Public Safety Canada Quarterly Financial Report
For the quarter ended June 30, 2013

Table of contents

1.0 Introduction

This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act, 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 (A) for 2013-14 and 2012-13, the Eligible Paylist Expenditures for 2012-13, as well as Canada’s Economic Action Plan 2012 (Budget 2012).

1.1 Authority, Mandate and Program Activities

Public Safety (PS) Canada plays a key role in discharging the Government’s fundamental responsibility for the safety and security of its citizens. The Department of Public Safety and Emergency Preparedness Act 2005 and the Emergency Management Act 2007 set out two essential roles for the Department: (i) support the Minister’s responsibility for all matters, except those assigned to another federal minister, related to public safety and emergency management, including national leadership; and (ii) coordinate the efforts of PS’s Portfolio agencies, as well as provide guidance on their strategic priorities.

The Department provides strategic policy advice and support to the Minister of PS on a range of issues, including: national security, border strategies, countering crime and emergency management. The Department also delivers a number of grant and contribution programs related to countering crime and emergency management.

Further information on the mandate, roles, responsibilities and programs of PS can be found in the Report on Plans and Priorities and the Main Estimates.

1.2 Basis of Presentation

This quarterly report has been prepared using an expenditure basis of accounting (modified-cash). 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 the Supplementary Estimates (A) for the 2013-14 fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet the information needs concerning the use of spending authorities.

The authority of Parliament is required before funds can be spent by the Government. Approvals are given in the form of annual limits provided through Appropriation Acts or through legislation in the form of statutory spending authority for specific purposes.

As part of the departmental performance reporting process, Public Safety prepares its annual departmental financial statements on a full accrual basis in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector. However, the spending authorities voted by Parliament remain on an expenditure basis, as do the expenditures presented in this report.

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. The 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 were established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012. In 2013-14, the changes to departmental authorities were reflected in the 2013-14 Main Estimates tabled in Parliament.

The quarterly financial report has not been subject to an audit or review.

1.3 Public Safety Canada Financial Structure

PS has a financial structure composed mainly of voted budgetary authorities that include Vote 1 – Operating Expenditures, Vote Netted Revenues and Vote 5 – Grants and Contributions, while the statutory authorities comprise the Contributions to employee benefit plans and Minister of PS – Salary and motor car allowance.

Over 75 percent of the Department’s budget is devoted to delivering transfer payment programs related to countering crime and emergency management. The largest programs include payments made pursuant to the Disaster Financial Assistance Arrangements (DFAA), the First Nations Policing Program (FNPP), the programming related to the implementation of the National Crime Prevention Strategy (NCPS) and the Financial Support to Provinces and Territories for 2011 Flood Mitigation Investments.

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

The numbers presented in the report are in accordance with the Government-Wide Chart of Accounts for Canada for 2013-14 and Treasury Board Accounting Standard (TBAS) 1.3.

The following graph provides a comparison of the net budgetary authorities and expenditures as of June 30, 2013 and June 30, 2012 for the Department’s combined Vote 1, Vote 5 and Statutory Votes.

Comparison of the budgetary authorities and expenditures
Image Description

Starting from the left hand side, the “first” column in the graph indicates that the Department authorities are at $670.9 million for fiscal year 2013-14. The year-to-date expenditures of $67.3 million reported at the end of the first quarter of the 2013-14 fiscal year are shown under the “second” column. The “third” column in the graph depicts the 2012-13 authorities which were at $395.6 million at the end of June 2012. The 2012-13 year-to-date expenditures of $121.5 million are shown under the “fourth” column.

2.1 Significant Changes to Authorities

For the period ending June 30, 2013, the authorities provided to the Department included the Main Estimates and the Supplementary Estimates (A), whereas the 2012-13 authorities for the same period are provided through the Main Estimates, the Supplementary Estimates (A) and TB Central Votes for Eligible Paylist Expenditures. The Statement of Authorities presents a net increase of $275.3 million in PS’s total authorities at June 30, 2013 compared to those of the previous year for the same period (from $395.6 million to $670.9 million).

