Quarterly Financial Report for the quarter ended June 30, 2013

Office of the Director of Public Prosecutions

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

A. Introduction

This quarterly report 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. It has not been subject to an external audit or review. This quarterly report should be read in conjunction with the Main Estimates and Supplementary Estimates as well as Canada’s Economic Action Plan 2012 (Budget 2012).

The Office of the Director of Public Prosecutions (ODPP) is an independent prosecution service mandated to prosecute offences under federal jurisdiction. Its sole strategic outcome is the prosecution of criminal and regulatory offences under federal jurisdiction in a manner that is independent, impartial and fair. Created on December 12, 2006 with the coming into force of the Director of Public Prosecutions Act, it:

The ODPP has three (3) program activities:

  1. Drug, Criminal Code and terrorism prosecution program:

    This program supports the protection of society against crime through the provision of legal advice and litigation support during police investigations, and the prosecution of: all drug offences under the Controlled Drugs and Substances Act and any related organized crime offences throughout Canada, except in Quebec and New Brunswick, where the Office of the Director of Public Prosecutions prosecutes such offences only where charges are laid by the Royal Canadian Mounted Police; proceeds of crime offences; pursuant to understandings with the provinces, Criminal Code offences where they are related to drug charges; all Criminal Code offences in the three territories; terrorism offences; and war crimes and crimes against humanity offences. This program activity also involves the promotion of federal/provincial/territorial cooperation on criminal justice issues of mutual concern.

  2. Regulatory offences and economic crime prosecution program:

    This program supports the protection of society against crime through the provision of legal advice and litigation support to federal investigative agencies, and the prosecution of: offences under federal statutes aimed at protecting the environment and natural resources as well as the country’s economic and social health (e.g., Fisheries Act, Income Tax Act, Copyright Act, Canada Elections Act, Canadian Environmental Protection Act, Competition Act, Customs Act, Excise Act, and the Excise Tax Act); offences involving fraud against the government; capital market fraud offences; and any organized crime offences related to the foregoing offences. This program also includes the recovery of outstanding federal fines and the promotion of federal/provincial/territorial cooperation on criminal justice issues of mutual concern.

  3. Internal services:

    Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These groups are: Communications Services; Corporate Counsel Office; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Material Management; Internal Audit; Procurement Services; and Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

B. Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the ODPP's spending authorities granted by Parliament and those used by the ODPP consistent with the Main Estimates for the 2013–2014 fiscal year. This quarterly report has been prepared using a 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 2012–2013, 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. In 2013–2014, the changes to departmental authorities were reflected in the 2013–2014 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.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

The ODPP 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 an expenditure basis.

C. Highlights of fiscal quarter and fiscal year to date results

1. Highlights of net spending authorities

The accompanying Statement of Authorities (see Appendix A) includes all budgetary authorities granted at quarter’s end through Main Estimates for this fiscal year and the previous fiscal year.

The following Table 1 highlights the principal items that contributed to the net decrease by standard objects.

Table 1: Budgetary Authorities
  (in thousands of dollars)
  2013–2014 2012–2013 Variance
Total 162,429 174,255 (11,826)
Personnel 123,121 125,552 (2,431)
Transportation and communications 6,180 6,765 (585)
Information 779 853 (74)
Professional and special services 39,172 42,876 (3,704)
Rentals 1,279 1,400 (121)
Repair and maintenance 1,297 1,420 (123)
Utilities, materials and supplies 860 941 (81)
Acquisition of machinery and equipment 2,202 2,410 (208)
Other subsidies and payments 5,281 5,780 (499)
Total gross budgetary authorities 180,171 187,997 (7,826)
Less: Revenues netted against expenditures 17,742 13,742 (4,000)
Significant changes to budgetary authorities

The budgetary authorities decreased by $11.8 million as of June 30, 2013 compared to those of the previous year for the same period, from $174.3 million to $162.4 million. The decrease is as a result of the government decisions of Budget 2010 and 2012 ($11.3 million or 96% of the decrease) and other minor adjustments ($0.5 million).

2. Highlights of budgetary expenditures

Appendix B sets out the ODPP budgetary expenditures by standard object for both 2012–2013 and 2013–2014. The expenditures shown are the planned expenditures for the fiscal year, those expended during the quarter and the year-to-date used at quarter-end.

The following Table 2 compares the year-to-date expenditures by standard objects for the quarter ended June 30, 2013 and June 30, 2012.

Table 2: Year-to-date expenditures for the quarter ended June 30:
  (in thousands of dollars)
  2013–2014 2012–2013 Variance
Total 37,373 32,733 4,640
Personnel 32,366 26,756 5,610
Transportation and communications 892 885 7
Information 119 126 (7)
Professional and special services 4,448 4,554 (106)
Rentals 41 150 (109)
Repair and maintenance 553 37 516
Utilities, materials and supplies 157 191 (34)
Acquisition of machinery and equipment 73 32 41
Other subsidies and payments 403 3 400
Total gross budgetary expenditures 39,052 32,733 6,319
Less: Revenues netted against expenditures 1,679 - 1,679
Significant changes to the expenditures

As of June 30, 2013, the total expenditures represent 23% of the budgetary authorities. They are 4% higher compared to the same period last year. The increase is mostly attributable to the payments to adjust LA salaries due to a new collective agreement and the timing of collected revenues.

