Federal Economic Development Agency for Southern Ontario Financial Statements (Unaudited) as at March 31, 2025

Statement of Management Responsibility Including Internal Control over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2025, and all information contained in these statements, rests with the management of the Federal Economic Development Agency for Southern Ontario (FedDev Ontario). These financial statements have been prepared using the Government of Canada’s accounting policies, which are based on Canadian public sector accounting standards.

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 best estimates and judgement, and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, FedDev Ontario maintains a set of accounts that provides a centralized record of the Agency’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in FedDev Ontario's Departmental Results Report, is consistent with these statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting (ICFR) designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities, and policies.

FedDev Ontario seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training, and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the Agency; and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.

The system of ICFR is designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, to assess the effectiveness of associated key controls and to make any necessary adjustments. A risk-based assessment of the system of ICFR for the year ended March 31, 2025, was completed in accordance with the Treasury Board Policy on Financial Management, and the results and action plans are summarized in the annex.

The financial statements of FedDev Ontario have not been audited.

Notes to the Financial Statements as at March 31, 2025

1. Authority and objectives

The Federal Economic Development Agency for Southern Ontario (FedDev Ontario) operates under the authority that was established in 2009 as a separate organization under Schedule I.1 of the Financial Administration Act to support economic growth in southern Ontario through the delivery of federal programs and services.

FedDev Ontario's core mandate is to strengthen southern Ontario's economic capacity for innovation, economic development and growth. In support of this, the Agency will continue to drive economic growth, innovation and community diversification, with a focus on scaling up businesses, building innovation ecosystems and supporting community development in the region, and ultimately, to promote a dynamic, inclusive and globally-competitive southern Ontario.

FedDev Ontario is a reliable, long-term and trusted partner to southern Ontario's businesses and communities. It supports the government's overall economic agenda in a manner that responds to the opportunities and challenges of the southern Ontario economy.

FedDev Ontario delivers ongoing regional funding streams that are designed to support the commercialization of new technologies, business scale-up and expansion, technology adoption and adaptation, and community diversification and development. The Agency's investments target opportunities created by innovation and inclusivity, positioning the region to become a leader in the shift to a green and sustainable economy.

In addition, FedDev Ontario plays an important role as a federal delivery agent for national programs. The Community Futures Program supports rural communities as they develop and sustain their local economies. The Economic Development Initiative supports Francophone and bilingual organizations in official language minority communities. Black entrepreneurs and organizations are supported through the Black Entrepreneurship Program. The Agency also delivers targeted and temporary national initiatives in southern Ontario that respond to government priorities. These include the Regional Quantum Initiative (RQI) and the Tourism Growth Program (TGP). These are key examples of the regional development agencies' (RDAs') ability to respond nimbly to emerging regional needs and priorities.

With its headquarters in Waterloo and offices in Toronto, Peterborough and Ottawa, FedDev Ontario has a presence across southern Ontario and facilitates collaboration with a broad range of stakeholders, including post-secondary institutions, not-for-profit organizations, municipal governments and the Ontario government, Indigenous communities and private sector firms. FedDev Ontario plays an important role in convening key regional stakeholders to seek a common vision and to encourage the development of coordinated plans. In addition, through ongoing collaboration and dialogue with other federal departments and agencies, FedDev Ontario reflects the perspectives of southern Ontario in decision-making at the federal level and provides on-the-ground support in implementing key government priorities.

2. Summary of significant accounting policies

These financial statements have been prepared using the government’s accounting policies stated below, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from the Canadian public sector accounting standards.

 

Significant accounting policies are as follows:

 

a) Parliamentary authorities 

FedDev Ontario is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to FedDev Ontario does not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament.

