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3 Additional information

3.1 Information on the Agency as at March 31, 2007

The Honourable Jean-Pierre Blackburn is Minister of the Economic Development Agency of Canada for the Regions of Quebec.

The President handles the day-to-day management of Agency activities on behalf of the Minister, to whom he reports. He acts as deputy head for the purposes of application of the Financial Administration Act, Public Service Employment Act and Public Service Labour Relations Act. He acts as accounting officer for the purposes of application of the Federal Accountability Act. Finally, the President acts as senior advisor to the Minister and the Government with respect to public policy.

The Vice-President, Policy and Planning is responsible for the definition of the Agency's strategic directions and objectives for its intervention, design of its programs and initiatives, development of policy and other guidelines for its intervention, execution of the socio-economic studies associated with its mandate, establishment of the basis for results-based management and provision of leadership within the Agency to promote that approach, and evaluation of the Agency's policies, programs and initiatives. The Vice-President, Policy and Planning ensures that the Agency's viewpoint is put forward in the development of national policy and programs by the federal government and that the interests of Quebec and its regions are presented to federal departments and agencies. Finally, she is responsible for the Agency's relations with the Government of Quebec. Three branches report to the Vice-President, Policy and Planning: Government Affairs, Policy and Programs, and Departmental Performance.

The Vice-President, Operations has the mandate to implement the Agency's strategic directions and deliver its programs and services in a coordinated manner. She does so primarily through a network of 14 regional business offices across Quebec, and through a Head Office branch responsible for business development, partnerships and infrastructure. The Vice-President, Operations is also responsible for implementation of agreements made with the Government of Quebec. Two branches report to the Vice-President, Operations: Regional Coordination and Business Development, and Infrastructure.

The Director General, Corporate Services acts on the Agency's performance by ensuring sound management of its human, financial, administrative and technological resources, and compliance with the statutes, regulations, policy, directives and standards (e.g. Public Service Modernization Act, Management Accountability Framework) covering its operations. As comptroller, the director general has to certify to the President and the Comptroller General of Canada that the Agency's resources are used optimally; that its organizational models are conducive to attaining the targeted performance; and that the financial data contained in its Memoranda to Cabinet, Treasury Board submissions, financial statements and other financial reports are reliable and objective. He also acts as the Agency's senior official with respect to its finances. Finally, he is responsible for application of the ISO 9001:2000 quality system, which covers the development and implementation of Agency programs.

The Communications Branch manages the Agency's public and media relations, as well as promotion and dissemination of information vis--vis the different target groups, in particular through the Web site, for which it has responsibility. This Branch also handles in-house communications, with a view to informing employees and raising their awareness as to the Agency's new programs and results-based management. Furthermore, it manages strategic communications in relation to Agency senior management through the development of communication strategies and provision of strategic advice.

Legal Services provides legal assistance and opinions with respect to Agency activities. In particular, Legal Services activity focusses on commercial law and its impact on public law. Legal Services also offers litigation support services. These services are provided to the Minister, Deputy Head and senior management, and to Agency managers, service directors and employees. Legal Services employees report to the Department of Justice on an organizational, functional and professional basis.

The Internal Audit Branch provides the President with an independent audit service with respect to the Agency's risk management, control and governance processes. During its audit work, the branch usually reviews all the elements in a program's delivery chain (for instance, it looks as much at the submission made by the Agency to request funds from the Treasury Board Secretariat as at the use made of those funds). On occasion, this leads to visits to the organizations supported by the Agency. Finally, this branch has to draw up an internal audit plan for programs that takes risk into account.

Organization chart of the Economic Development Agency of Canada for the Regions of Quebec1

Organization chart of the Economic Development Agency of Canada for the Regions of Quebec

Notes:

1 A more complete version of the organization chart is available at: www.dec-ced.gc.ca/asp/Apropos/Organigramme.asp?LANG=EN.
2 FTE: Full-time equivalent employee.

3.2 Financial performance

3.2.1 Comparison of planned spending with actual expenditures

This table presents the net cost of Agency activities, as well as an historical overview. First, services received without charge are added to the Agency's expenditures, such as accommodation supplied by Public Works and Government Services Canada and services provided free of charge by Justice Canada. Revenues are then subtracted from expenditures in order to arrive at the net cost of the Agency for Canadians.


