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Quarterly Financial Report - For the quarter ended December 31, 2012

ERRATUM

Location: Highlights of fiscal quarter and fiscal year to date (YTD) results, Statement of Authorities, first paragraph, first sentence.

Revision: "Authorities increased during the third quarter of 2012-13 to $3,268.3 million" replaces "Authorities increased during the third quarter of 2012-13 to $3,258.2 million".

Rationale for revision: Original amount reported was not correct.

Statement outlining results, risks and significant changes in operations, personnel and program

Introduction

Mandate:

The Minister of Public Safety is the minister responsible for the Royal Canadian Mounted Police (RCMP). The responsibilities of the RCMP are set out in section 18 of the Royal Canadian Mounted Police Act. The RCMP’s mandate is multi-faceted, it includes preventing and investigating crime; maintaining peace and order; enforcing laws; contributing to national security; ensuring safety of state officials, visiting dignitaries and foreign missions; and providing vital operational support services to other police and law enforcement agencies within Canada and abroad.

Further information on the mandate, roles, responsibilities and programs of the RCMP can be found in the RCMP’s 2012-13 Main Estimates, available on the following website: http://www.tbs-sct.gc.ca/est-pre/20122013/me-bpd/me-bpd-eng.pdf

  • This quarterly financial report:
    • Should be read in conjunction with the 2012-13 Main Estimates, the 2012-13 Supplementary Estimates (A) and (B) as well as Canada’s Economic Action Plan 2012 (Budget 2012);
    • Has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board Accounting Standard 1.3; and
    • Has not been subject to external audit or review.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the RCMP’s spending authorities granted by Parliament and those used by the department consistent with the Main Estimates and Supplementary Estimates (A) and (B) for the 2012-13 fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year. Budget 2012 was tabled in Parliament on March 29, after the tabling of the Main Estimates on February 28, 2012. As a result the measures announced in the Budget 2012 could not be reflected in the 2012-13 Main Estimates.

In fiscal year 2012-13, frozen allotments were established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012 and used as Funds Available to offset the appropriation received in Supplementary Estimates (B). In future years, the changes to departmental authorities will be implemented through the Annual Reference Level Update, as approved by Treasury Board, and reflected in the subsequent Main Estimates tabled in Parliament.

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

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

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

Statement of Authorities

Authorities increased during the third quarter of 2012-13 to $3,268.3 million due to allocations from Supplementary Estimates (B) ($221.2 million) and Treasury Board Central Vote transfer for paylist expenditures ($273.8 million). The 2012-13 authorities are $106 million higher than 2011-12. The RCMP was appropriated $499.0 million in additional authorities in Q3 in comparison to $117 million in 2011-12.

The 2011-12 authorities have been reduced by $77 million to reflect the transfer to Shared Services Canada, as directed by Treasury Board Secretariat in order to provide comparative year over year authorities. The authorities received in the 2012-13 Supplementary Estimates (B) of $242.4 million was to renew the funding for the police service agreements with the provinces, territories and municipalities that expired on March 31, 2012, it was offset by the savings identified in Budget 2012 of $44.4 million. With the adjustment to the authorities for these two items the remaining significant year over year difference relates to the Treasury Board Central Vote transfer for paylist expenditures which is $183 million higher in 2012-13 and represents the elimination the accumulation of severance benefits for voluntary resignation and retirement for members of the RCMP .

Long description of Comparison of total Budgetary Authories as of December 31 2012 follows image

Long description

Statement of Departmental Budgetary Expenditures by Standard Object

The RCMP has spent approximately 65% of its authorities at the end of the third quarter, compared with 77% in the previous year (as demonstrated in the chart below), when vote netted revenues are taken into consideration. However, vote netted revenues collected during the third quarter of 2012-13 compared to the same quarter last fiscal year are up $488.5 million, which is related to the timing of payments recorded. Overall revenue collected by year-end is expected to be consistent with revenue authorities. Like the authorities, the 2011-12 expenditures have been reduced by $17.5 million to reflect the expenditures incurred on behalf of Shared Services Canada from November 15 to December 31, 2011 as directed by Treasury Board Secretariat, in order to provide comparative year over year expenditures.

Long description of Comparison of Total Budgetary Authories and Expenditures follows image

Long description

Net expenditures used during the third quarter are 12% lower than the previous year; this is a result of revenues being substantially higher in 2012-13 at Q3. A year to date comparison of gross expenditures reflects a net increase of $179.2 million in 2012-13 over 2011-12.  A detailed review by standard object emphasizes some significant variances which are described below.

Personnel expenditures have risen by 9% in 2012-13 over 2011-12. This increase is directly attributable to the one-time disbursements related to the liquidation of severance pay pursuant to the elimination of the accumulation of severance benefits for voluntary resignation and retirement for RCMP members. The RCMP will continue to request funding for these payments through a Treasury Board Central Vote transfer. 

Personnel expenditures still include civilian members who are deemed to be transferred to SSC and represent approximately $16.3 million of the third quarter Personnel expenditures.  These expenditures together with associated operating costs will be transferred to SSC by year-end.