Note 3 provides a reconciliation between the bases of reporting. The planned results amounts in the “Expenses” and “Revenues” sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-oriented Statement of Operations included in the 2024–25 Departmental Plan. Planned results are not presented in the “Government funding and transfers” section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2024–25 Departmental Plan.

b) Net cash provided by government

FedDev Ontario operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by FedDev Ontario is deposited to the CRF, and all cash disbursements made by FedDev Ontario 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 government.

c) Amounts due from or to the CRF

Amounts due from or to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that FedDev Ontario is entitled to draw from the CRF without further appropriations to discharge its liabilities.

d) Revenues and deferred revenues

Revenues are comprised of revenues earned from non-tax sources. They include exchange transactions where goods or services are provided for consideration where a performance obligation exists, and non-exchange transactions where no performance obligations exist to provide a good or service. These transactions can be recurring and non-recurring in nature. Recurring transactions are viewed as ongoing, routine activities that form part of the normal course of operations and can be used to indicate if they can be reasonably expected to be earned again in future years.

Deferred revenue consists of amounts received in advance of the delivery of goods and rendering of services that will be recognized as revenues in a subsequent fiscal year as it is earned. Other revenues are recognized in the period the event giving rise to the revenues occurred.

Revenues that are non-respendable are not available to discharge FedDev Ontario’s liabilities. While the Deputy Head is expected to maintain accounting control, he or she has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are earned on behalf of the Government of Canada and are therefore presented as a reduction of FedDev Ontario’s gross revenues. Revenues earned on behalf of the government consist of the sale of services and gains on the sale of assets. These are recognized when earned.

e) Expenses

Transfer payments are recorded as an expense in the year the transfer is authorized, and all eligibility criteria have been met by the recipient. Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment. Services provided without charge by other government departments for accommodation and employer contributions to the health and dental insurance plans are recorded as operating expenses at their carrying value.

f) Employee future benefits

1. Pension benefits: Eligible employees participate in the Public Service Pension Plan (Public Service Superannuation Act), a multi-employer plan administered by the government. FedDev Ontario's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. FedDev Ontario’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. Severence benefits: The accumulation of severance benefits for voluntary departures ceased for applicable employee groups. The remaining obligation for employees who did not withdraw benefits is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the government as a whole.

g) Financial instruments

A contract establishing a financial instrument creates, at its inception, rights and obligations to receive or deliver economic benefits. The financial assets and financial liabilities portray these rights and obligations in the financial statements. FedDev Ontario recognizes a financial instrument when it becomes a party to a financial instrument contract.

Financial instruments consist of accounts and loans receivable, and accounts payable and accrued liabilities.

All financial assets and liabilities are recorded at cost or amortized cost. Any associated transaction costs are added to the carrying value upon initial recognition. For financial instruments measured at amortized cost, the effective interest method is used to determine interest revenue or expense.

Accounts and loans receivable are initially recorded at cost, and, where necessary, are discounted to reflect their concessionary terms. Concessionary terms of loans include cases where loans are made on a long-term, low interest or interest-free basis or include forgiveness clauses. Unconditionally repayable contributions are recognized as loans receivable. When necessary, an allowance for valuation is recorded to reduce the carrying value of accounts and loans receivable to amounts that approximate their net recoverable value. Loans receivable are subsequently measured at amortized cost.

h) Non-financial assets

The costs of acquiring land, buildings, equipment and other capital property are capitalized as tangible capital assets and, except for land, are amortized to expense over the estimated useful lives of the assets, as described in note 8. All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Tangible capital assets do not include immovable assets located on reserves as defined in the Indian Act, works of art, museum collection and Crown land to which no acquisition cost is attributable.

i) Contingent liabilities

Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, a provision is accrued, and expense recorded to other expenses. 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) Measurement uncertainty

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported and disclosed amounts of assets, liabilities, revenues and expenses reported in the financial statements and accompanying notes at March 31. The estimates are based on facts and circumstances, historical experience, general economic conditions and reflect the government’s best estimate of the related amount at the end of the reporting period. The most significant items where estimates are used are contingent liabilities, the liability for employee future benefits, the useful life of tangible capital assets and any valuation allowances for accounts and loans receivable.