Program activity
(in thousands of dollars)

Actual expenditures
2004-2005

Actual expenditures
2005-2006

2006-2007

Main Estimates

Planned Spending

Total Authorities

Actual Expenditures

Enterprise development

131,696

138,300

145,794

145,653

135,473

133,184

Improvement of the economic environment of regions

100,627

102,733

125,417

125,306

143,991

134,076

Improvement of community infrastructure

86,964

87,743

89,251

89,240

118,168

93,066

Provision of special adjustment measures

13,843

5,460

21,133

21,130

13,643

4,572

Total

333,130

334,235

381,595

381,329

411,275

364,899

Less: Non-respendable revenue

(38,500)

(45,791)

(36,000)

(36,000)

(36,000)

(50,211)

Plus: Cost of services received without charge

5,522

5,957

5,515

5,515

5,515

6,100

Net cost for the Agency1

300,152

294,401

351,110

350,844

380,791

320,788

Full-time equivalent (FTE)

401

417

408

408

417

417


Note:

1 Totals do not necessarily correspond to the sum of individual amounts, since these amounts have been rounded out.

The $30.1-million difference between total planned spending and actual expenditures is primarily attributable to the deferral to the coming year of certain expenditures (associated with payment of the grant to the Qubec Port Authority, management of the Social Economy Initiative and administration of the Canadian Textiles Program CANtex), cutbacks in planned spending under CANtex, and an increase in non-respendable revenue.

3.2.2 Program activities

For each of the Agency's program activities, this table presents appropriations voted by Parliament (Main Estimates); resources provided for in the Report on Plans and Priorities 2006-2007; level of spending authorized, reflecting changes made in the Supplementary Estimates; and use of funds.


Expenditures by program activity
(in thousands of dollars
)

2006-2007

Operations1

Grants

Contributions

Total

Budgetary

Enterprise development

Main Estimates

27,939

0

117,855

145,794

Planned spending

27,798

0

117,855

145,653

Total authorities

28,159

0

107,315

135,473

Actual expenditures

25,870

0

107,315

133,184

Improvement of the economic environment of regions

Main Estimates

18,879

17,070

89,468

125,417

Planned spending

18,768

17,070

89,468

125,306

Total authorities

19,033

18,945

106,013

143,991

Actual expenditures

20,468

10,445

103,163

134,076

Improvement of community infrastructure

Main Estimates

2,589

0

86,662

89,251

Planned spending

2,578

0

86,662

89,240

Total authorities

2,603

0

115,565

118,168

Actual expenditures

1,949

0

91,117

93,066

Provision of special adjustment measures

Main Estimates

1,023

0

20,110

21,133

Planned spending

1,020

0

20,110

21,130

Total authorities

1,058

0

12,585

13,643

Actual expenditures

487

0

4,085

4,572

Total2

Main Estimates

50,430

17,070

314,095

381,595

Planned spending

50,164

17,070

314,095

381,329

Total authorities

50,853

18,945

341,478

411,275

Actual expenditures

48,774

10,445

305,680

364,899


Notes:

1 This item includes the Agency's operating expenditures, its contribution to employee benefit plans and spending of proceeds from disposal of surplus Crown assets. The Grants item notably includes the grant to the Qubec Port Authority for the staging of Qubec's 400th Anniversary Celebrations.
2 Totals do not necessarily correspond to the sum of individual amounts, since these amounts have been rounded out.

3.2.3 Summary of voted and statutory appropriations

This table repeats the summary table from the Main Estimates and shows appropriations voted by Parliament; resources provided for in the Report on Plans and Priorities 2006-2007; level of spending authorized, reflecting changes made in the Supplementary Estimates; and use of funds.


Vote or statutory item
(in thousands of dollars)

Truncated vote or statutory wording

2006-2007

Main Estimates

Planned spending

Authorities

Actual expenditures

1

Operating expenditures

44,693

44,423

45,735

43,664

5

Grants and contributions

331,165

331,165

360,423

316,125

(S)

Contribution to employee benefit plans

5,737

5,741

5,085

5,085

(S)

Spending of proceeds from disposal of surplus Crown assets

33

25

 

Total for the Agency1

381,595

381,329

411,275

364,899


Note:

1 Totals do not necessarily correspond to the sum of individual amounts, since these amounts have been rounded out.

3.2.4 Services received without charge

This table presents the cost of services received without charge by the Agency, which are added to the expenditures presented in Table 3.2.1 in order to obtain the net cost of the Agency for Canadians.


