Quarterly Financial Report - For the quarter ended September 30, 2014
Date: December 17, 2014
Location: Annex B: Departmental budgetary expenditures by standard object (unaudited) - For the quarter ended September 30, 2014; Expended during the quarter ended September 30, 2013
- Total Revenues netted against expenditures - 479,394
- Total net budgetary expenditures - 623,963
Rationale for revision: Original amount reported was not correct.
- Highlights of fiscal quarter and fiscal year to date results
- Risks and uncertainties
- Budget 2012 implementation
- Significant changes in relation to operations, personnel and programs
- Annex A: Statement of Authorities (unaudited)
- Annex B: Budgetary Expenditures by Standard Object (unaudited)
Statement outlining results, risks and significant changes in operations, personnel and program
This quarterly financial report (QFR) 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. The report should be read in conjunction with the Main Estimates and Supplementary Estimates for 2014-15, as well as Canada's Economic Action Plan 2014 (Budget 2014). The quarterly report has not been subject to an external audit or review.
The Minister of Public Safety and Emergency Preparedness 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 Part II of the Estimates.
1.2 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 2014-15 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.
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.
2. Highlights of fiscal quarter and fiscal year to date (YTD) results
2.1 Statement of Authorities
For the period ending September 30, 2014, the RCMP had $2,821.4 million in total authorities available for use, as reflected in Annex A: Statement of Authorities. This amount includes the Main Estimates, $10.2 million related to the proceeds collected from the disposal of Crown assets and $1.8 million for in-year statutory adjustments, as displayed in Graph 1: Comparison of Total Budgetary Authorities below.
Graph 1: Comparison of Total Budgetary Authorities as of September 30, 2013 and September 30, 2014 (in millions of dollars)
Description of graph in tabular format follows.
|Supplementary Estimates (A)||-$1||$0|
|TB Vote 25 - Operating Budget Carry Forward||$138|
|TB Vote 33 - Capital Budget Carry Forward||$45|
|In-year Statutory Adjustments||$2|
|Proceeds from Disposal of Crown Assets||$7||$10|
Total authorities have increased by $57.0 million or 2%, when compared to the same period last year. This year-over-year change is primarily driven by two key factors. First, the 2014-15 Main Estimates included the final reduction to the RCMP's authorities related to the savings measures announced in Budget 2012. This reduction in authorities is offset by a timing difference in the receipt of funding of the operating and capital budget carry forwards. In 2013-14, the funding was not reflected in the RCMP's reference levels until the third quarter, as compared to 2014-15 which saw the transfer from TB Central Votes in the second quarter. When considering this timing difference, the RCMP's year-over-year authorities would have in fact decreased by approximately 5%.
2.1.1 Variance in Vote 1 - Net Operating expenditures
The increase of $37.9 million in Vote 1 - Net Operating expenditures authorities, reflected in Table 1: Authorities Available for Use, is related to a year-over-year reduction in the RCMP's Main Estimates and the timing of the Vote 25 - Operating Budget Carry Forward. The Operating Budget Carry Forward did not impact the RCMP's reference levels until the third quarter in 2013-14, whereas the funding was received in the second quarter of 2014-15. The increase is reduced by the year-over-year net reduction to the RCMP's 2014-15 Main Estimates by $100.8 million from 2013-14. This year-over-year reduction in the Estimates is largely due to $96.5 million for the savings measures announced in Budget 2012.
2.1.2 Variance in Vote 5 - Capital expenditures
The year-over-year increase to the Vote 5 - Capital expenditures authorities of $24.3 million, is primarily related to reductions in the 2014-15 Main Estimates and the timing of receipt of the Vote 33 - Capital Budget Carry Forward. The 2014-15 Main Estimates saw a reduction to a number of capital projects as outlined in the Quarterly Financial Report for period ending June 30, 2014. This is offset by an increase in 2014-15 for the Capital Budget Carry Forward received the second quarter, which was not reflected in the RCMP's references levels in 2013-14 until the third quarter.
