Quarterly Financial Report for FCAC for the quarter ended December 31, 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 December 31, 2018 totalled $6,347,324, or 82% of its budgeted expenses for the period, compared to 89% for the same period last year. The variance to budget as at December 31, 2018 of $1,414,550 is primarily due to delays in staffing new positions ($1,060,633) and timing in the acquisition of professional services for various projects ($433,924).
When compared to the previous year, FCAC’s total expenses for the three months ended December 31, 2018 of $6,347,324, were $736,241 or 13% higher than the same period last year. This increase is primarily due to increases in personnel costs of $576,830 and machinery and equipment of $141,117.
For the quarter ended December 31, 2018, personnel costs increased by $576,830 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. Economic and merit increases in salaries have also contributed to the increase.
Machinery and equipment expenses increased by $141,117 due to the in-house development of the Market Conduct Profile IT solution; a tool used in supervisory activities.
Year-to-date results
FCAC’s total expenses for the nine months ended December 31, 2018, totalled $17,800,017 or 83% of its budgeted expenses for the period, compare to 87% for the same period last year. The variance to budget of $3,573,150 is primarily in personnel costs ($2,178,105) resulting from delays in staffing new positions, in professional services ($1,107,949) mainly due to timing differences, in rental expenses ($186,122) and in machinery and equipment expenses ($54,433) both due to delays in the acquisition of additional space.
FCAC’s total expenses for the nine months ended December 31, 2018 of $17,800,017 were $3,099,130 or 21% higher than the same period last year. This increase is primarily due to a rise of $2,856,115 in personnel cost and $205,330 in machinery and equipment expenses.
Personnel costs increased by $2,856,115 due to the creation of new positions, as described in the quarterly results section, and due to economic and merit increases in salaries.
Machinery and equipment expenses have increased by $205,330 mainly due to the in-house development of the Market Conduct Profile IT solution; a tool used in supervisory activities.
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
FCAC is continuing to assess the impacts of the amendments 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.
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
Brigitte Goulard, FCAC’s Chief Financial Officer (CFO), left the Agency on November 30th, 2018. Lesley Ryan, Managing Director, Corporate Services was appointed as CFO.
Approved by:
Lucie M.A. Tedesco
Commissioner
Financial Consumer Agency of Canada
Lesley Ryan, CPA, CA
Managing Director, Corporate Services and Chief Financial Officer
Financial Consumer Agency of Canada
February 4, 2019
Statement of Authorities (unaudited) (in dollars)
Authority | Total available for use for the year ending March 31, 2019 | Used during the quarter ended December 31, 2018 | Year-to-date used at quarter end |
---|---|---|---|
Payments under Section 13 of the Financial Consumer Agency of Canada Act | $29,266,795 | $6,347,034 | $17,799,727 |
Spending of Amounts Equivalent to Proceeds from Disposal of Surplus Moveable Crown Assets | 509 |
290 |
290 |
Total authorities | $29,267,304 |
$6,347,324 | $17,800,017 |
Authority | Total available for use for the year ending March 31, 2018 | Used during the quarter ended December 31, 2017 | Year-to-date used at quarter end |
---|---|---|---|
Payments under Section 13 of the Financial Consumer Agency of Canada Act | $22,660,144 | $5,611,083 | $14,700,887 |
Spending of Amounts Equivalent to Proceeds from Disposal of Surplus Moveable Crown Assets | - | - | - |
Total authorities | $22,660,144 | $5,611,083 | $14,700,887 |
Departmental budgetary expenditures by Standard Object (unaudited) (in dollars)
Expenditures | Planned expenditures for the year ending March 31, 2019 | Expended during the quarter ended December 31, 2018 | Year-to-date used at quarter end |
---|---|---|---|
Personnel | $20,104,966 | $4,145,371 | $12,792,579 |
Transportation and communications | 662,411 | 178,100 | 406,711 |
Information | 851,140 | 528,217 | 602,553 |
Professional and special services | 4,954,301 | 886,257 | 2,349,853 |
Rentals | 1,493,397 | 337,825 | 934,276 |
Repair and maintenance | 61,936 | 334 | 670 |
Utilities, materials and supplies | 52,509 | 15,662 | 46,653 |
Acquisition of land, buildings and works | 350,000 | - | - |
Acquisition of machinery and equipment | 616,644 | 257,259 | 615,550 |
Other subsidies and payments | 120,000 | (1,701) | 51,172 |
Total gross budgetary expenditures | $29,267,304 | $6,347,324 | $17,800,017 |
Expenditures | Planned expenditures for the year ending March 31, 2018 | Expended during the quarter ended December 31, 2017 | Year-to-date used at quarter end |
---|---|---|---|
Personnel | $13,919,041 | $3,568,541 | $9,936,464 |
Transportation and communications | 634,926 | 241,613 | 499,462 |
Information | 688,411 | 392,683 | 434,269 |
Professional and special services | 5,835,830 | 937,712 | 2,536,487 |
Rentals | 1,135,241 | 266,900 | 746,233 |
Repair and maintenance | 11,300 | 3,183 | 6,361 |
Utilities, materials and supplies | 32,500 | 12,884 | 27,584 |
Acquisition of land, buildings and works | - | - | - |
Acquisition of machinery and equipment | 332,322 | 116,143 | 410,220 |
Other subsidies and payments | 70,573 | 71,424 | 103,807 |
Total gross budgetary expenditures | $22,660,144 | $5,611,083 | $14,700,887 |
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