Quarterly Financial Reports for the quarter ended June 30, 2013

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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.

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 Protection 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 program 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 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 2013-14. 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 federal organizations. 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.

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.

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 2013 was tabled in Parliament on March 21, after the tabling of the Main Estimates on February 25, 2013.  As a result the measures announced in the Budget 2013 could not be reflected in the 2013-14 Main Estimates.

In fiscal year 2013-2014, 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 2013.  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.

This report has not been subject to an external audit or review.

Highlights of fiscal quarter and fiscal year to date (YTD) Results

This section highlights the significant items that contributed to the increase in planned expenditures for the fiscal year ending March 31, 2014 as compared with March 31, 2013 and the increase in actual expenditures for the quarter ended June 30, 2013 as compared with that of the prior year’s quarter.

Statement of authorities analysis

The permanent funding for OPC remained stable over the past fiscal year. As reflected in the table on statement of authorities (attached), total authority available for the year is $29.099M compared to $24.605M in 2012-13.  The increase of $4.5M is essentially due to the one-time funding received in 2013-14 for the OPC move to Gatineau, Quebec.  This funding will be spent for the office set up and equipment as well as the new technology infrastructure.  Most of the expenses related to the move will take place over the latter part of this fiscal year.

As shown in the departmental budgetary expenditures by standard object table (attached), the OPC spent approximately 20% of its authorities in the first quarter of 2013-14 (Q1), which ended June 30, 2013.

The sections that follow explain the variance in the level of expenditures from the first quarter of 2013-14 to the corresponding quarter of 2012-13.

Budgetary expenditures by standard object analysis

The statement of budgetary expenditures by standard object of both 2013-14 and 2012-13 shows that significant spending variance can be found in the areas of personnel and professional and special services.

Personnel

In Q1, the OPC spent approximately 29% of its personnel authorities.  Compared to the previous fiscal year, OPC personnel expenditures for Q1 have increased by $0.71M. The variance is explained by the fact that the Office has successfully staffed most of its vacant positions in Q2 and Q3 of 2012-13 ($0.18M) and the remaining $0.53M is due to an over estimation of salary accruals which will be reversed and corrected in Q2 of 2013-14.

Professional and Special Services

There was a spending decrease of $0.16M on professional and special services in Q1 of 2013-14 ($0.43M) compared to that of 2012-13 ($0.59M).  This difference is mainly due to the continuous efforts to enhance the OPC’s internal capacity in resolving investigations of both the PA and PIPEDA.  However, the Office is expecting a significant increase in the remaining quarters of 2013-14 due to the move.

Risks and Uncertainties

The OPC’s key corporate risks are identified and assessed through an annual update of the Office’s Corporate Risk Profile. This year the Office identified a number of key risks which could have financial impacts should they materialize and strategies have been put in place to mitigate them. These risks and mitigation strategies are described in more detail below.

Relocation of OPC headquarters

The OPC is required to move its headquarter offices to a new building due to the retrofit of its current building. Significant costs will result from this move, scheduled for the winter of 2014. The OPC has received one-time funding in FY 2013-14 in the form of a loan to cover the estimated costs. This loan is to be reimbursed over the next several years.

Despite the significant funding pressures caused by this move, the OPC is seizing the opportunity to work more closely with other Agents of Parliament who will have their offices onsite and to create a work environment more conducive to greater information sharing and collaboration between employees. The Office is currently exploring opportunities for common and/or shared services with Agents of Parliament.

 Budget Reductions

In addition to the funding pressures associated with the relocation, the OPC is facing budget reductions of $0.7M in 2013-14 and $1.1M for 2014-15 and beyond (equivalent to 5% of its ongoing budget) as part of its contribution to the government’s efforts to generate operational efficiencies.

These budgetary reductions come at a time when demand for OPC privacy advice and expertise is rising as is the complexity of the requests. It is important to manage this situation well in order to maintain both the OPC’s solid credibility and a high quality of service for Canadians.

To manage this situation, the OPC strengthened its financial management framework and streamlined a number of its core processes resulting in increased effectiveness and efficiency of its operations. Additionally, the Office continues to closely monitor its financial situation and strategically allocate its resources.

Significant changes in relation to operations, personnel and programs

This year will mark the end of the current Commissioner’s mandate. This change in leadership, the first in 10 years for the OPC, represents an important transition for the Office. Work is underway to effectively manage this transition.

Approval by Senior Officials:

Approved by,

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Statement of Authorities (unaudited)
(in thousands of dollars)

	Fiscal year 2013-2014			Fiscal year 2012-2013
	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	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
Program expenditures	26,628	5,274	5,274	22,131	4,776	4,776
Budgetary statutory authority - Employee benefit plan	2,471	618	618	2,474	619	619
TOTAL AUTHORITIES	29,099	5,892	5,892	24,605	5,395	5,395

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Departmental budgetary expenditures by Standard Object (unaudited)
(in thousands of dollars)

	Fiscal year 2013-2014			Fiscal year 2012-2013
	Planned expenditures for the year ending March 31, 2014	Expended during the quarter ended June 30, 2013	Year to date used at quarter end	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	16,675	4,869	4,869	16,532	4,157	4,157
Transportation and communications	851	133	133	972	115	115
Information	553	56	56	495	70	70
Professional and special services	4,667	426	426	3,714	585	585
Rentals	201	260	260	92	277	277
Repair and maintenance	454	83	83	590	109	109
Utilities, materials and supplies	213	81	81	302	61	61
Acquisition of machinery and equipment	4,976	15	15	1,398	20	20
Transfer payments	500	-	-	500	-	-
Other subsidies and payments	9	(31)	(31)	10	1	1
TOTAL BUDGETARY EXPENDITURES	29,099	5,892	5,892	24,605	5,395	5,395