Quarterly Financial Report for the Quarter ended June 30, 2012

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Introduction

This quarterly 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 the Treasury Board Accounting Standard 1.3. This quarterly report should be read in conjunction with the Main Estimates and Supplementary Estimates. It has not been subject to an external audit or review.

Authority and Objectives

The Parole Board of Canada (PBC or the Board) is an independent administrative tribunal responsible for making decisions about the timing and conditions of release of offenders to the community on various forms of conditional release. The Board also makes record suspension decisions and recommendations for the exercise of clemency through the Royal Prerogative of Mercy (RPM).

Legislation governing the Board includes the Corrections and Conditional Release Act (CCRA), the Criminal Records Act (CRA), and the Criminal Code.The CCRA empowers the Board to make conditional release decisions for federal offenders and offenders in provinces and territories without their own parole boards. Provincial Boards currently exist in Quebec and Ontario. The CRA entitles the Board to order, deny and revoke record suspensions for convictions under federal acts or regulations. The Governor General or the Governor in Council approves the use of the RPM for those convicted of a federal offence, in all jurisdictions, based on investigations by the Board and recommendations from the Minister of Public Safety.

The Board has one strategic outcome: Conditional release and record suspension decisions and decision processes that safeguard Canadian communities. This strategic outcome is the cornerstone of the Board's public accountability and reporting of results.

Further details on the Board's authority, mandate and program activities may be found in the PBC's Report on Plans and Priorities.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Board's spending authorities granted by Parliament and those used by the department, consistent with the Main Estimates and Supplementary Estimates for the 2012-2013 fiscal year. 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 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.

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.

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.

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

Highlights of Fiscal Quarter and Fiscal Year to Date Results

Significant Changes to Authorities

As at June 30, 2012, total authorities available for the year have increased by $2.3M compared to the same quarter of the previous year, from $49.2M to $51.5M. The major changes are as follows:

  • An increase of $1.6M due to net results of reprofiling funds between various fiscal years for the Board's Medium to Long Term Accommodation Plan for Program Delivery;
  • An increase of $0.4M related to the Renewal of the federal Victims Strategy Initiative;
  • An increase of $573K for the Renewal of the Strengthening Community Safety Initiative;
  • An increase of $0.3M which is the fourth of six annual increases related to the Government's Truth in Sentencing Act;
  • On February 23rd 2012 the user fee for record suspension (formerly pardon) applications increased from $150 to $631. The authority to re-spend revenue increased by $3.2M from $2.4M to $5.6M accordingly.

Figure 1 - First Quarter Expenditures Compared to Annual Authorities

First Quarter Expenditures Compared to Annual Authorities

Source: PBC. The graph is in the form of a bar chart showing authorities and annual expenditures for the first quarter and year-to-date of each of 2011-12 and 2012-13.

Authorities.

Year 2011-12: $49.2M.

Year 2012-13: $51.5M.

Expenditures Q1.

Year 2011-12: $10.7M.

Year 2012-13: $10.0M.

Expenditures Year-to-Date.

Year 2011-12: $10.7M.

Year 2012-13: $10.0M.

Significant Changes to Gross Budgetary Expenditures

Quarterly and year-to-date spending, net of revenue, decreased by $632K or 6% in 2012-13, compared with the same quarter in 2011-12. Gross budgetary expenditures increased slightly by $219K or 2% in 2012-13 compared to 2011-12, while the revenue increased significantly in 2012-13 by $851K or 148% compared to 2011-12. As a percentage of planned expenditures, year-to-date net spending in the first quarter of 2012-13 decreased slightly with that of 2011-12 to $10.0M compared to $10.6M (19% in 2012-13 and 22.0% in 2011-12).

The change in gross expenditures is due primarily to an increase in Personnel offset by a decrease in Transportation and Communications.

  • Personnel expenditures increased by $495K or 5% in the first quarter of 2012-13. This is due to a combination of factors, including significant payments for severance pay and termination benefits and general increases in collective agreements. As well, additional human resources have been required to allow the Board to react to the increased workload arising from legislative changes, including the Abolition of Early Parole Act (the total number of Parole Hearings increased by 246 or 18.8% in the first quarter of 2012-13 compared to the prior year).
  • Transportation and Communications expenditures decreased by $175K or 29% compared with the first quarter last year, due in large part to beginning implementation of Budget 2012 measures. Further information on this is included below.
  • Information expenditures were $22K higher in the first quarter of 2011-12 than in the previous year. This represented a significant increase as last year's amount was only $2K. The increase is due to the printing of the Pardon Application Guide to coincide with changes to the Pardon process.