It is noteworthy that when the two anomalies above are removed, year over year personnel expenditures are trending only slightly higher in 2012-13 than 2011-12 by approximately 0.2%.  This is reflective of collective bargaining increases and is offset by an overall decrease in growth in the RCMP.

A decrease in Transportation and Communication of $34.2 million is as a result of the transfer of administration of information technology infrastructure services to SSC (for example cell phone costs).

Professional Services expenditures are approximately $18 million or 7% higher in 2012-13 than 2011-12. This increase is attributable to the following: contracting of specialized professionals for the pension administration outsourcing project; growth in services provided by independent police departments; contracting of health care professionals; contracting of laboratory services; and the timing of expenditures for legal services.

Risks and Uncertainties

The Departmental Quarterly Financial Report (QFR) reflects the results of the current fiscal period in relation to the Main Estimates, Supplementary Estimates (A) and (B), for which supply was released on December 10, 2012, in addition to central vote transfers related to the operating and capital budget carry forwards, paylist requirements and compensation adjustments.

The RCMP is funded through annual appropriations; as a result, operations are impacted by any changes in funding approved through Parliament. The RCMP also receives a significant portion of funding through respendable revenues from the provision of policing services to provinces, territories, municipalities and first nations communities.  There will continue to be ongoing pressure on the RCMP’s appropriations as the Government of Canada is closely reviewing spending and resource allocations.

Furthermore, the RCMP can be requested to respond anywhere in Canada and/or provide support for International Police operations at anytime.  These unforeseen operational requirements, depending on the extent of the RCMP’s involvement, can significantly increase costs, which can be mitigated either through internal allocations or requests for additional funding from Parliament.

Through the 2012-13 ARLU, the RCMP transferred $135 million to support Shared Services Canada’s role as the primary service provider of email, data centers and network services.  An additional $40 million will be frozen in the RCMP’s authorities and made available to Shared Services Canada in 2012-13.  With the on-going reductions related to other government-wide initiatives, a mitigation strategy has been put in place in 2012-13 to absorb this transfer. 

As previously noted, the RCMP faces other financial challenges in 2012-13 due to the cumulative impacts of a number of budget announcements:

Budget 2010 announced that the operating budgets of departments would be frozen at their 2010-11 levels for the fiscal years 2011-12 and 2012-13 also, the Departments would not be funded for 2010-11 to 2012-13 wage and salary increases resulting from collective agreement negotiations. The RCMP began taking measures in fiscal year 2009-10 to address the rapidly changing economic climate.  Recruitment of cadets at the RCMP Training Facility was substantially curtailed in anticipation of budgetary restraint federally, and softening demand for increased police services from our contract partners due to economic considerations.  This measure, along with other budgetary restrictions, had been put in place to mitigate the impact of the operating freeze.

Budget 2012 Implementation

This section provides an overview of the savings measures announced in Budget 2012 that will be implemented in order to refocus government and programs; make it easier for Canadians and business to deal with their government; and, modernize and reduce the back office.

The RCMP will achieve Budget 2012 savings of $44.4 million in 2012-13.  Savings will increase to $89.1 million in 2013-14 and will result in on-going savings of $195.2 million in 2014-15.  These savings will be accomplished with minimal impacts on direct policing operations.

The Force will realize savings across a number of administrative services by modernizing, simplifying and refocusing efforts on activities that directly contribute to the organization’s core policing mandate. With changes made to the Canada Health Act on June 29, 2012, every Regular Member of the RCMP will be an "insured person" under the Act and will receive the same level of basic health care coverage as every other Canadian living in their province or territory of residence.

Additional savings will be derived from operational support initiatives that enhance service delivery models within Criminal Intelligence, Technical Operations and the Canadian Police College.  It also includes restructuring the process of querying criminal records and police information databases, as well as savings within the Canadian Firearms Program and Forensic Laboratory Services.

Significant changes in relation to operations, personnel and programs

There have been no significant changes in relation to operations, personnel and programs in the third quarter of 2012-13.

Approval by Senior Officials

This section is to provide the approval of Senior Officials, as required by the Policy on Financial Resource Management, Information and Reporting as follows:

Approved by:

Bob Paulson,
Commissioner
Alain Duplantie, BBA, MBA, CGA
Assistant Commissioner
Chief Financial and Administrative Officer

Ottawa, Canada
February 13, 2013


Statement of Authorities (Unaudited)

For the quarter ended December 31, 2012
 (in thousands of dollars)

Fiscal Year 2012-2013
  Total available for use for the year ending March 31, 20131 Used during the quarter ended December 31, 2012 Year to date used at quarter-end
Gross Operating expenditures 4,103,790 1,150,296 2,907,681
Less: Vote Netted Revenues 1,760,450 802,046 1,308,280
Vote 45 - Net Operating expenditures 2,343,339 348,250 1,599,401
Vote 50 - Capital expenditures 340,895 38,214 96,161
Vote 55 - Grants and contributions 140,454 29,146 86,596
Contributions to employee benefit plans (members and public servants) 415,989 109,249 325,115
Proceeds from the Disposal of Crown Assets under the Surplus Crown Assets Act 10,114 2,958 5,393
Pensions under the Royal Canadian Mounted Police Pension Continuation Act 17,500 3,412 10,650
Statutory Authorities 443,602 115,619 341,158
Total budgetary authorities 3,268,291 531,229 2,123,316

1) Includes only Authorities available for use and granted by Parliament at quarter-end as well as a statutory authority for Proceeds from the Disposal of Crown Assets.