2.1.3 Variance in Vote 10 - Grants and contributions
The increase of $18.7 million in Vote 10 - Grants and contributions is mainly attributable to the increase in projected costs of the grant to compensate members of the RCMP for injuries received in the performance of their duties, as a result of increases in the number of Members receiving disability pension awards and the annual increases due to the indexation of disability pension benefits.
2.1.4 Variance in Budgetary statutory authorities
The reduction in Budgetary statutory authorities of $23.7 million is primarily associated to the decrease in Employee Benefit Plan costs due to a change in the rate used to calculate Employee Benefit Plan costs government wide and by the decrease to the pensions under the RCMP Pension Continuation Act, as the number of remaining pensioners and survivors are decreasing and all new members contribute under the RCMP Superannuation Act. Additionally there is a year-over-year increase in the Proceeds from the Disposal of Crown Assets.
|Vote 1- Net Operating expenditures||1,904,247||1,866,380||37,867||2%|
|Vote 5 - Capital expenditures||291,867||267,613||24,254||9%|
|Vote 10 - Grants and contributions||163,636||144,974||18,662||13%|
|Budgetary statutory authorities||461,673||485,420||(23,747)||-5%|
2.2 Statement of Departmental Budgetary Expenditures by Standard Object
The RCMP has spent approximately 45% of its authorities at the end of the second quarter, compared with 47% in the previous year, as demonstrated in Graph 2: Comparison of Total Budgetary Authorities and Net Expenditures below, when vote netted revenue is taken into consideration.
Table 2: Expenditures by Standard Object at Quarter end shows net expenditures used during 2014-15 being $8.4 million lower than the previous year; this is a result of revenues being higher by $50.4 million in the current year when compared to last year at the same time. A year-to-date comparison of gross expenditures reflects an increase of $42 million or a 2% increase in 2014-15 over 2013-14. A detailed review by standard object emphasizes some significant variances which are described below.
Graph 2: Comparison of Total Budgetary Authorities and Net Expenditures as of September 30, 2013 and September 30, 2014
(in millions of dollars and percentage)
Description of graph in tabular format follows.
|Total Budgetary Authorities||$2,764||$2,821|
|Net expenditures for the year to date||$1,290 (47%)||$1,281 (45%)|
2.2.1 Variance by Revenue
Vote netted revenue collected in 2014-15 is higher by $50.4 million over the same period last year. This is primarily driven by three factors. First is due to the timing of collections, as the RCMP received approximately $33 million in revenue in the first quarter of fiscal year 2014-15, which was expected to be collected in the fourth quarter of 2013-14. Second, actual revenues generated from Contract Policing activities increased reflecting year-over-year growth in that program. This year-over-year increase in Contract Policing revenues is offset by a reduction in revenue under pension administration. The recovery of pension administration costs have decreased by $16.7 million when compared to the same period last year. This lag in revenue collection is temporary in nature and is attributed to the renewal of the Pension Administration Services (PAS) authorities and the realignment of Pension Administration Outsourcing Project (PAOP) authorities. The renewal Treasury Board Submission is currently awaiting approval, expected in November.
2.2.2 Variance by Personnel
The $18.3 million reduction in personnel expenditures is largely due to a year-over-year decrease related to the one-time disbursement of the liquidation of severance pay for RCMP members. Expenditures were $26 million higher in 2013-14 as compared to the same time period this fiscal year. Additionally, expenditures have decreased related to temporary civilian employees. This is directly related to the Enhancing RCMP Accountability Act, which in part addressed the human resource management process, resulting in the "sunsetting" of temporary civilian employees gradually making the transition to other employee categories (effective March 31, 2014). This reduction is offset by annual wage increases and a $10 million increase in regular member overtime which is due to operational requirements.
2.2.3 Variance by Transportation and Communications
Transportation and communications expenditures are $14.1 million higher in 2014-15 as compared to 2013-14 and can largely be attributed to an increase in travel and relocation expenditures. The expenditure increases are mainly due to operational requirements in support of core policing, travel related to operational training and relocations as a result of the movement of cadets to their first post and regular members across the Force.
