Quarterly Financial Reports for the quarter ended June 30, 2012

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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 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 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 2012-13. 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.

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 slight decrease in planned expenditures for the fiscal year ending March 31, 2013 as compared with March 31, 2012 and the increase in actual expenditures for the quarter ended June 30, 2012 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 $24.605M compared to $24.659M in 2011-12.

The OPC’s quarterly spending is on an upward trend compared to the previous year with a variance of $1.1M or 25%.

As shown in the departmental budgetary expenditures by standard object table (attached), the OPC spent approximately 22% of its authorities in the first quarter of 2012-13 (Q1), which ended June 30, 2012.

The sections that follow explain the variance in the level of expenditures from the first quarter of 2012-13 to the corresponding quarter of 2011-12.

Budgetary expenditures by standard object analysis

The statement of budgetary expenditures by standard object of both 2012-13 and 2011-12 shows that significant spending variance can be found in the areas of personnel, professional and special services and rentals.

Personnel

In Q1, the OPC spent approximately 22% of its personnel authorities. This is in line with the total available allocated to personnel for use in 2012-13. Compared to the previous fiscal year, OPC personnel expenditures have increased by $0.53M. This increase is mainly explained by the fact that the Office has successfully staffed most of its vacant positions. New collective agreements were also ratified in Q2 and Q3 of 2011-12 which had a significant impact on personnel expenditures increase in Q1 of 2012-13.

Professional and Special Services

There was a significant spending increase on professional and special services in Q1 of 2012-13 ($0.59M) compared to that of 2011-12 ($0.38M); this difference is owed partly 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 Q2 and Q3 of 2012-13.

Rentals

The net increase of $0.27M from 2011-12 to 2012-13 is mainly due to a change in the reporting of the renewal of informatics licenses. While licences were coded under “repair & maintenance” in 2011-12, they are now coded under “rentals” as per the Receiver General of Canada instructions. In addition, there was a change in the accounting methodology of licenses in 2012-13 which also led to a shift in costs.

Risks and Uncertainties

The OPC is funded through annual appropriations. Consequently, its operations are impacted by any changes in funding approved through Parliament.

Budget Reductions

The 2010 Budget announced that departments and agencies would not be funded for 2010-11 to 2012-13 wage and salary increases resulting from collective agreements. Organizations would instead be expected to find efficiencies within their existing budgets to fund increases. The OPC is addressing the issue and the risk is being monitored closely to reduce its impact as the OPC spends two thirds of its 2012-13 budgets in salary costs.

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 was 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, the OPC was not formally subjected to this exercise. However, in the spirit and intent of the exercise, the OPC was encouraged to undertake a similar review. In response, the OPC offered reductions of $0.7M in 2012-13 and 2013-14 and $1.1M for 2014-15 and beyond which is equivalent to 5% of its ongoing budget.

Any impact on the OPC’s service to Canadians was kept to a minimum as part of the savings will result through general efficiencies from across the organization and by relinquishing additional funding which had been allocated to the OPC in support of implementing the Federal Accountability Act. In the end, while this funding remained available to the OPC, it was not needed to successfully implement the Act and therefore not accessed.

OPC Relocation

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 fall of 2013 at the latest. Negotiations are underway with the Treasury Board Secretariat to secure funding for this move as the OPC is not in a position to absorb these costs.

Significant changes in relation to operations, personnel and programs

Towards the end of the fiscal year 2011-12, the OPC completed the staffing of several key senior management positions. No other senior key positions are expected to be staffed in 2012-13 at this time. The organization is also further efforts to improve investigative processes. Effects of these efforts will be felt and analyzed in the quarters to come.

Approval by Senior Officials:

Approved by,

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

	Fiscal year 2012-2013			Fiscal year 2011-2012
	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	Total available for use for the year ending March 31, 2012	Used during the quarter ended June 30, 2011	Year to date used at quarter end
Vote 45 - Program expenditures	22,131	4,776	4,776	22,129	3,666	3,666
Budgetary statutory authority - Employee benefit plan	2,474	619	619	2,530	633	633
TOTAL AUTHORITIES	24,605	5,395	5,395	24,659	4,299	4,299

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

	Fiscal year 2012-2013			Fiscal year 2011-2012
	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	Total available for use for the year ending March 31, 2012	Used during the quarter ended June 30, 2011	Year to date used at quarter end
Expenditures
Personnel	16,532	4,157	4,157	16,586	3,580	3,580
Transportation and communications	972	115	115	1,065	80	80
Information	495	70	70	475	39	39
Professional and special services	3,714	585	585	4,364	384	384
Rentals	92	277	277	98	7	7
Repair and maintenance	590	109	109	532	133	133
Utilities, materials and supplies	302	61	61	177	69	69
Acquisition of machinery and equipment	1,398	20	20	859	6	6
Transfer payments	500	-	-	500	-	-
Other subsidies and payments	10	1	1	3	1	1
TOTAL AUTHORITIES	24,605	5,395	5,395	24,659	4,299	4,299