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3.  Section III–Supplementary Information

3.1  Organizational Information

3.1.1  Organizational Structure

More information on people in charge and the organizational structure of ACOA may be found at http://www.acoa-apeca.gc.ca/e/about/people.shtml.

3.1.2  Accountability

The minister of the Atlantic Canada Opportunities Agency is responsible for the policies and programs designed to encourage economic development in Atlantic Canada, and particularly to enhance the growth of earned incomes and employment opportunities. The minister is also responsible for the Enterprise Cape Breton Corporation (ECBC).

The president of ACOA is located in Moncton, New Brunswick. The president is also the chair of the Atlantic Canada Opportunities Board, and chair of ECBC’s board of directors.

While ECBC and ACOA have a close working relationship, ECBC is a separate entity. It is a Crown corporation that reports separately to Parliament.

3.1.3  Atlantic Canada Opportunities Board

Members of the Atlantic Canada Opportunities Board provide direction and support through expert advice to the president and minister on a broad spectrum of Agency strategy and policy matters. This board includes the president of ACOA as chair, and seven other members who are successful entrepreneurs, business professionals and community leaders from each of the four Atlantic provinces. The Governor‑in‑Council appoints board members on the recommendation of the minister.

3.1.4  Agency Organization

Twenty years ago, ACOA’s mandate and organizational structure were determined following consultations with Atlantic Canadians across the region. The establishment of a federal organization charged with regional economic development in Atlantic Canada was announced on June 6, 1987. The Agency has 36 regional and field offices in cities and towns across the Atlantic provinces. Consequently, ACOA’s funding and policy decisions are made by and for Atlantic Canadians.

The president of ACOA is responsible for the administration of the Agency's operations and its employees. Located in Moncton, New Brunswick, ACOA’s head office is home to the President's Office, as well as the branches responsible for Policy and Programs, Finance and Corporate Services, Human Resources, Communications and Legal Services.

The executive vice‑president is based in the Agency’s head office and assists the president in the management of the Agency’s operations and in the fulfillment of activities and responsibilities assigned to deputy heads.

The senior vice‑president has corporate responsibility for program areas and policies, as well as delivery of the pan‑Atlantic projects and initiatives. Regional vice‑presidents located in each provincial capital are responsible for the delivery of ACOA programs. Based in Sydney, Nova Scotia, the chief executive officer of ECBC is responsible for delivering ACOA’s programs on Cape Breton Island. Through its Ottawa office, ACOA ensures that Atlantic Canada's interests are reflected in both the policies and programs developed by other departments and agencies of the federal government. This office, which reports to the senior vice‑president, also works to ensure Atlantic Canadians are aware of, and able to take advantage of, the opportunities to provide services and products to the Government of Canada.

3.1.5  Key Responsibilities

• Senior vice‑president
  • Policy and programs
  • Regional level co‑ordination of priorities and programs
  • Delivery of pan‑Atlantic agreements
  • Advocacy and procurement
  • Co‑ordination of federal‑provincial relations

• Vice‑president, Finance and Corporate Services
  • Finance and Administration
  • Corporate Secretariat
  • Corporate Planning and Performance Management
  • Chief Information Office Directorate
  • Ministerial Liaison Office
  • Audit (administrative relationship)

• Vice‑presidents working in each of the Atlantic provinces
  • Federal‑provincial development strategy
  • Delivery of services and programs at provincial and local levels
  • Liaison with provinces, business community and other stakeholders
  • Tourism Atlantic (Vice‑President, Prince Edward Island)

3.2  Financial, Policy and Information Tables

3.2.1  Financial Overview

The Agency’s total authorities were $391.6 million, consisting of:

• Main Estimates of $381.7 million,

• augmented by $9 million in transfers and adjustments to appropriations through Supplementary Estimates, which includes:
  • an increase of $6.9 million for the Infrastructure Canada Program (reprofile of lapsed funds from 2005-2006);
  • a decrease of $1 million due to a transfer of funds to Transport Canada to provide financial support to maintain the Saint John‑Digby ferry service;
  • plus $3.1 million in operating adjustments, primarily due to the operating budget carry forward.

•  $0.9 million in other Treasury Board‑approved adjustments related to collective bargaining settlements and incremental funding to support changes to the government’s internal audit policy.

Actual expenditures of $385.3 million resulted in a lapse of $6.3 million, all of which was in the Agency’s operating expenditures vote. A portion of this lapse ($4.1 million) is eligible for the operating budget carry‑forward provisions.

The financial tables that follow show these figures:

• Main Estimates: only those authorities in Estimates Part II 2006‑2007, which are consistent with those as Main Estimates in the Public Accounts for 2006‑2007.

• Planned Spending: consistent with the Planned Spending column in the 2006‑2007 Report on Plans and Priorities.

• Total Authorities: the full spending authorities received during the fiscal year through Main Estimates, Supplementary Estimates and other Treasury Board approvals, and consistent with those in the Public Accounts for 2006‑2007.

• Actual Spending: consistent with figures in the Public Accounts for 2006‑2007.

FTE utilization of 700 in 2006‑2007 over actual utilization of 678 in 2005‑2006 represents the full impact of staffing committed to during 2005‑2006. The planned spending level of 612 FTEs represents the number of FTEs derived from the Treasury Board‑approved authority for salaries prior to adjustments planned through the operating budget transfer mechanism.

3.2.2  Table 1:  Comparison of Planned to Actual Spending (including FTEs)

This table provides an historical perspective on the use of Agency resources, along with a graph illustrating the trend for actual results.