2.2.4 Variance by Acquisition of Land, Buildings, and Works
The $12.2 million increase in expenditures is related to three capital projects; the RCMP Training Academy refurbishment, PRTC Firing Range and the 100 Mile House Detachment. First, in early 2013 the RCMP Training Academy refurbishment was stopped due to non-performance issues with the general contractor, whereas in 2014-15, a contractor is in place and the project is progressing as planned, therefore, resulting in higher year-over-year expenditures. The remaining increase can be attributed to two projects, the construction of the PRTC Firing Range and 100 Mile House Detachment which are also reflecting higher year-over-year expenditures at the end of the second quarter.
2.2.5 Variance by Acquisition of Machinery and Equipment
Acquisitions of machinery and equipment have increased by $12.9 million which is primarily attributed to the timing of purchases related to radio communications equipment, which are $6.7 million higher compared to last year at the same time and a year-over-year increase in vehicle purchases of $3.5 million.
2.2.6 Variance by Other subsidies and payments
The $22.2 million increase in year-over-year expenditures for other subsidies and payments is related to the timing of items being cleared from the interdepartmental settlement suspense account of approximately $6.2 million and the one-time transition payment of $13.9 million for implementing salary payment in arrears by the Government of Canada.
|Transportation and communications||94,867||80,770||14,097||17%|
|Professional and special services||157,903||157,699||205||0%|
|Repair and maintenance||36,108||34,677||1,431||4%|
|Utilities, materials and supplies||51,762||53,133||(1,371)||-3%|
|Acquisition of land, buildings and works||24,024||11,841||12,183||103%|
|Acquisition of machinery and equipment||68,945||56,000||12,946||23%|
|Other subsidies and payments||47,882||25,678||22,204||86%|
|Total gross budgetary expenditures||2,153,006||2,110,994||42,012||2%|
|Less: Vote Netted Revenue||871,905||821,473||50,432||6%|
|Total net budgetary expenditures||1,281,100||1,289,521||(8,420)||-1%|
3. Risks and Uncertainties
The Departmental QFR reflects the results of the current fiscal period in relation to the Main Estimates, Supplementary Estimates (A), for which supply was released on June 10, 2014.
The RCMP is funded through annual appropriations; as a result, operations are impacted by any changes in funding approved through Parliament. There will continue to be ongoing pressure on the RCMP's appropriations as the Government of Canada reviews spending and resource allocations, including the most recent examples;
- Budget 2013 impacted the RCMP's operating budget with the announcement to further reduce travel costs by implementing modern alternatives. The RCMP is focusing on reducing non-core mandate related travel.
- The October 16th, 2013 Speech from the Throne signalled the Government of Canada's commitment to continue to reduce the size and cost of government by freezing departmental operating budgets for 2014-15 and 2015-16, as well as requiring departments to absorb any collectively bargained wage increases, restrain hiring, and additional reductions to internal government spending. Further communication from central agencies on the 2013 Operating Budget Freeze reiterated continued scrutiny of operating budget authorities.
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. Recruitment of cadets by the RCMP is being adjusted as demand for increased policing services from our contract partners remains lower than expected due to their economic considerations. Although, the RCMP is seeing a reduction in demand with attrition and the contract partner's demand, the RCMP's recruitment campaigns targets are properly placed to deal with attrition.
Additionally, the RCMP can be requested to respond to emergent issues anywhere in Canada and/or provide support for International Police operations at any time. 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.
To best manage the current financial climate, the RCMP continues to pursue a financial management strategy to address its funding requirements.
4. Budget 2012 implementation
This section provides an overview of the savings measures announced in Budget 2012 intended to refocus government and programs; make it easier for Canadians and businesses to deal with their government; or modernize and reduce the back office. 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.
The RCMP achieved Budget 2012 savings of $44.4 million in 2012-13 and $89.1 million in 2013-14. 2014-15 savings will reach $195.2 million (inclusive of employee benefit plan costs). These savings will be accomplished with minimal impacts on direct policing operations.
