Public Safety Canada Quarterly Financial Report for the quarter ended September 30, 2017 (Revised)

Erratum

Date: January 31, 2018
Location: 7.0 Departmental budgetary expenditures by Standard Object (unaudited)
Revision: Discrepancies in the amounts reported in the column “Planned expenditures for the year ended March 31, 2017(1)” have been updated; “Total net budgetary expenditures” under “Planned expenditures for the year ended March 31, 2017(1)” amounts to $1,207,169,603 and replaces $1,096,958,408.
Rationale for the revision: Original amount reported was not correct.

1.0 Introduction

This quarterly financial report for the period ending September 30, 2017 has been prepared by management as required by section 65.1 of the Financial Administration Act, in the form and manner prescribed by Treasury Board. The report should be read in conjunction with the Main Estimates and the Supplementary Estimates, as well as Building a Strong Middle Class (Budget 2017).

This quarterly financial report has not been subject to an external audit or review. However, it has been reviewed by the Departmental Audit Committee prior to approval by senior officials.

Information on the mandate, roles, responsibilities and programs of Public Safety Canada can be found in the 2017-18 Departmental Plan and the 2017-18 Main Estimates.

1.1 Basis of Presentation

This quarterly report has been prepared using an expenditure basis of accounting. The accompanying Statement of Authorities table includes the Department's spending authorities granted by Parliament, or received from Treasury Board Central Votes, and those used by the Department consistent with the Main Estimates and the Supplementary Estimates (A) for the 2017-18 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 annually approved limits through Appropriation Acts or through legislation in the form of statutory spending authority for specific purposes.
Public Safety Canada 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, as do the expenditures presented in this report.

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

The following graph provides a comparison of the net budgetary authorities and expenditures as of September 30, 2017 and September 30, 2016 for the Department's combined:

Image description
Comparison of Budgetary Authorities and Expenditures as of September 30, 2017 and September 30, 2016 (in thousands)
2017-18 2016-17
Main Estimates 1,052,594 1,096,958
Supplementary Estimates (A) 4,496 0
TB Central Votes 4,934 110,211
Expenditures to Date 191,816 543,914
Q2 Expenditures 95,825 175,222

Note: The 2017-18 Supplementary Estimates "A" (SUPPS A) amounted to $4,496K and TB Central Vote transfers amounted to $4,934K. Public Safety's appropriations have increased to $1,062,024K as of September 30, 2017. The department did not have funding changes in SUPPS A in 2016-17.

2.1 Significant Changes to Authorities

For the period ending September 30, 2017, the authorities provided to the Department include Main Estimates, Supplementary Estimates (A) and TB Central Vote transfers. The 2016-17 authorities for the same period included Main Estimates and TB Central Vote transfers. The Statement of Authorities table presents a net decrease of $145.1 million (12.0 percent) compared to those of the same period of the previous year (from $1,207.2 million to $1,062.0 million).

Operating Expenditures authorities have decreased by $2.4 million (1.8 percent) (from $133.8 million to $131.4 million) mainly due to:

These decreases are offset by the following increases:

Grants and Contributions (G&C) authorities have decreased by $141.8 million (13.4 percent) (from $1,057.3 million to $915.5 million) mainly due to:

These decreases are offset by the following increases:

Budgetary Statutory authorities have decreased by $0.9 million (5.8 percent) in 2017-18 mostly as a result of the Employee Benefit Plan (EBP) costs associated with the department's budgetary requirements for salary and for which the EBP rate decreased as a result of an increase in the employee contributions portion.

2.2 Significant Variances from Previous Year Expenditures

Year-to-Date Expenditures

For the period ending September 30, 2017, the Departmental Budgetary Expenditures by Standard Object table presents a net decrease of $352.1 million (64.7 percent) in Public Safety's year-to-date (YTD) expenditures compared to the previous year (from $543.9 million to $191.8 million). This decrease is mostly due to:

These decreases are offset by:

Second Quarter Expenditures

Compared to the previous year, expenditures during the quarter ended September 30, 2017 have decreased by $79.4 million (45.3 percent) (from $175.2 million to $95.8 million) as reflected in the Departmental Budgetary Expenditures by Standard Object table.

Offset by the following increase:

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. Public Safety is called, on behalf of the Government of Canada, to rapidly respond to emerging threats and ensure the safety and security of Canadians. The Department'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 government-wide or central agency 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.

Disaster Financial Assistance Arrangements

The Disaster Financial Assistance Arrangements (DFAA) contribution program presents a greater level of risk and uncertainty than other PS grants and contributions programs given that it represents a significant portion of the PS budget and that it is subject to unforeseen events. The DFAA was established in 1970 to provide a consistent and equitable mechanism for federal sharing of provincial and territorial costs for natural disaster response and recovery where such costs would place an undue burden on a provincial or territorial economy.

Compensation Adjustments (Collective Agreements)

The Government of Canada announced in 2013 a freeze in the overall federal operating budget, generating government-wide savings of roughly $550 million in 2014-15 and $1.1 billion in 2015-16. Consequently, Public Safety will have to absorb the increases in salaries resulting from collective agreements that take effect during the freeze period (2014-2015 and 2015-2016), and for the ongoing impact of those adjustments. Salary increase impact for 2016-17 and beyond will be funded through adjustments to authorities.

As a result of collective bargaining agreements that have taken effect in 2017-18, an estimated $4.1 million in retroactive salary payments will have to be absorbed by the department in 2017-18. As a mitigation strategy, surplus funds from previous years totaling $3.1 million had been set aside.

