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Quarterly Financial Report - For the quarter ended September 30, 2012

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

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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) 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) 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 will be established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012. 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 second quarter of 2012-13 to $2,769.3 million due to allocations from Treasury Board Central Votes for the operating budget carry forward ($101.1 million) and for the capital budget carry forward ($69.2 million). Similar to the situation in Q1, the difference between 2012-13 Q2 and 2011-12 Q2 is mainly attributable to the Main Estimates.

The only additional item since Q1 contributing to the year over year variance is an increase of $17 million in the RCMP’s operating and capital carry forward. Summarized below are the remaining significant factors from Q1 contributing to the $276 million net decrease are:

  • The reduction of $206 million related to the expiry of the RCMP’s 20-year policing services agreements with provinces, territories and municipalities on March 31, 2012. All contracting partners have signed the renewed contracts that came into effect April 1, 2012, and the RCMP will be requesting new appropriations through the 2012-13 Supplementary Estimates (B) for the renewal of the contract policing agreement;
  • The transfer of $143 million to Shared Services Canada to fund information technology services;
  • An increase of $41 million transferred from Public Safety and Emergency Preparedness for First Nations Community Policing Services; and
  • An increase of $12.7 million to meet the projected costs of the grant to compensate members’ injuries received in the performance of their duties.

Long description

Statement of Departmental Budgetary Expenditures by Standard Object

The RCMP has spent approximately 57% of its authorities at the end of the second quarter, compared with 56% 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 second quarter of 2012-13 compared to the same quarter last fiscal year are up $83 million, which is related to the timing of payments recorded. Overall revenue collected by year-end is expected to be consistent with revenue authorities.

Long description

Overall expenditures used during the second quarter were nearly the same as the previous year, with 2012-13 Q2 expenditures only 1% higher than the year before, whereas a year to date comparison of the expenditures reflects a net decrease of $117.9 million in 2012-13 over 2011-12. A detailed review by standard object emphasizes some significant variances which are described below.

By the end of Q2, Personnel expenditures are 1% lower in 2012-13 over 2011-12. The 1% difference year over year is related to the liquidation of severance pay being approximately $10 million higher in 2011-12 than 2012-13. However, it is anticipated that the liquidation of severance pay will be considerably higher in 2012-13 over the previous year in line with the 2012 Federal Budget announcement. Specifically, compensation for the members of the RCMP will be brought in line with that of other public and private sector employers, which has eliminated the accumulation of severance benefits for voluntary resignation and retirement. The RCMP will request funding for these payments through a Treasury Board Central Vote transfer.

It is noteworthy, that Personnel expenditures still include civilian members who are deemed to be transferred to SSC and represent approximately $11.5 million of the second quarter Personnel expenditures. These expenditures together with associated operating costs will be transferred to SSC.

A decrease in Transportation and Communication of $23.8 million is as a result of the transfer of administration of information technology infrastructure services to SSC (for example cell phone costs).

The significant decrease in Other Subsidies and Payments of $62 million in Q2 reflects the clearing of items that were temporarily held in suspense pending identification and coding in Q1 of 2012-13. Year to date expenditures are comparable to the year before.

These decreases are offset by a net increase in Professional Services of $17.6 million largely related to timing of expenditures and include such things as services provided by independent police departments and recoveries from OGDs, as well as increases under other business 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 Operating and Capital Budget Carry Forward for which supply was released on September 2nd, 2012.

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. As a result of the new police services agreements that came into effect April 1st, 2012, the RCMP requested the renewal of funding for the federal costs of contract policing services through Supplementary Estimates (B). Sustainable funding will continue to be challenged 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.

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. Overall, financial impacts due to Budget 2012 for the period ending September 30, 2012, were minimal and will be reflected in subsequent quarters.