In fiscal year 2014-15 some of the key initiatives include:
- Health Care Modernization - The RCMP is modernizing its Health Services program through an amendment to the definition of an "insured person" under the Canada Health Act (received Royal Assent on June 29, 2012) and, as of April 1, 2013, basic health care coverage for regular members is now under provincial/territorial regimes. Full savings associated to the initiative will be realized in 2014-15. The initiative also includes changes to the RCMP's Supplemental Health Care, Sick Leave, and Disability Management regimes. However, in respect to the Sick Leave and Disability Management portion of the initiative, a two-year deferral until 2016-17 of the associated savings has been approved as the RCMP was instructed to await the establishment of the Workplace Wellness and Productivity Strategy (WPS) solution for the wider public service prior to advancing a proposal.
- Internal Services and Expenditure Efficiencies - A series of initiatives are aimed at reengineering how the main Internal Services functions are provided at the RCMP and identifying opportunities to reduce discretionary costs. Impacted areas include corporate accounting, fleet, financial management, material management, project management, information management, information technology, human resources, real property management, communications, procurement, and management and oversight functions.
- Forensic Lab Consolidation - Through this initiative, savings will be generated from administrative efficiencies, the rationalization of labour requirements and reducing infrastructure costs resulting from geographic consolidation to three labs within the current six site model. The final lab closure is scheduled for March 1, 2015.
- Civilianization - This initiative involves the conversion of police officer positions, in administrative or operational support functions, to non-police officer classifications in the areas of strategic planning, information management, information technology, and human resource management across the organization with a particular emphasis on positions at National Headquarters. The remainder of the savings will be achieved in 2014-15 as Regular Members continue to be transitioned out of those identified positions.
- Return of previously approved funding for authorized growth in Federal Policing - The unallocated portion of these funds, intended for future resource increases to support Federal Policing, were reallocated in recent years to mitigate increasing resource requirements within the RCMP's National Police Services (NPS). The capacity issues within NPS are currently being addressed separately as part of its sustainability initiative.
- Operational support initiatives are also being undertaken to enhance service delivery models within Criminal Intelligence, Technical Operations, the Canadian Police College, and the Canadian Firearms Program, while reducing costs.
Overall, as of period ending September 30, 2014, the RCMP is on track to achieve its savings target of $195.2 million, taking into consideration the two year deferral of the Sick Leave and Disability Management portion of Healthcare Modernization. Overall, expenditures are trending down in line with the RCMP's Budget 2012 initiatives including a reduction the operational clothing allowance and health expenditures. A few initiatives are not materializing as originally intended and will not individually meet their full savings target. In addition, a few initiatives are experiencing implementation lags, primarily due to the timing of Work Force Adjustment processes and options selected by affected employees. However, mitigating strategies are in place to address any resulting savings shortfalls.
5. Significant changes in relation to operations, personnel and programs
5.1.1 Bill C-42: An Act to amend the Royal Canadian Mounted Police Act and to make related and consequential amendments to other Acts
The Enhancing Royal Canadian Mounted Police Accountability Act (short title) received royal assent on June 19, 2013. The act strengthens the RCMP's accountability and transparency by:
- creating an independent Civilian Review and Complaints Commission to replace the existing Commission for Public Complaints against the RCMP;
- establishing a statutory framework to enhance the transparency of criminal investigations of serious incidents involving RCMP members; and
- modernizing the RCMP's human resource management process.
The internal changes to the RCMP's human resource management process will include; restructuring the discipline system, streamlining the grievance process, modernizing human resource management authorities and systems, and reducing the number of categories of employees from three to two (Regular Members and Public Servants).
There has been no significant change in relation to personnel in the second quarter of 2014-15.
There has been no significant change in relation to programs in the second quarter of 2014-15.