Program Activity	2004‑2005 ($ millions)	2005‑2006 ($ millions)	2006‑2007 ($ millions)
	Actual	Actual	Main Estimates	Planned Spending	Total Authorities	Total Actuals
Fostering SME Development and Regional Economic Capacity Building	268.5	259.2	280.9	279.6	240.3	223.6
Access to Business Information	3.3	3.1	2.8	2.8	2.9	3.9
Community Economic Development	115.7	111.2	42.8	42.8	102.2	111.4
Special Adjustment Measures	18.1	1.9	24.5	24.5	13.0	13.1
Infrastructure Programming	33.3	30.9	13.9	13.9	20.8	21.9
Policy	4.1	5.8	11.0	11.0	6.5	5.9
Advocacy	5.6	3.1	4.0	4.0	4.1	3.3
Co‑ordination	1.7	3.5	1.8	1.8	1.8	2.2
Total	450.3	418.7	381.7	380.4	391.6	385.3
Less:  Non‑respendable revenue73	(61.5)	(67.3)	(57.0)	(57.0)	(65.5)	(65.5)
Plus:  Cost of services received without charge	7.1	7.6	6.8	6.8	7.7	7.7
Total Agency spending	395.9	359.0	331.5	330.2	333.8	327.5
Full-time Equivalents (FTEs)	646	678	612	612	700	700

3.2.3  Table 2:  Resources by Program Activity

Program Activity	Budgetary 2006‑2007 ($ millions)
	Operating	Grants	Contributions and Other Transfer Payments	Total: Net Budgetary Expenditures
Fostering SME Development and Regional Economic Capacity Building
Main Estimates	65.4	1.0	214.5	280.9
Planned Spending	65.9	1.0	212.7	279.6
Total Authorities	67.4	1.0	171.9	240.3
Actual Spending	50.7	0.2	172.7	223.6
Access to Business Information
Main Estimates	2.8	-	-	2.8
Planned Spending	2.8	-	-	2.8
Total Authorities	2.9	-	-	2.9
Actual Spending	3.9	-	-	3.9
Community Economic Development
Main Estimates	11.3	1.0	30.5	42.8
Planned Spending	10.8	1.0	31.0	42.8
Total Authorities	13.0	1.0	88.2	102.2
Actual Spending	22.2	0.6	88.6	111.4
Special Adjustment Measures
Main Estimates	-	-	24.5	24.5
Planned Spending	-	-	24.5	24.5
Total Authorities	-	-	13.0	13.0
Actual Spending	0.1	-	13.0	13.1
Infrastructure Programming
Main Estimates	0.9	-	13.0	13.9
Planned Spending	0.9	-	13.0	13.9
Total Authorities	0.9	-	19.9	20.8
Actual Spending	2.0	-	19.9	21.9
Policy
Main Estimates	5.1	-	5.9	11.0
Planned Spending	5.1	-	5.9	11.0
Total Authorities	5.2	-	1.3	6.5
Actual Spending	4.6	-	1.3	5.9
Advocacy
Main Estimates	4.0	-	-	4.0
Planned Spending	4.0	-	-	4.0
Total Authorities	4.1	-	-	4.1
Actual Spending	3.3	-	-	3.3
Co-ordination
Main Estimates	1.8	-	-	1.8
Planned Spending	1.8	-	-	1.8
Total Authorities	1.8	-	-	1.8
Actual Spending	2.2	-	-	2.2

Explanation of significant variances, by program activity:

Fostering SME Development and Regional Economic Capacity Building

Total adjustments of $57 million were made to planned spending during the year to reduce contribution funding ($42 million), operating costs ($9 million) and human resources (71 FTEs) under this program activity. Corresponding increases occurred to the Community Economic Development program activity to reflect the implementation of the new Innovative Communities Fund and the increased demands in other programs.

Community Economic Development

An additional $69 million in resources was required for the delivery of four programs under this program activity ($58 million in contribution funding and $11 million in operating), and was made available through transfers from other program activities. The Strategic Community Investment Fund was extended by one year in 2005-2006 and commitments of $10 million were rolled forward to 2006-2007. The Innovative Communities Fund, a new program introduced in 2005-2006, experienced higher than expected activity with an additional $29 million in contributions, and increased activity experienced under the Business Development Program required an additional $17 million. Expenditures under the Community Futures Program were $2 million higher than originally planned. The increased activity in these programs resulted in increased human resource utilization (75 FTEs).

Special Adjustment Measures

Expenditures under the Saint John Shipyard Adjustment Initiative were $11 million less than originally planned, and funds were transferred to the Community Economic Development program activity to meet increased demands.

Infrastructure Programming

Increased activity and resources were required for the delivery of three infrastructure programs; namely, the Infrastructure Canada Program (including $6.9 million in contributions funding reprofiled from 2005-2006), the Municipal Rural Infrastructure Fund, and projects under the Canada Strategic Infrastructure Fund.

Policy

Adjustments to planned spending were made during the year to transfer funding to other activities.

3.2.4  Table 3:  Voted and Statutory Items

This table illustrates the way in which Parliament approved ACOA’s resources, and shows the changes in resources derived from supplementary estimates and other authorities, as well as how funds were spent.

Vote # or Statutory Item (S)	Truncated Vote or Statutory Wording	2006‑2007 ($ millions)
		Main Estimates	Planned Spending	Total Authorities	Total Actuals
1	Operating expenditures	82.8	82.8	86.8	80.5
5	Grants and contributions	290.4	289.1	296.3	296.3
(S)	Contributions to employee benefit plans	8.5	8.5	8.5	8.5
-	Minister of Atlantic Canada Opportunities Agency  - Salary and motor car allowance	0.0	0.0	0.0	0.0
	Total	381.7	380.4	391.6	385.3

Note:  The funding for the minister’s salary and motor car allowance is displayed under Foreign Affairs and International Trade Canada.

3.2.5  Table 4:  Services Received Without Charge

This table indicates cost of services provided to the Agency by other federal government departments.

