Quarterly Financial Report — For the Quarter ended September 30, 2023

1. Introduction

This quarterly report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. This report should be read in conjunction with the 2023–24 Main Estimates and Supplementary Estimates. This quarterly report has not been subject to an external audit or review.

1.1 Authority, mandate and core responsibility

The Federal Economic Development Agency for Southern Ontario's (FedDev Ontario) mandate is to "strengthen southern Ontario's economic capacity for innovation, economic development and growth, and to promote a dynamic, inclusive and globally-competitive southern Ontario."

Details and additional information on FedDev Ontario's authorities, mandate and core responsibility can be found in Part II of the Main Estimates and FedDev Ontario's Departmental Plan for 2023–24.

1.2 Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes FedDev Ontario's spending authorities granted by Parliament and those used by FedDev Ontario, consistent with the Main and Supplementary Estimates for the 2023–24 fiscal year. This quarterly report has been prepared using a special-purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before money can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.

FedDev Ontario uses the full accrual method of accounting to prepare and present its annual financial statements that are part of its performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

1.3 FedDev Ontario's financial structure

FedDev Ontario manages its expenditures under two votes:

• Vote 1 – Net operating expenditures include the Agency's authorities related to salary and operating expenditures; and
• Vote 5 – Grants and Contributions include all authorities related to transfer payments.

Expenses under budgetary statutory authorities, for which payments are made under a law previously approved by Parliament and which are not part of the annual appropriations bills, include items such as the Government of Canada's portion of the employee benefit plan and Minister's motor car allowance.

2. Highlights of fiscal quarter and fiscal year-to-date (YTD) results

This section highlights the significant items that contributed to the net increase or decrease in authorities available for the year and actual expenditures for the quarter ended September 30, 2023.

2.1 Authorities analysis (Vote 1 – Operating, Vote 5 – Grants and Contributions and Statutory Authorities)

Total authorities and planned expenditures decreased to $432.8 million for the second quarter of fiscal 2023–24 compared to $702.1 million for fiscal year 2022–23, as illustrated in the "Statement of Authorities" table.

The net decrease of $269.3 million over last fiscal year relates to:

• $4.4 million decrease in Vote 1 (Operating Authorities);
• $264.3 million decrease in Vote 5 (Grants and Contributions Authorities); and
• $0.6 million decrease in statutory authorities.

Vote 1 – Operating Authorities

Total Vote 1 Operating Authorities available for use for the year ending March 31, 2024, amount to $37.7 million, compared to $42.1 million for fiscal year 2022–23, which is a net decrease of $4.4 million. This difference is attributed to the reduction of operating expenses as the Agency sunsets Budget 2021 recovery programming and transitions to pre-pandemic authority levels.

Vote 5 – Grants and Contributions

Total Vote 5 Grants and Contributions Authorities available for use in 2023–24 is

$390.9 million, compared to $655.2 million for fiscal year 2022-23, reflecting a net decrease of $264.3 million. This decrease relates to the completion of Budget 2021 initiatives to support economic recovery in southern Ontario.

Statutory Authorities

Total statutory authorities granted for use for the year ending March 31, 2024, amount to $4.2 million, compared to $4.7 million in 2022–23, which represents a net decrease of $0.5 million. This decrease in the authorities relates to the statutory employee benefits plan linked to the decreased operating (personnel) authorities provided to deliver on Budget 2021 programs.

Statement of Authorities

2.2 Expenditure analysis

Year-to-date expenditures as at September 30, 2023, totaled $146.6 million, a decrease of $44 million, compared to $190.6 million at September 30, 2022. The difference in spending is primarily attributed to the sunsetting of Budget 2021 initiatives, resulting in a decrease in transfer payments and corresponding reductions in operating expenditures.

Year-to-date Expenditures as at September 30, 2023

Budgetary expenditures in the second quarter of 2023–24 totaled $92 million, compared to $99.6 million in the same period of 2022–23, as illustrated in the "Second Quarter Budgetary Expenditures" chart. The net decrease of $7.6 million is attributed primarily to lower transfer payment expenditures related to Budget 2021 initiatives.

Vote 1 (Operating Expenditures)

Operating expenditures in the second quarter of 2023–24 were $9.4 million, compared to $9.7 million in the same period of 2022–23. The change in operating expenditures is primarily driven by a decrease of $0.3 million in salary expenditures. This difference is linked to the sunsetting of Budget 2021 initiatives and a return to pre-pandemic levels of operating authorities for FedDev Ontario.

Expenditures for Transportation and Communications in the second quarter of 2023–24 have increased by $92,000 compared to the second quarter of 2022–23. This reflects the ongoing transition to normal business activities post-pandemic.

Expenditures in other operating standard objects did not see material fluctuations.

Vote 5 (Grants and Contributions)

Spending on transfer payments was $81.5 million in the second quarter of 2023–24, compared to $88.8 million in the same quarter of 2022–23. The decrease in quarterly spending is primarily attributed to the sunsetting of Budget 2021 initiatives.

Statutory Authorities

Spending through statutory authorities was $1 million in the second quarter of 2023–24, compared to $1.2 million in the same quarter of 2022–23. This decrease in expenditures is attributed to reduced costs for employee benefit plan contributions, related to decreased salary authorities.

Second Quarter Budgetary Expenditures (Year-To-date)

3. Risks and uncertainties

In 2023–24, FedDev Ontario will be winding down the suite of Budget 2021 initiatives, returning to its core of innovation-based initiatives and smaller national programs. Mounting macroeconomic pressures, uncertainty around potential economic slowdowns and impacts of interest rate increases have the potential to impact the capacity of recipients to deliver on funded projects.

4. Significant changes in relation to operations, personnel and programs

After delivering more than $496 million for the Regional Relief and Recovery Fund (RRRF) and over $600 million in Budget 2021 initiatives, FedDev Ontario is returning to pre-pandemic reference levels. Over the course of the 2023–24 fiscal year, the Agency will be transitioning to operational and staffing levels that reflect this lower level of grants and contributions programming.

Approval by Senior Officials