November 17, 2014
Alain Duplantie, MBA, CPA, CGA
Chief Financial and Administrative Officer
Annex A: Statement of authorities (unaudited) – For the quarter ended September 30, 2014
|Total available for use for the year ending March 31, 2015 Footnote 4||Used during the quarter ended September 30, 2014||Year to date used at quarter-end|
|Gross Operating expenditures||3,738,952||879,451||1,763,876|
|Less: Vote Netted Revenues||1,834,705||467,738||871,905|
|Vote 1 - Net Operating expenditures||1,904,247||411,713||891,971|
|Vote 5 - Capital expenditures||291,867||55,878||81,926|
|Vote 10 - Grants and contributions||163,636||36,659||73,221|
|Pensions and other employee benefits - Members of the Force||350,845||72,245||178,822|
|Contributions to employee benefit plans (public servants)||87,587||21,830||43,659|
|Pensions under the Royal Canadian Mounted Police Pension Continuation Act||13,000||2,870||5,821|
|Refunds of amounts credited to revenues in previous years||0||16||26|
|Proceeds from the Disposal of Crown Assets under the Surplus Crown Assets Act||10,241||2,127||4,610|
|Total budgetary authorities||2,821,423||604,382||1,281,101|
|Total available for use for the year ending March 31, 2014 Footnote 4||Used during the quarter ended September 30, 2013||Year to date used at quarter-end|
|Gross Operating expenditures||3,720,895||925,928||1,755,386|
|Less: Vote Netted Revenues||1,854,515||479,394||821,473|
|Vote 1 - Net Operating expenditures||1,866,380||446,534||933,913|
|Vote 5 - Capital expenditures||267,613||39,167||55,014|
|Vote 10 - Grants and contributions||144,974||32,937||65,341|
|Pensions and other employee benefits - Members of the Force||371,520||76,854||180,243|
|Contributions to employee benefit plans (public servants)||92,921||23,220||46,440|
|Pensions under the Royal Canadian Mounted Police Pension Continuation Act||14,000||3,094||6,252|
|Refunds of amounts credited to revenues in previous years||0||203||366|
|Proceeds from the Disposal of Crown Assets under the Surplus Crown Assets Act||6,978||1,949||1,949|
|Total budgetary authorities||2,764,386||623,963||1,289,521|
Annex B: Departmental budgetary expenditures by standard object (unaudited) - For the quarter ended September 30, 2014
|Planned expenditures for the year ending March 31, 2015||Expended during the quarter ended September 30, 2014||Year to date used at quarter-end|
|Transportation and communications||211,842||52,440||94,867|
|Professional and special services||439,292||94,013||157,903|
|Repair and maintenance||83,837||22,842||36,108|
|Utilities, materials and supplies||116,838||28,128||51,762|
|Acquisition of land, buildings and works||102,557||16,163||24,024|
|Acquisition of machinery and equipment||264,121||43,670||68,945|
|Other subsidies and payments||72,647||(6,611)||47,882|
|Total gross budgetary expenditures||4,656,128||1,072,120||2,153,006|
|Less Revenues netted against expenditures:|
|Vote Netted Revenues||1,834,705||467,738||871,905|
|Total Revenues netted against expenditures:||1,834,705||467,738||871,905|
|Total net budgetary expenditures||2,821,423||604,382||1,281,101|
|Planned expenditures for the year ending March 31, 2014||Expended during the quarter ended September 30, 2013||Year to date used at quarter-end|
|Transportation and communications||225,815||40,359||80,770|
|Professional and special services||397,263||93,850||157,699|
|Repair and maintenance||87,517||21,739||34,677|
|Utilities, materials and supplies||117,958||29,196||53,133|
|Acquisition of land, buildings and works||86,035||9,047||11,841|
|Acquisition of machinery and equipment||250,447||36,420||56,000|
|Other subsidies and payments||70,676||14,757||25,678|
|Total gross budgetary expenditures||4,618,900||1,103,357||2,110,994|
|Less Revenues netted against expenditures:|
|Vote Netted Revenues||1,854,515||479,374||821,473|
|Total Revenues netted against expenditures:||1,854,515||479,394||821,473|
|Total net budgetary expenditures||2,764,386||623,963||1,289,521|
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