	2006‑2007 ($ millions)
Accommodations, provided by Public Works and Government Services Canada	3.4
Contributions covering employer’s share of employees’ insurance premiums and expenditures, paid by the Treasury Board of Canada Secretariat, excluding revolving funds	4.0
Salary and associated expenditures of legal services, provided by the Department of Justice Canada	0.3
Total	7.7

3.2.6  Table 5:  Sources of Non‑respendable Revenue

Program Activity	2004‑2005 ($ millions) Actual	2005‑2006 ($ millions) Actual	2006‑2007 ($ millions)
			Main Estimates	Planned Revenue	Total Authorities	Actual
Program Activity:  Fostering SME Development and Regional Economic Capacity Building
- Repayable Contributions	54.9	59.5	55.0	55.0	57.3	57.3
- All Other*	6.6	7.8	2.0	2.0	8.2	8.2
Total	61.5	67.3	57.0	57.0	65.5	65.5

* “All Other” revenue includes refunds of prior years’ expenditures, adjustments to prior years’ accruals, return on investment from direct loans, service fees, proceeds from the disposal of Crown assets, interest revenues, and other miscellaneous revenues.

3.2.7  Table 6:  Resource Requirements by Branch

2006‑2007 ($ millions)
Program Activity   Branch	Fostering SME Development and Regional Economic Capacity Building	Access to Business Information	Community Economic Development	Special Adjustment Measures	Infrastructure Programming	Policy	Advocacy	Co‑ordination	Total
New Brunswick
Planned Spending	66.4	0.8	11.0	24.5	3.7	0.4	0.3	0.3	107.4
Actual Spending	45.6	1.4	22.8	13.1	2.2	0.4	0.3	0.4	86.2
Nova Scotia
Planned Spending	77.4	1.0	9.0	0.0	5.8	0.6	0.2	0.3	94.3
Actual Spending	63.2	0.9	36.0	0.0	9.7	1.2	0.6	0.7	112.3
Prince Edward Island
Planned Spending	33.4	0.4	3.6	0.0	1.2	0.2	0.1	0.2	39.1
Actual Spending	28.3	0.5	17.1	0.0	0.8	0.3	0.1	0.3	47.4
Newfoundland and Labrador
Planned Spending	67.6	0.6	13.0	0.0	3.2	0.6	0.6	0.3	85.9
Actual Spending	55.0	0.7	23.0	0.0	9.2	0.6	0.4	0.6	89.5
Corporate*
Planned Spending	34.8	0.0	6.2	0.0	0.0	9.2	2.8	0.7	53.7
Actual Spending	31.5	0.4	12.5	0.0	0.0	3.4	1.9	0.2	49.9

* Includes the Minister’s and President’s Offices, Human Resources, Finance and Corporate Services branch, and Policy and Programs branch.

3.2.8  Table 7A:  User Fees

A. User Fee	Fee Type	Fee‑setting Authority	Date Introduced or Last Modified	2006‑2007					Planning Years
				Forecast Revenue ($000)	Actual Revenue ($000)	Full Cost ($000)	Performance Standard	Performance Results	Fiscal Year	Forecast Revenue ($000)	Estimated Full Cost ($000)
Fees for processing access requests made under the Access to Information Act	Other products and services	Access to Information Act	1992	3.6	0.5	437.1	Response is to be provided within 30 days of receipt of the request. The response time may be extended, pursuant to Section 9 of the Act. Notice of an extension is to be provided within 30 days of receipt of the request. The Access to Information Act provides further details at http://laws.justice.gc.ca/en/A-1/index.html.	The 30‑day standard was met 30% of the time. Overall response standard (including extensions) was achieved 47% of the time.	2007‑2008 2008‑2009 2009‑2010	0.60 0.62 0.65	440.0 450.0 460.0
B.  Circumstances surrounding fees introduced or last modified during the 2006‑2007 fiscal year. Not applicable
C.  Significant Factors Affecting User Fees Nil

3.2.9  Table 7B:  Policy on Service Standards for External Fees

Supplementary information on Service Standards for External Fees can be found at http://www.tbs-sct.gc.ca/rma/dpr3/06-07/index_e.asp.

3.2.10  Table 8:  Details on Transfer Payments Programs

The following information tables have been completed regarding each ACOA transfer payment program with transfers in excess of $5 million in 2006-2007.

1. Atlantic Innovation Fund
2. Business Development Program
3. Community Futures Program
4. Infrastructure Canada Program
5. Innovative Communities Fund
6. Saint John Shipyard Adjustment Initiative

Further information on these projects can be found at http://www.tbs-sct.gc.ca/rma/dpr3/06-07/index_e.asp.

3.2.11  Table 9:  Horizontal Initiatives

Initiatives for which ACOA acts as the lead agency:

1. Atlantic Canada Tourism Partnership (ACTP)
   http://www.actp-ptca.ca/
   
   
2. International Business Development Program (IBDP)
   http://www.acoa-apeca.gc.ca/e/ibda/index.shtml
   
3. Team Canada Atlantic (TCA)
   http://www.teamcanadaatlantic.ca/

Other Horizontal Initiatives on which ACOA acts as a partner:

1. Rural Development/Canadian Rural Partnership
   http://rural.gc.ca/home_e.phtml
   
   
2. Team Canada Inc. (TCI)
   http://www.pch.gc.ca/progs/ac-ca/progs/rc-tr/progs/canada-inc/index_e.cfm
   
   
3. Infrastructure Canada Program (ICP)
4. Canada Strategic Infrastructure Fund (CSIF)
5. Municipal Rural Infrastructure Fund (MRIF)
   http://www.infrastructure.gc.ca/ip-pi/index_e.shtml
   
   
6. U.S. Enhanced Representation Initiative (ERI)
   http://webapps.dfait-maeci.gc.ca/minpub/Publication.asp?publication_id=380348&Language=E
   
   
7. Canada Business Service Centres (CBSCs)
   http://www.cbsc.org/
   
   
8. Canadian Agriculture and Food International (CAFI) Program
   http://www.agr.gc.ca/int/cafi-picaa/index_e.php?page=intro
   
   
9. Aboriginal economic development

 

Supplementary information on horizontal initiatives can be found at
http://www.tbs-sct.gc.ca/rma/eppi-ibdrp/hrdb-rhbd/profil_e.asp.