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 second 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
November 13, 2012


Statement of Authorities (Unaudited)

For the quarter ended September 30, 2012
 (in thousands of dollars)

Fiscal Year 2012-2013
  Total available for use for the year ending March 31, 20131 2 Used during the quarter ended September 30, 2012 Year to date used at quarter-end
Gross Operating expenditures 3,447,727 847,307 1,757,385
Less: Vote Netted Revenues 1,551,649 102,268 506,233
Vote 45 - Net Operating expenditures 1,896,077 745,039 1,251,152
Vote 50 - Capital expenditures 300,051 40,084 57,947
Vote 55 - Grants and contributions 132,498 28,762 57,450
Contributions to employee benefit plans (members and public servants) 415,989 129,425 215,866
Proceeds from the Disposal of Crown Assets under the Surplus Crown Assets Act 7,187 1,401 2,434
Pensions under the Royal Canadian Mounted Police Pension Continuation Act 17,500 3,572 7,239
Statutory Authorities 440,676 134,397 225,539
Total budgetary authorities 2,769,302 948,283 1,592,087

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) Total available for use does not reflect measures announced in Budget 2012

Fiscal Year 2011-2012
  Total available for use for the year ending March 31, 20121 Used during the quarter ended September 30, 2011 Year to date used at quarter-end
Gross Operating expenditures 3,820,177 963,788 1,786,379
Less: Vote Netted Revenues 1,716,932 203,700 423,616
Vote 45 - Net Operating expenditures 2,103,245 760,087 1,362,763
Vote 50 - Capital expenditures 338,995 47,101 66,234
Vote 55 - Grants and contributions 120,363 25,727 51,462
Contributions to employee benefit plans (members and public servants) 456,384 100,611 220,473
Proceeds from the Disposal of Crown Assets under the Surplus Crown Assets Act 8,847 1,347 1,350
Pensions under the Royal Canadian Mounted Police Pension Continuation Act 17,500 3,765 7,703
Statutory Authorities 482,731 105,723 229,526
Total budgetary authorities 3,045,334 938,639 1,709,984

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

Departmental budgetary expenditures by Standard Object (unaudited)

For the quarter ended September 30, 2012
 (in thousands of dollars)

Fiscal Year 2012-2013
  Planned expenditures for the year ending March 31, 20131 Expended during the quarter ended September 30, 2012 Year to date used at quarter-end
Expenditures:      
Personnel 2,795,175 810,089 1,540,812
Transportation and communications 240,194 45,947 88,499
Information 5,886 500 816
Professional and special services 376,909 101,513 169,217
Rentals 85,999 21,292 38,078
Repair and maintenance 94,536 16,366 27,273
Utilities, materials and supplies 120,397 28,198 52,081
Acquisition of land, buildings and works 94,090 17,155 22,998
Acquisition of machinery and equipment 283,694 36,204 61,378
Transfer payments 149,998 12,024 64,688
Other subsidies and payments 74,076 (38,737) 32,481
Total gross budgetary expenditures 4,320,952 1,050,551 2,098,321
Less Revenues netted against expenditures:      
Vote Netted Revenues 1,551,649 102,268 506,233
Total Revenues netted against expenditures: 1,551,649 102,268 506,233
Total net budgetary expenditures 2,769,302 948,283 1,592,087

1) Planned expenditures do not reflect measures announced in Budget 2012.

Fiscal Year 2011-2012
  Planned expenditures for the year ending March 31, 20121 Expended during the quarter ended September 30, 2011 Year to date used at quarter-end
Expenditures:      
Personnel 2,991,854 802,382 1,556,830
Transportation and communications 281,137 62,624 112,255
Information 7,975 1,224 1,622
Professional and special services 427,301 96,364 151,574
Rentals 104,114 22,996 40,203
Repair and maintenance 124,854 14,751 28,394
Utilities, materials and supplies 155,605 27,624 53,009
Acquisition of land, buildings and works 99,039 13,962 19,261
Acquisition of machinery and equipment 336,950 46,920 69,337
Transfer payments 137,863 29,992 65,465
Other subsidies and payments 95,575 23,499 35,651
Total gross budgetary expenditures 4,762,266 1,142,339 2,133,600
Less Revenues netted against expenditures:      
Vote Netted Revenues 1,716,932 203,700 423,616
Total Revenues netted against expenditures: 1,716,932 203,700 423,616
Total net budgetary expenditures 3,045,334 938,639 1,709,984

1) Planned expenditures do not reflect measures announced in Budget 2012.

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