Quarterly Financial Report - For the period ending June 30, 2018
Date: October 15, 2018
Location: Annex B: Departmental budgetary expenditures by standard object (unaudited)
Revision: "Other subsidies and payments" was changed to "Public debt charges" and an additional line was inserted for "Other subsidies and payments:"
- Planned expenditures for the year ending March 31, 2019 – 118,389
- Expended during the quarter ended June 30, 2018 – 22,799
- Year to date used at quarter-end – 22,799
Rationale for revision: Original version mislabelled the "Other subsidies and payments" line in the Annex; it should have been "Public debt charges." The Annex also omitted the line for "Other subsidies and payments."
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 for 2018-19, as well as Budget 2018. 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 Main 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 for the 2018-19 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 money 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 results reporting process. However, the spending authorities voted by Parliament remain on a cash expenditure basis.
2. Highlights of the fiscal quarter and fiscal year-to-date (YTD) results
2.1 Statement of Authorities
For the period ending June 30, 2018, the RCMP had $3,556.8 million in total authorities available for use, as reflected in Annex A: Statement of Authorities. This amount includes the Main Estimates, transfer from Treasury Board (TB) Central Vote 40 - Budget 2018 implementation and $6.6 million related to the proceeds collected from the disposal of Crown assets, as displayed in Graph 1: Comparison of Total Budgetary Authorities below.
Total authorities have increased by $667.3 million, when compared to the previous year, which includes a year-over-year increase of $652.3 million in Vote 1 – Operating expenditures, a $30.1 million increase in Vote 10 – Grants and contribution and a $22.8 million increase in Budgetary statutory authorities. These increases are partially offset by a decrease of $37.9 million in Vote 5 – Capital expenditures. The overall increase is primarily related to the net increase of $658.1 million in the 2018-19 Main Estimates and an increase of $9.5 million related to Budget 2018 item received through a transfer from TB Central Vote 40. Part of this increase is offset by a minor decrease of $0.3 million the proceeds collected from the disposal of Crown assets as the carry forward amount has decreased in 2018-19 when compared to 2017-18.
Graph 1: Comparison of Total Budgetary Authorities as of June 30, 2017 and June 30, 2018 (in millions of dollars)
Comparison of Total Budgetary Authorities as of June 30, 2017 and June 30, 2018 (in millions of dollars)
|TB Vote 40 – Budget Implementation||$9||$0|
|Proceeds from Disposal of Crown Assets||$7||$7|
2.1.1 Variance in Vote 1 – Net Operating expenditure authorities
The increase of $652.3 million in Net Operating authorities, reflected in Table 1: Authorities Available for Use, is attributable to the year-over-year increase in the 2018-19 Main Estimates as compared to the previous year. The increase is primarily related to a new funding model for the Contract Policing program ($500.1 million). This one-time, fiscally-neutral technical adjustment increase in appropriations will be largely offset by an equal increase in non-respendable non-taxable revenue to be deposited in the Consolidated Revenue Fund. The overall federal portion of the cost to deliver contract policing services remains consistent with prior year increases. The increase is also related to funding for the 2018 G7 Summit in Charlevoix, Quebec ($126.9 million) and negotiated salary adjustments for RCMP regular members, Civilian Members and Public Service employees ($61.8 million). These increases are partially offset by sunsetting funding related to the Merlo Davidson class action settlement agreement ($63.7 million) and Canada's Migrant Smuggling Enforcement Strategy ($3.7 million).
2.1.2 Variance in Vote 5 – Capital expenditure authorities
Capital authorities have decreased by $37.9 million when compared to the first quarter of 2017-18 as a result of an overall decrease in the 2018-19 Main Estimates. The decrease is primarily due to six technical adjustments related to funding received to maintain and upgrade federal infrastructure assets ($21.7 million), to replace the RCMP National Forensic Laboratory Services facilities ($6.1 million), for the National Operation Center (NOC) ($5.8 million), funding for the RCMP's Contract Policing program ($4.9 million), funding to expand biometric screening in Canada's immigration system ($1.2 million) and funding for the security infrastructure of the Rideau Cottage official residence ($1.2 million). These decreases are partially offset by an increase in funding to implement and administer a federal framework to legalize and regulate Cannabis ($2.5 million).
