Financial statements as of March 31, 2016

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About this publication

Publication author : Canada Economic Development for Quebec regions

Publish date : November 21, 2016

Summary :

This report presents the Agency’s financial statements as of March 31, 2016.

Table of Contents

  1. Statement of Management Responsibility Including Internal Control Over Financial Reporting
  2. Statement of Financial Position (Unaudited) as at March 31
  3. Statement of Operations and Departmental Net Financial Position (Unaudited) for the Year Ended March 31
  4. Statement of Change in Departmental Net Debt (Unaudited) for the Year Ended March 31
  5. Statement of Cash Flows (Unaudited) for the Year Ended March 31
  6. Notes to the Financial Statements (Unaudited) for the Year Ended March 31

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, 2016, and all information contained in these statements rests with the management of Canada Economic Development for Quebec Regions (CED). These financial statements have been prepared by management using the Government’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 management’s best estimates and judgment, and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of CED’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in CED’s Departmental Performance Report, is consistent with these financial 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.

Management 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 CED 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 on-going process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

CED is subject to periodic Core Control Audits performed by the Office of the Comptroller General and uses the results of such audits to comply with the Treasury Board Policy on Internal Control.

A Core Control Audit was performed in 2012-2013 by the Office of the Comptroller General of Canada (OCG). The Audit Report and related Management Action Plan are posted on the departmental web site.

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

________________________________________
Manon Brassard
President
Montreal, Canada
________________________________________
Marc Lemieux, MA, MBA, CPA, CMA
Chief Financial Officer

________________________________________
Date

Statement of Financial Position (Unaudited) as at March 31

Statement of Financial Position (Unaudited)
As at March 31
(in thousands of dollars)
2016 2015
Liabilities
Accounts payable and accrued liabilities (note 4) 41,724 48,140
Vacation pay and compensatory leave 1,497 1,357
Employee future benefits (note 5) 1,810 1,888
Total gross liabilities 45,031 51,385
Liabilities held on behalf of Government
Accounts payable and accrued liabilities (note 4) (17,850) (15,831)
Total liabilities held on behalf of Government (17,850) (15,831)
Total net liabilities 27,181 35,554
Financial assets
Due from Consolidated Revenue Fund 22,980 31,908
Accounts receivable and advances (note 6) 2,971 985
Loans receivable (note 7) 332,655 283,845
Total gross financial assets 358,606 316,738
Financial assets held on behalf of Government
Accounts receivable and advances (note 6) (2,075) (576)
Loans receivable (note 7) (332,655) (283,845)
Total financial assets held on behalf of Government (334,730) (284,421)
Total net financial assets 23,876 32,317
Departmental net debt 3,305 3,237
Non-financial assets
Prepaid expenses 184 141
Tangible capital assets (note 8) 938 940
Total non-financial assets 1,122 1,081
Departmental net financial position (2,183) (2,156)

Contractual obligations (note 9)

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

___________________________________________
Manon Brassard
President
Montreal, Canada
___________________________________________
Marc Lemieux, MA, MBA, CPA, CMA
Chief Financial Officer

________________________________________
Date

Statement of Operations and Departmental Net Financial Position (Unaudited) for the Year Ended March 31

Statement of Operations and Departmental Net Financial Position (Unaudited)
For the Year Ended March 31
(in thousands of dollars)
2016
Planned Results
2016 2015
Expenses
Business Development 63,064 47,848 79,123
Regional Economic Development 31,846 31,172 36,275
Strengthening Community Economies 57,674 45,973 50,317
Internal services 23,634 19,969 19,573
Expenses incurred on behalf of Government (19,124) 23,242 (33,841)
Total expenses 157,094 168,204 151,447
Revenues
Interest revenues 576 95 174
Miscellaneous revenues 132 35 120
Revenues earned on behalf of Government (708) (130) (294)
Total revenues 0 0 0
Net cost of operations before government funding and transfers 157,094 168,204 151,447
Government funding and transfers
Net cash provided by Government 171,723 145,253
Change due from Consolidated Revenue Fund (8,928) 1,928
Services provided without charge by other government departments (note 10a) 5,385 5,449
Transfer of the transition payments for implementing salary payments in arrears note 11) (3) (974)
Net cost of operations after government funding and transfers 27 (209)
Departmental net financial position – Beginning of year (2,156) (2,365)
Departmental net financial position – End of year (2,183) (2,156)

