ONTARIO MEDIA DEVELOPMENT CORPORATION AUDIT COMMITTEE MEETING

Transcription

1 1 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION AUDIT COMMITTEE MEETING Tuesday, September 5, 2017 OMDC Boardroom 175 Bloor Street East, South Tower, Suite 501 4:00 p.m. to 6:00 p.m. DRAFT AGENDA 1. Welcome B. Tohana 4:00 - Page # 2. OMDC Audited Financial Statements L. Bell / M. Martino & OAG Audit Findings Report [OAG] 4: In Camera meeting with OAG B. Tohana 4:35-4. OAG Post-audit Feedback Questionnaire P. Dervin 4: Approval of June 8, 2017 Minutes B. Tohana 4: Q Financial Report (Final) P. Dervin 4: Q4 Final vs Q4 Draft - Variance Schedules 7. Q Financial Report P. Dervin 5: Tax Credits Update J. Blitz 5: Electronic Payments Project Update R. Wells 5: Lease Renewal Update K. Thorne-Stone 5: Senior Management and Board Expense Summary Report [April 1, 2017 June 30, 2017] K. Thorne-Stone 5: Other Business B. Tohana 5:55 -

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14 14 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Statement of Financial Position as at March 31, ($ 000's) ($ 000's) ASSETS Cash and cash equivalents (Note 3) 22,506 27,741 Short-term investments (Note 3) 9,968 8,110 Accounts receivable Prepaid expenses Accrued interest Current assets 32,677 36,095 Capital assets (Note 4) LIABILITIES 32,970 36,415 Accounts payable and accrued liabilities (Note 5) 23,221 24,315 Due to the Province Current liabilities 23,614 24,665 DEFERRED REVENUE (Note 6) 3,780 2,213 ACCRUED EMPLOYEE BENEFITS OBLIGATION (Note 10) NET ASSETS Invested in capital assets Unrestricted 4,550 8,484 4,843 8,804 COMMITMENTS (Note 9) 32,970 36,415 The accompanying notes are an integral part of these statements. On behalf of the Board: Chair Member, Audit Committee

15 15 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Statement of Operations For the Year ended March 31, ($ 000's) ($ 000's) REVENUE Ministry of Tourism, Culture and Sport (Note 6) 41,623 42,405 Tax credit administrative fees 1,789 2,034 Prior year grants rescinded or recovered (Note 8) Return of investment under assistance programs Interest Other EXPENSES 44,388 45,747 Ontario Music Fund 15,245 13,469 Industry development initiatives 11,028 14,018 Operating expenses (Note 7) 10,834 10,955 Interactive Digital Media Fund 9,616 5,914 Toronto International Film Festival Group grants 1,330 1,375 Research initiatives ,349 46,108 Deficiency of revenue over expenses (3,961) (361) The accompanying notes are an integral part of these statements.

16 16 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Statement of Changes in Net Assets For the Year ended March 31, ($ 000's) 2016 ($ 000's) Invested in Capital Assets Unrestricted Total Total Balance, beginning of year 320 8,484 8,804 9,165 Deficiency of revenue over expenses (165) (3,796) (3,961) (361) Investment in capital assets 138 (138) - - Balance, end of year 293 4,550 4,843 8,804 The accompanying notes are an integral part of these statements.

17 17 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Statement of Cash Flows For the Year ended March 31, ($ 000's) ($ 000's) Cash flows from operating activities Deficiency of revenue over expenses (3,961) (361) Amortization of capital assets (3,796) (65) Changes in non-cash working capital Accounts receivable 37 (63) Prepaid expenses 7 (5) Accrued interest (3) 54 Current liabilities (1,051) 5,946 Deferred revenue 1,567 1,086 Accrued employee benefits obligation - (284) 557 6,734 Net cash (used in) from operating activities (3,239) 6,669 Capital Activities Purchase of capital assets (138) (213) Investing Activities Purchase of short-term investments (41,381) (19,906) Disposal of short-term investments 39,523 23,927 (1,858) 4,021 Net (decrease) increase in cash (5,235) 10,477 Cash and cash equivalents at beginning of year 27,741 17,264 Cash and cash equivalents at end of year 22,506 27,741 The accompanying notes are an integral part of these statements.

18 18 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Notes to Financial Statements March 31, BACKGROUND The Ontario Media Development Corporation (the 'Corporation') is an agency of the Ministry of Tourism, Culture and Sport of the Government of Ontario created under Regulation 672/00 of the Development Corporations Act, and as such is not required to pay income taxes. The Corporation promotes the economic growth of Ontario's cultural media sector and focuses on strategic partnerships among all the industries - film, television, sound recording, book and magazine publishing and interactive digital media. The Corporation is classified as a government not-for-profit organization for accounting purposes. 2. SIGNIFICANT ACCOUNTING POLICIES These financial statements have been prepared by management in accordance with the accounting standards for government not-for-profit organizations included in the Canadian Public Sector Accounting Standards ('PSAS'). Significant accounting policies followed in the preparation of these financial statements include: (a) Capital Assets Capital assets are recorded at cost less accumulated amortization. Capital assets are amortized on a straight-line basis over the following terms beginning in the year of acquisition: Furniture and Office Equipment Computer Hardware Computer Software Leasehold Improvements 10 years 3 years 3 years 5 years (b) Revenue Recognition Unrestricted government base operating grants are recognized as revenue in the period received. Restricted government grants are deferred and recognized as revenue in the year in which the related expenses are approved. Tax credit administrative fees are recognized when earned, which is normally upon receipt. The return of investment under assistance programs is recorded on a cash basis because a reasonable estimate of the amounts to be collected cannot be made. (c) (d) (e) (f) (g) (h) (i) Grants and Recoupable Advances Grants and recoupable advances are recorded as expenses and accounts payable and accrued liabilities in the year that the Corporation approves the grant or advance. As they are subject to certain performance conditions placed on the recipients, they are reflected net of an allowance for estimated grants or recoupable advances to be rescinded or recovered. Grants and advances approved in prior years that are rescinded or recovered in the year in excess of the allowance are recorded as revenue. Contributed Services Contributed services are received for certain events and are not recognized in the financial statements. Cash and Cash Equivalents Cash and cash equivalents includes cash on hand, current bank accounts, bankers' acceptances and bearer deposit notes from Canadian chartered banks with terms of maturity of less than 93 days. Short-term Investments Short-term investments are comprised of bankers' acceptances and bearer deposit notes from Canadian chartered banks with terms of maturity of 93 days to one year. Use of Estimates The preparation of financial statements in accordance with Canadian public sector accounting standards requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities as at the date of the financial statements and the reported amounts of revenue and expenses. Actual results could differ from management s best estimates as additional information becomes available in the future. The items subject to the most significant estimates are amortization of capital assets, employee future benefits, and accounts payable and accrued liabilities. Financial Instruments The Corporation's financial instruments which consist of cash and cash equivalents, short term investments, accounts receivable, accounts payable and due to the province are all valued at cost. As cost approximates fair value given the short term nature of the maturities, no statement of remeasurement gains and losses is included. Employee Benefits The Corporation follows PSAS requirements for accounting for employee future benefits, which includes post-employment benefits payable upon termination. Under these requirements, the cost of post-employment benefits is charged to operations annually as incurred.

19 19 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Notes to Financial Statements March 31, FINANCIAL INSTRUMENTS Credit and Interest Rate Risk Credit risk may arise from the possibility that a creditor defaults on payment obligations, while interest rate risk is inherent in investments due to fluctuations in interest rates. The Corporation s exposure to credit and interest rate risk is minimal as the Corporation s cash and cash equivalents and short term investments have relatively short maturity spans and are held with leading Canadian chartered banks. Cash and cash equivalents include $ million ( $ million) of bankers' acceptances and bearer deposit notes from Canadian chartered banks with interest rates ranging from 0.52% % ( % %). Short-term investments of $9.968 million ( $8.110 million) consist of bankers' acceptances and bearer deposit notes from Canadian chartered banks with interest rates ranging from 0.83% % ( % %). Market Risk - Market risk arises when the value of an investment portfolio decreases as a result of changes in the volatility of interest rates, stock prices and foreign exchange risks. The Corporation is not exposed to any market risk due to the nature of its investments. Liquidity Risk - Liquidity risk is the risk that the Corporation will be unable to fulfill its obligations on a timely basis or at a reasonable cost. The Corporation manages its liquidity risk by monitoring its operating requirements. The Corporation prepared budget and cash forecasts to ensure it has sufficient funds to fulfill its obligations. There have been no significant changes to the risk exposure from CAPITAL ASSETS 2017 ($000's) 2016 ($000's) Net Net Accumulated Book Book Cost Amortization Value Value Furniture and Office Equipment Computer Hardware Computer Software Leasehold Improvements ALLOWANCE FOR RESCINDED GRANTS Allowance for rescinded grants is included in accounts payable and accrued liabilities on the Statement of Financial Position as follows: ($000's) ($000's) Allowance, beginning of year Change in allowance Allowance, end of year 1, The allowance is recorded in the Statement of Operations as follows: ($000's) ($000's) Ontario Music Fund Industry Development Initiatives ,