This net increase in the authorities available for use is a combination of a decrease in Vote 1 – Operating Expenditures ($4.2 million), an increase in Vote 5 – Grants and Contributions ($278.7 million) and an increase in Budgetary Statutory Authorities ($0.8 million).

Vote 1 – Operating Expenditures

The Department’s Vote 1 decreased by $4.2 million or 3.2%, mainly due to:

Vote 5 - Grants and Contributions (G&C)  

The Department’s Vote 5 increased by $278.7 million or 110.6%, mainly due to:

Budgetary Statutory Authorities

The increase of $0.8 million in 2013-14 is related to the Employee Benefit Plans (EBP) costs associated with the change in the Department budgetary requirements for salary. This does not represent a material change compared to 2012-13.

2.2 Explanations of Significant Variances from Previous Year Expenditures

The Departmental budgetary expenditures by object presents a net decrease of $54.2 million in PS’s total expenditures at June 30, 2013 compared to those of the previous year for the same period (from $121.5 million to $67.3 million). This represents a decrease of 44.6% against expenditures recorded for the same period in 2012-13.

The net decrease in spending is mainly attributed to a decrease in Vote 5 - Grants and Contributions ($55.0 million), offset by slight increases in Vote 1 - Operating Expenditures ($0.6 million) and Statutory expenditures ($0.2 million).

For the most part, the expenditures variance is explained by the Transfer Payment decrease of $55.0 million from $121.5 million in the first quarter of 2012-13 to $67.3 million as of June 30, 2013. The 45.3% decrease in mainly attributed to a $50.0 million payment for the 2011 Manitoba Spring Flood paid in the first quarter of 2012-13 under the Disaster Financial Assistance Arrangements program. There was also a decrease in expenditures of $10.2 million for the First Nations Policing Program and $1.6 million for National Crime Prevention Strategy program due to delayed payments caused by the renewal and negotiation of the contribution agreements in the first quarter of 2013-14. These decreases were offset by an increase in expenditures of $6.6 million during the first quarter of 2013-14 under the Biology Casework Analysis Contribution Program, which were paid during the second quarter of 2012-13.

PS has experienced an increase of approximately $1.8M in its eligible paylist expenditures in the first quarter of 2013-14. Furthermore, the Department has taken measures to spread out its spending over the year which also contributed to an increase under Vote 1 – Operating Expenditures despite the implementation of the Budget 2012 Savings measures.

3.0 Risks and Uncertainty

The Department’s mandate spans from public safety and security, intelligence and national security functions, social interventions for youth-at-risk, to readiness for all manner of emergencies. The Department is called to rapidly respond to emerging threats and ensure the safety and security of Canadians. It’s ability to deliver its programs and services is subject to several risk sources, such as, the rapidly changing asymmetrical threat environment, its ability to respond to natural or man-made disasters, government priorities, and central agency’s or government-wide initiatives. To deliver this mandate effectively, the collaboration of many departments and agencies, provincial and territorial governments, international partners, private sector and first responders is required. Without the collaboration of all these partners, the Department is at risk in the delivery of its mandate and objectives, making the effectiveness of these relationships crucial.

Fiscal Restraint

PS continues to face pressures that have been previously identified. Collectively these pressures have reduced the Department’s funding base and its flexibility to reallocate funding to achieve expected results.

In recognition of this tightening fiscal environment, PS examined all of its departmental program spending, balancing resource allocations against identified priorities by shifting from lower to higher priorities. The Department continues to explore actions to mitigate and manage the impact of these efficiency measures on the organization and the delivery of corporate services.

Natural Disaster Response and Recovery

In the first quarter of 2013-14, Treasury Board (TB) endorsed Orders-in-Council to identify six natural disasters as eligible for cost sharing under the Disaster Financial Assistance Arrangements program. The estimated federal share of the remediation costs of these disasters is $225 million. The Department will be submitting a TB submission to request authority to seek additional funding in Grants and Contributions to make advance payments to eligible Provinces and Territories under this program.

4.0 Significant changes in relation to Operations, Programs and Personnel

4.1 Significant Changes in Relation to Operations

Reducing travel costs through the use of technology

In keeping with the Government’s commitment to implement new measures to return to balanced budgets and to make government more efficient, Economic Action Plan 2013 announces a number whole-of government initiatives to modernize government administration by improving service delivery and achieving efficiencies. One of these initiatives is to reduce travel costs through the use of technology.

