Quarterly Financial Reports for the quarter ended September 30, 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.

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.

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 net increase in planned expenditures for the fiscal year ending March 31, 2012 and the increase in actual expenditures for the quarter ended September 30, 2011.

Statement of authorities analysis

As reflected in the table on statement of authorities (attached), total authorities available for the year have increased by approximately $2.2 million to $24.659 million. This rise is in support of the Government’s new Anti-Spam legislation. It was received to investigate the misuse of personal information including the electronic compiling or supplying of lists of personal electronic addresses without consent, and the use of spyware and similar technologies for the unauthorized collection of personal information. This net increase is reflected mostly in personnel expenditures as well as for professional and special services.

The OPCs quarterly and year-to-date spending are on an upward trend compared to the previous year with a variance of $1.5 million or 30 percent. In addition to increased spending related to Anti-Spam legislation, a portion of the increased expenditures ($0.7M) is related to cash out of severance pay benefits due to major changes emerging from recent ratified collective bargaining agreements.

As shown in the departmental budgetary expenditures by standard object table (attached), the OPC has spent approximately 44.5% 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 stated in the previous quarter report, personnel expenditures 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 anti-spam legislation in December 2010. Compared to the previous fiscal year, OPC personnel expenditures have increased by $0.9 million. It’s noted however, as stated in the statement of authorities’ analysis that a large portion of the increase is the result of recent collective agreement ratifications relating to pay in lieu of severance. This trend is expected to continue in the third and fourth quarter of 2011-12 as affected employees are cashing out their severance pay benefits.

Professional and Special Services

There was a significant spending increase on professional and special services in the second quarter of 2011-12 ($1.4M) compared to that of 2010-11 ($0.8M); the difference
is partly due to ongoing investments in developing technologies to enhance tools and related documentation within the organization. The increase is also due to continuous efforts to enhance the OPC’s capacity in resolving investigations of both the PA and PIPEDA. It is expected that increased spending on investigation will continue into the third 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.

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.

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. The review will be forward looking and any possible budgetary impact will not take place until 2013-14.

2011 Reorganization

There has been an internal reorganization to reallocate resources to the OPC’s priority of improving service to Canadians. The reorganization was implemented in mid-April 2011 and has influenced the OPC’s spending profile in 2011-12’s first two quarters. Business activities are expected to reach a steady state by the third quarter.

Significant changes in relation to Operations, personnel and programs

The OPC is expecting a few changes in key senior level personnel which could affect its overall operations. Processes are currently underway to staff senior positions in the Technology Analysis, PA and PIPEDA investigations branches. OPC expects these positions to be staffed by January 2012.

Approval by Senior Officials:

Approved by,

(Original signed by)

Jennifer Stoddart
Privacy Commissioner of Canada