In 2017-18, the ongoing salary increases related to 2014-15 and 2015-16 to be absorbed by the department are estimated at $1.9 million.

Phoenix Pay Modernization Project

In April 2016, Public Safety moved to the new Phoenix federal public service pay system. In transitioning to the new pay system, large backlogs and delays at the centralized Pay Centre have led to a significant increase in pay-related issues reported by employees.

To support employees at highest risk, Public Safety continues to work on a range of issues that fall within the department's scope of control to support employees who are experiencing difficulties with their pay, including: providing emergency salary advances, analyzing and resolving integration issues between the department's Human Resource Management System and the Phoenix pay system, and working with partners to ensure readiness for collective agreement updates. Issues affecting Public Safety employees and the measures the Department is able to take to help mitigate them have been discussed with the unions at local and national level management consultation committees. At these meetings, union representatives have been engaged to ensure that employees' perspectives are shared with Management.

The Department is closely monitoring pay transactions to identify and address over and under payments in a timely manner and continues to apply ongoing mitigating controls which were implemented in 2016.

4.0 Significant Changes in Relation to Operations, Programs and Personnel

5.0 Approval by Senior Officials

Approved as required by the Policy on Financial Resource Management, Information and Reporting:

Malcolm Brown
Deputy Minister
Public Safety Canada
Ottawa (Canada)
Date: November 24, 2017

Caroline Weber
Chief Financial Officer and Assistant Deputy Minister
Corporate Management Branch
Public Safety Canada
Ottawa (Canada)
Date: November 23, 2017

6.0 Statement of Authorities (unaudited)

Fiscal year 2017-18 (in dollars)
Total available for use for the year ending March 31, 2018 (1) Used during the quarter ended September 30, 2017 Year to date used at quarter-end
Vote 1 - Net Operating Expenditures 131,400,054 36,819,362 63,860,908
Vote 5 - Grants and Contributions 915,540,358 55,300,489 120,544,318
Employee Benefit Plans (EBP) 14,999,364 3,684,485 7,368,970
Minister's Salary and Motor Car Allowance 84,400 21,150 42,300
TOTAL AUTHORITIES 1,062,024,176 95,825,486 191,816,496
(1) Includes only authorities available for use and granted by Parliament at quarter end.
Fiscal year 2016-17 (in dollars)
Total available for use for the year ended March 31, 2017 (1) Used during the quarter ended September 30, 2016 Year to date used at quarter-end
Vote 1 - Net Operating Expenditures 133,824,661 29,358,028 56,553,895
Vote 5 - Grants and Contributions 1,057,334,354 141,854,458 479,361,993
Employee Benefit Plans (EBP) 15,927,088 3,981,772 7,963,544
Minister's Salary and Motor Car Allowance 83,500 27,833 34,792
TOTAL AUTHORITIES 1,207,169,603 175,222,092 543,914,223
(1) Includes only authorities available for use and granted by Parliament at quarter end.

7.0 Departmental budgetary expenditures by Standard Object (unaudited)

Fiscal year 2017-18 (in dollars)
Planned expenditures for the year ending March 31, 2018 (1) Expended during the quarter ended September 30, 2017 Year to date used at quarter-end
Expenditures:
Personnel 110,263,117 33,647,357 61,274,599
Transportation and communications 4,057,918 655,160 1,136,896
Information 2,060,052 573,508 799,726
Professional and special services 21,489,046 3,710,122 5,556,220
Rentals 4,875,420 1,705,852 2,227,532
Repair and maintenance 777,775 250,188 282,439
Utilities, material and supplies 1,444,130 97,762 173,623
Acquisition of land, buildings and works - - -
Acquisition of machinery and equipment 4,103,509 154,743 672,003
Transfer payments 915,540,358 55,300,489 120,544,318
Public debt charges - - -
Other subsidies and payments 112,850 182,490 622,575
Total gross budgetary expenditures 1,064,724,176 96,277,671 193,289,931
Less Revenues netted against expenditures:
Interdepartmental Provision of Internal Support Services 2,700,000 452,185 1,473,435
Total net budgetary expenditures 1,062,024,176 95,825,486 191,816,496
(1) Includes only planned expenditures against authorities for use and granted by Parliament at quarter end.
Fiscal year 2016-17 (in dollars)
Planned expenditures for the year ended March 31, 2017 (1) Expended during the quarter ended September 30, 2016 Year to date used at quarter-end
Expenditures:
Personnel 108,609,936 26,659,818 53,949,262
Transportation and communications 4,071,579 712,407 1,191,201
Information 7,234,103 576,561 869,832
Professional and special services 21,886,592 4,629,617 7,939,792
Rentals 4,379,545 1,021,590 1,699,271
Repair and maintenance 474,935 50,969 88,148
Utilities, material and supplies 1,074,788 130,924 208,826
Acquisition of land, buildings and works 2,254,705 - -
Acquisition of machinery and equipment 2,549,066 213,075 355,725
Transfer payments 1,057,334,354 141,854,458 479,361,993
Public debt charges - - -
Other subsidies and payments - 4,791 4,193
Total gross budgetary expenditures 1,209,869,603 175,854,210 545,668,243
Less Revenues netted against expenditures:
Interdepartmental Provision of Internal Support Services 2,700,000 632,118 1,754,020
Total net budgetary expenditures 1,207,169,603 175,222,092 543,914,223
(1) Includes only planned expenditures against authorities for use and granted by Parliament at quarter end.
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