Economic Action Plan 2013 implements measures to reduce departmental travel costs by $42.7 million, or 5 per cent, and to boost productivity by using modern alternatives to travel.

PS is committed to controlling costs related to travel. As a result of cost containment measures announced in earlier budgets, coupled with the implementation of departmental strategies and tools that reinforce the use of lower cost alternatives and focus departmental expenditures on core mandates, PS’ year-over-year travel costs have been declining.

PS’ share of the government-wide travel cost reduction initiative is $0.2 million ongoing starting in fiscal year 2013-14. The reduction will be achieved by freezing the funds in the current fiscal year as part of the Supplementary Estimates process and by a reduction of future reference levels through the Annual Reference Level Update process.

Unifying cyber and national security

Effective June 24, 2013, PS’ National Security Branch was reconfigured as the National and Cyber Security Branch to reflect the need for a seamless approach to cyber and national security. This change is driven by the increasing importance of cyber security as a Government of Canada priority as well as recognition of the leadership role that PS plays for cyber security domestically and at the international level.

To develop its cyber security leadership role, PS’ Canadian Cyber Incident Response Centre (CCIRC), which focuses on the protection of national critical infrastructure against cyber incidents, will build its capacity to coordinate responses to cyber incident events with its domestic and international partners. PS will continue to collaborate with Portfolio partners and other government departments, to advance a coordinated approach to cyber security and critical infrastructure risk management and information sharing, through the Critical Infrastructure Sector Networks.

Improving service delivery and achieving efficiencies to audit and evaluation functions

PS’ Internal Audit and Evaluation units have been amalgamated into a single entity, the Internal Audit and Evaluation Directorate. This amalgamation was done to help create more efficient operation of the critical services offered by these two groups.

Merging internal audit and evaluation will allow for more comprehensive information and advice on the performance, relevance and effectiveness of programs, activities and overall management practices.

4.2 Significant Changes in Relation to Programs

Disaster Financial Assistance Arrangements

The Disaster Financial Assistance Arrangements (DFAA) Program was established in 1970 to provide a consistent and equitable mechanism for federal sharing of provincial or territorial costs for natural disaster response and recovery where such costs would place an undue burden on a provincial or territorial economy.

Since the inception of the program, the DFAA has been applied to over 180 events with a total federal payment to date of $2.18 billion. From 1970 to 1995, the total amount of DFAA payments averaged approximately $10 million per fiscal year. The 1996 Saguenay Flood, the 1997 Red River Flood and the 1998 Ice Storm resulted in large DFAA payments to affected provinces. DFAA payments of over $1.1 billion were made for these three events. Since 1996, DFAA payments have averaged $110 million per year.

There are currently over 60 natural disasters for which Orders-in-Council (OiCs) have been approved, authorizing the provision of federal financial assistance under DFAA, and for which final payments have not yet been made. Much of this outstanding federal share results from recent natural disasters. In 2010, there were an exceptional number of natural disasters for which provinces and territories requested federal financial assistance and the estimated federal share for these events alone is over $400 million. There is a timing risk related to the receipt of a final payment request from provinces and territories that the request may exceed the Department’s appropriation at the time the request is received.

Taking into account all the expected DFAA final payments, the total estimated outstanding federal liability in the first quarter is currently $1.35 billion (to be paid out over the next 5 years). The four most significant events, which represents over 50% of PS’s liabilities, are the 2011 Manitoba Floods estimated at $347 million, the Saskatchewan 2007 Spring Summer Flood at $138 million, the 2010 Alberta June Rainstorm at $90 million and the 2010 Hurricane Igor that affected Newfoundland at $82 million. The Department received $230 million additional funding in the first quarter of 2013-14 through the Supplementary Estimates process.

The Department currently has access to $1.1 billion, which amounts to over 80% of the DFAA obligation for the next 4 years.

First Nations Policing Program

The federal government will maintain funding for policing agreements with First Nation and Inuit communities under the First Nations Policing Program (FNPP) for the next five years. Budget 2013 announced an additional $33 million over two years to support these communities. PS will seek $15.9 million of this additional funding for fiscal year 2013-14 through the Supplementary Estimates process.

