Quarterly Financial Reports for the quarter ended September 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.

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 2012 was tabled in Parliament on March 29, after the tabling of the Main Estimates on February 28, 2012. As a result the measures announced in the Budget 2012 could not be reflected in the 2012-13 Main Estimates.

In fiscal year 2012-2013, 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 2012. 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 slight decrease in planned expenditures for the fiscal year ending March 31, 2013 as compared with March 31, 2012 and the decrease in actual expenditures for the quarter ended September 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 a downward trend compared to the previous year with a variance of $0.86M or (12.9%).

As shown in the departmental budgetary expenditures by standard object table (attached), the OPC spent approximately 23.6% of its authorities in the second quarter of 2012-13 (Q2), which ended September 30, 2012.

The sections that follow explain the variance in the level of expenditures from the second 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 professional and special services, rentals and repair and maintenance.

Personnel

In the second quarter, the OPC spent approximately 27.2% 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 remained stable. However, the severance pay immediate cash out and maternity leave allowance have decreased by $0.59M in 2012-13 (Q2) compared to the previous year 2011-12 (Q2). The regular salary has increased by $0.58M in 2012-13 (Q2). The increase in regular salary is mainly explained by the fact that the Office has successfully staffed most of its vacant positions.

Professional and Special Services

There was a significant spending decrease of $0.66M on professional and special services in the second quarter of 2012-13 ($0.75M) compared to that of 2011-12 ($1.41M); this difference is mainly due to the continuous efforts to enhance the OPC’s internal capacity for investigations of both PA and PIPEDA complaints, and also a decrease in the use of translation services. It is expected that spending on investigations consultants will continue to decrease in the third quarter (Q3) of 2012-13, while the internal capacity continues to be strengthened.

Rentals and repair and maintenance

The net increase in rentals of $0.15M 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 and 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

Any budget reductions were already discussed in Q1 of 2012-13. The OPC has previously addressed 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.

OPC Relocation

As already discussed in Q1, 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 fall of 2013. Negotiations are underway with the Treasury Board Secretariat and the Department of Finance to secure funding for the move. The OPC is requesting a loan, to be reimbursed over several years, for costs associated with the relocation as its reference levels cannot sustain its program delivery and move-related costs in a single year.

Significant changes in relation to operations, personnel and programs

No significant changes in key positions are expected in Q3 of 2012-13 at this time. The Office has also improved its investigative processes and the effects of these efforts started to be felt in Q2 and will continue in Q3 of 2012-13.

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 2012	Year to date used at quarter end	Total available for use for the year ending March 31, 2012	Used during the quarter ended 2011	Year to date used at quarter end
Program expenditures	22,131	5,192	9,973	22,129	6,040	9,706
Budgetary statutory authority - Employee benefit plan	2,474	619	1,237	2,530	632	1,265
TOTAL AUTHORITIES	24,605	5,811	11,210	24,659	6,672	10,971

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

	Fiscal year 2012-2013			Fiscal year 2011-2012
	Planned expenditures for the year ending March 31, 2013	Expended during the quarter ended 2012	Year to date used at quarter end	Planned expenditures for the year ending March 31, 2012	Expended during the quarter ended 2011	Year to date used at quarter end
Expenditures
Personnel	16,532	4,489	8,643	16,586	4,475	8,055
Transportation and communications	972	209	325	1,065	235	315
Information	495	66	136	475	141	180
Professional and special services	3,714	749	1,340	4,364	1,408	1,792
Rentals	92	175	453	98	24	31
Repair and maintenance	590	2	112	532	230	363
Utilities, materials and supplies	302	80	138	177	58	127
Acquisition of machinery and equipment	1,398	25	46	859	67	73
Transfer payments	500	14	14	500	25	25
Other subsidies and payments	10	2	3	3	9	10
TOTAL BUDGETARY EXPENDITURES	24,605	5,811	11,210	24,659	6,672	10,971