Quarterly Financial Reports for the quarter ended December 31, 2015

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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 (if applicable).

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, related to the Office’s responsibility to investigate privacy-related complaints and respond to inquiries from individuals and organizations, review breach reports and have the power to initiate its own investigations when warranted (Commissioner initiated complaints).  Through audits and reviews, the Office also assesses how well organizations are complying with requirements set out in the two federal privacy laws, and provides recommendations on Privacy Impact Assessments (PIAs), pursuant to the Treasury Board Directive on Privacy Impact Assessment;
• 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 and analysing legislative and regulatory initiatives, providing strategic legal, policy and technical advice on key issues, and developing policy positions that advance the protection of privacy rights in both the public and private sectors;
• Public outreach, which the Office delivers public education and communications activities, including speaking engagements and special events, exhibiting, media relations, and the production and distribution of promotional and educational material;
• Internal services, which refers to activities and resources that are administered to support the needs of programs and other corporate obligations of the OPC.

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 quarterly 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 (as applicable) for fiscal year 2015-16. This quarterly 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 on the Treasury Board website).

The authority of Parliament is required before moneys 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.

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 variances between actual expenditures and planned expenditures that affected both the quarter and the year-to-date results, compared to the same period the preceding fiscal year.

Statement of authorities analysis

Permanent funding for the OPC remained stable over the past fiscal year. As reflected in the statement of authorities table (attached), total authorities available for the year are $24,990K compared to $25,592K in 2014-15.  The variance is mainly explained by the difference in the one-time carry forward funding received for each fiscal year.

Budgetary expenditures by standard object analysis

As shown in the departmental budgetary expenditures by standard object table (attached), the OPC spent approximately 63.6% of its authorities as of December 31, 2015, of which 84.3% represents personnel costs.

Overall expenditures as of the end of this quarter decreased by $893K, or 5.3%, compared to the same quarter the previous fiscal year. This spending variance made up of both increases and decreases can be found in the areas of personnel, professional and special services, acquisition of machinery and equipment as well as other subsidies and payments.

Personnel

As of Q3, the OPC spent approximately 79.7% of its authorities for personnel. Compared to the previous fiscal year, OPC personnel expenditures for Q3 have increased by $223K. As explained in Q1 and Q2, the salary expenditures are increasing due to the continuous efforts of the OPC to fill vacant positions in order to enhance our internal investigative capacity.

Professional and special services

There was a spending decrease of $470K on professional and special services as of Q3 of 2015-16 ($1,142K) compared to that of 2014-15 ($1,612K). As in Q1 and Q2, this difference is mainly due to OPC’s efforts to reduce the use of consultants for investigative purposes by boosting internal capacity which is reflected in the Office’s personnel expenses.

Acquisition of machinery and equipment

The decrease of $178K in acquisition of machinery and equipment as of Q3 of 2015-16 ($49K) compare to that of 2014-15 ($227K)  is mainly due to the informatics technology equipment purchase (such as IT servers, computers, data storage, etc.) which has been delayed to Q4 of 2015-16.

Other subsidies and payments

As already reported in Q2, the decrease of $488K for other subsidies and payments as of Q3 is mainly due to the one-time transition payment in 2014-15 for implementing salary payment in arrears by the Government of Canada.

Risks and Uncertainties

As mentioned in recent quarterly reports, 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 that could have a financial impact should they materialize, as well as strategies have been put in place to mitigate them.

The OPC’s mandate as well as the complexity and volume of work continue to grow with no additional resources.  For example, the federal government introduced mandatory material privacy breach reporting to the OPC (and the Treasury Board Secretariat) for federal institutions in May 2014. It also passed Bill S-4, the Digital Privacy Act, which amended PIPEDA to mandate private sector organizations to report certain breaches to the OPC. This legislation also allows the OPC to enter into court-enforceable compliance agreements with private sector organizations following of an investigation. While such measures bolster accountability and privacy governance within federal institutions and private sector organizations, it will be a challenge for the OPC to deliver on this expanded mandate with the resources currently available. To help manage this risk, the Office will continue to pursue opportunities for efficiencies in its operations.  As well, OPC will monitor closely the impacts of decisions of the new Government as it further defines and implements new policy direction.

One key area of uncertainty is the impact of planned government-wide initiatives to standardize and consolidate back-office systems and services. As these initiatives are implemented in the years to come, the OPC will continue to take a proactive approach and remain engaged in discussions to ensure the operating and financial context of small organizations such as the OPC are taken into consideration in the design and roll-out of these initiatives.

Significant changes in relation to operations, personnel and programs

Besides changes highlighted in Q1 regarding the migration to a new financial system and the identification of new privacy priorities, no other significant changes related to operations, personnel or programs occurred during the third quarter of 2015-16.

Approval by Senior Officials:

Approved by,

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

	Fiscal year 2015-2016			Fiscal year 2014-2015
	Total available for use for the year ending March 31, 2016	Used during the quarter ended December 31, 2015	Year to date used at quarter end	Total available for use for the year ending March 31, 2015	Used during the quarter ended December 31, 2014	Year to date used at quarter end
Program expenditures	22,571	4,685	14,090	23,221	5,115	15,018
Budgetary statutory authority - Employee benefit plan	2,419	605	1,814	2,371	593	1,779
TOTAL AUTHORITIES	24,990	5,290	15,904	25,592	5,708	16,797

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

	Fiscal year 2015-2016			Fiscal year 2014-2015
	Planned expenditures for the year ending March 31, 2016	Expended during the quarter ended December 31, 2015	Year to date used at quarter end	Planned expenditures for the year ending March 31, 2015	Expended during the quarter ended December 31, 2014	Year to date used at quarter end
Expenditures
Personnel	16,820	4,406	13,402	16,026	4,595	13,179
Transportation and communications	867	189	429	719	147	400
Information	511	57	264	326	63	159
Professional and special services	4,405	485	1,142	4,539	607	1,612
Rentals	671	78	445	41	72	430
Repair and maintenance	314	2	39	561	7	87
Utilities, materials and supplies	297	26	74	146	32	165
Acquisition of machinery and equipment	597	29	49	62	183	227
Transfer payments	500	-	10	500	-	-
Other subsidies and payments	8	17	50	2,672	1	538
TOTAL BUDGETARY EXPENDITURES	24,990	5,290	15,904	25,592	5,707	16,797