(in thousands of dollars)

2006-2007

Accommodation provided by Public Works and Government Services Canada

3,200

Employer's contribution to employees' insurance plans and expenditures paid by the Treasury Board Secretariat

2,547

Salaries and associated expenditures for legal services provided by Justice Canada

353

Total services received free of charge in 2006-20071

6,100


Note:

1 Totals do not necessarily correspond to the sum of individual amounts, since these amounts have been rounded out.

3.2.5 Sources of non-respendable revenue by program activity

This table illustrates revenue, providing an historical perspective. Revenue consists primarily of repayments of the repayable contributions awarded by the Agency.


Non-respendable revenue
(in thousands of dollars)

Revenue
2004-20051

Revenue
2005-2006

2006-2007

Planned revenue

Actual revenue

Promotion of the economic development of the regions of Quebec

Enterprise development

36,575

43,502

35,000

39,964

Improvement of the economic environment of regions

1,925

2,290

1,000

10,014

Improvement of community infrastructure

2

Provision of special adjustment measures

231

Total non-respendable revenue2

38,500

45,791

36,000

50,211


Notes:

1 Non-respendable revenue for 2004-2005 excludes the $50.8 million billed to Papiers Gaspsia Inc., which placed itself under the protection of the Companies' Creditors Arrangement Act.
2 Totals do not necessarily correspond to the sum of individual amounts, since these amounts have been rounded out.

3.2.6 Main transfer payment programs (TPPs)

  • Innovation, development of entrepreneurship and access program for SMEs
  • Regional Strategic Initiative
  • Community Futures Program
  • Infrastructure Canada Program

Further information on these projects can be found at
www.tbs-sct.gc.ca/dpr-rmr/0506/info/ps-dp_e.asp

3.2.7A User fees


 

(in thousands of dollars)

Fee type

Fee-setting authority Date last modified

A.User fee

Fees for processing of access requests submitted to the Agency under the Access to Information Act

Other goods and services

Access to Information Act

1992

B. Circumstances with respect to fees modified during FY 2006-2007

Not applicable


User fees (cont'd)


2006-2007

Forecast revenue

Actual revenue

Full cost

Performance standard

Performance results

0

0.2

69.3

A response must be provided within 30 days after the request is received. Under section 9 of the Act, the response time may be extended, in which case notice of the extension must be given within 30 days after the request is received. Further information on the Access to Information Act is available at: http://laws.justice.gc.ca/en/A-1/index.html.

A response within the normal 30-day deadline was observed by the Agency for 46% of requests. The standard for the maximum time allowed by the Act was met for 59% of requests.

 


User fees (cont'd)


Planning Years

Fiscal year

Planned revenue

Estimated full cost

2007-2008

0.2

71

2008-2009

0.2

73

2009-2010

0.2

75

 


3.2.7B Policy on service standards for user fees


User fee

Service standard

Performance results

Stakeholder consultation

Fees for processing of access requests submitted under the Access to Information Act

A response must be provided within 30 days after the request is received. Under section 9 of the Act, the response time may be extended, in which case notice of the extension must be given within 30 days after the request is received. Further information on the Access to Information Act is available at: http://laws.justice.gc.ca/en/A-1/index.html.

A response within the normal 30-day deadline was observed by the Agency for 46% of requests. The standard for the maximum time allowed by the Act was met for 59% of requests.

The service standard is established by the Access to Information Act and the Access to Information Regulations.


The Agency exceeded the prescribed timeframe in processing some of the information requests submitted to it under the Access to Information Act. This was partly due to the complexity of the applications submitted to it. Indeed, several of them required consultation of third parties and government agencies. It was also due to the increase of more than 30% in the volume of access requests submitted to the Agency (43 files in 2006-2007, compared with 29 in 2005-2006). Over the coming fiscal year, the Agency will work particularly to meet the service standards set out in the Act.

3.3 Financial Statements

The additional information presented in the foregoing financial tables was prepared on a cash basis and the following financial statements were prepared on an accrual basis, tables reconciling these two accounting methods will be presented.

