2024-25 Departmental Plan - Future-Oriented Statement of Operations

Future-Oriented Statement of Operations (unaudited)

For the Year Ending March 31
(in thousands of dollars)

The accompanying notes form an integral part of the Future-Oriented Statement of Operations.

Notes to the Future-Oriented Statement of Operations (Unaudited)

1. Methodology and significant assumptions

The Future-Oriented Statement of Operations has been prepared based on government priorities and on the Atlantic Canada Opportunities Agency’s (ACOA) plans as described in its Departmental Plan.

The information in the forecast results for fiscal year 2023-24 is based on actual results as at September 30, 2023, and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for fiscal year 2024-25.

The main assumptions underlying the forecasts are as follows:

• The Agency’s activities are expected to return to pre-pandemic levels during fiscal year 2024-25.
• The numbers have been adjusted to account for initiatives related to COVID-19 and Hurricane Fiona, which are ending in 2023-24.
• Expenses and revenues, including the determination of amounts internal and external to the Government, are based on historical experience. The general historical pattern is expected to continue.
• Allowances for uncollectibility are based on historical experience.
• Interest rates used in the valuation of loans and the recognition of revenues increased by more than 2% between 2020-21 and 2023-24; however, it is anticipated that rates should start to stabilize in 2024-25.

2. Variations and changes to the forecast financial information

Although every attempt has been made to forecast final results for the remainder of 2023-24 and for 2024-25, actual results achieved for both years are likely to differ from the forecast information presented, and this variation could be material.

In preparing this Future-Oriented Statement of Operations, ACOA has made estimates and assumptions about the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are based on 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:

• the implementation of new collective agreements;
• economic conditions, which may affect both the amount of revenue earned and the collectibility of loans receivable;
• interest rates in effect at the time of issue, which will affect the net present value of non-interest-bearing loans; and
• 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, ACOA 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 of Canada’s accounting policies in effect for fiscal year 2022-23, and is 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 outlined below.

(a) Expenses

The Agency records expenses on an accrual basis.

Transfer payments are recorded as an expense in the year the transfer is authorized, and all eligibility criteria have been met by the recipient.

Other expenses are generally recorded when goods are received or services are rendered and include expenses related to personnel, professional and special services, repair and maintenance, utilities, materials and supplies, as well as amortization of tangible capital assets. Provisions to reflect changes in the value of assets or liabilities, such as provisions for bad debts, loans, investments, advances and inventory obsolescence, as well as utilization of inventories and prepaid expenses, and other are also included in other expenses.

(b) Revenues

Revenues from regulatory fees are recognized in the accounts based on the services provided in the fiscal year.

Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in which the related expenses are incurred.

Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

Revenues that are non-respendable are not available to discharge the Agency’s liabilities. Although the deputy head is expected to maintain accounting control, the deputy head has no authority over the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented as a reduction of the Agency’s gross revenues.

4.  Parliamentary authorities

The Agency is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the Agency 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, the Agency has 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 (in thousands of dollars)

(b) Authorities requested (in thousands of dollars)