 

3.2.12  Table 10:  Financial Statements

ATLANTIC CANADA OPPORTUNITIES AGENCY
Statement of Operations (Unaudited)
For the Year Ended March 31
(in thousands of dollars)

EXPENSES (Note 4)	2007	2006
Fostering SME Development and Regional Economic Capacity Building	199,343	251,768
Community Economic Development	113,185	111,768
Infrastructure Programming	21,870	34,512
Special Adjustment Measures	13,082	3,786
Policy Research	6,189	6,670
Access to Business Information	4,226	3,406
Advocacy	3,540	3,544
Co‑ordination	2,251	3,682
Total Expenses	363,686	419,136
REVENUES (Note 5)
Fostering SME Development and Regional Economic Capacity Building	14,652	14,629
Community Economic Development	11	10
Access to Business Information	4	6
Infrastructure Programming	1
Policy Research	1
Total Revenues	14,669	14,645
Net cost of operations	349,017	404,491

The accompanying notes form an integral part of these financial statements.

 

ATLANTIC CANADA OPPORTUNITIES AGENCY
Statement of Financial Position (Unaudited)
At March 31
(in thousands of dollars)

ASSETS	2007	2006
Financial assets
Accounts receivable and advances (Note 6)	3,711	2,250
Loans (Note 7)	225,072	238,919
Total financial assets	228,783	241,169
Non-financial assets
Prepaid expenses	17,450	20,544
Tangible capital assets (Note 8)	529	666
Total non-financial assets	17,979	21,210
TOTAL	246,762	262,379
LIABILITIES
Liabilities
Accounts payable and accrued liabilities (Note 9)	77,342	82,644
Vacation pay and compensatory leave	2,164	2,203
Other liabilities (Note 10)	556	410
Employee severance benefits (Note 11)	11,877	10,427
Total liabilities	91,939	95,684
Equity of Canada	154,823	166,695
TOTAL	246,762	262,379

Contingencies (Note 12)

Contractual obligations (Note 13)

The accompanying notes form an integral part of these financial statements.

 

ATLANTIC CANADA OPPORTUNITIES AGENCY
Statement of Equity of Canada (Unaudited)
For the Year Ended March 31
(in thousands of dollars)

	2007	2006
Equity of Canada, beginning of year	166,695	206,487
Net cost of operations	(349,017)	(404,491)
Current year appropriations used (Note 3)	385,341	418,740
Revenue not available for spending	(14,669)	(14,645)
Change in net position in the Consolidated Revenue Fund (Note 3c)	(40,926)	(46,607)
Services received without charge from other government departments (Note 14)	7,399	7,211
Equity of Canada, end of year	154,823	166,695

The accompanying notes form an integral part of these financial statements.

 

ATLANTIC CANADA OPPORTUNITIES AGENCY
Statement of Cash Flow (Unaudited)
For the Year Ended March 31
(in thousands of dollars)

	2007	2006
OPERATING ACTIVITIES
Net cost of operations	349,017	404,491
Non-cash items
Amortization of tangible capital assets	(260)	(417)
Amortization of unamortized discount on assistance loans	14,068	14,125
Gain on disposal and write-down of tangible capital assets	12	9
Provision for impaired loans and accounts receivable	(13,340)	(31,867)
Loan discount portion on assistance loans	(18,791)	(4,925)
Services provided without charge	(7,399)	(7,211)
Variations in Statement of Financial Position
Increase (decrease) in accounts receivable and prepaid operating expenses	4,400	(429)
(Increase) decrease in liabilities	3,745	3,748
Increase (decrease) in loans	1,252	(10,392)
Increase (decrease) in prepaid transfer payments	(3,071)	(9,735)
Cash used by operating activities	329,633	357,397
Capital investment activities
Acquisition of tangible capital assets	136	104
Proceeds from disposal of tangible capital assets	(23)	(13)
Cash used by capital investment activities	113	91
Financing activities
Net cash provided by Government of Canada	329,746	357,488

The accompanying notes form an integral part of these financial statements.

ATLANTIC CANADA OPPORTUNITIES AGENCY

Notes to the Financial Statements (Unaudited)

1.     Authority and Objectives

The Atlantic Canada Opportunities Agency operates under the authority from Part I of the Government Organization Act, Atlantic Canada, 1987, R.S., c G-5-7, otherwise known as the Atlantic Canada Opportunities Agency Act.

The Agency’s mandate is to increase opportunity for economic development in Atlantic Canada, and, more particularly, to enhance the growth of earned incomes and employment opportunities in that region. The Agency delivers its mandate under eight program activities:

Fostering SME Development and Regional Economic Capacity Building
Assistance to improve the climate for business growth and/or to SMEs (small and medium-sized enterprises) to help them start, expand or modernize their businesses.

Community Economic Development
Projects that help communities build their capacity and confidence in order to identify and co‑ordinate the implementation of priorities for economic development in their region.

Infrastructure Programming
Programming designed to renew and build infrastructure in rural and urban municipalities in Atlantic Canada.

Special Adjustment Measures
Support short-term adjustment initiatives designed to address the specific economic adjustment needs of Atlantic Canadian communities.

