Quarterly Financial Report For the quarter ended September 30, 2013

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 and the operating budget carry forward 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 and the operating budget carry forward 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 169,390 181,154 (11,764)
Personnel 123,121 125,552 (2,431)
Transportation and communications 6,935 7,512 (577)
Information 874 947 (73)
Professional and special services 43,951 47,613 (3,662)
Rentals 1,435 1,554 (119)
Repair and maintenance 1,456 1,577 (121)
Utilities, materials and supplies 964 1,045 (81)
Acquisition of machinery and equipment 2,471 2,677 (206)
Other subsidies and payments 5,925 6,419 (494)
Total gross budgetary authorities 187,132 194,896 (7,764)
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 September 30, 2013 compared to those of the previous year for the same period, from $181.2 million to $169.4 million. The decrease is 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 September 30, 2013 and September 30, 2012.

Table 2: Year-to-date expenditures for the quarter ended September 30:
  (in thousands of dollars)
  2013–2014 2012–2013 Variance
Total 82,477 71,173 11,304
Personnel 67,110 54,347 12,763
Transportation and communications 2,478 2,480 (2)
Information 278 304 (26)
Professional and special services 15,683 13,929 1,754
Rentals 408 330 78
Repair and maintenance 1,642 70 1,572
Utilities, materials and supplies 476 503 (27)
Acquisition of machinery and equipment 373 234 139
Other subsidies and payments 566 381 185
Total gross budgetary expenditures 89,014 72,578 16,436
Less: Revenues netted against expenditures 6,537 1,405 5,132
Significant changes to the expenditures

As of September 30, 2013, the total expenditures represent 49% of the budgetary authorities. They are 16% higher compared to the same period last year. The increase is mostly attributable to increased LA salaries, and severance pay and termination benefits disbursements due to a new collective agreement, payments to crown agents for prosecution services to other government departments, 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 include 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 at the beginning of the next fiscal year.

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 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
September 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
September 30, 2012
Year to date used at quarter-end
Total authorities 169,390 45,103 82,477   181,154 38,439 71,173
Vote 35 – Program expenditures 151,142 40,541 73,353   162,364 33,741 61,778
Statutory authority 18,248 4,562 9,124   18,790 4,698 9,395
Total Budgetary authorities 169,390 45,103 82,477   181,154 38,439 71,173
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
September 30, 2013
Year to date used at quarter-end   Planned expenditures for the year ended
March 31, 2013*
Expended during the quarter ended
September 30, 2012
Year to date used  at quarter-end
Expenditures:
Total net budgetary expenditures 169,390 45,103 82,477   181,154 38,439 71,173
Personnel 123,121 34,745 67,110   125,552 27,591 54,347
Transportation and communications 6,935 1,585 2,478   7,512 1,595 2,480
Information 874 159 278   947 178 304
Professional and special services 43,951 11,235 15,683   47,613 9,375 13,929
Rentals 1,435 367 408   1,554 180 330
Repair and maintenance 1,456 1,089 1,642   1,577 33 70
Utilities, materials and supplies 964 319 476   1,045 312 503
Acquisition of machinery and equipment 2,471 299 373   2,677 202 234
Other subsidies and payments 5,925 163 566   6,419 378 381
Total gross budgetary expenditures 187,132 49,961 89,014   194,896 39,844 72,578
Less Revenues netted against expenditures:
Legal Services 17,742 4,858 6,537   13,742 1,405 1,405

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

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