Quarterly Financial Report for the quarter ended December 31, 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 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, Supplementary Estimates, and transfers from Treasury Board 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 189,011 183,986 5,025
Personnel 138,964 127,933 11,031
Transportation and communications 6,860 7,725 (865)
Information 875 969 (94)
Professional and special services 48,992 47,696 1,296
Rentals 1,435 1,554 (119)
Repair and maintenance 5,131 1,577 3,554
Utilities, materials and supplies 966 1,178 (212)
Acquisition of machinery and equipment 2,605 2,677 (72)
Other subsidies and payments 5,925 6,419 (494)
Total gross budgetary authorities 211,753 197,728 14,025
Less: Revenues netted against expenditures 22,742 13,742 9,000
Significant changes to budgetary authorities

The net budgetary authorities increased by $5.0 million as of December 31, 2013 compared to those of the previous year for the same period. The increase is a result of payments for new collective bargaining settlements, payments to terminate severance pay entitlements, and the relocation of offices in 2013-14. The increase in revenues is from the provision of prosecution services by Crown Agents and increase in legal service rates recovered from Other Government Departments and agencies.

The government savings measures of Budget 2010 and 2012 have been reflected in the budgetary authorities.

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 December 31, 2013 and December 31, 2012.

Table 2: Year-to-date expenditures for the quarter ended December 31:
  (in thousands of dollars)
  2013–2014 2012–2013 Variance
Total 123,315 109,831 13,484
Personnel 99,018 85,368 13,650
Transportation and communications 4,087 4,192 (105)
Information 428 517 (89)
Professional and special services 26,913 24,131 2,782
Rentals 681 901 (220)
Repair and maintenance 2,982 125 2,857
Utilities, materials and supplies 880 931 (51)
Acquisition of machinery and equipment 530 438 92
Other subsidies and payments 639 1,012 (373)
Total gross budgetary expenditures 136,158 117,615 18,543
Less: Revenues netted against expenditures 12,843 7,784 5,059
Significant changes to the expenditures

As of December 31, 2013, the total expenditures represent 65% of the budgetary authorities (i.e., $123M out of $189M). They are 12% higher compared to the same period last year (i.e. $13.5M). The increase is mostly attributable to increased LA salaries, and severance pay and termination benefits, payments to Crown agents for prosecution services, the relocation of offices, 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
December 31, 2013
Year to date used at quarter-end   Total available for use for the year ended
March 31, 2013* **
Used during the quarter ended
December 31, 2012
Year to date used at quarter-end
Total authorities 189,011 40,839 123,315   183,986 38,658 109,831
Vote 35 – Program expenditures 170,763 36,277 109,629   165,196 33,960 95,738
Statutory authority 18,248 4,562 13,686   18,790 4,698 14,093
Total Budgetary authorities 189,011 40,839 123,315   183,986 38,658 109,831
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
December 31, 2013
Year to date used at quarter-end   Planned expenditures for the year ended
March 31, 2013*
Expended during the quarter ended
December 31, 2012
Year to date used at quarter-end
Total net budgetary expenditures 189,011 40,838 123,315   183,986 38,658 109,831
Expenditures:
Personnel 138,964 31,907 99,018   127,933 31,021 85,368
Transportation and communications 6, 860 1,609 4,087   7, 725 1,712 4,192
Information 875 151 428   969 213 517
Professional and special services 48,992 11,230 26,913   47, 696 10,201 24,131
Rentals 1,435 273 681   1,554 571 901
Repair and maintenance 5,131 1,340 2,982   1,577 55 125
Utilities, materials and supplies 966 404 880   1, 178 428 931
Acquisition of machinery and equipment 2,605 157 530   2,677 204 438
Other subsidies and payments 5,925 73 639   6,419 631 1,012
Total gross budgetary expenditures 211,753 47,144 136,158   197,728 45,036 117,615
Less Revenues netted against expenditures:
Legal Services 22,742 6,306 12,843   13,742 6,378 7,784

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

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