Actual results could differ significantly 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 authorities

FedDev Ontario receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Departmental Net Financial Position and the Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current, or future years. Accordingly, FedDev Ontario 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:

4. Accounts payable and accrued liabilities

The following table presents details of FedDev Ontario’s accounts payable and accrued liabilities:

5. Employee future benefits

a) Pension benefits

FedDev Ontario’s employees participate in the Public Service Pension Plan (the “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/Québec Pension Plans benefits and they are indexed to inflation.

Both the employees and FedDev Ontario contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Canada’s Economic Action Plan 2012, employee contributors have been divided into two groups—Group 1 relates to existing plan members as of December 31, 2012, and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.

The 2024–25 expense amounts to $4,107 thousand ($4,556 thousand in 2023–24). For Group 1 members, the expense represents approximately 1.02 times (1.02 times in 2023–24) the employee contributions and, for Group 2 members, approximately 1.00 times (1.00 times in 2023–24) the employee contributions.

FedDev Ontario'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

Severance benefits provided to FedDev Ontario’s employees were previously based on an employee’s eligibility, years of service and salary at termination of employment. However, since 2011, the accumulation of severance benefits for voluntary departures ceased progressively for substantially all employees. Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service. By March 31, 2018, substantially all settlements for immediate cash out were completed. Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities.

6. Accounts receivable and advances

The following table presents details of FedDev Ontario’s accounts receivable and advances balances:

The following table provides an aging analysis of accounts receivable from external parties and the associated valuation allowances used to reflect their net recoverable value.

7. Loans receivable (repayable contributions)

The following table presents details of FedDev Ontario’s unconditional repayable contribution balances:

Unconditionally repayable contributions

Unconditionally repayable contributions are in substance loans aimed at stimulating economic development for assistance. FedDev Ontario’s unconditionally repayable contributions are non-interest bearing and have annual repayment terms of 5 to 15 years. An allowance of $172,170 thousand ($140,208 thousand as re-stated for 2023–24) has been recorded.

The following table provides an aging analysis of loans receivable that are either past due or impaired and the associated valuation allowances used to reflect their net recoverable value:

8. Risk management

FedDev Ontario has exposure to the following risks from its use of financial instruments: credit risk and liquidity risk.

(a) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss.

FedDev Ontario’s maximum exposure to credit risk at March 31, 2025, and March 31, 2024, is the carrying amount of its financial assets.

FedDev Ontario has concentrations of credit risk related to accounts receivable with external parties. This mostly relates to the risk that salary overpayments may not be recoverable from current and former employees, or that such balances may become statute-barred for collection due to their age. An analysis of the age of these financial assets and the associated valuation allowances used to reflect these accounts at their net recoverable value is disclosed in note 6.

FedDev Ontario intentionally takes on counterparty risk related to certain loans receivable with concessionary terms in order to support economic development in southern Ontario. Valuation allowances are applied accordingly to reflect these accounts at their net recoverable value, as explained in Note 7.

(b) Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting its obligations associated with financial liabilities.

As the funding for FedDev Ontario’s financial liabilities is drawn from the Consolidated Revenue Fund, its exposure to liquidity risk is fully mitigated.

9. Tangible capital assets

All tangible capital assets having an initial cost of $10,000 or more are recorded at their acquisition cost. FedDev Ontario does not capitalize intangibles, works of art, and historical treasures that have cultural, aesthetic, or historical value, assets located on Indian reserves and museum collections.

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	7 years

10. Contractual obligations

The nature of FedDev Ontario’s activities can result in some large multi-year contracts whereby FedDev Ontario will be obligated to make future payments in order to carry out its transfer payment programs or when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

The contractual obligations for transfer payments for 2026 and beyond are related to projects under the Southern Ontario Prosperity Program, Community Futures Program, and the Regional Economic Growth through Innovation Program.

11. Contingent liabilities

In the normal course of its operations, FedDev Ontario becomes involved in various legal actions. 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 has been identified. As at March 31, 2025, FedDev Ontario has no contingent liabilities based on the legal assessment carried out by the Department of Justice of potential liability.