Fiscal Year 2011-2012
  Total available for use for the year ending March 31, 20121  2 Used during the quarter ended December 31, 2011 3 Year to date used at quarter-end 3
Gross Operating expenditures 3,920,512 939,266 2,725,643
Less: Vote Netted Revenues 1,716,932 396,115 819,730
Vote 45 - Net Operating expenditures 2,203,579 543,151 1,905,914
Vote 50 - Capital expenditures 345,697 34,188 100,422
Vote 55 - Grants and contributions 128,437 25,862 77,324
Contributions to employee benefit plans (members and public servants) 456,384 112,769 333,241
Proceeds from the Disposal of Crown Assets under the Surplus Crown Assets Act 10,834 2,937 4,287
Pensions under the Royal Canadian Mounted Police Pension Continuation Act 17,500 3,717 11,420
Statutory Authorities 484,718 119,423 348,948
Total budgetary authorities 3,162,431 722,624 2,432,609

1) Includes only Authorities available for use and granted by Parliament at quarter-end as well as a statutory authority for Proceeds from the Disposal of Crown Assets.

2) Pursuant to section 31.1 of the Financial Administration Act and Order-in-Council P.C. 2011-1297 effective November 15, 2011, $76,687 thousand is deemed to have been appropriated to Shared Services Canada, which results in a reduction for the same amount in Royal Canadian Mounted Police, Vote 45, Appropriation Act No.1, 2011-2012.

3)Excludes an amount of $17,535 thousand incurred on behalf of Shared Services Canada from the date of transfer of November 15 to December 31, 2011.

Departmental budgetary expenditures by Standard Object (unaudited)

For the quarter ended December 31, 2012
 (in thousands of dollars)

Fiscal Year 2012-2013
  Planned expenditures for the year ending March 31, 2013 Expended during the quarter ended December 31, 2012 Year to date used at quarter-end
Expenditures:      
Personnel 3,289,410 1,013,067 2,553,879
Transportation and communications 275,404 43,134 131,633
Information 6,884 523 1,339
Professional and special services 430,430 112,223 281,441
Rentals 99,037 22,723 60,801
Repair and maintenance 110,167 19,400 46,672
Utilities, materials and supplies 139,878 25,964 78,045
Acquisition of land, buildings and works 106,024 13,866 36,864
Acquisition of machinery and equipment 327,512 37,064 98,442
Transfer payments 157,954 32,558 97,246
Other subsidies and payments 86,042 12,753 45,234
Total gross budgetary expenditures 5,028,741 1,333,275 3,431,596
Less Revenues netted against expenditures:      
Vote Netted Revenues 1,760,450 802,046 1,308,280
Total Revenues netted against expenditures: 1,760,450 802,046 1,308,280
Total net budgetary expenditures 3,268,291 531,229 2,123,316


Fiscal Year 2011-2012
  Planned expenditures for the year ending March 31, 20121 Expended during the quarter ended December 31, 2011 Year to date used at quarter-end2
Expenditures:      
Personnel 3,086,187 784,766 2,341,596
Transportation and communications 282,442 53,587 165,841
Information 8,012 1,296 2,918
Professional and special services 429,286 111,868 263,442
Rentals 104,597 22,600 62,802
Repair and maintenance 125,434 19,312 47,706
Utilities, materials and supplies 156,328 30,937 83,946
Acquisition of land, buildings and works 106,610 15,617 34,878
Acquisition of machinery and equipment 338,512 36,102 105,438
Transfer payments 145,937 27,580 93,045
Other subsidies and payments 96,019 15,076 50,726
Total gross budgetary expenditures 4,879,364 1,118,738 3,252,338
Less Revenues netted against expenditures:      
Vote Netted Revenues 1,716,932 396,115 819,730
Total Revenues netted against expenditures: 1,716,932 396,115 819,730
Total net budgetary expenditures 3,162,431 722,624 2,432,609

1) Pursuant to section 31.1 of the Financial Administration Act and Order-in-Council P.C. 2011-1297 effective November 15, 2011, $76,687 thousand is deemed to have been appropriated to Shared Services Canada, which results in a reduction for the same amount in Royal Canadian Mounted Police, Vote 45, Appropriation Act No.1, 2011-2012.

2) Excludes an amount of $17,535 thousand incurred on behalf of Shared Services Canada from the date of transfer of November 15 to December 31, 2011.

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