Statement of management responsibility

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2007 and all information contained in these statements rests with the management of the Economic Development Agency of Canada for the Regions of Quebec. These financial statements have been prepared by management in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgment and gives due consideration to materiality. To fulfil its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the financial transactions of the Economic Development Agency of Canada for the Regions of Quebec. Financial information submitted to the Public Accounts of Canada and included in the Agency's Departmental Performance Report is consistent with these financial statements.

Management maintains a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are in accordance with the Financial Administration Act, are executed in accordance with prescribed regulations, within Parliamentary authorities, and are properly recorded to maintain accountability of Government funds. Management also seeks to ensure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility, and by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the Agency.

The financial statements of the Economic Development Agency of Canada for the Regions of Quebec have not been audited.


Deputy Minister/President,
Signature of Guy Mc Kenzie
Senior Financial Officer,

Signature of Pierre Bordeleau

Guy Mc Kenzie

Pierre Bordeleau

Montral, Canada

 


 


Statement of operations (unaudited)
For the year ended March 31

(in thousands of dollars)

2007

2006

Expenses (note 4)

Enterprise development

93,196

97,636

Improvement of the economic environment of regions

141,390

108,289

Improvement of community infrastructure

94,037

88,569

Provision of special adjustment measures

3,751

5,689

Total Expenses

332,374

300,183

Revenues (note 5)

Enterprise development

1,052

730

Improvement of the economic environment of regions

441

184

Improvement of community infrastructure

3

Provision of special adjustment measures

1

Total Revenues

1,497

914

Net Cost of Operations

330,877

299,269


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

 


Statement of Financial Position (Unaudited)
For the year ended March 31
(in thousands of dollars)

2007

2006

Assets

Financial assets

Accounts receivable and advances (note 6)

1,141

578

Loans (note 7)

157,231

152,832

Total financial assets

158,372

153,410

Non-financial assets

Prepaid expenses

324

63

Tangible capital assets (note 8)

2,153

2,604

Total non-financial assets

2,477

2,667

Total

160,849

156,077

Liabilities

Accounts payable and accrued liabilities

32,815

34,112

Vacation pay and compensatory leave

2,584

2,090

Employee severance benefits (note 9)

6,453

5,417

 

41,852

41,619

Equity of Canada

118,997

114,458

Total

160,849

156,077

Contingent liabilities (note 10)

 

 

Contractual obligations (note 11)

 

 


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

 


Statement of Equity of Canada (Unaudited)
at March 31
(in thousands of dollars)

2007

2006

Equity of Canada, beginning of year

114,458

73,630

Net cost of operations

(330,877)

(299,269)

Current year appropriations used (note 3)

364,899

334,235

Revenue not available for spending

(51,937)

(46,390)

Change in net position in the Consolidated Revenue Fund (note 3)

16,354

46,295

Services received without charge from other government departments (note 12)

6,100

5,957

Equity of Canada, end of year

118,997

114,458


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

 


Statement of Cash Flow (Unaudited)
For the year ended March 31
(in thousands of dollars)

2007

2006

Operating activities

Net cost of operations

330,877

299,269

Non-cash items:

amortization of tangible capital assets

(873)

(724)

loss on disposal and write-down of tangible capital assets

(3)

(8)

services provided without charge by other government departments

(6,100)

(5,957)

Variations in Statement of Financial Position:

increase (decrease) in accounts receivable and advances

563

(5,285)

increase (decrease) in prepaid expenses

261

(6,877)

decrease (increase) in liabilities

(233)

38,298

Cash used by operating activities

324,492

318,716

Investment activities

acquisitions of tangible capital assets

433

977

proceeds from disposal of tangible capital assets

(8)

(25)

net increase in loans

4,399

14,472

Cash used by investment activities

4,824

15,424

Financing activities

net cash provided by Government of Canada

(329,316)

(334,140)


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

Notes to the Financial Statements (Unaudited)

1. Authority and Objectives

Under the Economic Development Agency of Canada for the Regions of Quebec Act, which came into force on October 5, 2005, the object of the Agency is to promote the long-term economic development of the regions of Quebec by giving special attention to those where slow economic growth is prevalent or where opportunities for productive employment are inadequate. In carrying out its object, the Agency shall take such measures as will promote cooperation and complementarity with Quebec and communities in Quebec.