Segmented information (note 12)

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

Statement of Change in Departmental Net Debt (Unaudited) for the Year Ended March 31

Statement of Change in Departmental Net Debt (Unaudited)
For the Year Ended March 31
(in thousands of dollars)
2016 2015
Net cost of operations after government funding and transfers 27 (209)
Change due to tangible capital assets
Acquisition of tangible capital assets 321 556
Amortization of tangible capital assets (note 8) (295) (273)
Proceeds from disposal of tangible capital assets (28) (1)
Net (loss) or gain on disposal of tangible capital assets including adjustments 0 (2)
Total change due to tangible capital assets (2) 280
Change due to prepaid expenses 43 (10)
Net increase (decrease) in departmental net debt 68 61
Departmental net debt – Beginning of year 3,237 3,176
Departmental net debt – End of year 3,305 3,237

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

Statement of Cash Flows (Unaudited) for the Year Ended March 31

Statement of Cash Flows (Unaudited)
For the Year Ended March 31
(in thousands of dollars)
2016 2015
Operating activities
Net cost of operations before government funding and transfers 168,204 151,447
Non-cash items:
Amortization of tangible capital assets (note 8) (295) (273)
Loss on disposal of tangible capital assets 0 (2)
Services provided without charge by other government departments (note 10a) (5,385) (5,449)
Transition payments for implementing salary payments in arrears (note 11) 3 974
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances 487 (8)
Increase (decrease) in prepaid expenses 43 (10)
Decrease (increase) in accounts payable and accrued liabilities 8,435 (1,919)
Decrease (increase) in vacation pay and compensatory leave (140) 201
Decrease (increase) in future employee benefits 78 (263)
Cash used in operating activities 171,430 144,698
Capital investing activities
Acquisition of tangible capital assets (note 8) 321 556
Proceeds from disposal of tangible capital assets (28) (1)
Cash used in capital investing activities 293 555
Net cash provided by Government of Canada 171,723 145,253

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

Notes to the Financial Statements (Unaudited) for the Year Ended March 31

Notes to the Financial Statements (Unaudited)
For the Year Ended March 31

1. Authorities and objectives

Under the Economic Development Agency of Canada for the Regions of Quebec (CED) Act, which came into force on October 5, 2005, the mission of CED is to promote the long-term economic development of the regions of Quebec by according special attention to those regions where slow economic growth is prevalent or where opportunities for productive employment are inadequate. In carrying out its mission, CED takes measures to promote co-operation and complementarity with Quebec and the communities in Quebec.

Thus, CED aims to build stronger communities and strengthen the competitiveness of enterprises and regions of Quebec and is encapsulated in a single strategic result: A competitive and diversified economy for the regions of Quebec. To achieve this strategic outcome, CED has four programs:

  • Business Development: This program is designed to support development of enterprises throughout their life cycle so as to enhance Quebec’s economic growth. Enterprises are recognized as generating a major share of economic activity and job creation. CED’s aim is to foster the emergence of new businesses and the next generation of entrepreneurs. Its aim is also to enhance the competitiveness of existing businesses and help to ensure their survival by improving their performance through the development of production, innovation, commercialization and export capacities.

  • Regional Economic Development: The purpose of this program is to support the economic development of the various regions in order to increase Quebec’s economic growth. The regions of Quebec are not homogeneous and face different circumstances, with issues, challenges and strengths particular to their region. The regions generate prosperity, and their participation in the economy is essential for Quebec’s economic growth. CED supports the strengthening of their economic base by encouraging stakeholder engagement in economic development and stimulating investment in all regions of Quebec.

  • Strengthening Community Economies: In addition to its regular programs, CED is called upon to develop, administer and implement national programs or temporary, targeted initiatives intended to strengthen community economies and increase Quebec’s economic growth. CED supports the economic development of rural communities and ensures the sound and effective management of infrastructure programs in Quebec. CED also supports economic activity in Quebec communities experiencing economic shocks or where there are major economic development issues or promising opportunities for development.

  • Internal Services: Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically for a program. They ensure greater efficiency in program delivery and thus contribute to providing high quality services for Canadians.

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 Canadian public sector accounting standards.

Significant accounting policies are as follows:

  1. Parliamentary authorities - CED is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to CED do 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 Statements of Operations included in the 2015-2016 Report on Plans and Priorities. 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 2015-2016 Report on Plans and Priorities.

