Quarterly Financial Report for the Quarter ended September 30, 2017

Statement of Authorities (unaudited)

Departmental budgetary expenditures by Standard Object (unaudited)

Statement Outlining Results, Risks and Significant Changes in Operations, Personnel and Program

1. Introduction:

The quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by Treasury Board. This quarterly report should be read in conjunction with the 2017-18 Main Estimates and the 2016-17 Quarterly Financial Report for the quarter ended September 30, 2016. It has not been subject to an external audit or review.

A summary description of the Military Grievances External Review Committee (Committee) program activities can be found in Part II of the Main Estimates.
https://www.canada.ca/content/dam/canada/tbs-sct/migration/hgw-cgf/finances/pgs-pdg/gepme-pdgbpd/20172018/me-bpd-eng.pdf

Basis of Presentation:

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Committee’s spending authorities granted by Parliament and those used by the Committee, consistent with the Main Estimates. 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.

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.

The Committee uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

2. Highlights of Fiscal Quarter and Fiscal Year to Date (YTD) Results:

Statement of Authorities

In 2016-2017 and 2017-2018, the Committee’s total authorities included the Main Estimates and the Operating Budget Carry Forward from the previous year.

The total authorities available for use by the Committee have not undergone a significant change from previous year, with a slight decrease of $31,240 (0.44%).

The Statement of Authorities shows that 39.80% of authorities available for use were expended as of September 30, 2017, compared to 38.71% during the same period of the preceding fiscal year.

Statement of Departmental Budgetary Expenditures by Standard Object

During the second quarter of 2017-2018, expenditures have increased by $139,930 (9.50%) compared to the second quarter of the last fiscal year. This is mainly due to the processing of retroactive payments for new collective agreements. Those extra payments were however partially counterbalanced by a reduction in salaries, due to vacancies.

In addition, with regards to operating expenditures, there was an increase in rentals because invoices were processed at different times. There was also a decrease in professional and special services spending, mostly due to timing differences in processing translation invoices.

Essentially, the overall increase is due to the following items: personnel, rentals, and professional and special services spending.

3. Risks and Uncertainties:

Under subsection 29.16(1) of the National Defence Act (NDA), the Governor in Council (GIC) must appoint a Chairperson, at least two Vice-Chairpersons (one full-time and one part-time), and any number of members required by the Committee to carry out its mandate. This statutory requirement is fundamental to the Committee’s operations. Without a sufficient number of members, the Committee’s ability to fulfill its mandate (to review military grievances and issue findings and recommendations (F&R)) is at risk of being disrupted. In addition, the Committee will not likely to be able to fulfill its “duty to act expeditiously,” as stated in subsection 29.20(2) of the NDA.

Since February 2016, the Committee is short of the two Vice-Chairpersons, which is the minimum necessary complement of members established by 29.16(1) of the NDA. In addition, the term of the only remaining Committee member ended in June 2017. Further delay in appointment processes, initiated by the Privy Council Office (PCO) in October 2016, represents a risk, as it may be difficult for the Committee to carry out its functions. The Committee has a unique mandate that requires specific knowledge and experience. Due to the delays in appointments, there will be no knowledge transfer from previous members. Prolonged vacancies in the Committee’s membership and the absence of knowledge transfer together create the conditions for a difficult transition that may impact the quality and timeliness of the Committee’s F&R.

It should be noted, that the position of Chairperson and Chief Executive Officer (CEO), which has been vacant since January 2017, is currently occupied by the Committee’s Director of Operations and General Counsel, on an interim basis. The selection process for the nomination of a new Chairperson and CEO was recently posted on the PCO website.

During the second quarter of 2017-2018, the Committee continued to implement government-wide initiatives, such as back-office transformation and modernization of systems and business processes. Among other things, the Committee has launched an initiative to retrofit the office and reduce its footprint, and is planning a major investment in information technology infrastructure. These special projects, conducted in collaboration with other partners whose priorities and timetables are beyond the Committee’s control, must be completed by February 2018, before the end of the Committee's current lease. There is high pressure on the Committee to efficiently implement these government-wide initiatives, while conducting its day-to-day operations. Uncertainties regarding timetables, as well as financial and resource pressures, place strain on the Committee’s support services and may therefore impact the program’s ability to effectively deliver on its mandate.

4. Significant Changes to Operations, Personnel and Programs:

The Committee reviews grievances referred to it by the Chief of the Defence Staff (CDS). It is a demand-driven organization and, as such, has no control over the volume of cases referred for review. During the first quarter of 2017-2018, two members were available to issue F&R: the Interim Chairperson and CEO, and a part-time member whose term expired in June 2017. Since then, only the Interim Chairperson and CEO is able to act as member and issue F&R. During this period, there has been a significant decrease in the volume of cases referred to the Committee. Should the volume of referrals increase again to previous high levels, the Committee is at risk of not being able to deliver on its mandate.

Approved by:

Original signed by

_________________________________________
Caroline Maynard
Interim Chairperson and Chief Executive Officer
Ottawa, Canada
November 1, 2017

Original signed by

_________________________________________
Christine Guérette, CPA, CGA
Chief Financial Officer
Ottawa, Canada
November 1, 2017