Thus, the Agency targets strategic outcomes geared to the challenges of the global economy and of the regions' adjustment and vitality, namely: enterprises' competitiveness and vitality of communities. To achieve these strategic outcomes, the Agency has four program activities, namely:

  • Enterprise development in order to facilitate enterprises' business growth
  • Improvement of the economic environment of regions in order to contribute to creating socio-economic conditions conducive to the development of Quebec's communities and regions
  • Improvement of community infrastructure in order to develop and renew infrastructure associated with drinking water and wastewater, transportation infrastructure, and economic and cultural infrastructure
  • Provision of special adjustment measures in order to stabilize, revitalize and diversify the economy of certain communities facing economic shocks, and mitigate the impact of major natural disasters.

2. Summary of Significant Accounting Policies

The 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:

  1. 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.
  2. 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.
  3. Change in net position in the Consolidated Revenue Fund 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.
  4. Revenues:
    • Revenues 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.
  5. Expenses – Expenses are recorded on the accrual basis:
    • Grants are recognized in the year in which the conditions for payment are met. In the case of grants which do not form part of an existing program, the expense is recognized when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives Parliamentary approval prior to the completion of the financial statements.
    • Non-repayable contributions and conditionally repayable contributions are recognized in the year in which the beneficiary meets the eligibility criteria or fulfils the conditions of the transfer agreement, with the exception of payments anticipated for activities in April, which are recorded as prepaid expenses.
    • 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 and legal services are recorded as operating expenses at their estimated cost.
  6. Employee future benefits
    1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer 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 Agency's total obligation to the Plan. Current legislation does not require the Agency to make contributions for any actuarial deficiencies of the Plan.
    2. 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.
  7. Accounts and loans receivables are stated at amounts expected to be ultimately realized. A provision is made for receivables where recovery is considered uncertain.
  8. 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.
    1. Unconditionally repayable contributions are contributions that must be repaid without qualification. These contributions are provided by the Agency with a no interest clause and are recorded on the Statement of Financial Position as loans at their nominal value. The present value of these contributions is not estimated, since insufficient conditions of a concessionary nature are attached to them. An estimated allowance for uncollectibility is also recorded.
    2. Conditionally repayable contributions are contributions, 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 which time they are then recorded as a receivable and a reduction in transfer payment expenses. An estimated allowance for uncollectibility is recorded.
    3. Collections on Repayable Contributions amounted to $34,379K in Fiscal Year 2006-2007 ($29,223K in 2005-2006).
  9. 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. Doubt is calculated on the basis of past results. The Agency has written off $16,050K in Fiscal Year 2006-2007 for accounts deemed uncollectible and where all possible avenues of collection have been exhausted ($14,260K in 2005-2006). 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.
  10. 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.
  11. Tangible capital assets – All tangible capital assets and leasehold improvements having an initial cost of $5,000 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

    Computer hardware

    4 to 5 years

    Computer software

    3 to 6 years

    Other equipment

    5 to 10 years

    Motor vehicles

    5 to 8 years, depending on anticipated use

    Leasehold improvements

    Lesser of the remaining term of the lease or useful life of the improvement

    Assets under construction

    Once in service, in accordance with asset type



  12. 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 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 Economic Development Agency of Canada for the Regions of Quebec 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:


(in thousands of dollars)

2007

2006

Net cost of operations

330,877

299,269

Adjustments for items affecting net cost of operations but not affecting appropriations:

Add (Less):

services provided without charge

(6,100)

(5,957)

chargeback – Justice Canada expenses

(301)

(359)

amortization of tangible capital assets

(873)

(724)

doubtful debt expenses

(16,205)

(9,054)

adjustment of prepaid expenses

261

(6,877)

loss on disposal and write down of tangible capital assets

(3)

(8)

vacation pay and compensatory leave

(494)

(340)

employee severance benefits

(1,036)

(654)

revenues and repayment of prior year expenditures

1,504

929

contribution repayments

4,131

7,517

account payable adjustment

1,831

2,013

 

313,592

285,755

Adjustments for items not affecting cost of operations but affecting appropriations:

Add (Less):

acquisition of tangible capital assets

433

977

new loans

50,877

47,505

advances for training

(3)

(2)

Current year appropriations used

364,899

334,235


b) Appropriations available and used


(in thousands of dollars)

2007

2006

Appropriations available:

vote 1—Operating expenditures

45,735

46,638

vote 5—Grants and contributions

360,423

405,814

statutory amounts

5,117

5,793

 

