Quarterly Financial Report For the period ending December 31, 2021

Introduction
Highlights of fiscal quarter and fiscal year-to-date (YTD) results
Risks and uncertainties
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

1. Introduction

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 2021-22. The quarterly report has not been subject to an external audit or review.

1.1 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 Main Estimates (Part II of Estimates) and the Departmental Plan and Departmental Results Report (Part III of 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) and (B). 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

For the period ending December 31, 2021, the RCMP had $5,020.5 million in total authorities available for use, which represents an increase of $1,086.4 million (or 28%) when compared at the same quarter in the previous year. The RCMP's authorities have increased in the Operating (Vote 1), Capital (Vote 5) and Grants and Contributions (Vote 10) totalling $1,205.5 million. These increases are offset by a decrease of $119.1 million in statutory authorities.

The RCMP's expenditures were $3,469.4 million in the third quarter of the year, representing an increase of $699.3 million (or 25%) from the previous year's third quarter, as shown in Table 1.

Table 1: Summary of Fiscal Quarter and Fiscal Year-to-date (in thousands of dollars) ^{Table 1 note 1}
Authorities	2021-22 Authorities as at December 31, 2021	2020-21 Authorities as at December 31, 2020	Variance in authorities	%	Year-to-date expenditures as at December 31, 2021	Year-to-date expenditures as at December 31, 2020	Variance in expenditures	%
Vote 1- Net Operating expenditures	3,861,600	2,765,814	1,095,786	40%	2,572,319	2,116,296	456,023	22%
Vote 5 - Capital expenditures	300,636	294,176	6,460	2%	122,265	115,579	6,686	6%
Vote 10 - Grants and contributions	501,740	398,439	103,301	26%	412,763	206,717	206,046	100%
Budgetary statutory authorities	356,489	475,601	(119,112)	(25%)	362,067	331,488	30,579	9%
Total authorities	5,020,464	3,934,030	1,086,434	28%	3,469,414	2,770,080	699,334	25%
Table 1 note Table 1 note 1 Totals may not add due to rounding. Return to table 1 note 1 referrer

2.1 Statement of authorities

For the period ending December 31, 2021, the RCMP has $5,020.5 million in total authorities available for use. This amount includes the Main Estimates, Supplementary Estimates (A), Supplementary Estimates (B), Operating Budget Carry Forward, Capital Budget Carry Forward, in-year adjustments including compensation adjustments, paylist reimbursement and proceeds from the disposal of Crown assets.

Total authorities have increased by $1,086.4 million, when compared to the previous year. The increase is made up of a year-over-year increase of $1,095.8 million in Vote 1 – Operating expenditures, a $6.5 million in Vote 5 – Capital, and a $103.3 million in Vote 10 – Grants and Contributions. These increases are partially offset by a decrease of $119.1 million in statutory authorities.

The changes in authorities are mainly related to compensation adjustments in support of the first ever National Police Federation collective agreement for RCMP members and reservists, and funding to compensate members of the RCMP for injuries received in the performance of duty.

Table 2: Cumulative Variance in Authorities Available for use in 2021-22 in comparison to 2020-21^{Table 2 note 1}
Based on the end of the Second Quarter (December) (in thousands of dollars)	Total authorities available for use		Year over year variance
	2021-22	2020-21	Authorities	Percentage
Gross Operating expenditures	5,641,299	4,558,204	1,083,095	24%
Less: Vote Netted Revenues	1,779,699	1,792,390	(12,691)	(1%)
Vote 1 - Net Operating expenditures	3,861,600	2,765,814	1,095,786	40%
Vote 5 - Capital expenditures	300,636	294,176	6,460	2%
Vote 10 - Grants and contributions	501,740	398,439	103,301	26%
Total voted authorities	4,663,975	3,458,429	1,205,546	35%
Pensions and other employee benefits - Members of the Force	247,036	373,034	(125,998)	(34%)
Contributions to employee benefit plans (public servants)	96,248	82,858	13,390	16%
Pensions under the Royal Canadian Mounted Police Pension Continuation Act	6,750	6,750	0	0%
Proceeds from the Disposal of Crown Assets under the Surplus Crown Assets Act	6,455	12,959	(6,504)	(50%)
Total statutory authorities	356,489	475,601	(119,112)	(25%)
Total budgetary authorities	5,020,464	3,934,030	1,086,434	28%
Table 2 notes Table 2 note 2 Totals may not add due to rounding. Return to table 2 note 1 referrer

