Quarterly Financial Report for PCO - Quarter ended June 30, 2016

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


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 previous Quarterly Financial Reports.

A summary description of the Privy Council Office (PCO) programs can be found in Part II of the Main Estimates. For more information on PCO's main roles, please visit PCO's website.

This quarterly report has not been subject to an external audit or review but has been shared with the PCO Departmental Audit Committee and it reflects the committee members' comments.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes PCO’s spending authorities granted by Parliament and those used by the department, consistent with the Main Estimates for the 2016-17 fiscal year and Supplementary Estimates (A) for the same year. This quarterly report has been prepared using a special purpose financial reporting framework (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 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.

PCO 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.

Highlights of Fiscal Quarter and Fiscal Year to Date Results

This section highlights the significant items that contributed to the net increase or decrease in authorities available for the year and actual expenditures for the quarter ended June 30, 2016.

Statement of Authorities

Authorities available for use:
The net increase of $23.5 million, from $118.9 million for 2015-16 to $142.4 million for 2016-17 is mainly related to the following:

  • An increase of $23.9 million in funding through Supplementary Estimates (A). Funding of $22.4 million to support PCO's information technology modernization project and other organizational changes (e.g. $3.5 million for communications activities and $0.5 million for e-Cabinet operations) along with $1.5 million to support the creation of a new non-partisan, merit-based Senate appointment process;

  • An increase of $1.1 million for PCO's activities related to the continuation and advancement of the Border Implementation Team in support of the Beyond the Border Action Plan ($0.8 million) and for the continued implementation of Canada's Migrant Smuggling Prevention Strategy ($0.3 million);

  • An increase of $0.6 million in funding to modernize the Prime Minister’s digital presence;

  • An increase of $0.5 million related to employee benefits plans in accordance with TBS guidelines;

  • An increase of $0.1 million for the salary and motor car allowance for the Minister of Democratic Institutions and the annual adjustment to Ministerial salaries and motor car allowance;

  • A decrease of $0.4 million in funding for the implementation of various government-wide initiatives, including the continued consolidation of pay services ($0.2 million), the implementation of the Canada School of Public Service’s new business model ($0.1 million) and the 2016 Census of Population ($0.1 million);

  • A decrease of $2.2 million due to transfer of responsibilities related to the Canadian Secretariat to the Canada-U.S. Regulatory Cooperation Council from PCO to the Treasury Board Secretariat. This transfer took effect on April 1, 2016, as per Order-in-Council P.C. 2016-209.

Authorities used during the quarter:
Overall, PCO's 2016-17 expenditures for the quarter ended June 30, 2016, have increased by $2.3 million (from $24.7 million for 2015-16 to $27.0 million for 2016-17) when compared to the 2015-16 expenditures for the same quarter. Further information related to this increase is provided in the section below addressing the Statement of Departmental Budgetary Expenditures by Standard Object.

Statement of Departmental Budgetary Expenditures by Standard Object

Authorities available for use:
The increase of $23.5 million in authorities by Standard Object from $118.9 million for 2015-16 to $142.4 million for 2016-17 is mainly explained as follows:

  • Professional Services and Acquisition of Machinery and Equipment
    An increase of $18.0 million in Professional Services ($15.0 million) and Acquisition of Equipment ($3.0 million) is related to the modernization of PCO's information technology infrastructure to efficiently support its activities. Investments in IT will also allow the department to build the capacity to permit the broader sharing of information with Canadians who want to use technology to connect with their government. This initiative will touch all areas of PCO and can be summarized as follows:

    • The replacement / upgrade of the aging IT infrastructure which supports PCO's business solutions and systems to better align with Government of Canada technology and security standards.
    • The introduction of new tools, and the enhancement of existing tools, to support the broad corporate requirements to facilitate information sharing through collaboration tools, business intelligence tools, reporting, and analytics tools.
    • The modernization of communications, collaboration, and information management tools for PCO and its clients, to facilitate open interactions with Canadians, promote open government, and improve transparency.
    • The beginning of a project to implement e-Cabinet, highlighted by the introduction of new tools to facilitate the management and communication of Cabinet documents in digital form.
  • Personnel
    The $3.4 million increase is attributable to funding that was received in Supplementary Estimates (A) related to PCO’s information technology modernization project and for other organizational changes. These organizational changes are for the production and distribution of the media products for the Prime Minister, enhancing the Prime Minister’s digital presence, Federal-Provincial-Territorial and Clerk’s communications. New employees are also required for the e-Cabinet initiative to define business requirements, design a new process and delivery model for the management of Cabinet meetings that will ensure the integrity and flow of electronic Cabinet documents across the Government of Canada while maintaining the integrity and security of the Cabinet documents system. The increase in personnel is also needed to support the creation of a new non-partisan, merit-based Senate appointment process.
  • Information
    The increase of $2.0 million is related to communications specifically for increased public opinion research (POR). The government will undertake an ongoing cycle of public opinion research to obtain data on emerging or priority issues and public reaction to new programs and policies as they are implemented. This will help ensure that the government is responding to the needs of Canadians. The new approach to POR at PCO is expected to reduce costs across the government and improve collaboration.