411,275

458,245

Less:

appropriations available for future years

(7)

(25)

lapsed appropriations: Operating and Grants and contributions

(46,369)

(123,985)

Current year appropriations used

364,899

334,235


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


(in thousands of dollars)

2007

2006

Net cash provided by Government

329,316

334,140

Revenue not available for spending

51,937

46,390

 

381,253

380,530

Change in net position in the Consolidated Revenue Fund

variation in accounts receivable and advances

(496)

5,280

variation in accounts payable and accrued liabilities

(1,297)

(39,291)

other adjustments1

(14,561)

(12,284)

 

(16,354)

(46,295)

Current year appropriations used

364,899

334,235


Note:

1 This item is primarily explained by the allowance for doubtful accounts of $16,205K in 2007 (2006 – $9,054K).

4. Expenses

The following table presents details of expenses by category:


(in thousands of dollars)

2007

2006

Transfer payments

Non-repayable contribution payments

non-profit organizations

145,884

141,412

municipalities

91,311

85,721

industry

20,982

8,219

Conditionally repayable

industry

4,989

5,017

Billed repayments of prior year contributions

(4,131)

(7,517)

Subtotal

259,035

232,852

Doubtful debts

16,205

9,054

Total transfer payments

275,240

241,906

Operations

Salaries and employee benefits

41,422

42,284

Professional and special services

6,142

6,547

Rentals

4,508

4,297

Transportation and communications

2,585

2,663

Amortization

873

724

Equipment and furniture purchases

508

684

Information

685

660

Materials and supplies

283

329

Repairs and maintenance

92

70

Other

33

11

Loss on disposal of tangible capital assets

3

8

Total operating expenses

57,134

58,277

Total Expenses

332,374

300,183


5. Revenues

The following table presents details of revenues by category:


(in thousands of dollars)

2007

2006

Interest – accounts receivable

1,200

801

Miscellaneous revenues

297

113

Total revenues

1,497

914


6. Accounts Receivable and Advances

The following table presents details of accounts receivable and advances:


(in thousands of dollars)

2007

2006

Receivables from other Federal Government departments and agencies

739

292

Receivables from external parties

5,517

5,502

Employee advances

22

12

 

6,278

5,806

Less: Allowance for doubtful accounts on external receivables

5,137

5,228

Total

1,141

578


7. Loans Receivable

Loans receivable (unconditionally repayable contributions) are transfer payments made to eligible recipients for implementation of a project. The contribution agreement sets out stringent repayment arrangements which determine the date and amount of payments. Generally speaking, the repayment schedule is no more than five years in length, commencing no later than two years after the project completion date.


(in thousands of dollars)

2007

2006

Contributions repayable at beginning of period

287,824

278,239

New contributions paid

50,877

47,505

Repayments received and other credits (write-offs)

(46,297)

(37,920)

Contributions repayable at end of period

292,404

287,824

Allowance for uncollectibility

(135,173)

(134,992)

Total

157,231

152,832


8.Tangible Capital Assets


Capital asset class

Opening balance

Acquisitions
Disposals/
Transfers of work in progress
Closing balance

(in thousands of dollars)

Cost

Computer hardware

807

157

964

Computer software

2,485

40

290

2,815

Other equipment

167

167

Motor vehicles

505

(48)

457

Leasehold improvements

282

282

Development of Herms application – Programs

54

236

(290)

Total

4,300

433

(48)

4,685


Tangible Capital Assets (cont'd)


Opening balance

Amortization
Disposals
Closing balance

Net book value

Net book value

Accumulated amortization

2007

2006

309

148

457

507

498

1,070

569

1,639

1,176

1,415

12

21

33

134

155

213

59

37

235

222

292

92

76

168

114

190

54

1,696

873

37

2,532

2,153

2,604


Amortization expense for the year ended March 31, 2007 is $873K (2006 – $724K).

9. Employee benefits

  1. 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 2 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 Plan benefits and are indexed to inflation.

    Both the employees and the Agency contribute to the cost of the Plan. The 2006-2007 expense amounts to $3,747K ($4,208K in 2005-2006), which represents approximately 2.2 times the contributions by employees (2.6 times in 2005-2006).