2.1.3 Variance in Vote 10 – Grants and contributions
The increase of $30.1 million in Grants and contributions authorities is related to changes in the 2018-19 Main Estimates for projected costs of the grant to compensate members of the RCMP for injuries received in the performance of their duties. The increase is as a result of a higher number of Members receiving disability pension awards and the indexation of disability pension benefits.
2.1.4 Variance in Budgetary statutory authorities
The increase in budgetary statutory authorities of $22.8 million in the 2018-19 Main Estimates is primarily related to an increase of $24.1 million in Employee Benefit Plan costs related to new initiatives and a change in the rate used to calculate Employee Benefit Plan costs government wide. These increases are offset by reduction in funding for the Pension Continuation Act (PCA) statutory grant ($1.8 million) as there are fewer recipients and a minor decrease in the proceeds collected from the disposal of Crown assets ($0.3 million).
|Vote 1 - Net Operating expenditures||2,540,328||1,888,011||652,316||35%|
|Vote 5 - Capital expenditures||289,536||327,466||(37,930)||(12%)|
|Vote 10 - Grants and contributions||253,673||223,573||30,100||13%|
|Budgetary statutory authorities||473,262||450,455||22,807||5%|
For more information on the authority changes impacting the RCMP we would direct the reader to our 2018-19 Main Estimates.
2.2 Statement of Departmental Budgetary Expenditures by Standard Object
The RCMP has spent approximately 22% of its authorities at the end of the first quarter, compared with 31% 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.
Graph 2: Comparison of Total Budgetary Authorities and Net Expenditures as of June 30, 2017 and June 30, 2018 (in millions of dollars and percentage)
Comparison of Total Budgetary Authorities and Net Expenditures as of June 30, 2017 and June 30, 2018 (in millions of dollars and percentage)
|Total Budgetary Authorities||$3,557||$2,890|
|Net expenditures for the quarter||$792 (22%)||$901 (31%)|
Table 2: Net Expenditures by standard object at the end of the first quarter 2018-19 were 12% or $109 million lower than the previous year. This variance is primarily the result of increased revenue collections. Additionally there was a reduction in gross expenditures of $22.0 million or 2% from the previous year. A detailed review by standard object emphasizes some significant variances which are described below.
|Transportation and telecommunications||67,541||62,336||5,205||8%|
|Professional and special services||95,826||82,957||12,869||16%|
|Repair and maintenance||13,373||12,455||918||7%|
|Utilities, materials and supplies||35,319||28,038||7,281||26%|
|Acquisition of land, buildings and works||9,809||4,175||5,634||135%|
|Acquisition of machinery and equipment||48,929||22,914||26,015||114%|
|Public debt charges||188||0||188||100%|
|Other subsidies and payments||22,799||21,642||1,157||5%|
|Total gross budgetary expenditures||1,199,564||1,221,570||(22,006)||(2%)|
|Less: Vote Netted Revenue||407,855||320,443||87,412||27%|
|Total net budgetary expenditures||791,709||901,127Footnote 3||(109,418)||(12%)|
2.2.1 Variance by Revenue
Vote netted revenue collected in the first quarter of 2018-19 increased by $87.4 million (or 27%) over the same period last year. The increase is related primarily to the timing of the invoices for contract policing services, as well as increased revenue related to growth within that program.
2.2.2 Variance by Personnel
Personnel expenditures are $101.8 million (or 11%) lower when compared to 2017-18. The decrease is primarily due to $122.4 million of retroactive salary payments that occurred in the first quarter of 2017-18, in addition to an associated decrease of $17.8 million for employee benefit plan costs. This significant decrease was partially offset the ongoing impact of the new rates of pay and increased overtime cost for security related to the G7 Summit, in Charlevoix Quebec.
2.2.3 Variance by Professional and Special Services
Professional and Special Services have increased by $12.9 million (or 16%) when compared to 2017-18. The increase is primarily due to an increase $2.4 million in expenditures related to the G7 Summit and increased expenditures of $6.1 million for Information Management and Information Technology projects. Additionally health costs for regular members and pensioners have increased by $3.7 million. The remaining increases can be attributed to invoicing timing differences.
2.2.4 Variance by Rentals
Rentals have increased by $13.4 million (or 67%) when compared to 2017-18. This increase is primarily due to increased costs of $12.9 million incurred in for security costs related to the G7 Summit.