The FNPP supports professional, dedicated and culturally responsive policing services to First Nation and Inuit communities. FNPP funding supplements existing funding and policing services provided by provinces and territories.

Currently, funding provided under the FNPP supports 163 policing agreements, which represent approximately 1,250 professionally trained and dedicated police officers working in some 400 First Nation and Inuit communities, serving a total population of over 338,000.

On a daily basis, Public Safety employees in the NCR and offices across the country make important contributions on the FNPP file.

As we explore ways to provide the most cost-effective and sustainable policing options for our country, this five-year commitment will allow us to continue to deliver this program and to help our department, as a whole, work towards our mission of building a safe and resilient Canada.

This initiative is in keeping with the Government’s Plan for Safe Street and Communities, which focuses on tracking crime, victims’ rights, and fair and efficient justice system.

Canada-U.S. Beyond the Border Action Plan

The release of the Economic Action Plan 2013 underlined the importance of the investments in economic and security initiatives to implement Canada’s commitments under the Beyond the Border Action Plan. The Plan also highlighted a number of initiatives over the next five years to address threats as early as possible and allow border agencies to further facilitate the flow of legitimate goods and people across our shared border.

PS continues to work closely with the U.S. to identify and address threats to North America early by undertaking joint threat assessments as part of the continued implementation of the Canada-U.S. Beyond the Border Action Plan.

PS’s ongoing activities include negotiations towards a comprehensive approach to preclearance, including an agreement for land, rail and marine modes and amendments to the existing air preclearance agreement between Canada and the U.S. In addition, PS, in coordination with partners in Canada and the U.S., will move forward on the implementation of the pilot project on truck cargo pre-inspection.

4.3 Significant Changes in Relation to Key Personnel

Pursuant to the reconfiguration of the National and Cyber Security Branch (NCSB) to reflect the need for a seamless approach to national and cyber security, as described in sub-section 4.1 Significant Changes in Relation to Operations, Ms. Lynda Clairmont will continue as Senior Assistant Deputy Minister.  In her position, Ms. Clairmont will coordinate Government of Canada efforts on key national and cyber security matters, and will lead national efforts to strengthen information sharing and foster strong partnerships with domestic and international stakeholders. Mr. Gary Robertson joined NCSB as Assistant Deputy Minister to support Ms. Clairmont in her expanded role. An interim replacement, Mr. René Bolduc, has been assigned to assume the responsibilities of Assistant Deputy Minister of Corporate Management Branch and Chief Financial Officer until a replacement is appointed.

The amalgamation of PS’ audit and evaluation functions into a single entity, as described in section 4.1 Significant Changes in Relation to Operations, has resulted in the creation of a new position of Chief Audit & Evaluation Executive, which is assumed by Ms. Rosemary Stephenson. As Public Safety's current Chief Audit Executive, Ms. Stephenson is equipped with the knowledge and extensive senior-level management experience to undertake the new evaluation function assigned to her.

With the departure of Mr. Richard Wex in February 2013, Ms. Kathy Thompson joined the Law Enforcement and Policing Branch as its new Assistant Deputy Minister. Ms. Thompson was recently the Director General, Policy and Communications at Communications Security Establishment Canada. Ms. Thompson has extensive experience in strategic and operational policy development, stakeholder engagement, as well as Cabinet and parliamentary affairs.

After two years as Assistant Deputy Minister of the Emergency Management & Regional Operations Branch, Ms. Gina Wilson left the Department to return to Aboriginal Affairs and Northern Development Canada to be the Senior Assistant Deputy Minister, Treaties. Until further notice, Mr. Shawn Tupper has been asked to oversee the Emergency Management & Regional Operations Branch in addition to his role as Assistant Deputy Minister of the Community Safety and Partnership Branch.

5.0 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.

PS is doing its part to support the federal government’s return to a balanced budget, reduce the deficit, and deliver on its commitments to Canadians.

The Department will achieve Budget 2012 savings of $24.7 million by fiscal year 2014-15 through organizational restructuring as well as by transforming some of its business activities, while also minimizing service reductions to priority policies and programs.

