Quarterly Financial Report for PCO - Quarter ended June 30, 2012

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Statement outlining results, risks and significant changes in operations, personnel and program
For the quarter ended June 30, 2012

[ PDF 58 KB ]


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 Accounting Standard 1.3. This quarterly financial report should be read in conjunction with the Main Estimates and Supplementary Estimates and with the previous Quarterly Financial Statements as well as Canada's Economic Action Plan 2012 (Budget 2012).

This quarterly report has not been subject to an external audit or review but has been reviewed by the Privy Council Office Audit Committee.

Authority, Mandate and Program Authorities

The mandate of the Privy Council Office (PCO) is to serve Canada and Canadians by providing professional, non-partisan advice and support to the Prime Minister, the ministers within the Prime Minister's portfolio and the Cabinet. PCO supports the development of the Government of Canada's policy agenda; coordinates responses to issues facing the Government and the country; and supports the effective operation of the Cabinet.

As Head of the Public Service of Canada, the Clerk of the Privy Council sets strategic direction and oversees all major issues for the Public Service. Led by the Clerk of the Privy Council, PCO helps the Government to implement its vision and respond effectively and quickly to issues facing the Government and the country. PCO's three primary roles are:

  1. Advice to the Prime Minister: PCO provides impartial advice to the Prime Minister, portfolio ministers, Cabinet and Cabinet committees on matters of national and international importance;
  2. Secretariat to the Cabinet: PCO ensures the smooth functioning of the Cabinet decision-making process and facilitate the implementation of the Government's agenda; and
  3. Public Service Leadership: PCO fosters a high-performing and accountable public service.

Further information on PCO's program activities can be located in Part II of the Main Estimates. For more information on PCO's main roles, please visit PCO's website.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the department's spending authorities granted by Parliament and those used by the department, consistent with the Main Estimates and Supplementary Estimates for the 2012-13 fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework (using a cash basis) designed to meet financial information needs with respect to the use of spending authorities.

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 appropriations acts or through legislation in the form of statutory spending authority for specific purposes.

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, 2012 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 2012-13, frozen allotments will be established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012. In future years, the changes to departmental authorities will be implemented through the Annual Reference Level Update, as approved by Treasury Board, and reflected in the subsequent Main Estimates tabled in Parliament.

The Department uses the full accrual method of accounting to prepare and present its departmental financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

Highlights of Fiscal Quarter and Fiscal Year to Date (YTD) Results

Statement of Authorities

As of June 30, 2012, the total authorities available for the year have decreased by $12.6 million when compared to the same quarter in 2011-12.

As per the Statement of Authorities, the net decrease of $12.6 million, from $140.7 million for 2011-12 to $128.1 million for 2012-13 is mainly related to the following:

  • A reduction of $7.4 million for a transfer to the Shared Services Canada Agency which was created on August 4, 2011. PCO transferred all of its resources associated with the delivery of email, data centre and network services;
  • A reduction of $3.9 million for the conclusion of the Afghanistan Task Force, which sunsetted in March 2012;
  • A reduction of $2.2 million for Strategic Review in order to reflect the savings to be achieved in the second year of implementation for Strategic Review;
  • A reduction of $1.1 million for the funding received to enhance security to focus exclusively on the highest priority elements directly related to the security of the Department. This reduction in 2012-13 is explained by the fact that for the previous two years, PCO incurred one-time fit-up and start-up costs for some initiatives; and
  • A reduction of $0.5 million for adjustments to employee benefit plans in which the rate of the employee benefit plan changed from 18% to 17.6%. Yearly statutory authorities are directly affected by variations in the annual employee benefit rate.

Partially offset by the following:

  • An increase of $1.8 million for the operation of the Commission of Inquiry into the Decline of Sockeye Salmon in the Fraser River. The Commissioner was to submit one or several final reports by June 30, 2012. Then on March 26, 2012, a further extension was granted for the Commissioner to submit one or several final reports by September 30, 2012; and
  • An increase of $1.0 million for the operation of the Office of the Special Advisor on Human Smuggling and Illegal Migration. The Special Advisor is responsible for coordinating the Government's overall strategy and response to migrant smuggling by sea, including through engagement with key domestic and international partners to promote cooperation.

The biggest variances in the standard objects are for personnel and professional and special services which can be attributed to the transfer to Shared Services Canada as well as the Commission of Inquiry into the Decline of Sockeye Salmon in the Fraser River which is only operating for a portion of fiscal year 2012-13.

In accordance with section 29.2 of the Financial Administration Act, PCO identified $74,000 as Vote Net Revenue in its 2012-13 Main Estimates to provide internal support services to other departments.

Statement of Departmental Budgetary Expenditures by Standard Object

As of June 30, 2012, the expenditure for the quarter ended June 30, 2012, has decreased by $3 million compared to the same period for fiscal year 2011-12.

As per the Statement of Departmental Budgetary Expenditures by Standard Object, the decrease in the year-to-date used at quarter-end can mainly be attributed to changes in personnel, and professional and special services.