2.2.5 Variance by Utilities, Materials and Supplies
Utilities, Materials and Supplies have increased by $7.3 million (or 26%) in comparison to 2017-18. This is mainly due to increased costs of $3.7 million incurred for security related to the G7 Summit, increased fuel expenditures of $1.3 million, as well as $0.7 million in incremental Clothing and Kit for new recruits. The remaining variance is attributed for the most part to timing differences of invoices throughout the organization.
2.2.6 Variance by Acquisition of Land, Buildings, and Works
Acquisitions of Land, Buildings and Works expenditures have increased by $5.6 million (or 135%) when compared to 2017-18. This increase primarily relates to $3.0 million for the construction of the new Vancouver laboratory and $2.1 million for various construction projects. The remaining variance is largely related to increased security costs related to the G7 Summit.
2.2.7 Variance by Acquisition of machinery and equipment
Increased expenditures for the acquisition of machinery and equipment of $26.0 million (or 114%) in comparison to 2017-18 is primarily due to $9.6 million in security costs related to the G7 Summit as well as $8.1 million related to vehicle and fit up equipment purchased as bulk orders, which occurs at different periods throughout the year. The remaining variance is largely as a result of timing differences in the acquisition of annual inventories, information management and information technology invoices, and investigational aids.
2.2.8 Variance by Transfer Payments
Increases of $7.1 million (or 13%) related to Transfer Payments are related to the Grant to compensate members injured in the performance of their duties resulting from an increase in the number of members receiving disability pension awards and the annual increases due to the indexation of disability pension benefits.
2.2.9 Variance by Public debt Charges
The $0.2 million (or 100%) increase in expenditures is due to a government wide coding change. Previously these expenditures were captured under Other Subsidies and payments as was the case in 2017-18.
3. Risks and uncertainties
The Departmental QFR reflects the results of the current fiscal period in relation to the Main Estimates, for which full supply was released on June 21, 2018.
The RCMP is funded through annual appropriations and are, therefore, impacted by any changes in funding approved through Parliament. In addition, it receives a significant portion of funding through vote netted revenue (VNR) from the provision of policing services to provinces, territories, municipalities and first nations communities, as well as from cost sharing agreements with provinces and territories for the provision of DNA analysis by the RCMP. The RCMP also receives VNR authorities to bill Parliamentary Protective Service (PPS) for the provision of security services throughout the Parliamentary precinct and the grounds of Parliament Hill.
On October 6, 2016, the RCMP announced that a settlement agreement had been reached between the RCMP and the plaintiffs in the Merlo and Davidson lawsuits filed on behalf of current and former female regular members, civilian members and public service employees. The settlement agreement was approved by the Federal Court and includes an independent claims process with compensation for women working, or having worked, at the RCMP who experienced harassment, bullying or discrimination based on their gender or sexual orientation during their employment from September 16, 1974 until May 30, 2017. The assessment of claims is the responsibility of an Independent Assessor appointed by the Federal Court. The window in which class members could file claims ran from August 12, 2017 to May 22, 2018. According to statistics posted on the Independent Assessor's website, a total of 3,131 claims were filed. As claims are assessed by the Independent Assessor, compensation awards are currently being paid to successful claimants in accordance with the terms of the settlement.
Given the increasing demands on RCMP resources, particularly on National Security files, the RCMP is facing significant resourcing challenges. The increased concerns around terrorism and extremism, cybercrime, changing demographics, population growth and rapid technological advancements continues to create unanticipated operational requirements and increase the existing organizational costs.
In recent years, the RCMP's reference levels have been constrained by government-wide spending reduction exercises which have resulted in significant financial pressures. In order to assess the financial integrity issues faced by the RCMP and serve as the basis for longer term strategic recommendations to the Minister of Public Safety and Preparedness, a comprehensive resourcing review was undertaken, and a final report was completed in May 2017. The review findings have been assessed and the RCMP will be returning to Government with a fulsome Departmental Review in the fall of 2018, with the expectation that longer term options related to addressing the resourcing issues will be presented.
4. Significant changes in relation to operations, personnel and programs
In comparison to the first quarter of 2017-18, the RCMP has seen two major operational initiatives: Canada Hosted the G7 Summit; and there have been increased expenses related to the irregular migration.
Commissioner Brenda Lucki was appointed as the 24th Commissioner of the RCMP on March 09, 2018 with a starting date of April 16, 2018.
There has been no significant change in relation to programs in the first quarter of 2018-19.