20 20 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Notes to Financial Statements March 31, MINISTRY OF TOURISM, CULTURE AND SPORT FUNDING The Ministry of Tourism, Culture and Sport (a related party) provided a $ million ( $ million) base operating grant which has been recognized as revenue in the fiscal year. The Ministry also provided funding of $15 million for the Ontario Music Fund (2016- $15 million), of which the following was recognized as revenue in the Statement of Operations and the remainder was deferred ($000's) 2016 ($000's) Ontario Tax Credit Total Ontario Music Transitional Music Fund Grant Fund Opening balance 2,213-2,213 1,127 Funding received 15,000 2,700 17,700 15,000 Recognized as revenue (16,133) - (16,133) (13,914) Closing balance 1,080 2,700 3,780 2,213 Revenue recognized for the Ontario Music Fund includes $ million ( $ million) in grants, $0.926 million ( $1.060 million) in Operating expenses and is net of prior year grants rescinded or recovered in the year of $0.038 million ( $0.615 million). In connection with tax credit rate reductions announced in the 2015 Ontario budget to the Ontario Production Services Tax Credit and the Ontario Computer Animation Services Tax Credit, the Tax Credit Transitional Grant provides relief to qualifying productions that did not otherwise meet eligibility criteria for rate grandfathering measures. 7. OPERATING EXPENSES ($ 000's) ($ 000's) Salaries, wages and benefits - Tax credit administration 2,406 2,243 - Industry development 2,595 2,667 - Business affairs and research 1,351 1,270 - Other ,102 6,609 Corporate expenses and operations 1,203 1,196 Consulting services Amortization of capital assets Advertising, promotion & publications Program support 908 1,378 Travel ,834 10, PRIOR YEAR GRANTS RESCINDED OR RECOVERED Amounts rescinded or recovered are shown net of the allowance for rescinded grants on the Statement of Operations as follows: ($ 000's) ($ 000's) Rescinded or recovered amounts during the year 910 1,122 Less: prior year allowance Prior year grants rescinded or recovered Rescinded or recovered amounts during the year were as follows: ($ 000's) ($ 000's) Ontario Music Fund Industry Development Initiatives ,122

21 21 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Notes to Financial Statements March 31, LEASE EXPENSES The Corporation is committed under operating leases for premises and office equipment to future minimum payments as follows: ($ 000's) The Corporation is committed future minimum payments for its premises lease of $580,000 and its proportionate share of reality taxes and operating expenses, which amounted to $313,000 during 2017 (2016 $322,000). These amounts are expected to be similar in future years. Infrastructure Ontario (a related party) makes the lease payments to the landlord, and is subsequently reimbursed by the Corporation. The premises lease expires October 31, The Corporation is also committed under operating leases for office equipment to future minimum payments totalling $16,000. The leases for office equipment expire at various times over the next four years. 10. OBLIGATION FOR EMPLOYEE FUTURE BENEFITS (a) Pension Plans The Corporation's full-time employees participate in the Public Service Pension Plan (PSPP) or the Ontario Public Service Employees Union Pension Plan (OPSEU-PP), which are defined benefit pension plans for employees of the Province and many provincial agencies. The Province of Ontario, which is the sole sponsor of the PSPP and a joint sponsor of the OPSEU-PP, determined the Corporation's annual payment to the funds. Since the Corporation is not a sponsor of these funds, gains and losses arising from statutory actuarial funding valuations are not assets or obligations of the Corporation, as the sponsors are responsible for ensuring that the pension funds are financially viable. The Corporation's annual payments of $488,000 ( $470,000) are included in operating expenses in the Statement of Operations. (b) Accrued Employee Benefits Obligation The costs of any legislated severance and unused vacation entitlements are recognized when earned by eligible employees. During the year, the accrued employee benefits obligation was reduced by $264,000 ( $292,000) due to a curtailment resulting from changes under the Public Service Act of Ontario. During the year, the decrease (increase) in the obligation was $28,000 ( ($23,000)). The total liability for legislated severance and vacation is reflected in the accrued employee benefits obligation, less any amounts payable within one year, which are included in accounts payable and accrued liabilities, as follows: ($ 000's) ($ 000's) Total liability for legislated severance and vacation 1,076 1,030 Less: Due within one year and included in accounts payable and accrued liabilities (343) (297) Accrued employee benefits obligation The legislative severance portion of the accrued benefit obligation was calculated based on the following assumptions: discount rate of 2.55% ( %); and estimated average years to retirement of years ( years). Due to the curtailment of the plan during the year no assumption of wage and salary escalation was used (2016 0%). These assumptions are management s best estimates. (c) Other Non-Pension Post-Employment Benefits The cost of other non-pension post-retirement benefits is determined and funded on an ongoing basis by the Province (a related party) and accordingly is not included in these financial statements.

22 22 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Notes to Financial Statements March 31, PUBLIC SECTOR SALARY DISCLOSURE Section 3(5) of the Public Sector Salary Disclosure Act (1996) requires disclosure of Ontario public sector employees who were paid an annual salary in excess of $100,000 in the calendar year For the Corporation, this disclosure is as follows: Name Title Salary Jennifer Blitz Director, Tax Credit and Financing Program $113,002 Patrick Dervin Corporate Controller $100,253 Raina Feldman Director, Business Affairs & Research $142,774 Kristine Murphy Director, Industry Development Group $144,591 Manya Rouben Team Leader, Tax Credits $102,340 Monica Szenteszky Team Leader, Tax Credits $101,003 Karen Thorne-Stone President & Chief Executive Officer $195,330

23 23 of 77 Appendix C Post-Audit Feedback Questionnaire Your feedback is an important way in which we assess the value of and determine satisfaction with our work. Please help us improve our work by taking a few moments to complete this short survey after the approval of the audited financial statements. Agency Audit Period March 31, 2017 Ontario Media Development Corporation Instructions: Responses should reflect the views of the audit committee and management. Please indicate your level of agreement with the statements below. If you select strongly or generally disagree for any item, please provide us with details in Part IV (Additional Feedback) to assist us in improving our work. Once completed, please forward the survey to the address indicated at the bottom of the survey. PART I AUDIT TEAM 1. The audit team was professional throughout the audit. 2. The auditors demonstrated an understanding of your business. 3. The auditors were able to communicate well. Strongly Disagree Generally Disagree No Opinion/ Don t Know Generally Agree 4. The audit team was objective. 5. Overall, you were satisfied with the audit team. PART II AUDIT PROCESS 6. The purpose and scope of the audit was clearly communicated. 7. The timetable in the audit planning report met your agency s needs (e.g., tabling deadline). 8. The auditors focused their attention on the most important risk areas. 9. There was sufficient communication between the agency and the audit team. 10. Overall, the audit provided added value. 11. Overall, you were satisfied with the audit. PART III AUDIT FINDINGS REPORT 12. The audit team was willing to listen to your feedback regarding the audit. Strongly Agree Not Applicable 13. The report was understandable. 14. The report was accurate. 15. The report was clear and concise.

24 24 of 77 Strongly Disagree Generally Disagree No Opinion/ Don t Know Generally Agree Strongly Agree Not Applicable 16. The report was relevant. 17. The report was timely. 18. The recommendations in the report were fair. 19. The recommendations in the report were feasible. 20. The recommendations in the report were useful. 21. The implementation of these recommendations will result in improved management of public resources and accountability. PART IV ADDITIONAL FEEDBACK 22. What did you like about the audit? The audit team was professional and courteous. 23. Are there any things we need to improve? No areas for improvement were identified. 24. Are there any other issues you would like us to assess within your agency or elsewhere in government to help promote well-managed government? No specific issues to assess at this time. 25. Please share any other comments you may have: Completed by: Date: Thank you for taking the time to complete our survey! Please forward your completed survey to: Rebecca Yosipovich, CPA, CA Professional Practices Manager Office of the Auditor General of Ontario 20 Dundas Street West, Suite 1530 Toronto, ON M5G 2C2 rebecca.yosipovich@auditor.on.ca