Policy Research
Carrying out policy analysis and research to determine the areas in which the Agency will act to most effectively carry out its mandate.

Access to Business Information
Providing counselling, mentoring and information referrals to Atlantic Canadians.

Advocacy
Advocating the interests of Atlantic Canada to make new government initiatives more responsive to the needs of Atlantic Canada.

Co‑ordination
Engaging economic partners in addressing the Atlantic region’s strategic economic priorities.

2.     Summary of Significant Accounting Policies

These financial statements have been prepared in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector.

Significant accounting policies are as follows.

a)      Parliamentary appropriations

The Agency is financed by the Government of Canada through parliamentary appropriations. Appropriations provided to the Agency do not parallel financial reporting according to generally accepted accounting principles, since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the statement of operations and the statement of financial position are not necessarily the same as those provided through appropriations from Parliament. Note 3 provides a high level reconciliation between the bases of reporting.

b)     Net cash provided by Government

The Agency operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Agency is deposited to the CRF, and all cash disbursements made by the Agency are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements, including transactions between departments of the federal government.

c)      Change in net position in the Consolidated Revenue Fund (CRF)

This amount is the difference between the net cash provided by Government and appropriations used in a year, excluding the amount of non-respendable revenue recorded by the Agency. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.

d)     Expenses - Expenses are recorded on the accrual basis:

• Grants and non-repayable contributions are recognized in the year in which the conditions for payment are met.
  
• Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
  
• Services provided without charge by other government departments for accommodation, the employer’s contribution to the health and dental insurance plans, workers’ compensation, and legal services are recorded as operating expenses at their estimated cost.

e)      Revenues

These are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues, except for the item listed below.
-  Loans are non-interest bearing and, due to the uncertainty as to ultimate collection, interest income is only charged on overdue amounts and is recorded when received.

f)       Employee future benefits

• Pension benefits:  Eligible employees participate in the Public Service Pension Plan, a multi-employer plan administered by the Government of Canada. The Agency’s contributions to the plan are charged to expenses in the year incurred and represent the total Agency’s obligation to the plan. Current legislation does not require the Agency to make contributions for any actuarial deficiencies of the plan.
  
• Severance benefits:  Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

g)      Repayable contributions are contributions where the recipient is expected to repay the amount advanced. Depending on their nature, they are classified as either unconditionally repayable or conditionally repayable, and are accounted for differently.

• Unconditionally repayable contributions are contributions that must be repaid without qualification. Normally, these contributions are provided with no interest clause and have various repayment terms. Due to their concessionary nature, they are recorded as loans at their face value and are discounted using a modified effective rate method. A portion of the unamortized discount is brought into income each year to reflect the change in the present value of the contributions outstanding. An estimated allowance for uncollectibility is also recorded where appropriate.
  
• Conditionally repayable contributions are contributions that, all or part of which, become repayable if conditions specified in the contribution agreement come into effect. Accordingly, they are not recorded on the Statement of Financial Position until such time as the conditions specified in the agreement are satisfied; at this time, they are recorded as a receivable and a reduction in transfer payment expenses. An estimated allowance for uncollectibility is recorded where appropriate.
  
• Collections on repayable contributions amounted to $57,261,482 in fiscal year 2006‑2007 ($59,508,903 in fiscal year 2005‑2006).

h)     Allowance for impaired loans and accounts receivable

Loans and accounts receivable are classified as impaired when, in the opinion of management, there is reasonable doubt as to the timely collection of the full amount of principal and, where applicable, interest. A specific allowance is established to reduce the recorded value of the loan to its estimated net realizable value. For assistance loans, which are granted with a zero interest rate, impairment is calculated based on the assistance loans amount, net of the unamortized discount on assistance loans.

The Agency has written off $12,478,738 in fiscal year 2006‑2007 ($13,986,310 in fiscal year 2005‑2006) for accounts deemed uncollectible, and where all possible avenues of collection have been exhausted. The write‑off of a Crown debt is a bookkeeping action only, and does not eliminate the obligation of a debtor to make payment and does not affect the right of the Crown to enforce collections.

i)        Contingent liabilities – Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

j)       Tangible capital assets – All tangible capital assets having an initial cost of $10,000 or more are recorded at their acquisition cost.

Amortization of tangible capital assets is done on a straight‑line basis over the estimated useful life of the asset as follows:

Asset Class                              Amortization Period
Vehicles                                     5 years
Computer equipment                  3 years
Software developed                   5 years
Machinery and equipment          15 years

k)     Measurement uncertainty – The preparation of these financial statements in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are contingent liabilities, the liability for employee severance benefits, unamortized discount on assistance loans, and the useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically, and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3.      Parliamentary Appropriations

The Agency receives most of its funding through annual parliamentary appropriations. Items recognized in the statement of operations and the statement of financial position in one year may be funded through parliamentary appropriations in prior, current or future years. Accordingly, the Agency has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables.

a)     Reconciliation of net cost of operations to current year appropriations used:

	2007	2006
	(in thousands of dollars)
Net Cost of Operations	349,017	404,491
Adjustments for items affecting net cost of operations, but not affecting appropriations
Add (Less):
Services provided without charge	(7,399)	(7,211)
Amortization of tangible assets	(260)	(417)
Prepaid expenses recognized	(19,918)	(29,048)
Conditions met on contributions	5,359	7,536
Justice Canada fees	(299)	(368)
Loan discount portion on assistance loans	(18,791)	(4,925)
Vacation pay and compensatory leave	32	(929)
Provision for impaired loans and accounts receivable	(13,340)	(31,867)
Adjustments to prior year’s accruals	3,601	1,046
Employees severance pay benefits	(1,450)	(1,756)
Other adjustments		7
Loss on disposition of tangible capital assets	(1)
Transfer of repayable contribution to non‑repayable	624	(5,845)
	(51,842)	(73,777)
Revenue not available for spending	14,669	14,645
Adjustments for items not affecting net cost of operations, but affecting appropriations
Add (less):
Assistance loans	55,944	52,757
Prepaid expenses	17,417	20,520
Acquisitions of tangible capital assets	136	104
	73,497	73,381
Current year appropriations used	385,341	418,740

b)     Appropriations provided and used:

	Appropriations Provided
	2007	2006
	(in thousands of dollars)
Vote 1 - Operating expenditure	86,754	88,014
Vote 5 - Grants and contributions	296,340	350,119
Statutory amounts	8,547	9,573
Less:
Lapsed appropriations: operating	(6,293)	(28,962)
Appropriations available for future years	(7)	(4)
Current year appropriations used	385,341	418,740

c)     Reconciliation of net cash provided by Government to current year appropriations used:

	2007		2006
	(in thousands of dollars)
Net cash provided by Government	329,746	357,488
Revenue not available for spending	14,669	14,645
Change in net position in the Consolidated Revenue Fund
Variation in accounts receivable and advances	(2,693)	20,464
Variation in accounts payable and accrued liabilities	(3,745)	(3,748)
Other adjustments	47,364	29,891
	40,926	46,607
Current year appropriations used	385,341	418,740

4.      Expenses

The following table presents details of expenses by category:

	2007	2006
	(in thousands of dollars)
Transfer payments
Conditionally repayable
Individuals	117	976
Industry	45,313	39,231
	45,430	40,207
Conditions met	(5,359)	(7,536)
	40,071	32,671
Non-repayable
Industry	9,396	11,438
Non-profit organizations	154,192	177,798
Other levels of government	33,230	58,430
	196,818	247,665
Adjustments to prior year’s accruals	(3,414)	(938)
Loan discount portion on assistance loans	18,790	4,925
Provision for impaired loans and accounts receivable	13,339	31,867
Total transfers payments	265,604	316,189
Operating
Personnel	67,492	69,540
Professional services	14,263	16,211
Transportation and telecommunications	7,408	7,505
Accommodation	3,355	3,285
Equipment (less than $10,000 per item)	1,631	1,513
Rental	1,286	1,522
Information	1,068	1,472
Utilities, material and supplies	769	864
Purchased, repair and maintenance	512	511
Amortization of tangible capital assets	260	417
Loss on disposal of tangible capital assets	1
Miscellaneous expenses	37	107
Total operating expenses	98,082	102,947
Total expenses	363,686	419,136

5.      Revenues

The following table presents details of revenues by category:

	2007	2006
	(in thousands of dollars)
Revenue from amortization of discount on assistance loans	14,068	14,125
Interest on overdue loans	559	465
Return on investments on loans under Special Areas and Highway Agreements		21
Gain on disposal of tangible capital and non-capital assets	13	9
Other revenues	29	25
Total revenues	14,669	14,645

Return on investment represents interest earned on loans that were made under the Special Areas and Highways Agreement.

6.      Accounts Receivable and Advances

The following table presents details of accounts receivable:

	2007	2006
	(in thousands of dollars)
Accounts receivable from contributions
Conditionally repayable conditions met	9	3
Defaulted conditionally repayable contributions	8,081	7,200
Defaulted non-repayable contributions	584	377
Overpayments to be recovered	57	140
	8,731	7,720
Less: allowance for impaired accounts receivable	(8,470)	(7,515)
	261	205
Accounts receivable from other federal government departments and agencies	937	386
Other accounts receivable	2,507	1,647
Employee advances	6	12
Total	3,711	2,250

7.      Loans

	2007	2006
	(in thousands of dollars)
Assistance loans	366,076	375,278
Less: Unamortized discount on assistance loans	(41,571)	(36,849)
	324,505	338,429
Less: Allowance for impaired assistance loans	(99,433)	(99,510)
	225,072	238,919
Provincial and territorial governments for regional and industrial development	457	457
Less: Allowance for Newfoundland and Labrador Development Corporation (NLDC) loans	(457)	(457)
Total	225,072	238,919

The “provincial and territorial governments for regional and industrial development” loans originated from the Newfoundland and Labrador Development Corporation Limited (NLDC), of which Canada owned 40 percent of the shares. In an agreement dated March 29, 1989, the Newfoundland Government purchased Canada’s shares to effect the withdrawal of the Government of Canada from the corporation. A condition of the withdrawal was that the Government of Canada accepts these NLDC loans as full payment of moneys owing by the corporation to Canada. These loans are currently being administrated by the Agency. The NLDC loans bore interest at rates from 10% to 17% per annum, and were repayable at various due dates. A decision has been made to recommend that the balance of the NLDC portfolio be written off.

8.      Tangible Capital Assets  (in thousands of dollars)

Cost					Accumulated amortization				2007 Net book value	2006 Net book value
Capital asset class	Opening balance	Acquis-itions	Disposals, write‑offs	Closing balance	Opening balance	Amorti-zation	Disposals, write‑offs	Closing balance
Vehicles	708	93	(142)	659	(349)	(116)	130	(335)	324	359
Computer equipment	1,300			1,300	(1,300)			(1,300)		1
Software developed	1,400	43		1,443	(1,176)	(138)		(1,314)	129	224
Machinery, equipment	88			88	(6)	(6)		(12)	76	82
Total	3,496	136	(142)	3,490	(2,831)	(260)	130	(2,961)	529	666

Amortization expense for the year ended March 31, 2007, is $260 ($417 in 2006).

