Quarterly Financial Report for FCAC for the quarter ended June 30, 2019

Introduction

The Quarterly Financial Report (QFR) for the Financial Consumer Agency of Canada (FCAC, or the Agency) 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 Act (the 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 2019-2020.

The QFR has not been subjected to an external audit or review.

Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Agency’s spending authorities as set out in section 13 of the Act. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The Agency uses the full accrual method of accounting to prepare and present its annual agency financial statements that are part of the departmental results reporting process. However, spending authorities included in this report remain on an expenditure basis.

Highlights of the fiscal quarter and the fiscal year-to-date (YTD) results

FCAC’s total expenses for the three months ended June 30, 2019 totalled $7,625,702, or 82.5% of its budgeted expenses for the period, compared to 85.5% for the same period last year. The variance to budget as at June 30, 2019 of $1,612,695 is primarily due to delays in staffing vacant positions.

When compared to the previous year, FCAC’s total expenses for the three months ended June 30, 2019 of $7,625,702, were $2,151,176 or 39.3% higher than the same period last year. This increase is primarily due to higher information costs of $1,077,776, personnel costs of $395,171, professional services costs of $271,103 and machinery and equipment costs of $270,271.

The increase of $1,077,776 in information costs is mainly due to the timing of this year’s advertising campaign “Take Charge of your Finances” (phase two), which focused on debt management. The first phase of the project occurred in the third quarter of 2018-19.

The increase in personnel costs of $395,171 is due to the growth of the Agency and economic increases.

The increase in professional services of $271,103 is mainly due to the completion of the Financial Literacy program evaluation and the completion of the Canadian Financial Capabilities Survey.

The increase of $270,271 in machinery and equipment is due to timing of hardware acquisitions.

Risks and uncertainties

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.

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.

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.

Changes to consumer protection framework

FCAC is continuing to assess the impacts of the amendments provided for in Bill C-86—the Budget Implementation Act, 2018, No. 2 — to the Financial Consumer Agency of Canada Act and the Bank Act that introduce a new financial consumer protection framework and provide the Commissioner with additional enforcement powers. It is also working to implement these changes and make necessary adjustments to its supervisory approach and its structure, resources, systems and processes to ensure that it can be effective in this regard.

Significant changes in operations, personnel and programs

Lucie M.A. Tedesco’s tenure as Commissioner of the Financial Consumer Agency of Canada ended on May 31st, 2019.  As of June 1st, 2019, Mr. Werner Liedtke, Assistant Commissioner, Corporate Services and Chief Financial Officer, is duly authorized to exercise the Commissioner's powers in this regard, in accordance with section 9 of the Financial Consumer Agency of Canada Act. Ms. Judith Robertson has been appointed as the Commissioner of the Financial Consumer Agency of Canada effective August 19, 2019.

Approved by:

Werner Liedtke, CPA, CMA
Assistant Commissioner, Corporate Services and Chief Financial Officer
Financial Consumer Agency of Canada

July 17, 2019

Statement of Authorities (unaudited) (in dollars)

Fiscal year 2019-2020
Authority 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
Payments under Section 13 of the Financial Consumer Agency of Canada Act $38,402,738
$7,625,583
$7,625,583
Spending of Amounts Equivalent to Proceeds from Disposal of Surplus Moveable Crown Assets 119 119 119
Total authorities $38,402,857
$7,625,702 $7,625,702
Fiscal year 2018-2019
Authority Total available for use for the year ending March 31, 2019 Used during the quarter ended June 30, 2018 Year-to-date used at quarter end
Payments under Section 13 of the Financial Consumer Agency of Canada Act $29,266,795
$5,474,526
$5,474,526
Total authorities $29,266,795
$5,474,526 $5,474,526

Departmental budgetary expenditures by Standard Object (unaudited) (in dollars)

Fiscal year 2019-2020
Expenditures Planned expenditures for the year ending March 31, 2020 Expended during the quarter ended June 30, 2019 Year-to-date used at quarter end
Personnel $26,007,877 $4,733,518 $4,733,518
Transportation and communications 843,817 121,161 121,161
Information 768,640 1,105,725 1,105,725
Professional and special services 7,313,521 916,201 916,201
Rentals 2,043,238 409,189 409,189
Repair and maintenance 11,300 4,284 4,284
Utilities, materials and supplies 55,319 20,511 20,511
Acquisition of land, buildings and works 350,000 - -
Acquisition of machinery and equipment 804,045 318,803 318,803
Other subsidies and payments 205,100 (3,690) (3,690)
Total gross budgetary expenditures $38,402,857 $7,625,702 $7,625,702
Fiscal year 2018-2019
Expenditures Planned expenditures for the year ending March 31, 2019 Expended during the quarter ended June 30, 2018 Year-to-date used at quarter end
Personnel $20,104,966 $4,338,347 $4,338,347
Transportation and communications 662,411 111,230 111,230
Information 851,140 27,949 27,949
Professional and special services 4,954,301 645,098 645,098
Rentals 1,493,397 281,806 281,806
Repair and maintenance 61,936 - -
Utilities, materials and supplies 52,000 16,619 16,619
Acquisition of land, buildings and works 350,000 - -
Acquisition of machinery and equipment 616,644 48,532 48,532
Other subsidies and payments 120,000 4,945 4,945
Total gross budgetary expenditures $29,266,795 $5,474,526 $5,474,526

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