25 25 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION AUDIT COMMITTEE MEETING DRAFT MINUTES Thursday June 8, :00 P.M. 6:00 P.M. Audit Committee Blake Tohana, Chair, Audit Committee Mark Sakamoto, Chair, Board Anita McOuat Marguerite Pigott Ontario Media Development Corporation Karen Thorne-Stone, President and CEO Suzan Ayscough, Communications & Corporate Secretary Raina Wells, Director, Business Affairs and Research [A] Patrick Dervin, Controller Jennifer Blitz, Director, Tax Credits & Financing Programs (Item # 6) Lorraine Wharton, Financial Officer, Recording Office of the Auditor General of Ontario (Item #2) Laura Bell, Director Mary Martino, Manager 1 Welcome Blake Tohana welcomed the Provincial Auditors, Committee members, and OMDC staff. 2 OAG Audit Planning Report to Audit Committee Laura Bell began by introducing Mary Martino as the manager on the file and indicated that Tom Chatzidimos will continue as in-field supervisor. Laura informed the Committee that this year s OAG Audit Planning Report followed a similar template as last year s. She stated that the purpose of the audit is to obtain sufficient and appropriate evidence to provide a basis for expressing an opinion on whether the financial statements of the Corporation for the year ended March 31, 2017 have been presented fairly in accordance with Canadian Public Sector Accounting Standards. Consistent with previous years, a sample of expense claims will also be reviewed to determine compliance with the Travel, Meal and Hospitality Expenses directive. Laura continued by outlining the responsibilities of the auditors, and the responsibilities of management and the Board. She inquired of the Committee whether they were aware of any instances of fraud in the agency over the past year, and Blake responded no. She walked through the audit approach of key risk areas as detailed in section 3.4 of the planning report. Regarding the legal inquiry letter, Laura informed the Committee that the Joint Policy Statement between the Canadian Auditing and Assurance Board and the Canadian Bar Association had recently changed. Management is required to draft the evaluation of claims and possible claims for the inclusion in the inquiry letter to Ministry legal services. Laura turned to Appendix B, Matters for Discussion with Audit Committee, which consisted of a series of questions concerning Board and Audit Committee oversight. Blake responded to the

26 26 of 77 questions and indicated there were no other matters that warranted particular attention for purposes of the audit. Laura encouraged the Committee and management to complete the post-audit questionnaire in Appendix C at the conclusion of the audit. 3 Approval of April 13, 2017 Joint SPC-Audit Committee Minutes A motion to approve the minutes from the Joint SPC-Audit Committee meeting was made by Anita and seconded by Marguerite. The minutes will also be presented for approval at the next SPC meeting. 4 Q Draft Financial Report Patrick referred the Committee to page 24 of the audit package, the Q Financial Report. He stated that column 3 represented the Q4 draft financial results, which reported a net deficit of $3.9 million. The variance of the actuals to the approved budget is $662k, and against the Q3 reforecast, $587k. In revenues, the increase in OMO revenue recognized reflected the increase in expenditures compared to the Q3 reforecast. Other increases against the reforecast included tax credit revenue of $88k and Film Fund recoupments of $106k. In expenditures, the allowance for rescinded grants was increased by $300k to account for two Film Fund projects that would not proceed, for which documentation would be finalized in Q The underspend in the film group against the reforecast was due to lower scouting costs and the decision to not proceed with the FAM tour, which will now happen in July Blake noted that the uncommitted cash is $587k better than at the Q3 reforecast. Patrick indicated that the major contributors to the change were the increase in the rescinded grant provision of $300k and the increase in net revenues of $200k. A motion to approve the Q4 results will occur at the conclusion of the audit; this draft will be submitted to the Board for information purposes only. 5 Senior Management and Board Expense Summary Report [Jan. 1 Mar. 31, 2017] Karen referred the Committee to page 36 of the package for the expense claim summary. She informed the Committee that no variances to the Travel, Meal and Hospitality Expenses directive were identified in the quarter. She noted the hospitality event in Berlin in her claim, which was the Ontario & International Producers dinner. Karen also noted that the schedule was updated to indicate that items in the airfare column are paid directly by OMDC, and not by the individual. Blake recommended that a footnote be added to explain the shaded-out airfare column. 6 Tax Credits Update Jennifer referred the Committee to page 45, and proceeded to explain the nature of the fluctuations of products received, reviewed and certified over the last five fiscal years in relation to processing time. By implementing operational changes, OMDC has increased its productivity and reviewed hundreds more products now than we did five years ago and we can analyze applications faster. However, the sheer volume of products applying each year has steadily outpaced these productivity gains. OMDC can only control how much time a file spends in analysis time, whereas the amount of time a file waits in queue is a function of volume. The last time tax credit staffing levels correlated to the intake volume of products such that there was no significant backlog was in

27 27 of 77 Blake noted that in the products reviewed chart on page 46 approximately one-third of OIDMTC products reviewed in were ineligible or withdrawn, which represented a significant use of resources. Jennifer indicated that the regulatory and legislative changes to the OIDMTC is expected to result in fewer products applying and fewer ineligible products. Discussion continued and focused on queue volatility. Karen informed the Committee that a Film and Television advisory panel was established by the Ministry to provide advice on modernizing and streamlining eligibility requirements, however the panel has also focused on improving queue time. It suggested that low risk applications be fast tracked by prioritizing them in the queue, which would have a positive effect in reducing queue time over the short term. It was decided to implement this process on a nine month trial basis. The Committee agreed with the decision and would review the results of the process at the end of the trial period. Jennifer informed the Committee that leave to appeal the Judicial Review decision was granted. A date for the hearing has not been set but will likely be sometime in the fall. 7 Premises Lease Update Raina distributed a briefing note to the Committee and OMDC staff. She informed the Committee that the current premises lease will expire on October 31, While the existing lease was negotiated and executed by Infrastructure Ontario (IO), under the terms of the new OPS realty directive OMDC meets the criteria to execute their premises lease on its own behalf. The realty directive also requires additional approvals to transfer the lease from Her Majesty the Queen to OMDC. Other required approvals include those from Treasury Board Secretariat and the Lieutenant Governor in Council. Two options are under consideration. The first is to engage IO to broker the lease on a cost recovery basis. The second is to engage an external broker. Pros and cons exist in both options. The pros of using a broker is that their fee is paid by the landlord so they may be more motivated. The advantage of using IO is that we are then able to use the Government lease template, which has a clause that caps the expenditures that the tenant would be responsible for. In addition, IO has expertise in government approval processes. The recommended approach was to engage IO to negotiate the new lease. The Committee agreed and Blake recommended that we employ best efforts to get the best fee deal with IO. 8 Electronic Payment Update Raina informed the Committee that the transition to electronic payments was a project OMDC had committed to undertake, and elements of it were included in this year s budget. She distributed project timelines for the phases of the project. Phase one is payments in for tax credit application fees; phase two is payments out for staff, board and suppliers; phase three is payments out to grant recipients and tax credit refunds. Raina provided high-level details on phase one, and indicated payment options would include credit card, debit or EFT and would be implemented through an e-commerce service provider. A discussion of the associated costs of each method followed. Raina also indicated that we have implemented EPP payments for wires, which can done in house through the RBC Express module. The roll out will be in stages ending by January of Requirements gathering has started for phase three and we hope to have this phase completed by the end of the fiscal year. Anita inquired about IT security in situations where client s banking information would be stored. Raina informed her that the information would only appear to the client and will be

28 28 of 77 securely stored. Karen added that we will ensure the requisite controls will be in place. Blake commented that it was important to have the controls documented. More comprehensive information will be included in a briefing note which will be discussed at the next Committee meeting. 9 Other Business There was no other business. The meeting was adjourned at 5:50 pm. Audit Committee Board Secretary Date