9.      Accounts Payable and Accrued Liabilities

The following table presents details of accounts payable and accrued liabilities by category:

	2007		2006
	(in thousands of dollars)
Regular accounts payable	(28,981)	(33,848)
Accrued salaries and wages	(2,237)	(2,052)
Accrued liabilities (payable at year-end)	(43,031)	(43,301)
Other payables to other government departments	(905)	(1,412)
Contractors holdback	(2,184)	(2,017)
Other payables	(4)	(14)
Total	(77,342)	(82,644)

10.  Other Liabilities

The Agency records deposits from non‑federal partners for their share of costs under various projects. Monies are distributed on behalf of contributions as projects are undertaken. Unused funds are to be returned to contributors. Activity during the year is as follows:

	2007	2006
	(in thousands of dollars)
Opening liability	410	678
Deposits	620	273
Payments	(474)	(541)
Closing liability	556	410

11.  Employee Benefits

a)     Pension benefits:  The Agency's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of two percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Quebec Pension Plans benefits and they are indexed to inflation.

Both the employees and the Agency contribute to the cost of the plan. The 2006‑2007 expense amounts to $6,620,071 ($7,017,769 in 2005‑2006), which represents approximately 2.2 times the contributions by employees.

The Agency’s responsibility with regard to the plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the plan’s sponsor.

b)     Severance benefits:  The Agency provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre‑funded. Benefits will be paid from future appropriations. Information about the severance benefits, measured as at March 31, is as follows:

	2007	2006
	(in thousands of dollars)
Accrued benefit obligation, beginning of year	10,427	8,671
Expense for the year	2,111	2,425
Benefits paid during the year	(661)	(669)
Accrued benefit obligation, end of year	11,877	10,427

12.  Contingencies

a)     Claims and litigation

Claims have been made against the Agency in the normal course of operations. Legal proceedings for claims totalling approximately $10,802,858 (as in 2006) were still pending at March 31, 2007. Some of these potential liabilities may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded in the financial statements.

b)     Potential recoveries of contributions

As at March 31, 2007, potential recoveries of conditionally repayable contributions were estimated at $11,896,715 ($10,007,966 in 2005-2006). Revenues will be recognized in the year that the conditions are met.

13.  Contractual Obligations

The nature of the Agency’s activities can result in some large multi‑year contracts and obligations, whereby the Agency will be obligated to make future payments when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows.

	(in thousands of dollars)
	2008	2009	2010	2011	2012	Total
Transfer payments	241,995	79,190	14,010	4,771	361	340,327
Loans and advances	5,124					5,124
Operating and maintenance	8,297	325				8,622
Total	255,416	79,515	14,010	4,771	361	354,073

14.  Related party Transactions

The Agency is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The Agency enters into transactions with these entities in the normal course of business and on normal trade terms. Also during the year, the Agency received services that were obtained without charge from other government departments as presented in part (a).

a)     Services provided without charge:

During the year, the Agency received services without charge from other departments for accommodation, the employer's contribution to the health and dental insurance plans, and workers’ compensation and legal services. These services without charge have been recognized in the Agency’s Statement of Operations as follows.

	2007	2006
	(in thousands of dollars)
Accommodation provided by Public Works and Government Services Canada	3,355	3,284
Employer’s contribution to the health and dental insurance plans	4,028	3,913
Workers’ compensation coverage provided by Human Resources and Social Development Canada	7	6
Legal services provided by Justice Canada	9	8
Total	7,399	7, 211

The Government has structured some of its administrative activities for efficiency and cost‑effectiveness purposes so that one department performs these on behalf of all without charge. The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada, are not included as an expense in the Agency’s Statement of Operations.

b)     Payables and receivables outstanding at year end with related parties:

	2007	2006
	(in thousands of dollars)
Accounts receivable with other government departments and agencies	642	386
Accounts payable to other government departments and agencies	906	1,412

15.  Comparative information

Comparative figures have been reclassified to conform to the current year's presentation.

3.2.13  Table 11:  Response to Parliamentary Committees Audits and Evaluations

Response to Parliamentary Committees
No recommendations were received for 2006-2007.
Response to the Auditor General (including the Commissioner of the Environment and Sustainable Development)
The Auditor General of Canada did not report on the activities of ACOA in 2006-2007. 2006 Report of the Commissioner of the Environment and Sustainable Development - Sustainable Development Strategies. The President of ACOA responded to the Commissioner.
External Audits
Office of the Commissioner of Official Languages – 2006-2007 Annual Report. http://www.ocol-clo.gc.ca/html/ar_ra_2006_07_e.php
Internal Audits
Completed Compliance audits: Audit of Contracting Business Development Program Quality Assurance Audit Atlantic Innovation Fund Quality Assurance Audit Audit of Innovation Audit of Program Delivery for Community Economic Development Audit of Appointment Delegation and Accountability Instrument and Public Service Employment Act Service Quality Initiative Grants and contributions payment system – reliability audit Follow-up Engagements: Audit of Infrastructure Canada Program Audit of Community Futures Program and Youth Seed ConneXion Program Ongoing Finance/administration (Prince Edward Island Region – changed from Nova Scotia) Finance/administration (Newfoundland and Labrador Region) Community Economic Development – Community Development Resources Entrepreneurship and Business Skills Development Rescheduled to 2007-2008 due to resource-related issues Operational and Financial Planning and Reporting Access to Information (Canada Business Service Centres) Further information on audit reports and, where applicable, their corresponding Management Action Plans is available on ACOA’s website at http://www.acoa-apeca.gc.ca/e/library/index.shtml.
Evaluations
Mid-term Evaluation of the Atlantic Trade and Investment Partnership (ATIP), Belleclaire Consulting in association with Perrin Research & Information Services, August 2006. http://www.acoa-apeca.gc.ca/e/library/evallist.shtml Summative Evaluation of the Economic Development Component of the Canadian Fisheries Adjustment and Restructuring Initiative, Goss Gilroy Inc., September 2006. http://www.acoa-apeca.gc.ca/e/library/evallist.shtml There are two changes to report with respect to the evaluations listed in the 2006‑2007 Report on Plan and Priorities: It is anticipated that the Strategic Community Investment Fund Summative Evaluation will now be completed by March 2008, due to delays encountered with the contracting process. It is recommended that the International Business Development Program (IBDP) Implementation Evaluation be removed from the list of evaluations. While examining past IBDP studies (e.g. evaluations, results-based management and accountability frameworks, risk-based audit frameworks), it was determined that the program is well structured, has sufficient controls and procedures, and has matured throughout its lifetime. Questions concerning the IBDP can be answered through the studies completed to date, and through ongoing monitoring for results. ACOA’s evaluation unit is currently awaiting responses to the recommendation from the Agency’s management committee and Treasury Board Secretariat.