Table 3: Year over year changes in authorities by vote (in millions of dollars) - Explanation of authority changes ^{Table 3 note 1} (2021-22 compared to 2020-21)
Expenditure	Year over Year Changes in Authorities by Vote (in millions of dollars)
Vote 1 - Net Operating Expenditures
In-year compensation adjustment	1,099.9
Paylist reimbursement	33.9
Compensation and modernization adjustment for various Public Servants and Civilian Members	26.4
Operating Budget Carry Forward	17.0
RCMP's foundational improvements for Federal Policing	12.4
Creation of the independent centre for harassment resolution	4.7
Other increases related to previously approved initiatives in the Main Esimates	4.2
Firearms transfer to Canada Border Services Agency	1.7
Funding to implement new requirements related to firearms licensing, transport and transfer of ownership	1.4
Ensuring security and prosperity in the digital age phase II	0.5
Other decreases related to timing of in-year funding for initiatives and transfers	(0.9)
Drug-impaired driving transfer from Public Safety	(4.5)
Funding to strengthen RCMP operations	(18.1)
Funding profile change for the class action legal settlement	(24.0)
First National Community Policing Service transfer from Public Safety	(58.8)
Sub-total Net Operating Expenditures	1,095.8
Vote 5 - Net Capital Expenditures
Capital Budget Carry Forward	11.0
RCMP's foundational improvements for Federal Policing	2.6
Ensuring security and prosperity in the digital age phase II	1.4
Funding to implement new requirements related to firearms licensing, transport and transfer of ownership	0.3
Canadian Safety and Security Program transfer from Department of National Defence	(0.7)
Funding profile change for various previously approved initiatives in the Main Estimates	(1.8)
Renewing the radio system for Ontario, Quebec and the National Capital Region	(6.3)
Sub-total Capital Expenditures	6.5
Vote 10 - Grants and Contributions
Funding for the grant to compensate members of the RCMP for injuries received in the performance of duty	103.3
Sub-total Grants and Contributions	103.3
Statutory
Increase in Public Service Employees and Members of the Force Employee Benefits Plan related to new and previously approved initiatives	7.3
Proceeds from Disposal of Crown Assets	(6.5)
Public Service Employees and Members of the Force Employee Benefits Plans related to changes in the effective EBP rate	(119.9)
Sub-total Statutory	(119.1)
Grand total	1,086.5
Table 3 notes Table 3 note 1 Amounts displayed in this table represent planned changes to funding profiles, as well as variances due to the timing the authorities are granted by Parliament. As such, the negative amounts do not represent cuts to program spending. Return to table 3 note 1 referrer

2.2 Statement of Departmental Budgetary Expenditures by Standard Object

Net budgetary expenditures at the end of the third quarter 2021-22 were $699.3 million (or 25%) higher than the previous year. This variance is the result of an increase in gross budgetary expenditures of $534.8 million (or 14%) and a decrease in vote netted revenues of $164.5 million (or 16%) from the previous year.

Table 4: Expended by standard object at Quarter end (in thousands of dollars)^{Table 4 note 1} ^{Table 4 note 2}
Standard objects	2021-22	2020-21	Variance	%
Personnel	2,813,937	2,580,787	233,150	9%
Transportation and communications	146,763	120,750	26,013	22%
Information	1,800	1,900	(100)	(5%)
Professional and special services	411,938	335,995	75,943	23%
Rentals	111,129	101,616	9,513	9%
Purchased repair and maintenance	59,934	59,824	110	0%
Utilities, materials and supplies	102,951	102,343	608	1%
Acquisition of land, buildings and works	49,148	38,457	10,691	28%
Acquisition of machinery and equipment	113,588	135,957	(22,369)	(16%)
Transfer payments	416,048	210,539	205,509	98%
Public debt charges	463	489	(26)	(5%)
Other subsidies and payments	77,965	82,174	(4,209)	(5%)
Total gross budgetary expenditures	4,305,664	3,770,831	534,833	14%
Less: Revenues and other reductions	836,250	1,000,751	(164,501)	(16%)
Total net budgetary expenditures	3,469,414	2,770,080	699,334	25%
Table 4 notes Table 4 note 1 Totals may not add due to rounding Return to table 4 note 1 referrer Table 4 note 2 The gross budgetary expenditures represent all RCMP programs and are not directly correlated to revenue trends as revenues are primarily related to the RCMP contract policing activities. Return to table 4 note 2 referrer

In 2020-21, the federal and provincial and territorial governments implemented various measures to curb the spread of COVID-19, which resulted in several activities within the RCMP being slowed down or halted at the onset of the pandemic. With restrictions loosening in 2021-22, the RCMP is experiencing an increase in operations, leading to the rise in the overall expenditures. It is observed that multiple standard objects had significant increases in year-over-year expenditures primarily for this reason.