29 ONTARIO MEDIA DEVELOPMENT CORPORATION Report on Variances to Budget April 1, March 31, of / / / / / /17 Total Total Q4 Variance Q4 Variance vs. Q4 Draft Actual Budget Final to Budget Draft (1) (2) (3) (4)=(2)-(3) (5) (6)=(5)-(3) $ $ $ $ $ $ REVENUES MTCS Funding - Base Allocation 28,450,300 25,450,300 25,450,300-25,450, Ontario Music Office 13,914,587 14,974,005 16,132,493 1,158,488 (1) 16,131, (a) - OPSTC / OCASE Transitional Grant - 3,000,000 - (3,000,000) (2) Other 40,000 40,000 40,000-40, Deferred Revenue - Cdn Screen Awards Prior year grants rescinded (OMF) 614,964-38,498 38,498 (1)/(3) 38,498 - Prior year grants rescinded (Other Funds) (118,149) - 21,898 21,898 (3) 21,898 - Tax Credit Admin. Fees 2,033,660 1,980,000 1,788,855 (191,145) (4) 1,788,855 - Investment & Bank Interest 307, , , ,542 (5) 346,542 - Other 159, , ,317 (5,183) 138,317 - Film Fund Recoupments 343, , , ,752 (6) 430,752 - TOTAL REVENUES 45,746,550 45,962,805 44,387,655 (1,575,150) 44,386, CEO's office Salaries & Benefits 619, , ,661 (29,101) 631,661 - Travel, Seminars, etc. 39,497 33,500 38,138 (4,638) 38, (e) Communications 678, , ,215 6, ,216 (4,999) (b) 1,337,076 1,286,060 1,313,014 (26,954) 1,308,121 (4,893) Board of Directors 35,861 34,500 17,573 16,927 17,102 (471) (b) Business Affairs & Research Salaries & Benefits 1,267,264 1,370,930 1,347,572 23,358 1,347,572 - Training/legal/translation etc. 82,380 93,193 77,757 15,436 76,722 (1,035) (c)/(e) Digital Dialogue Conference 108, , ,686 9, ,686 - Research & Strategic Plan 422, , ,277 36,523 (7) 514,277 - Cinematheque 815, , , ,000 - Toronto Film Festival Group - Operating 300, , , ,000 - Operations 891, , ,714 12, ,714 - Information Services 393, , ,326 28, ,326 - Strategic Initiatives - BAR - 110,000 46,359 63,641 (8) 46,359-4,280,274 4,571,359 4,382, ,668 4,381,656 (1,035) Industry Development Salaries & Benefits 1,784,350 1,824,280 1,835,111 (10,831) 1,834,175 (936) (b) Training/legal/translation, etc. 57,853 60, ,728 (62,728) (9) 122,728 - OMDC Book Fund 2,237,893 2,300,000 2,203,620 96,380 (10) 2,203,620 - OMDC Film Fund 4,574,330 4,500,000 4,499, ,499,917 - OMDC IDM Fund 5,987,848 9,735,000 9,771,586 (36,586) (11) 9,771,586 - OMDC Magazine Fund 2,007,783 2,000,000 1,997,423 2,577 1,997,423 - OMDC Collaboration & Innovation Fund 1,377, Strategic Initiatives - 465, ,893 (92,893) (10) 554,662 (3,231) (b) Industry Development Support 2,672,282 1,250,000 1,136, ,796 (12) 1,136,204 - International Business Development 1,962,582 1,338,500 1,461,245 (122,745) (13) 1,461,245 - Sector Marketing Support 567, , ,510 (4,510) 154,510 - Trillium Awards 239, , ,364 16, ,364 - Film Group (Incl. LA Office) 615, , , ,966 (14) 531,534 1,000 (c) Allowance for Rescinded Grants - IDG (300,000) (300,000) (600,000) 300,000 (15) (600,000) - 23,783,745 24,224,280 23,879, ,145 23,875,968 (3,167) Ontario Music Office Salaries & Benefits 882, , ,203 35,797 (16) 760,203 - Program administration 177, , ,788 62,217 (17) 164,869 (919) (a) Music Company Development 8,327,500 8,500,000 8,050, ,000 (18) 8,050,000 - Music Industry Development 2,327,000 2,500,000 2,695,000 (195,000) (18) 2,695,000 - Live Music 2,277,500 2,500,000 3,800,000 (1,300,000) (18) 3,800,000 - Music Futures 1,087,250 1,000,000 1,200,000 (200,000) (18) 1,200,000 - Allowance for Rescinded Grants - OMF (550,000) (550,000) (500,000) (50,000) (19) (500,000) - 14,529,552 14,974,005 16,170,991 (1,196,986) (1) 16,170,072 (919) Tax Credit & Financing Programs Salaries & Benefits 2,242,528 2,327,450 2,405,945 (78,495) (20) 2,405,945 - Training/legal/translation, etc. 14,810 33,500 40,576 (7,076) 40,576 - OPSTC / OCASE Transitional Grant 3,000,000-3,000, ,257,338 5,360,950 2,446,521 2,914,429 2,446,521 - Legislated Severance and Unused Vacation Days (198,382) 85, ,195 (26,195) (2) 98,204 (12,991) (d) TOTAL EXPENDITURES 46,025,464 50,536,154 48,321,120 2,215,034 48,297,644 (23,476) SURPLUS/(DEFICIT) (278,914) (4,573,349) (3,933,465) (3,790,184) (21) (3,910,908) (22,557)

30 30 of 77 Variance to Budget Explanations: (1) (2) (3) (4) (5) (6) (7) (8) (9) OMO revenue is restricted and is recognized as related costs are incurred. Total OMO revenue allocation, plus net rescinded OMF grants revenue, equals total OMO expenditures. As this is a restricted source of funding, revenue will be recognized as related expenses are incurred. No expenditures occurred in this fiscal year, and therefore no revenue will be recognized. The budget was set at $3 million, but it was later determined that the amount to be allocated by MTCS would be $2.7 million. The amount was received and is recorded in deferred revenue. Rescinded grant revenue (i) OMF: $588k grants rescinded against reversal of accrual made in of $550k resulted in $38k OMO revenue; (ii) Non-OMF: $322k grants rescinded against reversal of accrual of $300k resulted in $22k revenue. Variance due to timing of implementation of budgeted fee increase, which began in April Increased interest revenue caused by the timing of receipt of funds from MTCS against expectations based on All Ministry cash flow sources (including the OPSTC/OCASE transitional grant) were received in Q1. Larger than expected recoupments mainly due to one film from production stream ($160k). Underspend due to lower than anticipated costs for digital dialogue breakfast series and delayed timing of data inventory project, offset by a revised estimate for records management project. Underspend is primarily a timing difference associated with the electronic payments project - approximately $40k of strategic initiatives line will be incurred in Variance created by in-year decision to proceed with a program evaluation of the IDM Fund, partially offset by savings in research in Note 7. (10) Funding awards were below allocated budget for the program. Unspent amount was redirected to strategic initiatives to expand the book marketing project in Ontario and U.S. libraries. (11) (12) (13) (14) IDM Fund overcommitment in Global Market Development. Industry Development Support lower than originally anticipated. Decision to award higher than budgeted allocation for the Export Fund is due to recipient underspending. Underspend in Film Unit due to the decision not to proceed with a FAM tour this year, and lower than expected scouting costs. (15) Increase in allowance for non-omf rescinded grants by $300k to $600k is due to two prior year Film Fund awards that will not go forward. Documentation to effect the two rescinded grants will occur in (16) Budgeted allocation for FOI coordinator not fully utilized. (17) (18) Projected administration underspend in OMO primarily in strategic music initiatives and a research allocation that will not be utilized. MIDEM activity did not occur; Music Makes It will occur in No net underspend as OMF revenue is decreased accordingly. Steering Committee awarded below notional allocation in music company development and redirected to Live Music stream. Total grants awarded were greater than budget, in order to utilize unspent amounts in deferred revenue (created by rescinded grants of prior fiscal years). (19) (20) Adjustment to budgeted allowance for rescinded grants is based on management's best estimate at year end. Reforecast variance due to the approval of additional overtime to address application backlog. (21) Uncommitted Cash at March 31, 2017 $ Unrestricted Net Assets - March 31, ,483, Revenues 44,387, Expenses (48,321,120) Unrestricted Net Assets - March 31, ,550,169 Deduct: Provision for Rescinded Grants (unrestricted funding) (600,000) Uncommitted Cash after Provision for Rescinded Grants - March 31, ,950, Per March 31, 2016 audited financial statements 2 Reflects the uncommitted cash in the event that all grants approved in , and remaining grants payable of prior fiscal years, fully pay out

31 31 of 77 Report on Variances: Q4 Draft to Q4 Final Notes [a] [b] [c] [d] [e] Revenue matching of OMO invoice received after Q4 draft was issued invoices received after Q4 draft was issued Journal entry to charge cost to correct department Discount rate to determine present value of legislated severance was provided by the OAG after draft was issued; original estimate was based on prior year's discount rate. Difference between actual expense incurred and estimate accrued in Q4 draft Effect on Uncommitted Cash (Column 6 - Report on Variances to Budget) $ Increase in Revenue 919 Increase in Expenditures (23,476) Increase in Deficit (22,557)

32 32 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Statement of Financial Position - Reconciliation Draft vs. FINAL (Post-Audit) as at March 31, 2017 Audit Committee Audit Committee Difference Allocation of Difference Final Draft (OMDC Post-draft Adjustments) (Auditor Adjustments) ASSETS Cash and cash equivalents 22,506,166 22,506, Short-term investments 9,968,386 9,968, Accounts receivable 112, , Prepaid expenses 36,291 36, Accrued interest 55,209 55, Current assets 32,678,257 32,677, Capital assets 292, , LIABILITIES 32,970,983 32,970, Accounts payable and accrued liabilities 23,221,461 23,210,489 10,972 10,972 - Due to the Province 393, , Current liabilities 23,614,616 23,603,644 10,972 10,972 - DEFERRED REVENUE 3,780,080 3,780,999 (919) (919) - ACCRUED EMPLOYEE BENEFITS OBLIGATION 733, ,402 12,991 12,991 - COMMITMENTS NET ASSETS Invested in capital assets 292, , Unrestricted 4,550,168 4,572,727 (22,558) (22,558) - 4,842,894 4,865,453 (22,558) (22,558) - 32,970,983 32,970,

