Quarterly Financial Reports for the quarter ended December 31, 2011

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Office of the Privacy Commissioner of Canada

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

Introduction

This quarterly report was 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 should be read in conjunction with the OPC Main and Supplementary Estimates as well as OPC’s previous quarterly reports for the current year. This report has not been subject to an external audit or review.

The OPC’s mandate is overseeing compliance with both the Privacy Act (PA), which covers the personal information-handling practices of federal government departments and agencies, and the Personal Information Protections and Electronic Document Act (PIPEDA), Canada’s private sector privacy law. Its mission is to protect and promote the privacy rights of individuals via the following four key program activities:

  • Compliance activities, represented by the responsibility to investigate privacy-related complaints and responding to information requests from individuals and organizations;
  • Research and policy development activities, through which the Office serves as a centre of expertise on emerging privacy issues in Canada and abroad by researching trends and technological developments, monitoring legislative and regulatory initiatives, providing legal, policy and technical analyses of key issues, and developing policy positions that advance privacy protection;
  • Public outreach, which the Office delivers through public education and communications activities, including speaking engagements, special events, media relations, and producing and sharing of promotional and educational material;
  • Internal services, which refers to activities and resources that support programs needs and other OPC corporate obligations.

Detailed information on the OPC’s authority, mandate and program activities can be found in our Report on Plans and Priorities (RPP) and the Main Estimates.

Basis for Presentation

This report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Office’s spending authorities granted by Parliament and those used by the Office, consistent with the Main Estimates and the Supplementary Estimates for fiscal year 2011-12. This report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before money 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 OPC uses full accrual method of accounting to prepare and present its annual 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

This section highlights the significant items that contributed to the net increase in planned expenditures for the fiscal year ending March 31, 2012 and the increase in actual expenditures for the quarter ended December 31, 2011.

Statement of authorities analysis

As reflected in OPC’s previous quarterly report, total authority available for the year has not changed.  OPC total authority remained at $24.659 million.  Included in the total authority, $2.2 million and 6 FTEs (full time equivalent) were recently approved and are in support of Canada’s new anti-spam law.  This funding is mostly for personnel expenditures as well as for professional and special services to:

  • enhance the OPC’s technical capability to deal with the new investigative impacts;
  • work co-operatively with the CRTC and the Competition Bureau to ensure coordination of enforcement efforts,increase consumer education and awareness to help them better understand the risk posed by unsolicited electronic messages and how to use the online environment more safely.

The OPCs third quarter and year-to-date spending is continuously on an upward trend compared to the previous year. A spending increase of $1.5 million or 30 percent has occurred in the last two quarters of 2011-12 for a total increase of nearly $3.0 million between 2010-11 and 2011-12.

As shown in the departmental budgetary expenditures by standard object table (attached), the OPC has spent approximately 70.5% of its authorities. The upward trend for salary expenditures is projected to continue in the third quarter of 2011-12, due to new hiring towards reaching full staff capacity.

Given that the OPC’s most significant expense is salaries (67% of total available for use), the Office’s spending is generally distributed equally throughout the year.

Budgetary expenditures by standard object analysis

The statement of budgetary expenditures by standard object shows that significant spending variance can be found in the areas of personnel and professional and special services.

Personnel

As already stated in the previous quarterly reports, expenditures on personnel are projected to steadily increase throughout fiscal year 2011-12 as outstanding staffing actions are completed.  This is in line with the total available allocated to personnel for use in 2011-12 which increased from 2010-11 with funding received following Royal Assent of Canada’s anti-spam legislation in December 2010. Compared to the previous fiscal year, OPC personnel expenditures for the third quarter have increased by $0.6 million. This increase is less than in the previous quarter as recent collective agreement ratifications related to the pay in lieu of severance have been completed.

Professional and Special Services

The third quarter expenses in professional and special services remained approximately the same as the previous quarter at $1.5 million in 2011-12 compared to $0.7 million in 2010-11.  The expenses are due to the ongoing investments in developing technologies to enhance tools and related documentation within the organization and to the continuous efforts to enhance OPC’s capacity in resolving investigations under both the PA and PIPEDA.  Professional and special services have increased by 77.5% compared to the same period last fiscal year as a standing offer for investigation services has been put in place to carry out OPC’s compliance activities until staffing activities are completed.  It is expected that OPC will maintain the same level of expenditures on investigation activities in the last quarter of 2011-12.