The Department is achieving Budget 2012 savings of $15.8 million in 2013-14. Vote 1 - Operating Expenditures saving measures account for $6.0 million, Vote 5 - Grants and contributions account for $9.2 million and the Statutory Vote - Employee Benefit Plans account for the remaining $0.5 million.

PS is well positioned to undertake these changes. The Department has developed action plans for all initiatives and is closely monitoring their implementation in order to ensure that all risks are mitigated. The initiatives arising from Budget 2012 will further enable PS to focus its resources on the Department’s key priorities and core mandate, while at the same time ensuring we continue to build a safe and secure Canada.

Approval by Senior Officials:

François Guimont, Deputy Minister  
Ottawa, Ontario
August 16, 2013

René Bolduc, A/Chief Financial Officer
Ottawa, Ontario
August 16, 2013

6.0 Statement of Authorities (unaudited)

Fiscal year 2013-2014
(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
Vote 1 - Net Operating expenditures 124,342 27,716 27,716
Vote 5 - Grants and contributions 530,629 35,611 35,611
Employee Benefit Plans (EBP) 15,861 3,965 3,965
Minister's Salary and Car Allowance 79 20 20
Total Authorities 670,911 67,312 67,312

* Includes only authorities available for use and granted by Parliament at quarter-end.

Note: Totals may not add and may not agree with details provided elsewhere due to rounding.

Fiscal year 2012-2013
(In thousands of dollars)
  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
Vote 1 - Net Operating expenditures 128,499 27,092 27,092
Vote 5 - Grants and contributions 251,940 90,645 90,645
Employee Benefit Plans (EBP) 15,056 3,764 3,764
Minister's Salary and Car Allowance 78 19 19
Total Authorities 395,573 121,520 121,520

* 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.

Note: Totals may not add and may not agree with details provided elsewhere due to rounding.

7.0 Departmental budgetary expenditures by standard object (unaudited)

Fiscal Year 2013-2014
(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
Expenditures:      
Personnel 107,095 29,295 29,295
Transportation and communications 4,359 565 565
Information 2,148 157 157
Professional and special services 18,860 1,492 1,492
Rentals 4,296 421 421
Repair and maintenance 1,694 57 57
Utilities, material and supplies 809 115 115
Acquisition of land, buildings and works 1,020 - -
Acquisition of machinery and equipment 2,399 168 168
Transfer payments 530,629 35,611 35,611
Public debt charges - - -
Other subsidies and payments 102 3 3
Total gross budgetary expenditures 673,411 67,885 67,885
Less Revenues netted against expenditures:
Interdepartmental Provision of Internal Support Services		 2,500 572 572
Total net budgetary expenditures 670,911 67,312 67,312

* Includes only planned expenditures against authorities available for use and granted by Parliament at quarter-end.

Note: Totals may not add and may not agree with details provided elsewhere due to rounding.

Fiscal year 2012-2013
(In thousands of dollars)
  Planned expenditures for the year ending
March 31, 2013*, **		 Expended during the quarter ended June 30, 2012 Year to date used at quarter-end
Expenditures:      
Personnel 103,242 27,485 27,485
Transportation and communications 6,853 617 617
Information 1,284 49 49
Professional and special services 19,444 1,514 1,514
Rentals 4,616 997 997
Repair and maintenance 1,365 78 78
Utilities, material and supplies 1,206 96 96
Acquisition of land, buildings and works 1,392 - -
Acquisition of machinery and equipment 4,164 36 36
Transfer payments 251,940 90,645 90,645
Public debt charges - - -
Other subsidies and payments 67 3 3
Total gross budgetary expenditures 395,573 121,520 121,520
Less Revenues netted against expenditures***:
Interdepartmental Provision of Internal Support Services		 - - -
Total net budgetary expenditures 395,573 121,520 121,520

* Includes only planned expenditures against authorities available for use and granted by Parliament at quarter-end.
** Planned expenditures do not reflect measures announced in Budget 2012.
*** 2012-13 Vote netted revenues (VNR) were approved through 2012-13 Supplementary Estimates (B), as such they were not included at the quarter ended June 30, 2012.

Note: Totals may not add and may not agree with details provided elsewhere due to rounding.

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