33 33 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Statement of Operations - Reconciliation Draft vs. FINAL (Post-Audit) For the Year ended March 31, 2017 Audit Committee Audit Committee Difference Final Draft Allocation of Difference (OMDC Postdraft Adjustments) (Auditor Adjustments) REVENUE Ministry of Tourism and Culture 41,622,793 41,621, Tax credit administrative fees 1,788,855 1,788, Prior year grants rescinded or recovered 60,396 60, Interest 346, , Other 138, , Return of investment under assistance programs 430, , EXPENSES 44,387,656 44,386, Ontario Music Office 15,245,000 15,245, Industry Development Initiatives 11,027,527 11,019,296 8,231 8,231 - Operating expenses 10,834,316 10,819,071 15,245 15,245 - Toronto International Film Festival Group grants 1,330,000 1,330, Interactive Digital Media Fund 9,615,803 9,615, Research Initiatives 295, , ,348,166 48,324,690 23,477 23,477 - Deficit of revenue over expenses (3,960,510) (3,937,952) (22,558) (22,558) -

34 34 of 77 OMDC Financial Statement / Q4 Financial Report Reconciliation Total IDG Admin Film Commission Comunications Board of Directors Business Affairs & Reseach CEO Ontario Music Office Industry Development Support International Business Development Legislated Severance Balance Sheet $ Assets Accounts Receivable Liabilities Accounts payable and accrued liabilities 10, (1,000) 4, , ,024 3, Deferred revenue (919) (919) Accrued Employee Benefits Obligation 12,991 12,991 Decrease In Net Assets (22,557) (936) 1,000 (4,999) (472) (1,035) (3,231) - (12,991) Statement of Operations - Revenue Ministry of Tourism, Culture and Sport Expenditures Industry Development Initiatives 8, ,231 5,000 - Operating expenses 15, (1,000) 4, ,035 (107) (5,000) 12,991 Net Increase in Expenses over Revenues (22,557) (936) 1,000 (4,999) (472) (1,035) (3,231) - (12,991)

35 35 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Expenditure Breakdown For the year ended March 31, 2017 Direct Corporate Program-Related Total Salaries, Wages and Benefits Includes all salaries & benefits CEO & Communications 426, ,721 Business Affairs & Research 1,169, ,409 Industry Development - 1,796,760 Ontario Music Office 760,203 Tax Credits - 2,444,296 1,595,717 5,506,389 7,102,106 Corporate Expenses and Operations Includes: Premises lease, telephone, fax, courier, cell phone, postage, paper, office supplies, software, photocopier rental, professional development, recruiting costs, books & magazines, computer leases, corporate memberships, board expenses OMDC other 854, ,803 Ontario Music Office 13,208 Consulting Services Includes Consultants for: OMDC Content, Marketing and Export Funds, HR, AccPac, Library, Strategic Planning 854, ,011 1,203,107 Industry Development Programs - 282,818 Communications 24,030 - Strategic Planning 100,952 - Human Resources - - Other 93,652 - Amortization of Capital Assets 218, , ,451 Includes Amortization of: Furniture, office Equipment, digital library, corporate database, leasehold improvements 75,902 89, ,154 Advertising, Promotion & Publications Includes design/artwork, writing, printing, translation for: Annual Report, Trillium award, OMDC newsletter, production guide Trillium Awards - 10,182 Annual Report 34,238 - Newsletter, Production Guide, etc. - 7,655 Regular Advertising 417,063 - Ontario Music Office 75,571 Other (i.e. Event signage, general design & artwork) 37, , , ,672 Direct Support - 37,513,850 37,513,850 Program Support Includes Honoraria for juries, program delivery costs, space rental, etc. L.A. Office - 232,645 Library, Scouting & Digital Db 219,560 Trillium Book Awards 65,763 Ontario Music Office 25,807 Other (e.g. CelebrateOnt, SunnySideofDocs, IFF at TIFF,program honoraria) 364, , ,825 Travel Includes all staff travel and local hospitality - Banff TV Festival, CFTPA, L.A. Mission, Export Marketing programs, etc. OMDC Other 154, ,163 Ontario Music Office 58, , , ,001 Total Expenditures 3,350,360 44,997,806 48,348,166 % of total for Q % 93.1% 100.0% % of total for Q ,152,807 42,955,445 46,108, % 93.2% 100.0%

36 36 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Assumptions used to Calculate Corporate vs. Program Expenses: For the year ended March 31, 2017 Corporate Program Salaries, Wages and Benefits CEO Department (based on weighted average by position) 66.7% 33.3% Business Affairs & Research (see below by position) Director 66.7% 33.3% Finance Staff 100.0% 0.0% Mgr, Research, Sr. Policy Advisor 60.0% 40.0% Research Consultant 0.0% 100.0% I/T staff 100.0% 0.0% Industry Development 0.0% 100.0% Tax Credits 0.0% 100.0% Accrued Leg Severance & Vacation Pay Apply % average of (CEO, BAR, IDG, TC) Corporate Expenses and Operations Office Rent; Supplies 100.0% 0.0% Computer Lease costs (based on staff total + spares) 30.0% 70.0% Other - e.g. courier, mail, office supplies 33.3% 66.7% Consulting Services Strategic Planning 100.0% 0.0% Industry Development Programs 0.0% 100.0% Board Governance 100.0% 0.0% Human Resources 33.3% 66.7% Other - allocation based on a review of actual services Amortization of Capital Assets Customized database development 0.0% 100.0% Furniture, Office Equipment & Other 100.0% 0.0% Advertising, Promotion & Publications Other - allocation based on a review of actual services (e.g. Conference = program; Annual Report = Corporate) Direct Support 0.0% 100.0% Program Support 0.0% 100.0% Travel Allocation based on a review of actual activity

37 37 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Report on Variances to Budget April 1, June 30, / / / / /18 Total Total Q1 Q1 Q1 Actual Budget Budget Actual Variance (1) (2) (3) (4) (3)-(4) $ $ $ $ $ REVENUES MTC Funding - Base Allocation 25,450,300 28,450,300 14,225,150 18,150,300 3,925,150 (1) - Ontario Music Office 16,132,493 14,501, , ,847 (253,032) (2) - OPSTC/OCASE Transitional Grant - 2,700,000 2,000,000 - (2,000,000) (3) - Diversity Fund - 1,500, Ontario Books in Schools Program - 300, Other 40,000 40, Tax Credit Admin. Fees 1,788,855 2,640, , , ,746 (4) Prior Year Rescinded Grants - Other 21, , ,153 (5) Prior Year Rescinded Grants - OMO 38, Investment & Bank Interest 346, ,000 87,000 76,363 (10,637) Other 138, ,038 50,000 1,076 (48,924) (6) Film Fund Recoupments 430, ,000 68,750 15,972 (52,778) (7) TOTAL REVENUES 44,387,655 50,873,230 17,649,879 19,473,557 1,823,678 CEO's office Salaries & Benefits 631, , , ,565 (799) Travel, Seminars, etc. 38,138 48,500 14,275 2,876 11,399 Communications 643, , , ,096 21,404 Strategic Initiatives - Comm - 150,000 37,500-37,500 (8) 1,313,014 1,500, , ,537 69,504 Board of Directors 17,573 33,500 6,375 2,043 4,332 Business Affairs & Research Salaries & Benefits 1,347,572 1,466, , ,488 16,513 Training/legal/ etc. 77,757 98,339 20,175 13,205 6,970 Digital Dialogue Conference 120, Research & Strategic Plan 514, ,800 86,500 18,991 67,509 (9) Cinematheque 815, , Toronto Film Festival Group - Operating 300, , Operations 809, , , ,431 (2,436) Information Services 351, , ,809 91,282 11,527 Strategic Initiatives - BAR 46,359 55,000 10,000-10,000 4,382,691 4,499, , , ,083 Industry Development Salaries & Benefits 1,835,111 1,868, , ,094 3,969 Training/legal/translation, etc. 122, ,500 16,625 69,337 (52,712) (10) OMDC Book Fund 2,203,620 2,300, OMDC Film Fund 4,499,917 4,250, OMDC Diversity Fund - 1,500, OMDC IDM Fund 9,771,586 9,468, , ,223 (227,223) (11) OMDC Magazine Fund 1,997,423 2,000, Ontario Books in Schools - 300,000 1,152 (1,152) Strategic Initiatives 557, ,000 75,000 20,402 54,598 (11) Industry Development Support 1,136,204 1,423, , , ,836 (11) International Business Development 1,461,245 1,400,500 95,000 51,520 43,480 (11) Sector Marketing Support 154, ,000 20,000 3,000 17,000 Trillium Awards 208, , , ,213 (27,213) Film Group (Incl. LA Office) 530, , , ,786 23,839 Provision for Rescinded Grants (600,000) (300,000) ,879,135 25,856,410 1,833,313 1,767,891 65,422 Ontario Music Office Salaries & Benefits 760, , , ,485 11,144 Program administration 165, ,292 65,250 8,362 56,888 (12) Music Company Development 8,050,000 7,500, Music Industry Development 2,695,000 3,000, ,000 65, ,000 (13) Live Music 3,800,000 2,500, Music Futures 1,200,000 1,000, Provision for Rescinded Grants (500,000) (500,000) ,170,991 14,501, , , ,032 (2) Tax Credit & Financing Programs Salaries & Benefits 2,405,945 2,614, , ,263 41,051 (14) Training/legal/translation, etc. 40,576 52,000 9,500 1,062 8,438 OPSTC/OCASE Transitional Grant - 2,700,000 2,000,000-2,000,000 (3) 2,446,521 5,366,360 2,659, ,325 2,049,489 Legislated Severance and Unused Vacation Days 111,195 25, TOTAL EXPENDITURES 48,321,120 51,783,230 6,190,902 3,639,040 2,551,862 SURPLUS/(DEFICIT) (3,933,465) (910,000) 11,458,977 15,834,517 4,375,540 (15) Prepared by Patrick Dervin - Updated