Risks and Uncertainties

The OPC is funded through annual appropriations. Consequently, its operations are impacted by any changes in funding approved through Parliament. The OPC strategically allocates its resources considering its mandate in a context of increasing demands. 

Budget 2010

The 2010 Budget announced that departments would not be funded for 2010-11 to 2012-13 wage and salary increases resulting from collective agreements and would be instead expected to find efficiencies within their existing budgets to fund increases. The OPC has addressed the issue and the risk is deemed to be minimal, however, the OPC is staying appraised of the situation as new agreements are being ratified.

Budget 2011

The 2011 Budget announced the government’s intention to undertake a Strategic and Operational Review (SOR) in 2011-12 to achieve ongoing net fiscal savings of at least $4 billion by 2014-15. The review is intended to generate ongoing operational and productivity improvements and efficiencies across government, as well as ensure that existing programs continue to be relevant and effective for Canadians. As an Agent of Parliament, OPC is not formally subjected to this exercise. However, in the spirit and intent of the exercise, the OPC is encouraged to undertake a similar review.   In response, the OPC is currently in the process of reviewing its activities to identify possible cost savings with the objective of continuously maintaining the best possible level of service to Canadians. As already mentioned in the previous quarterly report, the current intent of the review is forward looking and any possible budgetary impact is not anticipated to take place until 2013-14.

Financial risk

The OPC is expecting a normal operating lapse in funding tied to Canada’s anti-spam law as the legislation has not yet come into force. In the last quarter of 2011-12 and early 2012, the OPC will continue to build its capacity and infrastructure in order to be well positioned to deliver on its new responsibilities once the law comes into force, expected in the fall of 2012.

Significant changes in relation to Operations, personnel and programs

The OPC is going through some changes in key senior level personnel which could affect its overall operations. As mentioned in the previous quarter, the Technology Analysis and Privacy Act Branches’ senior positions have been successfully staffed.  Staffing of two key officials in PIPEDA Investigations Branch is still underway. OPC expects this position to be staffed in early spring.

Approval by Senior Officials:

Approved by,

(Original signed by)

Jennifer Stoddart
Privacy Commissioner of Canada

(Original signed by)

Daniel Nadeau, CGA
Chief Financial Officer

Date

Date


Statement of Authorities (unaudited)
(in thousands of dollars)
Fiscal year 2011-2012 Fiscal year 2010-2011
Total available for use for the year ending March 31, 2012 Used during the quarter ended December 30, 2011 Year to date used at quarter end Total available for use for the year ending March 31, 2011 Used during the quarter ended December 30, 2010 Year to date used at quarter end
Program expenditures 22,129 5,788 15,494 20,099 4,365 12,852
Budgetary statutory authority -
Employee benefit plan
2,530 633 1,898 2,291 572 1,719
TOTAL AUTHORITIES 24,659 6,421 17,392 22,390 4,937 14,571

Departmental budgetary expenditures by Standard Object (unaudited)
(in thousands of dollars)
Fiscal year 2011-2012 Fiscal year 2010-2011
Total available for use for the year ending March 31, 2012 Used during the quarter ended December 30, 2011 Year to date used at quarter end Total available for use for the year ending March 31, 2011 Used during the quarter ended December 30, 2010 Year to date used at quarter end
Expenditures
Personnel 16,586 4,248 12,303 15,770 3,619 10,760
Transportation and communications 1,065 193 508 964 252 735
Information 475 142 322 356 55 296
professional and special services 4,364 1,499 3,291 3,231 737 1,854
Rentals 98 18 49 78 19 54
Repair and maintenance 532 49 412 361 48 400
Utilities, materials and supplies 177 45 172 112 22 125
Acquisition of machinery and equipment 859 132 205 1,018 167 322
Transfer payments 500 91 116 500 - 5
Other subsidies and payments 3 4 14 - 18 20
Total net budgetary expenditures 24,659 6,421 17,392 22,390 4,937 14,571
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