Approved by Senior Officials
Original signed by
Brenda Lucki, Commissioner
Original signed by
Dennis Watters, CPA, CA
Chief Financial and Administrative Officer
Date: August 20, 2018
Annex A: Statement of Authorities (unaudited)
|Total available for use for the year ending |
March 31, 2019 Footnote 4
|Used during the quarter ended |
June 30, 2018
|Year to date used at quarter-end|
|Gross Operating expenditures||4,240,316||1,004,317||1,004,317|
|Less: Vote Netted Revenues||1,699,988||407,855||407,855|
|Vote 1 - Net Operating expenditures||2,540,328||596,462||596,462|
|Vote 5 - Capital expenditures||289,536||33,533||33,533|
|Vote 10 - Grants and contributions||253,673||59,536||59,536|
|Pensions and other employee benefits - Members of the Force||398,850||85,039||85,039|
|Contributions to employee benefit plans (public servants)||59,526||14,872||14,872|
|Pensions under the Royal Canadian Mounted Police Pension Continuation Act||8,250||1,746||1,746|
|Refunds of amounts credited to revenues in previous years||0||519||519|
|Proceeds from the Disposal of Crown Assets under the Surplus Crown Assets Act||6,636||2||2|
|Total budgetary authorities||3,556,799||791,709||791,709|
|Total available for use for the year ending March 31, 2018 Footnote 4||Used during the quarter ended June 30, 2017||Year to date used at quarter-end|
|Gross Operating expenditures||3,822,343||1,030,554||1,030,554|
|Less: Vote Netted Revenues||1,934,332||320,443||320,443|
|Vote 1 - Net Operating expenditures||1,888,011||710,111||710,111|
|Vote 5 - Capital expenditures||327,466||19,079||19,079|
|Vote 10 - Grants and contributions||223,573||52,054||52,054|
|Pensions and other employee benefits - Members of the Force||363,215||100,121||100,121|
|Contributions to employee benefit plans (public servants)||70,293||17,573||17,573|
|Pensions under the Royal Canadian Mounted Police Pension Continuation Act||10,000||2,106||2,106|
|Refunds of amounts credited to revenues in previous years||0||83||83|
|Proceeds from the Disposal of Crown Assets under the Surplus Crown Assets Act||6,947||0||0|
|Total budgetary authorities||2,889,506||901,127||901,127|
Annex B: Departmental budgetary expenditures by standard object (unaudited)
|Expenditures||Planned expenditures for the year ending March 31, 2019||Expended during the quarter ended June 30, 2018||Year to date used at quarter-end|
|Transportation and communications||213,890||67,541||67,541|
|Professional and special services||475,039||95,826||95,826|
|Repair and maintenance||101,590||13,373||13,373|
|Utilities, materials and supplies||143,995||35,319||35,319|
|Acquisition of land, buildings and works||97,233||9,809||9,809|
|Acquisition of machinery and equipment||243,633||48,929||48,929|
|Public debt charges||824||188||188|
|Other subsidies and payments||118,389||22,799||22,799|
|Total gross budgetary expenditures||5,256,787||1,199,564||1,199,564|
|Less Revenues netted against expenditures:|
|Vote Netted Revenues||1,699,988||407,855||407,855|
|Total Revenues netted against expenditures:||1,699,988||407,855||407,855|
|Total net budgetary expenditures||3,556,799||791,709||791,709|
|Expenditures||Planned expenditures for the year ending March 31, 2018||Expended during the quarter ended June 30, 2017||Year to date used at quarter-end|
|Transportation and communications||173,265||62,336||62,336|
|Professional and special services||402,982||82,957||82,957|
|Repair and maintenance||91,963||12,455||12,455|
|Utilities, materials and supplies||121,479||28,038||28,038|
|Acquisition of land, buildings and works||88,262||4,175||4,175|
|Acquisition of machinery and equipment||265,735||22,914||22,914|
|Public debt charges||0||0|
|Other subsidies and payments||157,876||21,642||21,642|
|Total gross budgetary expenditures||4,823,838||1,221,570||1,221,570|
|Less Revenues netted against expenditures:|
|Vote Netted Revenues||1,934,332||320,443||320,443|
|Total Revenues netted against expenditures:||1,934,332||320,443||320,443|
|Total net budgetary expenditures||2,889,506||901,127||901,127|
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