    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.
  2. 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:

(in thousands of dollars)

2007

2006

Accrued benefit obligation, beginning of year

5,417

4,763

Expense for the year

1,547

942

Benefits paid during the year

(511)

(288)

Accrued benefit obligation, end of year

6,453

5,417


10. Contingent liability

Claims and litigation – A claim has been made against the Agency in the normal course of operations. Legal proceedings for a claim totalling $127,477 were still pending at March 31, 2007. Some of this potential liability 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. Since legal counsel are of the view that the Agency will not have to pay this sum, no expense was recorded in the financial statements.

11. Contractual Obligations

The nature of the Agency's activities can result in some multi-year obligations whereby the Agency will be obligated to make future payments. Significant contractual obligations that can be reasonably estimated are summarized as follows:


(in thousands of dollars)

2008

2009

2010

2011

2012 and thereafter

Total

Transfer payments

314,566

98,793

46,276

11,060

13,672

484,367

Loans and advances

49,323

20,082

4,391

2,637

76,433

Total

363,889

118,875

50,667

13,697

13,672

560,800


12. 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 which were obtained without charge from other Government departments as presented in Part (a).

  1. Services provided without charge – During the year the Agency received services without charge from other departments (accommodation, legal fees and the employer's contribution to the health and dental insurance plans). These services without charge have been recognized in the Agency's Statement of Operations as follows:


    (in thousands of dollars)

    2007

    2006

    Accommodation

    3,200

    3,148

    Employer's contribution to the health and dental insurance plans

    2,547

    2,602

    Legal services

    353

    207

    Total

    6,100

    5,957



    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.

  2. Payables and receivables outstanding at year-end with related parties:


    (in thousands of dollars)

    2007

    2006

    Accounts receivable with other Government departments and agencies

    739

    292

    Accounts payable to other Government departments and agencies

    375

    2,026


3.4 Response to Parliamentary Committees, audits and evaluations for Fiscal Year 2006-2007


Response to Parliamentary Committees

  • No recommendations were issued by any Parliamentary Committees concerning the Agency during FY 2006-2007.

Response to Auditor General of Canada reports, including reports from the Commissioner of the Environment and Sustainable Development

  • The Agency was not the subject of any Office of the Auditor General (OAG) audits during FY 2006-2007.
  • In her report tabled in the House of Commons on September 28, 2006, the Commissioner of the Environment and Sustainable Development indicated that the Agency ranked among departments which have taken steps to plan, implement and monitor implementation of government commitments with respect to sustainable development. For its actions, the Agency received the "satisfactory" rating from the Commissioner.

The Report of the Commissioner of the Environment and Sustainable Development is available on the Auditor General of Canada site at
www.oag-bvg.gc.ca/domino/reports.nsf/html/c20060904ce.html.


Previous reports from the Office of the Auditor General and the Office of the Commissioner are available on the OAG Web site at www.oag-bvg.gc.ca.


External audit by the Office of the Commissioner of Official Languages

  • The Office of the Commissioner of Official Languages (OCOL) published its annual report on May 15, 2007. This report presents Performance Report Cards for federal institutions with respect to official languages. The report card compares the Agency's performance with that of other federal agencies. In June 2006, the OCOL conducted an enquiry to assess the quality of counter and telephone services provided for the English-language minority in the Agency's bilingual-designated offices. The OCOL gave the Agency a "good" rating in terms of respect for linguistic duality.

The Agency's Performance Report Card is available on the OCOL site at www.ocol-clo.gc.ca/html/ced_dec_06_07_e.php



 


Internal audit reports approved for FY 2006-2007

Date of approval at Departmental Audit Committee

Reports

March 22, 2007

Audit of compliance with official language contractual requirements by designated Community Futures Development Corporations (CFDCs) and Business Development Centre (BDC)

March 22, 2007

Recipient audit – Softwood Industry and Community Economic Adjustment Initiative (SICEAI)

March 22, 2007

Audit of 2000 Canada-Quebec Agreement relative to the Infrastructure Works Program – Period ended March 31, 2005

March 22, 2007

Internal audit – Infrastructure Branch, Compliance with key project approval and contribution payment process controls, 2005-2006


Compliance with official language contractual requirements by designated CFDCs and BDC

This audit concluded that, overall, the audited CFDCs and BDC provide the public they serve with an acceptable level service in both official languages.

That being said, the Agency is conscious that there is room to improve the active offering of services to local official language minority communities, as well as relations with these communities.