2.2.1 Variance - Personnel

The increase in expenditures by $233.1 million (or 9%) is attributed to higher pay expenditures for Public Service Employees (PSE) and Members of the RCMP. As a number of collective agreements have been ratified in the current and past years, newly implemented rates of pay for various occupational groups increased the overall expenditures. Also, an increase in Member Extra Duty Pay due to increased operational tempo in 2021-22 further increased Personnel expenditures.

2.2.2 Variance - Transportation and Communications

The increase in expenditures by $26.0 million (or 22%) is mainly due to the loosening of pandemic restrictions.

2.2.3 Variance - Professional and special services

The increase in expenditures by $75.9 million (or 23%) is mainly related to increases in health costs, professional services costs and legal services costs related to timing of invoices and payments as well as the increased operational tempo in 2021-22. Finally, delays in staffing within the Information Management and Information Technology area caused an increase in contracting services in an effort to move ahead with projects.

2.2.4 Variance - Acquisition of land, buildings and works

The increase in expenditures by $10.7 million (or 28%) is mainly due to the increased operational tempo, and an increase of real property projects such as the construction of Pangnirtung detachment, Norway House detachment and Carcross detachment in Contract Policing jurisdiction, in addition to the Operational Communications Centre.

2.2.5 Variance – Acquisition of machinery and equipment

The decrease in expenditures by $22.4 million (or 16%) is mainly due to higher expenditures for personal protective equipment (PPE), computer and office equipment in 2020-21, as the RCMP equipped employees with protective gears and with adequate work-from-home environment at the beginning of the pandemic. Also, in 2020-21, there was one-time carbine and armoury parts purchase.

2.2.6 Variance - Transfer payments

The increase in expenditures by $205.5 million (or 98%) is primarily related to an increase in disability pension payments under the Grant to compensate members of the RCMP for injuries received in the performance of duty.

2.2.7 Variance -Revenues and other reductions

The decrease in Vote netted revenues by $164.5 million (or 16%) is primarily due to the timing differences in revenue collections related to Contract Policing.

3. Risks and uncertainties

The Departmental QFR reflects the results of the current fiscal period in relation to the Main Estimates and the Supplementary Estimates (A) and (B).

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 included 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 was the responsibility of an Independent Assessor appointed by the Federal Court. Claims were filed between August 12, 2017 and May 22, 2018. As of August 14, 2020, all 3,086 claims that were submitted had been assessed. On November 19, 2020, the Assessor's final report was released that set out his observations and recommendations stemming from his work in assessing claims. All Compensation awards to successful claims in Merlo/Davidson have now been paid.

The Tiller class action concerns women who worked or volunteered in RCMP workplaces but who were not employed by the RCMP (e.g., municipal employees, contractors) and who experienced gender or sexual orientation based harassment and discrimination from RCMP members and employees between September 16, 1974 and July 5, 2019. A settlement that provides for a claims process based on the one used in the Merlo/Davidson settlement was approved by the Federal Court on March 10, 2020. Claims were filed between July 16, 2020 and April 22, 2021. Claims are currently being assessed by the Independent Assessors; as claims are decided, compensation awards are paid to successful claimants in accordance with the terms of the settlement.

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, a comprehensive resourcing review was initiated in Budget 2016 and completed in May 2017, during which the Treasury Board committed to addressing integrity issues to ensure that the RCMP can deliver mission-critical services to Canadians. The review findings have been assessed and the RCMP returned to Treasury Board with a fulsome Departmental Review in the fall of 2018 that included short, medium and long-term proposals to address its ongoing resourcing issues. Recent announcements identified funding to support and enhance RCMP operations.

4. Significant changes in relation to operations, personnel and programs

4.1 Operations

In comparison to the third quarter of 2020-21, the operational tempo of certain activities resumed as a result of the loosening of COVID-19 restrictions. The RCMP continues to assess the evolving circumstances of COVID-19 and is adjusting its operations accordingly.

4.2 Personnel

There has been no significant change in relation to personnel in the third quarter of 2021-22.

4.3 Programs

There has been no significant change in relation to programs in the third quarter of 2021-22.

Approved by senior officials

Approved by:

Original signed by

Brenda Lucki
Commissioner