and develops initiatives to address areas where it is most at risk.
External risks
Economic, industry and supervisory environment
FCAC operates in a rapidly evolving financial marketplace, including increasingly complex financial products and new technology developed to suit the needs and demands of today’s consumers. This may impede FCAC’s ability to keep pace with this rapid rate of change.
FCAC must continue to assess the impact of these changes and be prepared to act quickly while remaining flexible. FCAC must also stay abreast of new developments and discussions, both domestically and internationally, and leverage resulting opportunities, while managing risks to ensure the continued achievement of its mandate.
Changes to consumer protection framework
The Government of Canada is working towards improving the federal financial consumer protection framework. FCAC will contribute to this discussion and assess potential impacts on its supervisory approach and its structure, resources, systems and processes to effectively and efficiently supervise federally regulated financial entities under this potential new framework.
Ability to deliver and diversity of external influencers
In advancing key components of its financial literacy program and the national strategy for financial literacy, FCAC relies heavily on a diverse network of partners and stakeholders from the public, private and not-for-profit sectors, and seeks to develop sound, strategic and credible alliances. Each partner and stakeholder may have its own organizational interests and goals, which may differ from those of FCAC. The Agency will continue to cultivate program development partnerships and maintain optimal approaches to ensure common goals are achieved.
Financial risks
Financial risks, primarily liquidity and credit risks, are closely managed and continue to be rated low.
Significant changes in operations, personnel and programs
Changes in Accounting Standards - Transition to Public Sector Accounting Standards (PSAS)
In December 2014, the Public Sector Accounting Board (PSAB) issued amendments to Public Sector Accounting Standards (PSAS). These amendments introduced the concept of a new public sector entity – referred to as a government component – and provided the basis of accounting to be used by such entities. FCAC is considered a government component and as such has adopted PSAS effective April 1, 2017.
First Time adoption by Government Organizations requires that the accounting policies in effect as at March 31, 2018 be applied to the opening PSAS statement of financial position as at April 1, 2016. FCAC monitors PSAS developments to ensure that the impacts of any potential or actual changes to PSAS are appropriately considered in its changeover plan. The impact to the opening statement of financial position will be disclosed in the annual financial statements for the year ended March 31, 2018.
There were no other significant changes in Operations, Personnel and Programs during the quarter ended June 30, 2017.
Approved by:
Lucie M.A. Tedesco
Commissioner
Financial Consumer Agency of Canada
Brigitte Goulard
Deputy Commissioner and Chief Financial Officer
Financial Consumer Agency of Canada
August 17, 2017
Departmental Budgetary Expenditures by Standard Object (Unaudited)
Expenditures | Planned expenditures for the year ending March 31, 2018 | Expended during the quarter ended June 30, 2017 | Year-to-date used at quarter end |
---|---|---|---|
Personnel | 13,936,041 | 2,970,600 | 2,970,600 |
Transportation and communications | 634,926 | 122,925 | 122,925 |
Information | 688,411 | 46,280 | 46,280 |
Professional and special services | 5,802,830 | 691,817 | 691,817 |
Rentals | 1,135,241 | 199,829 | 199,829 |
Repair and maintenance | 11,300 | 0 | 0 |
Utilities, materials and supplies | 32,500 | (10,098) | (10,098) |
Acquisition of machinery and equipment | 121,797 | 19,437 | 19,437 |
Other subsidies and payments | 615,595 | 98,070 | 98,070 |
Total gross budgetary expenditures | 22,978,641 | 4,138,860 | 4,138,860 |
Expenditures | Planned expenditures for the year ending March 31, 2017 | Expended during the quarter ended June 30, 2016 | Year-to-date used at quarter end |
---|---|---|---|
Personnel | 11,517,434 | 2,874,152 | 2,874,152 |
Transportation and communications | 519,632 | 108,158 | 108,158 |
Information | 931,719 | 9,496 | 9,496 |
Professional and special services | 3,625,391 | 465,704 | 465,704 |
Rentals | 989,417 | 208,793 | 208,793 |
Repair and maintenance | 14,480 | 1,301 | 1,301 |
Utilities, materials and supplies | 32,500 | 10,171 | 10,171 |
Acquisition of machinery and equipment | 113,670 | 8,859 | 8,859 |
Other subsidies and payments | 516,865 | 90,272 | 90,272 |
Total gross budgetary expenditures | 18,261,108 | 3,776,906 | 3,776,906 |
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