38 38 of 77 Variance Explanations: (1) (2) Cash flow calendarization was over the first two quarters; variance is due to timing and will reverse in Q2. OMF revenue is recognized as related expenses are incurred. See variance notes 12, 13. (3) Revenue is recognized when the related grants are awarded, which is expected to occur in Q2 and Q3. (4) (5) (6) OPSTC and OFTTC revenue was higher than budgeted primarily due to the fee increase implemented on April 1, Prior year rescinded grant revenue is budgeted to be zero (i.e. actual grants rescinded will equal reversal of prior year's accrual). Reversal of the accrual against actuals is done at year-end. Accruals made in which will reverse in Q4 are as follows: OMF - $500k, non-omf $600k. At Q1 actual rescinded amounts are $132k (non-omf) and $0 (OMF). Variance is due to the timing of a shared cost recovery budgeted for Q1 but was received in Q2 (City of Toronto - $50k re: LA Office). (7) (8) Film Fund recoupment pattern is difficult to predict budget was increased based on prior year's actuals. Expenditures related to strategic initiatives were expected to commence in Q1 but will now begin in Q2. (9) (10) (11) Business Intelligence Research program was being finalized in Q1; variance is timing. Film Fund evaluation contract was awarded in Q1 instead of Q2. IDM grant awards were approved ahead of estimated calendarization; support in other program budget lines will occur in subsequent quarters. Variances are due to timing; budgets are on track for the fiscal year. (12) (13) (14) OMF travel and strategic initiatives calendarized in Q1 will begin in Q2. Budgets are on track for the fiscal year. Q1 calendarization was an estimate; MID has a rolling deadline and actuals reflect approved applicants in that period. Q1 salary budget included costs for three additional business officers. These officers are scheduled to begin in late July and August. (15) Projected Uncommitted Cash at March 31, 2018 Unrestricted Net Assets - March 31, 2017 $4,550, Budgeted Revenues 50,873, Budgeted Expenses (51,783,230) Projected Uncommitted Cash - March 31, 2018 Deduct: Budgeted allowance for rescinded grants funded from unrestricted revenue $3,640,168 (300,000) Projected Uncommitted Cash - March 31, 2018 $3,340,168 1 Per March 31, 2017 draft financial statements. Note: Future minimum premises lease payments (including estimated operating costs and taxes) after March 31, 2017 total $1.17 million.

39 39 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Statement of Financial Position as at June 30, 2017 June 30, 2017 March 31, 2017 ASSETS Cash and cash equivalents 28,868,247 22,506,166 Short-term investments 10,003,476 9,968,386 Accounts receivable 65, ,205 Accrued interest 74,772 55,209 Prepaid expenses 7,485 36,291 Current Assets 39,019,016 32,678,257 Capital Assets 309, ,726 LIABILITIES 39,328,320 32,970,983 Accounts payable and accrued liabilites 14,129,295 23,221,461 Due to the Province 252, ,155 Current Liabilities 14,381,706 23,614,616 DEFERRED REVENUE 3,519,234 3,780,080 ACCRUED EMPLOYEE BENEFITS OBLIGATION 733, ,393 NET ASSETS Invested in capital assets 309, ,726 Unrestricted 20,384,683 4,550,168 20,693,987 4,842,895 39,328,320 32,970,984

40 40 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Statement of Operations For the three months ended June 30, 2017 June 30, 2017 June 30, 2016 REVENUE Ministry of Tourism, Culture and Sport 18,411,147 25,586,133 Tax credit administrative fees 836, ,424 Prior year grants rescinded or recovered 132, ,284 Return of investment under assistance programs 15, ,418 Interest 76,363 76,641 Other 1,076 12,811 EXPENSES 19,473,557 26,354,711 Ontario Music Fund 65,000 - Industry Development Initiatives 440,300 1,073,786 Operating expenses 2,675,864 2,494,430 Interactive Digital Media Fund 411, ,815 Toronto International Film Festival Group grants 30,000-3,622,464 3,958,031 Excess of revenue over expenses 15,851,093 22,396,680

41 41 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Statement of Changes in Net Assets as at June 30, 2017 June 30, 2017 March 31, 2017 Invested in Capital Assets Unrestricted Total Total Balance, beginning of period 292,726 4,550,168 4,842,895 8,803,405 Excess (deficiency) of revenue over expenses - 15,851,093 15,851,093 (3,960,510) Investment in capital assets 16,578 (16,578) - - Balance, end of period 309,304 20,384,683 20,693,987 4,842,895

42 42 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Statement of Cash Flows For the three months ended June 30, 2017 June 30, 2017 March 31, 2017 Cash flows from operating activities Excess (deficiency) of revenue over expenses 15,851,093 (3,960,510) Amortization of capital assets - 165,154 15,851,093 (3,795,356) Changes in non-cash working capital Accounts receivable 47,169 36,914 Prepaid expenses 28,806 6,897 Accrued interest (19,563) (3,345) Current liabilities (9,232,909) (1,051,007) Deferred revenue (260,847) 1,567,506 Accrued benefit obligation - (218) (9,437,343) 556,747 Net cash generated from (used in) operating activities 6,413,750 (3,238,609) Capital Activities Net purchase of capital assets (16,578) (138,110) Investing activities Purchase of short-term investments (35,090) (41,380,981) Disposal of short-term investments - 39,523,172 (35,090) (1,857,808) Net increase (decrease) in cash 6,362,082 (5,234,527) Cash and cash equivalents at beginning of period 22,506,166 27,740,693 Cash and cash equivalents at end of period 28,868,247 22,506,166

43 43 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Schedule of operating expenses For the three months ended June 30, 2017 June 30, 2017 June 30, 2016 Salaries, Wages and Benefits 1,766,195 1,723,682 Corporate Expenses and Operations 311, ,276 Consulting Services 21, ,275 Advertising, Promotion & Publications 120, ,640 Program Support 298, ,952 Travel 156,257 83,606 Total Operating Expenses 2,675,864 2,494,430

44 44 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Cash and Cash Equivalents as at June 30, 2017 Bank - Chequing 38,934 Bank - Investment bank account 322,820 Petty Cash 500 Short-term investments (< 93 days) 28,539,693 $ Cash and Cash Equivalents 28,901,947 Short-term investments (> 93 days) 10,003,476 Q:\Accounting\Quarterly Reports\2018\Q1\Cash and Cash Equivalents Q1

45 45 of 77 OMDC Investment Schedule June 30, 2017 Purchase Maturity Interest # of Maturity Interest # Days Post Accrued Ref.:# Date Value Cost Rate Days Date at Maturity Interest Product Investments: Maturity < 93 days $ $ $ , , , , BNS BA , , , , RBC BA ,500, ,499, RBC BA ,500, ,498, , , RBC BA ,000, ,981, , , RBC BA , , RBC BA ,492, ,490, , RBC BA , , RBC BA ,600, ,598, , RBC BA , , , , RBC BA ,300, ,295, , , RBC BA ,775, ,771, , , RBC BA ,025, ,022, , , BNS BDN ,200, ,194, , , RBC BA ,000, ,997, , BMO BA ,053, ,043, , , RBC BA ,250, ,238, , , RBC BA ,194, ,189, , RBC BA Subtotal 28,621, ,539, Accrued Interest - Investments < 93 days 56, Investments: Maturity 93 days ,500, ,488, , , RBC BA ,200, ,190, , , RBC BA , , , RBC BA ,000, , , RBC BA ,000, , , , BNS BA ,500, ,489, , , RBC BA ,127, ,118, , , RBC BA ,250, ,234, , RBC BA Subtotal 10,077, ,003, Accrued Interest - Investments > 93 days 17, Total Investments: June 30, ,543, Accrued Interest - Investments 73, Accrued Interest - Current Accounts Total Accrued Interest 74, Q:\Accounting\Quarterly Reports\2018\Q1\Investments June 30, 2017

