Quarterly Financial Reports for the quarter ended September 30, 2014

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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 Documents 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 programs:

• Compliance activities, represented by the responsibility to investigate privacy-related complaints and responding to information requests from individuals and organizations;
• Research and policy development, 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 programs 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 2014-15. 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. (More information can be found at the following address on the Treasury Board of Canada Secretariat website).

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 2014 was tabled in Parliament on February 11, just before the tabling of the Main Estimates on February 17, 2014. As a result the measures announced in the Budget 2014 could not be reflected in the 2014-15 Main Estimates.

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 variances in relation to actual expenditures and planned expenditures that affected both the quarter and the year to date results, compared to the same periods of the preceding fiscal year.

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 $24,320K compared to $29,099K in 2013-14. The decrease of $4,779K is essentially due to the one-time funding of $4,141K received in 2013-14 for the OPC’s move to Gatineau, Quebec. This additional funding was spent on office set up and equipment as well as new technology infrastructure. This one time funding provided for the move is to be reimbursed annually ($276K) from OPC reference levels for a period of 15 years starting fiscal year 2014-15 to 2028-29.

Budgetary expenditures by standard object analysis

As shown in the departmental budgetary expenditures by standard object table (attached), the OPC spent approximately 45.6% of its authorities as of September 30, 2014, of which 77.4% represents personnel costs.

OPC overall expenditures in this quarter decreased by $59K or 1.1% compared to the same quarter in the previous fiscal year. Significant spending variances can be found in the areas of personnel, rentals, and acquisition of machinery and equipment.

Personnel

There is an increase of $381K on personnel spending in Q2 of 2014-15 ($4,322K) compared to Q2 of 2013-14 ($3,941K) mainly due to the staffing of vacant positions in the previous fiscal year (2013-14).

Rentals

There is a spending decrease of $94K on rentals in Q2 2014-15 ($80K) compared to that of 2013-14 ($174K). This difference is mainly due to license rentals and maintenance of client and networking software. Some licenses have been renegotiated last fiscal year at a lower cost which results in a decrease in spending.

Acquisition of machinery and equipment

The decrease of $277K in expenditures on the acquisition of machinery and equipment is mainly due to a decrease in spending on the acquisition of computer equipment servers ($22K in Q2 of 2014-15 compared to $299K in Q2 of 2013-14) which last year was exceptional as it related to the move to 30 Victoria.

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 below in more detail.

Budgetary Pressures

As previously highlighted in the 2013-14 Quarterly Financial Reports, the OPC is facing a budget reduction of $1,106K 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. This is in addition to the budget reduction of $276K stemming from the reimbursement of the one-time funding received to address the move costs.

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

No other significant changes in relation to operations, personnel or programs occurred during the second quarter of 2014-15.

Approval by Senior Officials:

Approved by,

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

	Fiscal year 2014-2015			Fiscal year 2013-2014
	Total available for use for the year ending March 31, 2015	Used during the quarter ended September 30, 2014	Year to date used at quarter end	Total available for use for the year ending March 31, 2014	Used during the quarter ended September 30, 2013	Year to date used at quarter end
Program expenditures	21,949	4,713	9,903	26,628	4,747	10,021
Budgetary statutory authority - Employee benefit plan	2,371	593	1,186	2,471	618	1,236
TOTAL AUTHORITIES	24,320	5,306	11,089	29,099	5,365	11,257

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

	Fiscal year 2014-2015			Fiscal year 2013-2014
	Planned expenditures for the year ending March 31, 2015	Expended during the quarter ended September 30, 2014	Year to date used at quarter end	Planned expenditures for the year ending March 31, 2014	Expended during the quarter ended September 30, 2013	Year to date used at quarter end
Expenditures
Personnel	16,743	4,322	8,584	16,675	3,941	8,810
Transportation and communications	758	166	253	851	169	302
Information	510	64	96	553	47	103
Professional and special services	3,997	592	1,005	4,667	610	1,036
Rentals	682	80	358	201	174	434
Repair and maintenance	139	6	80	454	9	92
Utilities, materials and supplies	234	51	133	213	63	144
Acquisition of machinery and equipment	751	22	44	4,976	299	314
Transfer payments	500	-	-	500	20	20
Other subsidies and payments	6	3	536	9	33	2
TOTAL BUDGETARY EXPENDITURES	24,320	5,306	11,089	29,099	5,365	11,257