Quarterly Financial Report for FCAC for the quarter ended September 30, 2020

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 2020-2021.

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, 2020 totalled $7,823,081, or 79.5% of its budgeted expenses of $9,847,009 for the period, compared to 73.4% for the same period last year. The variance to budget as at September 30, 2020 of $2,023,928 is primarily due to personnel costs as a result of delays in staffing vacant positions ($1,112,654), underspending in professional services ($355,937), lower transportation and communication costs ($166,545) resulting from travel restrictions due to the COVID-19 pandemic, and to timing related to the acquisition of information costs and machinery and equipment ($134,990 and $115,735 respectively). 

When compared to the previous year, FCAC’s total expenses for the three months ended September 30, 2020 of $7,823,081, were $1,066,172 or 15.8% higher than the same period last year. This increase is mainly due to higher Personnel costs ($996,616) due to the growth of the Agency.

Year-to-date results 

FCAC’s total expenses for the six months ended September 30, 2020, totalled $15,151,826 or 77.8% of its budgeted expenses of $19,482,492 for the period, compared to 78.0% for the same period last year. The variance to budget of $4,330,666 is primarily due to personnel costs ($2,406,100) resulting from delays in staffing new positions, underspending in professional services ($1,237,971), lower transportation and communication costs ($337,116) as a result of the travel restrictions due to the COVID-19 pandemic, and due to timing related to the acquisition of information costs ($309,008).

FCAC’s total expenses for the six months ended September 30, 2020 of $15,151,826 were $769,215 or 5.3% higher than the same period last year. This increase is primarily due to an increase of $1,659,303 in personnel costs due to the growth of the Agency and economic increases, and $364,337 in professional services expenses related to the modernization of workplace processes and systems. These increases are partially offset by lower information costs ($1,066,261)  since last year’s advertising campaign, “Take Charges of Your Finances”, took place earlier in the fiscal year, as well as by lower repairs & maintenance expenses ($146,741).

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 research, policy and education program and the national strategy for financial literacy, FCAC relies 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. 

COVID-19

The outbreak of the Coronavirus disease “COVID-19” has resulted in FCAC implementing emergency measures such as travel bans, physical distancing, and teleworking. In addition, the pandemic is expected to have an impact on the Agency’s human resources plan, and also may have a potential impact on the Agency’s procurement due to business interruption.  The duration and impact of the COVID-19 outbreak is unknown at this time. As a result, it is not possible to reliably estimate the length and severity of the impact on FCAC’s financial position and financial results in future periods.

Significant changes in operations, personnel and programs

There were no significant changes in Operations, Personnel and Programs during the quarter ended September 30, 2020.

Approved by:

Judith Robertson
Commissioner
Financial Consumer Agency of Canada 

Werner Liedtke, CPA, CMA
Chief Financial Officer
Financial Consumer Agency of Canada

October 28, 2020

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.