12. Related party transactions

FedDev Ontario is related as a result of common ownership to all government departments, agencies, and Crown corporations. FedDev Ontario enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, FedDev Ontario has an agreement with the Department of Innovation, Science and Economic Development related to the provision of information technology, finance and administration services. During the year, FedDev Ontario received common services that were obtained without charge from other government departments as disclosed below.

(a) Common services provided without charge by other government departments

In 2024–25, FedDev Ontario received services without charge from certain common service organizations, related to accommodation services and the employer’s contribution to the health and dental insurance plans. These services provided without charge have been recorded in FedDev Ontario’s Statement of Operations and Departmental Net Financial Position as follows (In thousands of dollars):

	2025	2024
Employer's contributions to the health and dental insurance plan	2,836	3,147
Accommodation	1,655	1,973
Total	4,491	5,119

The government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as payroll and cheque issuance services provided by Public Services and Procurement Canada and audit services provided by the Office of the Auditor General are not included in FedDev Ontario’s Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties (In thousands of dollars)

	2025	2024
Expenses – Other government departments and agencies	7,335	8,677

Expenses and revenues disclosed in (b) exclude common services provided without charge, which are already disclosed in (a).

13. Segmented information

Presentation by segment is based on FedDev Ontario’s Departmental Results Framework. The presentation by segment is based on the same accounting policies as described in the summary of significant accounting policies in note 2. The following table presents the expenses incurred and revenues generated for the core responsibility, by major object of expense and by major type of revenue. The segment results for the period are as follows (in thousands of dollars):

14. Adjustments to prior year’s results

In 2024–25, the Agency reviewed its accounting policies related to outstanding accounts receivable amounts related to loans receivable with the assistance of the Receiver General. The previous accounting treatment recorded loans receivable amounts as accounts receivable once a recipient was invoiced for outstanding loan amounts. An accounting policy change was made to reflect the continued treatment of these amounts as loans receivable once invoiced. The effects of this change will be applied retroactively and comparative information for 2023–24 has been re-stated.

There was also an error in the net accounts receivable in 2023–24 where the GST refundable balance owing from the Canada Revenue Agency was incorrectly included in receivables held on behalf of government. This has required a re-statement of the relevant financial statements and notes.

An error in the preparation of the 2023–24 statements with regard to the bad debt expense recorded under program area Economic development in southern Ontario. This has required a re-statement of the relevant financial statements and notes.

A reconciliation of the restatement for the significant financial statement line items follows:

Annex to the Statement of management responsibility, including internal control over financial reporting of Federal Economic Development Agency for Southern Ontario for fiscal year 2024–25

1. Introduction

In support of an effective system of internal control, the Federal Economic Development Agency for Southern Ontario (FedDev Ontario) conducted self-assessments of key control areas that were identified to be assessed in the 2024 to 2025 fiscal year. A summary of the assessment results and action plan is provided in section 2.

FedDev Ontario will assess all key control areas over a five-year period. The assessment plan is provided in section 3.

2. Assessment results for the 2024 to 2025 fiscal year

FedDev Ontario completed the assessment of key control areas as indicated in the following table. A summary of the results, action plans, and additional details are also provided.

Key control areas	Remediation required	Summary results and action plan
Pay administration	Yes	Six instances where documentation did not demonstrate compliance to controls; remedial actions to be addressed.
Financial management governance	No	Internal controls are functioning as intended; no action plan required.

With respect to the key control areas of pay administration and financial management governance, for the most part, controls were functioning well and formed an adequate basis for FedDev Ontario’s system of internal control. Six instances related to the lack of adequate documentation were identified and will be addressed by December 2025, as applicable.

3. Assessment plan

FedDev Ontario will assess the performance of its system of internal control by focusing on key control areas over a cycle of years as shown in the following table.

Key control areas	2024 to 2025 fiscal year	2025 to 2026 fiscal year	2026 to 2027 fiscal year	2027 to 2028 fiscal year	2028 to 2029 fiscal year
Pay administration
Financial management governance
Acquisition cards
Leave
Special financial authorities
Travel
Hospitality
Accountable advances
Delegation
Transfer payments
Contracting
Year-end payables
Receivables

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