Quarterly Financial Report for FCAC for the quarter ended September 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

Quarterly results

FCAC’s total expenses for the three months ended September 30, 2019 totalled $6,756,909, or 73.4% of its budgeted expenses of $9,210,216 for the period, compared to 83.0% for the same period last year. The variance to budget as at September 30, 2019 of $2,453,307 is primarily due to personnel costs as a result of delays in staffing vacant positions ($1,599,459) and due to timing related to the acquisition of professional services ($566,545).

When compared to the previous year, FCAC’s total expenses for the three months ended September 30, 2019 of $6,756,909, were $778,741 or 13.0% higher than the same period last year. This increase is primarily due to higher personnel costs of $480,213, professional services costs of $231,947 and repair and maintenance costs of $143,926.

The increase in personnel costs of $480,213 is due to the growth of the Agency and economic increases.   

The increase in professional services of $231,947 is mainly due to the need to temporarily backfill vacant positions.  

The increase of $143,926 in repair and maintenance is due to a retrofitting of office space.

Year-to-date results

FCAC’s total expenses for the six months ended September 30, 2019, totalled $14,382,611 or 78.0% of its budgeted expenses of $18,448,614 for the period, compare to 84.1% for the same period last year. The variance to budget of $4,066,003 is primarily due to personnel costs ($3,287,715) resulting from delays in staffing new positions, and in professional services ($1,316,110) mainly due to timing differences.

FCAC’s total expenses for the six months ended September 30, 2019 of $14,382,611 were $2,929,917 or 25.6% higher than the same period last year. This increase is primarily due to an increase of $1,185,267 in information expenses, $875,385 in personnel costs, $503,051 in professional services expenses, and $215,785 in rentals.

The increase of $1,185,267 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.

Personnel costs increased by $875,385 due to the growth of the Agency and economic increases.

Professional services costs increased by $503,051 because of the need to temporarily backfill vacant positions.

Rental expenses have increased by $215,785 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.

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

Ms. Judith Robertson was appointed as the Commissioner of the Financial Consumer Agency of Canada effective August 19, 2019.

Approved by:

Judith Robertson
Commissioner
Financial Consumer Agency of Canada

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

November 8, 2019

Statement of authorities (unaudited)

Note: Totals may not add due to rounding.

Departmental budgetary expenditures by Standard Object (unaudited)

Note: Totals may not add due to rounding.

Note: Totals may not add due to rounding.