  2. Net Cash Provided by Government – CED operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by CED is deposited to the CRF, and all cash disbursements made by CED 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.

  3. Amounts due from 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 CED is entitled to draw from the CRF without further authorities to discharge its liabilities.

  4. Revenues - Revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place, 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 when received. Other revenues consist of other fees and gains on the disposal of capital and non-capital assets.

    Revenues that are non-respendable are not available to discharge CED’s liabilities. While the Deputy Minister is expected to maintain accounting control, she has no authority regarding 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 in reduction of the entity’s gross revenues.

  5. Expenses - Expenses are recorded on the accrual basis:

    • Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met all eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses 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. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.
    • 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, employer contributions 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 pension plan administered by the Government. CED’s contributions to the Plan are charged to expenses in the year incurred and represent CED’s total obligation to the Plan. CED’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, the Plan's sponsor.
    2. Severance benefits: Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. 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 receivable are stated at the lower of cost and net recoverable value. The present value of these contributions is not estimated, since insufficient conditions of a concessionary nature are attached to them. Transfer payments that are unconditionally repayable are recognized as loans receivable. A valuation allowance is recorded for accounts and loans receivable where recovery is considered uncertain.

  8. 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. CED 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
    Computer hardware
    3 to 5 years
    Computer software
    3 years
    Other equipment
    5 years
    Motor vehicles
    6 years
    Leasehold improvements
    Lesser of the remaining term of lease or useful life of the improvement.
    Assets under construction are recorded in the applicable capital asset class in the year that they become available for use and are not amortized until they become available for use.

  9. Measurement uncertainty – The preparation of these financial statements 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 allowances for doubtful accounts, the liability for employee future 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 authorities

CED 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, CED has different net results of operations for the year on a government funding basis than on an accrual accounting basis. These differences are reconciled in the following tables:

a) Reconciliation of net cost of operations to current year authorities used
(in thousands of dollars)
2016 2015
Net cost of operations before government funding and transfers 168,204 151,447
Adjustments for items affecting net cost of operations but not affecting authorities:
Services provided without charge by other government departments (5,385) (5,449)
Amortization of tangible capital assets (295) (273)
Loss on disposal of tangible capital assets (0) (2)
Decrease (increase) in vacation pay and compensatory leave (140) 201
Decrease (increase) in employee future benefits 78 (263)
Repayment of contributions and previous years’ expenditures 5,140 4,974
Other (254) 12,176
Total items affecting net cost of operations but not affecting authorities (856) 11,364
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets (note 8) 321 556
Increase (decrease) in prepaid expenses 43 (10)
New loans (note 7) 91,488 89,566
Transition payments for implementing salary payments in arrears (note 11) 3 974
Other (6) 1
Total items not affecting net cost of operations but affecting authorities 91,849 91,087
Current year authorities used 259,197 253,898
b) Authorities provided and used (in thousands of dollars)
Authorities provided and used 2016 2015
Authorities provided:
Vote 1-Operating expenditures 40,162 40,344
Vote 5-Grants and contributions 221,433 212,168
Statutory amounts 4,113 4,262
Total 265,708 256,774
Less:
Authorities available for use in future years (42) (1)
Lapsed: Operating and Grants and contributions (6,469) (2,875)
Current year authorities used 259,197 253,898

4. Accounts payable and accrued liabilities

The following table presents details of CED’s accounts payable and accrued liabilities :
Accounts payable and accrued liabilities (in thousands of dollars) 2016 2015
Accounts payable – Other government departments and agencies 5,892 8,704
Accounts payable – External parties 2,998 3,507
Total accounts payable 8,890 12,211
Accrued liabilities 32,834 35,929
Total gross accounts payable and accrued liabilities 41,724 48,140
Accounts payable on behalf of Government (17,850) (15,831)
Net accounts payable and accrued liabilities 23,874 32,309

5. Employee future benefits

  1. Pension benefits: CED’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 Plan benefits and they are indexed to inflation.

    Both the employees and CED contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to 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 2015-2016 expense amounts to $2,805 thousand ($2,901 thousand in 2014-2015). For Group 1 members, the expense represents approximately 1.25 times (1.41 times in 2014-2015) the employee contributions and, for Group 2 members, approximately 1.24 times (1.39 times in 2014-2015) the employee contributions.

