Quarterly Financial Report for FCAC for the quarter ended September 30, 2018
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 2018-19.
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
Quarterly results
FCAC’s total expenses for the three months ended September 30, 2018 totalled $5,978,167, or 83% of its budgeted expenses for the period, compared to 88% for the same period last year. The variance to budget as at September 30, 2018 of $1,228,582 is primarily due to delays in staffing new positions, timing in the acquisition of professional services for various projects, and in information costs due to delays with our advertising campaign.
When compared to the previous year, FCAC’s total expenses for the three months ended September 30, 2018 of $5,978,167, were $1,020,707 or 21% higher than the same period last year. This increase is primarily due to increases in personnel costs of $906,850 and machinery and equipment of $110,589.
For the quarter ended September 30, 2018, personnel costs increased by $906,850 due to the creation of a new Enforcement Division and the addition of personnel to enhance the Agency’s ability to monitor trends and emerging issues. The Agency also added new positions in Corporate Services to create an in-house capacity for human resources and finance functions, allowing the Agency to operate more efficiently and reduce costs. Economic and merit increases in salaries have also contributed to the increase.
Machinery and equipment expenses have increased by $110,589 due to the acquisition of new servers.
Year-to-date results
FCAC’s total expenses for the six months ended September 30, 2018, totalled $11,452,694 or 84% of its budgeted expenses for the period, compare to 86% for the same period last year. The variance to budget of $2,158,599 is primarily due to timing differences primarily in personnel costs (~$1,117K) resulting from delays in staffing new positions, in professional services (~$674K) mainly due to timing differences, in rental expenses (~$151K) due to delays in the acquisition of additional space, and in information expenses (~$136K) due to delays with our advertising campaign.
FCAC’s total expenses for the six months ended September 30, 2018 of $11,452,694 were $2,362,890 or 26% higher than the same period last year. This increase is primarily due to a rise of $2,279,284 in personnel cost and $117,118 in rental expenses.
Personnel costs increased by $2,279,284 due to the creation of new positions, as described in the quarter results section, and due to economic and merit increases in salaries.
Rental expenses have increased by $117,118 as a result of the acquisition of additional space required to accommodate the Agency’s growing workforce.
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.
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
On October 29, 2018, the Government of Canada tabled a new federal financial consumer protection legislative framework. FCAC will assess potential impacts of this new legislation 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
There were no significant changes in Operations, Personnel and Programs during the quarter ended September 30, 2018.
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
November 13, 2018
Statement of Authorities (unaudited) (in dollars)
Authority | Total available for use for the year ending March 31, 2019 | Used during the quarter ended September 30, 2018 | Year-to-date used at quarter end |
---|---|---|---|
Payments under Section 13 of the Financial Consumer Agency of Canada Act | $29,266,795 | $5,977,877 | $11,452,403 |
Spending of Amounts Equivalent to Proceeds from Disposal of Surplus Moveable Crown Assets | 290 | 290 | 290 |
Total authorities | $29,267,085 | $5,978,167 | $11,452,694 |
Authority | Total available for use for the year ending March 31, 2018 | Used during the quarter ended September 30, 2017 | Year-to-date used at quarter end |
---|---|---|---|
Payments under Section 13 of the Financial Consumer Agency of Canada Act | $22,660,144 | $4,957,461 | $9,089,804 |
Spending of Amounts Equivalent to Proceeds from Disposal of Surplus Moveable Crown Assets | - | - | - |
Total authorities | $22,660,144 | $4,957,461 | $9,089,804 |
Departmental budgetary expenditures by Standard Object (unaudited) (in dollars)
Expenditures | Planned expenditures for the year ending March 31, 2019 | Expended during the quarter ended September 30, 2018 | Year-to-date used at quarter end |
---|---|---|---|
Personnel | $20,104,966 | $4,308,862 | $8,647,208 |
Transportation and communications | 662,411 | 117,381 | 228,611 |
Information | 851,140 | 46,386 | 74,336 |
Professional and special services | 4,954,301 | 818,498 | 1,463,595 |
Rentals | 1,493,397 | 314,645 | 596,451 |
Repair and maintenance | 61,936 | 336 | 336 |
Utilities, materials and supplies | 52,290 | 14,372 | 30,992 |
Acquisition of land, buildings and works | 350,000 | - | - |
Acquisition of machinery and equipment | 616,644 | 309,758 | 358,291 |
Other subsidies and payments | 120,000 | 47,929 | 52,874 |
Total gross budgetary expenditures | $29,267,085 | $5,978,167 | $11,452,694 |
Expenditures | Planned expenditures for the year ending March 31, 2018 | Expended during the quarter ended September 30, 2017 | Year-to-date used at quarter end |
---|---|---|---|
Personnel | $13,919,041 | $3,402,012 | $6,367,924 |
Transportation and communications | 634,926 | 134,924 | 257,849 |
Information | 688,411 | (4,694) | 41,586 |
Professional and special services | 5,835,830 | 887,604 | 1,598,776 |
Rentals | 1,135,241 | 279,505 | 479,333 |
Repair and maintenance | 11,300 | 3,178 | 3,178 |
Utilities, materials and supplies | 32,500 | 24,798 | 14,700 |
Acquisition of land, buildings and works | - | - | - |
Acquisition of machinery and equipment | 332,322 | 199,169 | 294,077 |
Other subsidies and payments | 70,573 | 30,965 | 32,381 |
Total gross budgetary expenditures | $22,660,144 | $4,957,461 | $9,089,804 |
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