The decrease is attributed to the transfer of a portion of PCO's responsability for the information technologies activities to Shared Services Canada Agency, the completion of the Afghanistan Task Force, the adjustments to employee benefit plans in which the rate of the employee benefit plan changed from 18% to 17.6%, the legal costs, translation costs and research costs related to the decrease of operations in 2012-13 of the Commission of Inquiry into the Decline of Sockeye Salmon in the Fraser River.

Risks and Uncertainties

PCO faces a number of external and internal risks. The dominant financial risks lie in the area of funding initiatives to deal with issues that emerge unexpectedly. As part of its coordinating role, PCO is expected to launch these initiatives on short notice, and either manage the necessary expenditures within its own spending authorities, or cash manage until increased spending authorities are approved.

This Departmental Quarterly Financial Report (QFR) reflects the results of the current fiscal period in relation to the Main Estimates for which full supply was released on June 29, 2012 and also includes the $1.3 million received in the 2012-13 Supplementary Estimates A.

Significant Changes in Relation to Operations, Personnel and Programs

Budget 2010 announced that the operating budgets of departments would be frozen at their 2010-11 levels for the fiscal years 2011-12 and 2012-13. Management is implementing various options to adjust to this constraint in funding.

PCO has taken several budget reduction-related activities in recent years. The combined effect of various savings exercises such as Budget 2010, Strategic Review, and measures to modernize and reduce the cost of government announced in Canada's Economic Action Plan 2012 (Budget 2012) have resulted in a reduction to PCO's workforce.

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.

PCO will achieve Budget 2012 savings of $9.2M by fiscal year 2014-15 through efficiency measures that align resources to its core mandate; scaling back where the need is reduced; transforming how it works internally and by consolidating and streamlining. With these changes, PCO will focus on supporting management excellence and accountability across government.

In the first year of implementation, PCO will achieve savings of approximately $1.4M. Savings will increase to $2.6M in 2013-14 and will result in ongoing savings of $9.2M by 2014-15.

PCO does not administer programs, and thus the major expenses are salaries and associated operational costs, therefore most of the savings will need to be generated by having fewer jobs at PCO.

The 2012-13 savings will be achieved by the following initiatives:

  • Streamlining of the Cabinet system to improve the efficiency and effectiveness of decision-making that will result in reduced workload;
  • Modernization and streamlining of the Government communications function which includes a new approach to media monitoring and analysis;
  • Reviewing the business processes of the Corporate Services Branch and adjust service levels accordingly;
  • Modernization of business processes in other Branches within PCO and achieve administrative efficiencies.

Approved by Senior Officials:

Wayne Wouters
Clerk of the Privy Council and
Secretary to the Cabinet

Michelle Doucet
Assistant Deputy Minister
Corporate Services

Ottawa, Canada
Wednesday, August 29, 2012

Statement of Authorities (unaudited)

(in thousands of dollars)
Fiscal year 2012-2013 Fiscal year 2011-2012
Total available for use for the year ending March 31, 2013 ** Used during the quarter ended June 30, 2012 Year to date used at quarter end Total available for use for the year ending March 31, 2012 ** Used during the quarter ended June 30, 2011 Year to date used at quarter end
Vote 1 - Net operating expenditures 113,113 23,341 23,341 125,175 26,235 26,235
Budgetary statutory authorities 14,974 3,744 3,744 15,515 3,871 3,871
Total budgetary authorities 128,087 27,085 27,085 140,688 30,106 30,106
Total Authorities 128,087 27,085 27,085 140,688 30,106 30,106

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

Note: Details may not add to totals due to rounding.

Departmental budgetary expenditures by Standard Object (unaudited)

(in thousands of dollars)
Fiscal year 2012-2013 Fiscal year 2011-2012
Planned expenditures for the year ending March 31, 2013 ** Expended during the quarter ended June 30, 2012 Year to date used at quarter end Planned expenditures for the year ending March 31, 2012** Expended during the quarter ended June 30, 2011 Year to date used at quarter end
Personnel 97,963 23,726 23,726 99,495 24,584 24,584
Transportation and communications 5,810 715 715 7,827 1,048 1,048
Information 1,956 221 221 2,529 126 126
Professional and special services 12,676 1,282 1,282 17,235 2,793 2,793
Rentals 1,511 302 302 1,578 372 372
Repair and maintenance 2,103 14 14 2,667 249 249
Utilities, materials and supplies 1,173 114 114 1,771 108 108
Acquisition of machinery and equipment 4,831 630 630 7,009 795 795
Transfer payments 25 - - - - -
Other subsidies and payments 113 81 81 578 31 31
Total gross budgetary expenditures 128,161 27,085 27,085 140,688 30,106 30,106
Revenues (74) - - - - -
Total revenues netted against expenditures (74) - - - - -
Total Budgetary Expenditures 128,087 27,085 27,085 140,688 30,106 30,106

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

Note: Details may not add to totals due to rounding.