The Agency has implemented action plans to that end. More specifically, it has taken steps to raise the awareness of the CFDCs and BDC concerned, and it has amended the agreements reached with them.

Recipient audit – Softwood Industry and Community Economic Adjustment Initiative (SICEAI)

The audit provided the Agency with reasonable assurance that the recipients of this initiative met all the important conditions of the contribution agreements.

However, the study revealed that it would be in the Agency's interest to track project files more closely, in order to ensure better monitoring of the contribution agreement clauses with respect to project deadlines (project start and end dates) and eligible costs.

The action plans developed in this area will enable the Agency to institute the necessary corrective measures when future short-term programs similar to the SICEAI are set up or when new programming is implemented.

Infrastructure Canada Program

The two audit reports on this program conclude that the systems and procedures put in place by the Agency with regard to implementation of this program are appropriate. Payments are also made in line with government standards. The auditors made no recommendations to the Agency.

The audit and evaluation of the Social Economy Initiative scheduled in 2006-2007 have been postponed to the next fiscal year. In fact, implementation of this initiative was not carried out as rapidly as planned.

Evaluation report

Comprehensive Evaluation Report:


www.dec-ced.gc.ca/Complements/Publications/
PublicationAgence-EN/Rap_Parlement_2006/index_en.html

Evaluation of the Sustainable Development Strategy 2003-2006:


http://www.dec-ced.gc.ca/Complements/Publications/
Strategie-FR/sdd_2003-2006/index_EN.html

Report to Parliament 2006 (Comprehensive Evaluation Report)

In line with a requirement enshrined in the Agency's enabling legislation, the Deputy Head of the Agency is required, every five years, to table in Parliament a comprehensive evaluation report on its activities. This report highlights the Agency's achievements since its enabling legislation took effect in October 2005, describes lessons learned, and presents the design and implementation plan for its main programs. The Agency tabled its first Comprehensive Evaluation Report in 2007. The following points emerge:

  • The Agency practises results-based management:
    buoyed by lessons learned from prior evaluations, the Agency ensures that its programs and management methods are increasingly results-based. The results targeted by its programs are now well defined, then translated into precise indicators. The Agency wants to be in a position, in the medium term, to specify the levels of results to be attained.
  • The Agency addresses development issues with an integrated approach:
    the Agency addresses economic development issues by means of a comprehensive, territorial, horizontal and participatory approach. It wishes to take into account both the economic, social, cultural and environmental dimensions of development. This enables it to take greater account of the fact that development needs and priorities are not the same from one region of Quebec to another.
  • The Agency has improved its accountability:
    the Agency is continuing its efforts to enhance the measurement, evaluation and reporting of the results of its intervention. Since departmental performance measurement depends on the Agency's capacity to access reliable, accurate data on the results and costs of its programs and activities, it has undertaken preparatory work for implementation of an effective, efficient performance information management system.

Evaluation of the Sustainable Development Strategy 2003-2006 (SDS)

The evaluation of the Agency's Sustainable Development Strategy 2003-2006 indicates that:

  • With regard to timeliness:
    • the SDS would gain from being deployed in line with a moderated approach reflecting the specific characteristics and needs of each region
    • the SDS should be configured so as to lead the Agency to exert a leverage effect on sustainable development in the regions, and to make a real difference on the environmental front when growth-generating projects are carried out by SMEs and NPOs.
  • With regard to implementation:
    • advisors could play a more proactive role in guiding promoters and coordinating their action if they had enhanced capability
    • a review should be conducted of the offering of services available within the framework of existing partnerships with federal departments and agencies, so as to draw on their expertise in sustainable development.
  • With regard to performance:
    • it is difficult for the Agency to obtain the data required to calculate the quantitative results achieved through productivity enhancement projects; to mitigate this problem, it should put collection and interpretation mechanisms in place for data with respect to sustainable development that are independent of the business offices
    • the Agency should improve the formulation of the targets presented in the external component of the SDS; it should also adapt more closely to its priorities the targets it sets itself in the internal component.

An evaluation of the Agency's main programs (IDEA-SME and RSI) was also conducted during the previous fiscal year, to prepare the Agency's program renewal. In 2006-2007, efforts were therefore focussed primarily on drawing up results-based management and accountability frameworks to be applied to the Agency's three new programs, and on preparing its next five-year evaluation plan.