Future-Oriented Statement of Operations For the Year Ending March 31, 2022

Notes to the Future-Oriented Statements of Operations (unaudited)

1. Methodology and Significant Assumptions

The Future-Oriented Statement of Operations has been prepared on the basis of government priorities and departmental plans as described in the Departmental Plan.

The information in the forecast results for fiscal year 2020–21 is based on actual results as at November 30, 2020 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2021–22 fiscal year.

During 2020–21 the Agency was provided with over $435 million in additional funding to deliver the Regional Relief and Recovery Fund (RRRF) in southern Ontario. This additional funding has impacted the estimates in this document, notably the 2020–21 forecast results via an increase in both authorities and expenditures. The RRRF provides liquidity support to businesses and organizations affected by the economic impacts of COVID-19, that are unable to access other federal relief measures, or require additional support.

Notwithstanding RRRF incremental funding, for FedDev Ontario's core operations the main assumptions underlying the forecasts are as follows:

• FedDev Ontario's activities will remain substantially the same as in the previous year.
• Expenses and revenues, including the determination of amounts internal and external to the government, are based on past experience. The general historical pattern is expected to continue.
• Allowances for uncollectible accounts are based on experience, but with the current environment, uncollectible amounts in general may increase. The general historical pattern is expected to continue
• Transfer payment spending is based on historical spending patterns and anticipated stakeholder requirements.

These assumptions are made as at November 30, 2020.

2. Variations and Changes to the Forecasted Financial Information

Although every attempt has been made to forecast final results for the remainder of 2020–21 and for 2021–22, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing this Future-Oriented Statement of Operations the Federal Economic Development Agency for Southern Ontario(FedDev Ontario) has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, and are continually evaluated.

Factors that could lead to material differences between the Future-Oriented Statement of Operations and the historical statement of operations include:

• Economic conditions may affect the collectability of loan receivables.
• Value of the Canadian dollar and its impact on the cost of imported goods.
• Implementation of new collective agreements.
• Other changes to the operating budget, such as new initiatives or technical adjustments later in the fiscal year.

After the Departmental Plan is tabled in Parliament, FedDev Ontario will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Results Report.

3. Summary of Significant Accounting Policies

The Future-Oriented Statement of Operations has been prepared using the Government's accounting policies that came into effect for the 2017–18 fiscal year and 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 Canadian public sector accounting standards.

Significant accounting policies are as follows:

Expenses

FedDev Ontario records expenses on an accrual basis.

Expenses for FedDev Ontario's operations are recorded when goods are received or services are rendered, including services provided without charge for accommodation, employee contributions to health and dental insurance plans, legal services and worker's compensation, which are recorded as expenses at their estimated cost. Vacation pay and compensatory leave, as well as severance benefits, are accrued and expenses are recorded as the benefits are earned by employees under their respective terms of employment.

Transfer payments are recorded as expenses when the recipients have met all the eligibility criteria and the transfers are authorized by March 31. In the case of transfers that do not form part of an existing program, the transfers are considered to be authorized 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.

Expenses also include provisions to reflect changes in the value of assets, including provisions for bad debt on accounts receivable, provision for valuation on loans, investments and advances and inventory obsolescence or liabilities, including contingent liabilities and environmental liabilities, to the extent the future event is likely to occur and a reasonable estimate can be made.
Expenses also include amortization of tangible capital assets, which are capitalized at their acquisition cost. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset.

4. Parliamentary Authorities

FedDev Ontario is financed by the Government of Canada through parliamentary authorities. Financial reporting of parliamentary authorities provided to FedDev Ontario differs from financial reporting according to generally accepted accounting principles because authorities are based mainly on cash flow requirements. Items recognized in the Future-Oriented Statement of Operations in one year may be funded through parliamentary authorities in prior, current, or future years. Accordingly, FedDev Ontario has a different net cost 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 requested authorities, and (b) Authorities requested.