46 46 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Deferred Revenue as at June 30, Tax Credit Ontario Transitional grant Music Office Total Total $ $ $ $ Opening balance 2,700,000 1,080,081 3,780,081 2,212,574 Funding received ,700,000 Recognized as revenue - (191,216) (191,216) (16,132,493) Closing balance 2,700, ,865 3,588,865 3,780,081 Q:\Accounting\Quarterly Reports\2018\Q1\Q Deferred Revenue

47 47 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Expenditure Breakdown For the three months ended June 30, 2017 Direct Corporate Program-Related Total Salaries, Wages and Benefits Includes all salaries & benefits CEO & Communications 106,630 53,235 Business Affairs & Research 281,174 70,293 Industry Development - 446,214 Ontario Music Office 187,485 Tax Credits - 621, ,803 1,378,392 1,766,195 Corporate Expenses and Operations Includes: Premises lease, telephone, fax, courier, cell phone, postage, paper, office supplies, software, photocopier rental, professional development, recruiting costs, books & magazines, computer leases, corporate memberships, board expenses OMDC other 226,027 84,110 Ontario Music Office 1,667 Consulting Services Includes Consultants for: OMDC Content, Marketing and Export Funds, HR, AccPac, Library, Strategic Planning 226,027 85, ,805 Industry Development Programs - 16,147 Communications 5,625 - Strategic Planning - - Human Resources - - Other 203-5,828 16,147 21,974 Advertising, Promotion & Publications Includes design/artwork, writing, printing, translation for: Annual Report, Trillium award, OMDC newsletter, production guide Trillium Awards - 11,441 Annual Report - - Newsletter, Production Guide, etc. - 1,500 Regular Advertising 103,921 - Ontario Music Office 162 Other (i.e. Event signage, general design & artwork) 3, ,921 16, ,777 Direct Support - 946, ,600 Program Support Includes Honoraria for juries, program delivery costs, space rental, etc. L.A. Office - 65,540 Library, Scouting & Digital Db 71,936 Trillium Book Awards 81,912 Ontario Music Office - Other (e.g. CelebrateOnt, SunnySideofDocs, IFF at TIFF,program honoraria) 79, , ,855 Travel Includes all staff travel and local hospitality - Banff TV Festival, CFTPA, L.A. Mission, Export Marketing programs, etc. OMDC Other 44, ,449 Ontario Music Office 4,218 44, , ,257 Total Expenditures 678,918 2,943,546 3,622,464 % of total for Q % 81.3% 100.0% % of total for Q ,330 3,166,701 3,958, % 80.0% 100.0%

48 48 of 77 ONTARIO MEDIA DEVELOPMENT CORPORATION Assumptions used to Calculate Corporate vs. Program Expenses: For the three months ended June 30, 2017 Corporate Program Salaries, Wages and Benefits CEO Department (based on weighted average by position) 66.7% 33.3% Business Affairs & Research (see below by position) Director 66.7% 33.3% Finance Staff 100.0% 0.0% Mgr, Research, Sr. Policy Advisor 60.0% 40.0% Research Consultant 0.0% 100.0% I/T staff 100.0% 0.0% Industry Development 0.0% 100.0% Tax Credits 0.0% 100.0% Accrued Leg Severance & Vacation Pay Apply % average of (CEO, BAR, IDG, TC) Corporate Expenses and Operations Office Rent; Supplies 100.0% 0.0% Computer Lease costs (based on staff total + spares) 30.0% 70.0% Other - e.g. courier, mail, office supplies 33.3% 66.7% Consulting Services Strategic Planning 100.0% 0.0% Industry Development Programs 0.0% 100.0% Board Governance 100.0% 0.0% Human Resources 33.3% 66.7% Other - allocation based on a review of actual services Amortization of Capital Assets Customized database development 0.0% 100.0% Furniture, Office Equipment & Other 100.0% 0.0% Advertising, Promotion & Publications Other - allocation based on a review of actual services (e.g. Conference = program; Annual Report = Corporate) Direct Support 0.0% 100.0% Program Support 0.0% 100.0% Travel Allocation based on a review of actual activity

49 49 of 77 Highlights for Q Tax Credit Processing Processing Time Total processing time in Q1 was 4% faster 1.8 weeks faster vs the previous quarter (41.7 weeks vs 43.5 weeks) Out of total processing time, analysis accounted for only 5.2 weeks, which was 9% faster than in Q4 of (5.7 weeks) This is the fastest aggregate analysis time we have seen since Q1 of If we drill down into the analysis times for each credit, three of the six credits saw faster analysis times in Q1 vs Q4: OCASE, OSRTC and OIDMTC Of those, the most significant improvement was in the analysis time for OIDMTC which was 36% quicker or 5 weeks faster: 9 weeks analysis time in Q1 vs 14 weeks in the prior quarter This significant improvement in analysis time can be attributed to the greater percentage of low risk files and products that benefited from an ultra low review in Q1 vs Q4 Output We reviewed 21% more products in Q1 vs the prior quarter: 905 products vs 746 (accounting for an additional 159 products reviewed) We certified 45% more products in Q1 vs the prior quarter: 766 vs 527 (accounting for an additional 239 products certified) There were fewer ineligible products reviewed this quarter, which helped improve our productivity and processing time Regulatory Change Comes Into Effect The OIDMTC application deadline which was announced in the Fall Economic Statement of November 2016 and passed into law December 8, 2016 became effective in May 2017 Companies must apply to OMDC for an OIDMTC for a product within 18 months of the company s year end in which the product was completed Older applications were only eligible to be submitted until May 15, 2017 We received 80+ OIDMTC applications in the first two weeks of May. By contrast we only received 30+ OIDMTC applications in the six week period from May 16 to June 30 th 2017 Possible Future Legislative/Regulatory Changes to Modernize Tax Credits The Tax Credits department continued to meet with the Ministry Film and Television Advisory Panel which was established under Ontario s first Culture Strategy to examine priority issues facing the industry to promote the growth, innovation and global expansion of the sector

50 50 of 77 We also met with the panel s tax credits working group, to explore options for modernizing the eligibility requirements for the suite of tax credits for screen based productions. The industry has proposed a number of priority tax credit items they would like to change, however many are not about modernizing the credit so much as they would increase the amount of the tax credit (broader base of eligible expenditures) or would reduce the amount of documentation required to receive the tax credits The industry has focused on OMDC operations which was not the original objective In May 2017 some members wrote the Minister s Chief of Staff which spawned additional meetings related to the film and television suite of tax credits as well as the formation of an OIDMTC Working Group which will begin to meet in Q2 CRA Policy Update In April 2017 CRA posted an application policy on the definition of assistance for purposes of the Canadian Film or Video Production Tax Credit (CPTC) and the Film or Video Production Services Tax Credit (PSTC) The policy also applies to similar provincial tax credits that are co administered by the CRA, such as OFTTC, OPSTC and OCASE The policy includes a section on crowdfunding and discusses which of the various crowdfunding models would be considered assistance Operational Items As of April 1 st 2017 a new tax credit admin fee structure was implemented to enable OMDC s Tax Credits department to move to a cost recovery model In May 2017 the Tax Credits department welcomed its first summer intern. Our summer student has been deployed to send out documentation requests to OIDMTC applicants The Tax Credits department ran a competition for four Business Officer positions. One was to fill a vacancy when a Business Officer left for outside employment and the other three were additional FTEs that the Ministry had approved to assist in dealing with tax credit volumes. The four new Business Officers will commence in July August 2017 The department continued with the pilot begun on February 1 st 2017 to process low risk scored OBPTC, OFTTC and OPSTC applications as filed and conduct only an ultra low review on low risk scored OCASE and OIDMTC products. The pilot will continue for six months ending July 31 st 2017 at which time its benefits and challenges will be assessed. Coming out of the spate of film and television industry meetings referenced above, OMDC prepared to launch another two operational pilots for 6 months beginning July 1 st : i) triage or fast track OFTTC and OPSTC low risk scored applications and process them first ii) advise OFTTC, OPSTC and OCASE applicants of missing documentation and apply a 30 day deadline to provide the documentation or their file will be closed Judicial Review Leave to appeal was granted May 12 th and materials were filed in July 2017 but no hearing date has been set at this time