    CED’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: CED provides severance benefits to its employees based on eligibility, years of service and salary at termination of employment. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, measured as at March 31, is as follows:

    As part of collective agreement negotiations with certain employee groups, and changes to conditions of employment for executives and certain non-represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.
Severance benefits (in thousands of dollars) 2016 2015
Accrued benefit obligation - Beginning of year 1,888 1,625
Expense for the year 159 811
Benefits paid during the year (237) (548)
Accrued benefit obligation - End of year 1,810 1,888

6. Accounts receivable and advances

The following table presents details of CED’s accounts receivable and advances balances:
Accounts receivable and advances (in thousands of dollars) 2016 2015
Receivables – Other government departments and agencies 889 396
Receivables – External parties 6,503 18,922
Employee advances 7 13
Subtotal 7,399 19,331
Allowance for doubtful accounts on receivables from external parties (4,428) (18,346)
Gross accounts receivable 2,971 985
Accounts receivable held on behalf of Government (2,075) (576)
Net accounts receivable 896 409

Amounts collected in respect to conditionally repayable contributions totalled $5,283 thousand for the 2015-2016 fiscal year ($5,073 thousand in 2014-2015). CED wrote off a total of $11,679 thousand in the 2015-2016 fiscal year for accounts deemed uncollectible ($667 thousand in 2014-2015).

7. Loans receivable

Loans (unconditionally repayable contributions) are transfer payments made to eligible recipients to carry out a project. The contribution agreement sets out strict conditions for repayment which determine the dates and amounts of payments. In general, the repayment schedule does not exceed five years, beginning no later than 24 to 48 months after the project completion date. The amounts collected in respect to unconditionally repayable contributions totalled $63,535 thousand for the 2015-2016 fiscal year ($58,011 thousand in 2014-2015). CED wrote off a total of $3,845 thousand in 2015-2016 for accounts deemed uncollectible ($5,470 thousand in 2014-2015). All loans are held on behalf of Government, since the Deputy Head has no authority with regard to their disposal.

The following table presents the details of CED’s loans and transfer payment recoverable balances:
Loans (in thousands of dollars) 2016 2015
Repayable contributions at the beginning of the year 443,466 419,627
New contributions paid 91,488 89,566
Repayments received and other credits (67,474) (65,727)
Subtotal: Repayable contributions at year end 467,480 443,466
Less: Allowance for uncollectiblity (134,825) (159,621)
Total loans receivable 332,655 283,845

8. Tangible capital assets
(in thousands of dollars)

Capital Asset Class Cost
Opening Balance Acquisitions Adjustments (1) Disposals Closing Balance
Computer hardware 280 0 252 0 532
Computer software 4,476 147 55 0 4,678
Other equipment 68 6 0 0 74
Motor vehicles 535 101 0 (174) 462
Leasehold improvements 168 0 0 0 168
Assets under construction 307 67 (307) 0 67
Total 5,834 321 0 (174) 5,981

Tangible capital assets (con't)
(in thousands of dollars)

Capital Asset Class Accumulated Amortization Net Book Value
Opening Balance Amortization Adjustments (1) Disposals Closing Balance 2016 2015
Computer hardware 246 69 0 0 315 217 34
Computer software 4,238 138 0 0 4,376 302 238
Other equipment 57 7 0 0 64 10 11
Motor vehicles 249 61 0 (146) 164 298 286
Leasehold improvements 104 20 0 0 124 44 64
Assets under construction 0 0 0 0 0 67 307
Total 4,894 295 0 (146) 5,043 938 940

(1) Adjustments include assets under construction of $307 thousand that were transferred to other categories upon completion of the assets.