D. Risks and Uncertainties

1. Dependence on Vote Netting Revenue

To fulfill its mandate, the ODPP is funded through a combination of Parliamentary appropriations and cost recovery. Recovering prosecution costs is therefore necessary to allow us to provide prosecution services to federal departments and agencies so that they can achieve their enforcement objectives.

There are a number of issues with using this funding model in the area of prosecutions.

To minimize the risk of not recovering for prosecution services, the ODPP is entering into Memoranda of Understanding (agreements) with departments and agencies. The Memoranda includes clauses governing roles and responsibilities, workload projections, and invoicing and payment.

2. Outsourcing the fine recovery program

During the 2010 Strategic Review Exercise, the ODPP proposed to have the collection of outstanding federal fines conducted by outside entities under ODPP supervision as a means of increasing the collection of fines and thereby increasing their deterrent effect as well as public confidence in the administration of justice. The rationale for this proposal was that the ODPP’s recovery efforts were limited to what its 19 FTEs could achieve, whereas a collection agency would likely have the incentive to dedicate more resources as any additional recoveries generated would increase their own revenues. Thus, it was reasonable to expect fines recovered by a private collection agency to eventually exceed the $6 million average in recoveries achieved by the ODPP during each of the last five years. As a result, the ODPP’s reference levels were permanently reduced by $1.6 million which corresponded to the savings in salary costs and other FTE-related costs of the FTEs dedicated to the program.

The ODPP is facing delays in the implementation of this project due to the challenges in identifying a source of funds and a funding mechanism to pay the commission to the collection agencies. Hence, it is anticipated that the collection of fines by private collection agencies will begin in the last quarter of the fiscal year. As a result, the anticipated revenues in the Fiscal Framework of $6 million (formerly achieved by the ODPP) will not be fully realized in 2013-14. The ODPP is seeking the authority to reprofile revenues earmarked in the Fiscal Framework as well as additional funds to pay the commissions to the collection agencies.

E. Significant changes in relations to operations, personnel and programs

Budget 2010 (Strategic Review)

The ODPP achieved the reductions ($3.6 million) of Budget 2010 by:

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 ODPP has already achieved Budget 2012 savings of $8.4 million by: reducing the funding associated with the Federal Policing Initiative ($7.4 million); reducing its budget for consultants ($0.8 million); and rationalizing the number of print and electronic legal research services to which it subscribes ($0.2 million).

None of the measures affected staff levels and none contain any financial risks or uncertainties.

Approval by Senior Officials

Approved by:



________________________
Brian Saunders
Director of Public Prosecutions


Ottawa, Canada


________________________
Date



_______________________
Lucie Bourcier CPA, CGA
Chief Financial Officer

Appendix A

Statement of Authorities (unaudited)

  Fiscal year 2013–2014 Fiscal year 2012–2013
(in thousands of dollars) Total available for use for the year ending
March 31, 2014*
Used during the quarter ended
June 30, 2013
Year to date used at quarter-end Total available for use for the year ended
March 31, 2013 * **
Used during the quarter ended
June 30, 2012
Year to date used at quarter-end
Total authorities 162,429 37,373 37,373 174,255 32,733 32,733
Vote 35 – Program expenditures 144,181 32,811 32,811 155,465 28,035 28,035
Statutory authority 18,248 4,562 4,562 18,790 4,698 4,698
Total Budgetary authorities 162,429 37,373 37,373 174,255 32,733 32,733
Non-budgetary authorities - - - - - -

More information is available in the attached table.

* Includes only Authorities available for use and granted by Parliament at quarter end.
** Total available for use does not reflect measures announced in Budget 2012.

Appendix B

Departmental budgetary expenditures by Standard Object (unaudited)

  Fiscal year 2013–2014 Fiscal year 2012–2013
(In thousands of dollars) Planned expenditures for the year ending
March 31, 2014
Expended during the quarter ended
June 30, 2013
Year to date used at quarter-end Planned expenditures for the year ended
March 31, 2013*
Expended during the quarter ended
June 30, 2012
Year to date used at quarter-end
Total net budgetary expenditures 162,429 37,373 37,373 174,255 32,733 32,733
Expenditures:
Personnel 123,121 32,366 32,366 125,552 26,756 26,756
Transportation and communications 6,180 892 892 6,765 885 885
Information 779 119 119 853 125 125
Professional and special services 39,172 4,448 4,448 42,876 4,554 4,554
Rentals 1,279 41 41 1,400 150 150
Repair and maintenance 1,297 553 553 1,420 37 37
Utilities, materials and supplies 860 157 157 941 191 191
Acquisition of machinery and equipment 2,202 73 73 2,410 32 32
Other subsidies and payments 5,281 403 403 5,780 3 3
Total gross budgetary expenditures 180,171 39,052 39,052 187,997 32,733 32,733
Less Revenues netted against expenditures:
Legal Services 17,742 1,679 1,679 13,742 - -

* Planned expenditures do not reflect measures announced in Budget 2012.

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