Authorities used during the quarter:
The increase of $2.3 million in authorities used during the quarter by Standard Object from $24.7 million for 2015-16 to $27.0 million for 2016-17 is mainly explained as follows:

  • Professional and Special Services and Rentals
    The increase of $2.0 million is related to activities for the modernization of PCO's information technology infrastructure. This includes $1.6 million for informatics technology services and $0.4 million for license and maintenance fees for software.
  • Other Subsidies and Payments
    The increase of $0.5 million is mainly related to an advance payment made to Global Affairs Canada to provide funding for travel expenses for the media that accompany the Prime Minister during his official international travels. Once expenses are incurred, the amounts are recovered from the media.
  • Acquisition of Equipment
    The increase of $0.1 million is for the acquisition of office furniture related to PCO's office optimization strategy to achieve a more modern and functional workspace for employees.
  • Personnel
    The overall decrease of $0.4 million in personnel spending is related to salary costs and payments in lieu of leave that are partially offset by an increase in contributions to Employee Benefits Plan in accordance with TBS guidelines.

Risks and Uncertainties

PCO’s complex, fast-paced and ever-evolving operating environment unavoidably creates a broad spectrum of management and operational risks. Accordingly, PCO has adopted an Integrated Risk Management Strategy that is supported by a comprehensive governance and oversight regime. The risk management structure ensures that PCO has the information, analysis and management direction required to detect, prevent and, if necessary, actively mitigate emerging and evolving risks.

PCO faces a number of external and internal risks. The dominant financial risks lie in 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 reflects the results of the current fiscal period in relation to the 2016-17 Main Estimates and 2016-17 Supplementary Estimates (A) (full supply for Main Estimates and supply for Supplementary Estimates (A) were released on June 23, 2016).

Significant Changes in Relation to Operations, Personnel and Programs

PCO's current operating environment continues changing as it adapts to the priorities of this government's mandate. Budget 2016 allocated $108.2 million for the first two years and $26.7 million on-going to PCO to fulfill its new and expanded responsibilities. Many of the initiatives and projects require new staff. As a result, up to 113 full-time employees will join PCO over the next fiscal year. This may lead to further organizational and reporting structure changes. Recent changes include the Deputy Clerk of the Privy Council and Associate Secretary to the Cabinet, Serge Dupont taking on additional responsibilities as the Deputy Minister of Intergovernmental Affairs. As well, Kami Ramcharan has joined PCO as the new Assistant Deputy Minister of Corporate Services and Chief Financial Officer. An organization chart is regularly updated and posted on the PCO website.

Approved by Senior Officials: (original signed by)

Original signed by                          
Michael Wernick
Clerk of the Privy Council and
Secretary to the Cabinet

Original signed by                          
Kami Ramcharan
Assistant Deputy Minister and
Chief Financial Officer
Corporate Services Branch

Ottawa, Canada
August 26, 2016

Statement of Authorities (unaudited) (note 2)

(in thousands of dollars)
Fiscal year 2016-2017 Fiscal year 2015-2016
Total available for use for the year ending March 31, 2017 (note 1) Used during the quarter ended June 30, 2016 Year-to-date used at quarter- end Total available for use for the year ending March 31, 2016 (note 1) Used during the quarter ended June 30, 2015 Year-to-date used at quarter- end

Note 1: Includes only Authorities available for use and granted by Parliament at quarter-end for each respective fiscal year.

Note 2: Details may not add to totals due to rounding.

Vote 1 - Net operating expenditures 126,842 23,358 23,358 104,454 21,166 21,166
Budgetary statutory authorities  
Contributions to employee benefits plans 15,202 3,650 3,650 14,123 3,531 3,531
Prime Minister - Salary and motor car allowance 172 14 14 170 42 42
Minister of Infrastructure, Communities and Intergovernmental Affairs and Minister of the Economic Development Agency of Canada for the Regions of Quebec - Salary and motor car allowance - - - - - -
Leader of the Government in the House of Commons - Salary and motor car allowance 84 7 7 82 21 21
Minister of Democratic Institutions 84 7 7 - - -
Minister of State (Democratic Reform) - Motor car allowance - - - 2 - -
Minister of State and Chief Government Whip - Motor car allowance - - - 2 1 1
Spending of proceeds from the disposal of surplus Crown assets 14 - - 19 - -
Total budgetary authorities 142,397 27,036 27,036 118,852 24,760 24,760
Total Authorities 142,397 27,036 27,036 118,852 24,760 24,760

Departmental budgetary expenditures by Standard Object (unaudited) (note 2)

(in thousands of dollars)
Fiscal year 2016-2017 Fiscal year 2015-2016
Planned expenditures for the year ending March 31, 2017 (note 1) Expended during the quarter ended June 30, 2016 Year-to-date used at quarter-end Planned expenditures for the year ending March 31, 2016 (note 1) Expended during the quarter ended June 30, 2015 Year-to-date used at quarter-end

Note 1: Includes only Authorities available for use and granted by Parliament at quarter-end for each respective fiscal year.

Note 2: Details may not add to totals due to rounding.

Expenditures  
Personnel 101,876 21,738 21,738 98,447 22,133 22,133
Transportation and communications 3,891 677 677 3,236 659 659
Information 4,233 374 374 2,191 344 344
Professional and special services 24,792 2,683 2,683 9,768 1,078 1,078
Rentals 1,239 717 717 1,291 276 276
Repair and maintenance 1,000 24 24 1,446 5 5
Utilities, materials and supplies 689 77 77 678 98 98
Acquisition of machinery and equipment 4,832 212 212 1,845 99 99
Other subsidies and payments (79) 534 534 26 67 67
Total gross budgetary expenditures 142,473 27,036 27,036 118,928 24,760 24,760
Less Revenues netted against expenditures:
  Revenues
(75) - - (75) - -
Total revenues netted against expenditures (75) - - (75) - -
Total Budgetary Expenditures 142,397 27,036 27,036 118,852 24,760 24,760