3.2.14  Table 12:  Sustainable Development Strategies

Topics to address	ACOA’s Response
1.     What are ACOA’s key goals, objectives, and/or long-term targets of the Sustainable Development Strategy (SDS)?	The key goals are to raise awareness of the benefits of sustainable development and sustainable communities; assist SMEs to identify ways to become more eco-efficient; and ensure that SMEs and communities are aware of the federal funding programs available to help them. The long-term target is to have more competitive, resource‑efficient and sustainable businesses and communities in the region.
2.     How do ACOA’s key goals, objectives and/or long-term targets help achieve ACOA’s strategic outcomes?	The key goals, objectives and long-term targets in ACOA’s SDS play an important part in developing policies and programs that strengthen the economy of the region, helping to increase the number of competitive and sustainable SMEs in Atlantic Canada, and encouraging dynamic and sustainable communities.
3.     What were ACOA’s targets for the reporting period?	For the most part, the targets for the reporting period relate to completion of the outstanding commitments under SDS III. Work with other federal departments to hold one workshop on national environmental programs. Investigate the cap and trade emissions policies in the southeastern U.S. and the New York Energy Smart Program to build policy capacity in this region, and identify opportunities for Atlantic Canada in this key market, and lessons learned that could be applicable. Undertake a pilot project in New Brunswick to determine the feasibility of encouraging SMEs to permanently integrate pollution prevention (P2) and eco‑efficiency (E2) practices into their operations, in order to improve their productivity and economic sustainability. Internally: purchase at least one additional alternative fuel vehicle; purchase recycled toner cartridges; recycled paper and green products; ensure at least one procurement officer at head office and each regional office completes the online course entitled Guide to Buying Green; deliver information sessions to ACOA employees as part of the consultations process in preparing SDS IV (success will be measured in the number of participants who attend the sessions and hear the message).
4.     What is ACOA’s progress to date? (This includes outcomes achieved in relation to objectives and progress on targets.)	ACOA partnered with Natural Resources Canada, Industry Canada, Environment Canada, and Public Works and Government Services Canada to conduct consultations with stakeholders in Atlantic Canada. As part of the agenda, each department made a presentation about its funding programs. A guest speaker at each session provided a presentation on sustainable development. A total of 107 stakeholders participated in the workshops. ACOA did not have the opportunity to fully investigate the cap and trade emissions policies in the southeastern U.S. and the New York Energy Smart Program. This initiative is being pursued in 2007 and several meetings are planned. The Sustainable Business Initiative pilot project in New Brunswick is well underway; ten companies have been identified and engaged in the project. Internally:  The Agency purchased three hybrid vehicles in 2006-2007.  ACOA also continued to increase the amount of green products purchased such as recycled paper, toner and office supplies. Online training was offered to procurement staff on Guide to Buying Green and most have completed the course; the remainder will take the updated online training being offered. Training was offered to all Agency staff as part of the internal consultations for SDS 2007‑2010. Workshops for Community Business Development Corporations and Regional Economic Development Organizations were conducted, and the results captured in a report, including recommendations for future steps. A total of 198 representatives participated.
5.     What adjustments has ACOA made, if any?	From the feedback during consultations and the workshops on eco-efficiency, it is clear that ACOA is on the right track in getting the message out to SMEs and communities on the benefits of sustainable development.

SDS 2007-2010 was prepared and tabled in Parliament in December 2006, and is available at http://www.acoa-apeca.gc.ca/e/sustain/2006/index.shtml

Sustainable Development was incorporated into the Agency’s Program Activity Architecture, and into work plans for the 2007-2008 fiscal year.

3.2.15  Table 13:  Client-centred Service

During the 2006‑2007 period, a third corporate client satisfaction survey, based on the common measurement tool process, was completed with an excellent 84% satisfaction rating being achieved.

The service improvement plan continues to require continual modification to maintain relevance, and the results of the 2006‑2007 survey will be incorporated into the plan to meet client priorities identified in the latest survey.

The research to develop a formal complaint redress mechanism for the Agency was started during the latter part of fiscal 2006‑2007, but the mechanism was not finalized and put into place as originally expected. This exercise should be completed in fiscal 2007‑2008.

The Agency continued its approach to looking at standards development for project approval under various programming activities, including the Business Development Program (BDP). The original intent for this period was to use the corporate system as a tracking tool in order to publish measurable standards under the BDP. This exercise is still ongoing and the process needs further development to ensure reliability of data for publishing purposes.

Supplementary information on Client-centred Service can be found at
http://www.tbs-sct.gc.ca/rma/dpr3/06-07/index_e.asp.

3.2.16  Table 14:  Travel Policies

The Atlantic Canada Opportunities Agency follows the Treasury Board of Canada Secretariat’s Special Travel Authorities, as well as the Travel Directive, Rates and Allowances.

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