51 Tax Credits 1st Quarter Report 2017/18 Credit Products Received Completed Files in Q1 No. of Products certified Certificates Issued Total Value of Estimated Tax Credits OFTTC $ 73,641,385 OPSTC $ 55,869,265 OCASE $ 8,282, of 77 Note: OCASE and OIDMTC applications are based on the applicant's fiscal year of activity and may include multiple products. Multiple OSRTC certificates are issued for each product and may include up to 3 certificates for each recording certified. OIDMTC $ 21,080,445 OBPTC $ 1,141,221 OSRTC $ 71,210 Total $ 160,086,110 Products Received by Quarter Q1 Credit Q1 Q2 Q3 Q4 Total by credit Total for 16/17 Queue at end of Q1 OFTTC OPSTC OCASE OIDMTC OBPTC OSRTC Total LOC Applications Received and Issued by Quarter (OFTTC) LOC Applications Receieved Q1 Q2 Q3 Q4 Total LOC Issued This information about the number of applications we receive in a quarter for a Letter of Confirmation (LOC) and the number of LOCs we issue in the quarter is gathered for internal purposes only to better understand and measure the volume of work the department is processing. 1

52 Tax Credits 1st Quarter Report 2017/18 52 of 77 Credit Average Total Processing Time in Weeks Weighted Average Low Medium High/ Random Note: Queue Wait Time + Analysis Time = Total Processing Time OFTTC OPSTC OCASE OIDMTC OBPTC OSRTC Weighted average % of Certified Files by Score Type Credit Low Medium High /Random High OFTTC 33% 41% 26% OPSTC 22% 62% 16% OCASE 78% 15% 7% OIDMTC 38% 38% 25% OBPTC 68% 16% 17% OSRTC 42% 33% 25% ADJUSTED 2

53 53 of Average Processing Time for Six Tax Credits 13/14 vs. 14/15 vs. 15/16 vs. 16/17 vs. 17/18 Queue wait time + Analysis time = Total Processing time Weeks in Analysis Weeks in Queue Total Processing Time Number of Weeks Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013/ / / / /2018

54 54 of 77 Products Certified by Quarter 15/16 vs. 16/17 vs. 17/ Q4 Q3 Q2 Q1 Total Number of Products Certified OFTTC OPSTC OCASE OIDMTC OBPTC OSRTC

55 Q1 2017/18 55 of 77 Total Certified, Withdrawn and Ineligible Products by Cumulative Fiscal Year 15/16 vs. 16/17 vs. 17/ Cumulative Fiscal Ineligible Products Cumulative Fiscal products certified Total Number of Products / / /18

56 OFTTC 56 of 77 Number of Weeks Processing Time 13/14 vs. 14/15 vs. 15/16 vs. 16/17 vs. 17/18 Queue wait time + Analysis time = Total Processing time Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012/ / / / /18 Analysis Queue Total Processing Analysis Queue Total Processing Risk Breakdown of Files Certified in Q1 Medium Risk 41% Low Risk 33% Random / High Risk 26% Processing Time by Risk Level Number of Weeks High Medium Low High Medium Low High Medium Low High Medium Low Q1 Q2 Q3 Q4 2017/18 Analysis Queue Total processing Analysis Queue Total processing N.B. Weeks in Queue, Analysis and Total Processing are rounded to one decimal only and that is why some totals may not add. ADJUSTED

57 OPSTC 57 of 77 Number of Weeks Processing Time 13/14 vs. 14/15 vs. 15/16 vs. 16/17 vs. 17/18 Queue wait time + Analysis time = Total Processing time Analysis Queue Total Processing Medium Risk 62% Risk Breakdown of Files Certified in Q1 Random / High Risk 16% Low Risk 13% 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013/ / / / /18 Analysis Queue Total Processing Number of Weeks High Medium Low High Medium Low High Medium Low High Medium Low Analysis Queue Total processing Q1 Q2 Q3 Q4 2017/18 Processing Time by Risk Level Analysis Queue Total processing N.B. Weeks in Queue, Analysis and Total Processing are rounded to one decimal only and that is why some totals may not add. ADJUSTED

58 OCASE 58 of 77 Number of Weeks Processing Time 13/14 vs. 14/15 vs. 15/16 vs. 16/17 vs. 17/18 Queue wait time + Analysis time = Total Processing time Analysis Queue 26 Total Processing Risk Breakdown of Files Certified in Q1 Medium Risk 15% Random / High Risk 7% 10 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013/ / / / /18 Analysis Queue Total Processing Low Risk 61% b f k Number of Weeks Processing Time by Risk Level Analysis Queue Total processing 10 0 High Medium Low High Medium Low High Medium Low High Medium Low Q1 Q2 Q3 Q4 2017/18 Analysis Queue Total processing N.B. Weeks in Queue, Analysis and Total Processing are rounded to one decimal only and that is why some totals may not add. ADJUSTED

59 OIDMTC 59 of 77 Number of Weeks Processing Time 13/14 vs. 14/15 vs. 15/16 vs. 16/17 vs. 17/ Queue wait time + Analysis time = Total Processing time Analysis Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013/ / / / /18 Analysis Queue Total Processing Queue Total Processing Risk Breakdown of Files Certified in Q1 Low Risk 38% Random / High Risk 25% Medium Risk 38% Processing Time by Risk Level Number of Weeks Analysis Queue Total processing High Medium Low High Medium Low High Medium Low High Medium Low Q1 Q2 Q3 Q4 2017/18 Analysis Queue Total processing N.B. Weeks in Queue, Analysis and Total Processing are rounded to one decimal only and that is why some totals may not add. ADJUSTED

60 OBPTC 60 of 77 Number of Weeks Processing Time 13/14 vs. 14/15. 15/16 vs. 16/17 vs. 17/18 Queue wait time + Analysis time = Total Processing time Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013/ / / / /18 Analysis Queue Total Processing Analysis Queue Total Processing Low Risk 68% Risk Breakdown of Files Certified in Q1 Random / High Risk 17% Medium Risk 16% Processing Time by Risk Level Number of Weeks Analysis Queue Total processing 0 High Medium Low High Medium Low High Medium Low High Medium Low Q1 Q2 Q3 Q4 2017/18 Analysis Queue Total processing N.B. Weeks in Queue, Analysis and Total Processing are rounded to one decimal only and that is why some totals may not add.

61 OSRTC 61 of 77 Number of Weeks Number of Weeks Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013/ / / / /18 Analysis Queue Total Processing Processing Time 13/14 vs. 14/15 vs. 15/16 vs. 16/17 vs. 17/ Queue wait time + Analysis time = Total Processing time Analysis Queue Total Processing Processing Time by Risk Level Analysis Queue Total processing Risk Breakdown of Files Certified in Q1 Medium Risk 33% Random / High Risk 17% Low Risk 42% 0 High Medium Low High Medium Low High Medium Low High Medium Low Q1 Q2 Q3 Q4 2017/18 Analysis Queue Total processing N.B. Weeks in Queue, Analysis and Total Processing are rounded to one decimal only and that is why some totals may not add.

62 175 Bloor Street East South Tower, Suite 501, Toronto, Ontario M4W 3R8 Telephone (416) Fax (416) rue Bloor est Édifice sud, bureau 501, Toronto, Ontario M4W 3R8 Téléphone (416) Télécopieur (416) of 77 BRIEFING NOTE DEVELOPMENT OF OMDC ELECTRONIC PAYMENT SYSTEM 1 For discussion with OMDC Audit Committee, September 5, Issue OMDC is implementing an electronic system to receive Tax Credits administration fees and to make payments to vendors, suppliers, grant recipients and others. The purpose of this note is to provide an overview of the project and a status update. 2. Background OMDC currently accepts payment of Tax Credits administration fees only by cheque, and issues payments by cheque. The review of OMDC business processes completed by MNP LLP recommended providing an electronic payment option to clients in order to improve service delivery and streamline processing and workflows across departments. Benefits of moving to an electronic payment system for Tax Credits administration fees include a sizable reduction in the amount of paper produced and in staff time spent photocopying hardcopy cheques, both in the Tax Credits and accounting groups, and increased convenience for applicants. Linking payment to a specific application file at the time of payment will reduce staff time spent matching payments to applications; and receipt of the Tax Credits administration fee when applications are submitted will ensure that payment is received before file analysis begins. Moving to a system of electronic payments by OMDC will reduce the risk of cheque fraud and reduce the need to cancel and reissue cheques lost in the mail or stale-dated. Postage costs will no longer be incurred to mail cheques. Electronic payment systems are also more environmentally friendly than cheques (both paper, and gas used to transport physical mail are eliminated), and payments are received more quickly than when cheques are sent by mail. Audit Committee and the Board were made aware of the project, and it was included in the and Business Plans. Expenditures were approved as part of the and Budgets. Audit Committee received a project update on June 8, See Appendix A for a Glossary of Terms.