9. Contractual obligations

The nature of CED’s activities result in some large multi-year contracts and obligations whereby CED 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:

Contractual obligations
(in thousands of dollars)
2017 2018 2019 2020 2021 and thereafter Total
Transfer payments 193,078 102,094 46,648 9,377 37,453 388,650
Operations and maintenance 4,597 1,987 1,878 1,876 0 10,338
Total 197,675 104,081 48,526 11,253 37,453 398,988

10. Related party transactions

CED is related as a result of common ownership to all government departments, agencies and Crown corporations. CED enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, CED received services which were obtained without charge from other government departments as disclosed below.

a) Common services provided without charge by other government departments

During the year, CED received services without charge from certain common service organizations, related to accommodation, legal services and the employer’s contribution to the health and dental insurance plans. These services, provided without charge, have been recorded in CED’s Statement of Operations and Departmental Net Financial Position as follows:

Common services (in thousands of dollars) 2016 2015
Employer’s contribution to the health and dental insurance plans 2,549 2,399
Accommodation 2,607 2,796
Legal Services 229 254
Total 5,385 5,449

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 the 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 the Department’s Statement of Operations and Departmental Net Financial Position. The costs of information technology infrastructure services provided by Shared Services Canada, following the transfer of responsibilities in November 2011 and April 2013, are also not included in the Department’s Statement of Operations and Departmental Net Financial Position.

b) Administration of programs on behalf of other government departments

Under memorandums of understanding signed with Infrastructure Canada (INFC), CED administers and delivers infrastructure programs through federal-provincial agreements with the province of Quebec. Expenses related to federal contributions for these agreements are reflected in the financial statements of INFC and not those of CED.

Among the agreements covered by these memorandums of understanding are those of the Building Canada Fund (BCF). During the year, CED incurred expenses of $24,279 thousand ($29,285 thousand in 2014-2015). To administer these agreements, CED receives additional operating funds in its own authorities through budget processes, and these expenses are included in these financial statements.

c) Other transactions with related parties

Expenses (in thousands of dollars) 2016 2015
Expenses - Other government departments and agencies 1,512 1,646

The expenses disclosed in section (c) do not include common services provided free of charge, which are disclosed in section (a).

11. Transfer of the transition payments for implementing salary payments in arrears

The Government of Canada implemented salary payments in arrears in 2014-2015. As a result, a one-time payment was issued to employees and will be recovered from them in the future. The transition to salary payments in arrears forms part of the transformation initiative that replaces the pay system and also streamlines and modernizes the pay process. This change to the pay system had no impact on the expenses of CED. However, it did result in the use of additional spending authorities by CED. Prior to year-end, the transition payments for implementing salary payments in arrears were transferred to a central account administered by Public Services and Procurement Canada, who is responsible for the administration of the Government pay system.

12. Segmented information (in thousands of dollars)

Presentation by segment is based on CED’s Program Alignment Architecture. 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 main programs, by major object of expense and by major type of revenue. The segment results for the period are as follows:

Expenses Business Development Regional Economic Development Strengthening Community Economies Internal services Total 2015 Total
Transfer payments
Non-repayable payments
Non-profit organizations 42,758 28,158 39,151 0 110,067 109,982
Other levels of government 0 1,871 9,371 0 11,242 5,686
Industry 2,638 1,242 1,626 0 5,506 2,227
Conditional repayments
Industry (2,520) (2,686) (1,717) 0 (6,923) (381)
Other (12,609) (40) (8,306) (20,955) 21,732
Subtotal 30,267 28,545 40,125 0 98,937 139,246
Expenses incurred on behalf of Government 13,464 1,365 8,413 0 23,242 (33,841)
Total – Transfer payments 43,731 29,910 48,538 0 122,179 105,405
Operating expenses
Salaries and employee benefits 13,719 2,286 5,138 14,697 35,840 35,950
Professional and special services 2,243 92 166 2,400 4,901 4,937
Accommodation 1,067 157 351 1,187 2,762 2,915
Travel and communications 390 65 137 378 970 860
Purchases of equipment and furniture 7 1 2 369 379 307
Amortization 39 6 13 237 295 273
Information 64 11 22 203 300 315
Supplies and procurement 42 7 16 82 147 138
Repairs and maintenance 9 2 3 14 28 23
Loss on disposal of tangible capital assets 0 0 0 0 0 2
Other 1 0 0 402 403 322
Total – Operating expenses 17,581 2,627 5,848 19,969 46,025 46,042
Total - Expenses 61,312 32,537 54,386 19,969 168,204 151,447
Revenues
Interest revenues 78 0 17 0 95 174
Miscellaneous revenues 30 2 3 0 35 120
Revenues earned on behalf of Government (108) (2) (20) 0 (130) (294)
Total - Revenues 0 0 0 0 0 0
Net cost from continuing operations 61,312 32,537 54,386 19,969 168,204 151,447

13. Comparative information

Comparative figures have been reclassified to conform to the current year's presentation.

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