E. Use of Derivatives

Derivatives are used solely to advance the OFA’s objective of providing the Province’s financing and liquidity requirements in a sound and cost-effective manner. Derivatives are used to manage exposures arising from existing and planned debt and in a manner consistent with the Financing and Debt Management Plans. Risks that arise from the use of derivatives are identified, monitored, evaluated and managed prudently.

Risk Management and Financial Reporting

The OFA’s Board of Directors receives quarterly progress reports on financing and debt management plans and current risk exposures. Also, OFA management provides the Board of Directors with a monthly assessment of performance of the Province’s financing and debt management program and its liquid reserve investments relative to benchmarks approved by the Board.

The Director of Risk Control reports to the Board of Directors on the OFA’s compliance with applicable financial policies. The Deputy Minister of Finance, on behalf of the Minister of Finance, receives weekly financial and financing program reports.

The adequacy and effectiveness of internal controls are examined independently by the Audit Services Division of Management Board Secretariat. It also verifies compliance with policies, procedures and operational limits. The results of these audits are reported to management and the Audit Committee of the Board of Directors.

The OFA prepares annual financial statements in accordance with Generally Accepted Accounting Principles (GAAP) for approval by the Audit Committee and the Board of Directors. Unaudited financial statements are prepared quarterly and presented to the Audit Committee and the Board. The annual financial statements are reviewed by the Provincial Auditor who expresses an opinion on whether they are presented fairly and in accordance with GAAP. The Provincial Auditor’s findings are reviewed by the Audit Committee and the Board of Directors. These audited financial statements are tabled in the Ontario Legislature as part of the OFA’s Annual Report and are included as a schedule to the Public Accounts of the Province.