Significant Changes to Revenues Collected

The Board collects a fee for processing record suspension applications. Effective February 23, 2012, the fee increased from $150 to $631, resulting in the need to increase the authority to re-spend revenue by $3.2M from $2.4M to $5.6M. The increased fee and changes to the legislation resulted in a decrease in the number of applications accepted: 1,576 or 41% from the first quarter of 2011-12. Despite this, revenue collected in the first quarter increased considerably, from $575K to $1.4M.

Risks and Uncertainties

The PBC receives all of its funding through annual Parliamentary authorities. As a result, its operations are impacted by any changes in funding approved through Parliament. The Board collects user fees for processing record suspension applications, and has the authority to spend revenues received during the year on activities related to processing applications for record suspensions. Lower than expected volumes from forecasts will have an impact on the Board's net financial situation.

As a small agency, the Board faces difficulties in recruiting and retaining staff. Small agencies offer fewer opportunities for advancement, which leads some applicants to choose to work elsewhere, while current employees are often forced to leave to obtain promotional opportunities. As well, the Board faces the same demographic crunch as the rest of government, with retirement of personnel affecting operations. As a lean organization with few managers, it is difficult to manage on-going responsibilities while running staffing actions. Over the next few months/years, the Board is expecting to see increased activity as a result of recently-approved as well as potential legislative changes. While the increase in workload will be most obvious in the number of conditional release reviews conducted, the entire organization will be impacted. This could exacerbate the recruiting and retention difficulties should employees seek opportunities outside the Board.

Significant Changes in Relation to Operations, Personnel and Programs

On February 23, 2012, the user fee for a record suspension increased from $150 to $631. This change will have a major impact on the PBC's revenue.

Budget 2012 Implementation

This section provides an overview of the savings measures announced in Budget 2012 that will be implemented in order to refocus government and programs; make it easier for Canadians and business to deal with their government; and, modernize and reduce the back office.

The PBC will achieve Budget 2012 savings of $4.8M by 2014-15 through internal efficiency measures and through operational changes to how some conditional release reviews are conducted. The Board will maintain its focus on public safety, through quality decision-making on conditional release and record suspensions to safeguard Canadian communities.

In the first year of implementation, the Board will achieve savings of $1.6M. Savings will increase to $2.7M in 2013-14 and will result in ongoing saving of $4.8M by 2014-15. To date, cost savings have been achieved through reduced travel due to tele-work by Board members and increased use of video-conferencing in hearings. On the latter, the number of hearings held by videoconference increased by more than 400% over the first quarter last year.

The balance of Budget 2012 savings for will be reflected later in the fiscal year and in future fiscal years.

There are no financial risks or uncertainties related to these savings. Work on all remaining initiatives is underway, and in accordance with plans.

Approval by Senior Officials

______________________

Cathy Gaudet, CPA, CA
Acting Chief Financial Officer

_____________________

Harvey Cenaiko
Chairperson 

Statement of Authorities (unaudited)

(In thousands of dollars)
  Fiscal year 2012-13 Fiscal year 2012-11
Total available for uses 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 uses for the year ending
March 31, 2012
Used during the quarter ended
June 30, 2011
Year to date used at quarter-end
Vote 35 – Program expenditures 51,196 9,980 9,980 45,656 9,732 9,732
Less revenues netted against expenditures 5,645 1,426 1,426 2,436 575 575
Budgetary statutory authorities - EBP 5,938 1,475 1,475 6,015 1,504 1,504
Total authorities 51,489 10,029 10,029 49,235 10,661 10,661

Departmental Budgetary Expenditures by Standard Object (unaudited)

(In thousands of dollars)
Expenditures Fiscal year 2012-13 Fiscal year 2011-12
Planned expenditures for the year ending March 31, 2013 Expended during the quarter ended June 30, 2012 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2012 Expended during the quarter ended June 30, 2011 Year to date used at quarter-end
Personnel 43,841 10,649 10,649 40,591 10,154 10,154
Transportation and communications 4,324 423 423 4,382 598 598
Information 146 1 1 140 24 24
Professional and special services 3,956 294 294 3,747 376 376
Rentals 311 29 29 242 29 29
Repair and maintenance 1,967 6 6 1,662 3 3
Utilities, materials and supplies 566 28 28 361 29 29
Acquisition of machinery and equipment 1,992 22 22 542 21 21
Other subsidies and payments 31 3 3 4 3 3
Total gross budgetary expenditures 57,134 11,455 11,455 51,671 11,236 11,236
Total revenues netted against expenditures 5,645 1,426 1,426 2,436 575 575
Total net budgetary expenditures 51,489 10,029 10,029 49,235 10,661 10,661
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