Quarterly Financial Report - For the quarter ended June 30, 2018

Statement outlining results, risks and significant changes in operations, personnel and programs

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 Directive on Accounting Standards, GC 4400 Departmental Quarterly Financial Report. This quarterly financial report should be read in conjunction with the Main Estimates and previous Quarterly Financial Reports. For more information on PCO, please visit PCO's website.

This quarterly report has not been subject to an external audit or review but has been shared with the PCO Departmental Audit Committee and it reflects the committee members' comments.

Mandate

PCO supports the development and implementation of the Government of Canada's policy and legislative agendas, coordinates responses to issues facing the Government and the country, and supports the effective operation of Cabinet. PCO is led by the Clerk of the Privy Council, who also serves as Secretary to the Cabinet and the Head of the Public Service.

PCO serves Canada and Canadians by providing advice and support to the Prime Minister, portfolio ministers, and Cabinet.

PCO has three main roles:

  1. Provide professional non-partisan advice to the Prime Minister, portfolio ministers, Cabinet and Cabinet committees on matters of national and international importance.
  2. Support the smooth functioning of the Cabinet decision-making process and facilitate the implementation of the Government’s agenda.
  3. Foster a high-performing and accountable Public Service.

Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes PCO’s spending authorities granted by Parliament and those used by the department, consistent with the 2018-19 Main Estimates . This quarterly report has been prepared using a special purpose financial reporting framework (cash basis) 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.

PCO uses the full accrual method of accounting to prepare and present its annual departmental financial statements1 that 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

This section highlights the significant items that contributed to the net increase or decrease in authorities available for the year and actual expenditures for the quarter ended June 30, 2018.

PCO spent approximately 22% of its authorities available for use by the end of the first quarter, compared to 17% in the same quarter of 2017-18 (see graph 1 below).

Graph 1: Comparison of Total Authorities Available For Use and Total Net Budgetary Expenditures as of Q1 2018-2019 and 2017-2018

Total Authorities Available and Total Net Budgetary Expenditures
Text version - Graph 1
in millions
2018-19 2017-18
Total Authorities available for use 166.0 179.3
Q1 Expenditures 37.0 30.0

Significant changes to authorities

As per graph 2 below as at June 30, 2018 and Table 1, presented at the end of this document, PCO has authorities available for use of $166.0 million in 2018-19 compared to $179.3 million as of June 30, 2017, for a net decrease of $13.3 million or 7%.

Graph 2: Variance in Authorities as at June 30, 2018

Variance in Authorities as at June 30, 2018
Text version - Graph 2
Vote 1 - Operating Statutory Total budgetary authorities
Fiscal year 2017-18 total available for use for the year ended March 31 2018 163.0 16.3 179.3
Fiscal year 2018-19 total available for use for the year ended March 31 2019 149.9 16.1 166.0

The net decrease in authorities of $13.3 million is mainly explained by:

  • Decrease in authorities
    • $20.2 million for the National Inquiry into Missing and Murdered Indigenous Women and Girls;
    • $5.6 million for the Access Control and Physical Security Project; and
    • $0.3 million for Canada's Migrant Smuggling Prevention Strategy.
  • Increase in authorities
    • $9.4 million for PCO's information technology modernization project and other organizational changes;
    • $1.3 million for implementing the Impact Canada Initiative by creating a centre of expertise within PCO;
    • $1.1 million for the establishment of a LGBTQ2 (Lesbian Gay Bisexual Transgender Queer Two-Spirit) Secretariat within the PCO; and
    • $1.0 million for the creation of a Secretariat supporting a Working Group of Ministers on the review of laws and policies related to Indigenous peoples.

Significant changes to expenditures

Year-to-date expenditures recorded to the end of the first quarter increased by $6.9 million, or 23%, from the same period of the previous year (from $30.0 million for 2017- 18 to $36.9 million for 2018-19). Table 1 below presents budgetary expenditures by standard object. This Departmental Quarterly Financial Report reflects the results of the current fiscal period in relation to the 2018-19 Main Estimates .

Table 1

(in thousands of dollars)
Material Variances to Expenditures by Standard Object Fiscal year 2018-19 Expended during the quarter ended 30-June-2018 Fiscal year 2017-18 Expended during the quarter ended 30-June-2017 Variance $ Variance %
Personnel 29,843 24,285 5,558 23%
Transportation and communications 835 857 (22) (3%)
Information 521 403 118 29%
Professional and special services 4,422 2,846 1,576 55%
Rentals 439 527 (88) (17%)
Repair and maintenance (305) 31 (336) (1084%)
Utilities, materials and supplies 122 73 49 67%
Acquisition of machinery and equipment 568 516 52 10%
Transfer payments 132 0 132  - 
Other subsidies and payments 380 480 (100) (21%)
Total gross budgetary expenditures * 36,957 30,017 6,940 23%
* Details may not add to totals due to rounding

Personnel

The overall increase of $5.6 million in personnel spending is related to spending for the National Inquiry into Missing and Murdered Indigenous Women and Girls, departmentwide personnel costs, and an increase in contributions to Employee Benefit Plans.

Professional and special services

The increase of $1.6 million is mainly due to spending for the National Inquiry into Missing and Murdered Indigenous Women and Girls and for informatic technology services.

Repair and maintenance

The decrease of $0.3 million is due to an overestimated recovery transaction with another department, which will be adjusted in the second quarter report.

Transfer payments

The increase of $132K in transfer payments is due to spending for the activities of the National Inquiry into Missing and Murdered Indigenous Women and Girls.

Risks and uncertainties

The dominant financial risks lie in funding initiatives to deal with issues that emerge unexpectedly. As part of its coordinating role, PCO is expected to launch these initiatives on short notice, and either manage the necessary expenditures within its own spending authorities, or cash manage until increased spending authorities are approved.

PCO provides administrative and financial support to the National Inquiry into Missing and Murdered Indigenous Women and Girls. There are limitations to financial oversight due to the arms length relationship between PCO and the National Inquiry.

This Departmental Quarterly Financial Report reflects the results of the current fiscal period in relation to the 2018-19 Main Estimates.

PCO is closely monitoring pay transactions to identify and address over and under payments in a timely manner and continues to apply ongoing mitigating controls which were implemented in 2016.

Significant changes in relation to operations, personnel and programs

PCO's operating environment has not significantly changed in the last quarter as it pursues the priorities of the gouvernment's mandate.

Approval by senior officials:

Michael Wernick
Clerk of the Privy Council and
Secretary to the Cabinet

Matthew Shea
Assistant Deputy Minister,
Corporate Services Branch and
Chief Financial Officer

Ottawa, Canada
August 29, 2018

Annexes A & B

Statement of authorities (unaudited) (note 2)

(in thousands of dollars)
Fiscal year 2018-2019 Fiscal year 2017-2018
Total available for use for the year ending March 31, 2019 (note 1) Used during the quarter ended June 30, 2018 Year-to-date used at quarter–end Total available for use for the year ending March 31, 2018 (note 1) Used during the quarter ended June 30, 2017 Year-to-date used at quarter–end
Vote 1 - Net operating expenditures 149,935 32,959 32,959 163,047 27,531 27,531
Budgetary statutory authorities  
Contributions to employee benefits plans 15,727 3,932 3 ,932 15,904 2,436 2,436
Prime Minister - Salary and motor car allowance 178 44 44 174 44 44
Minister of Infrastructure, Communities and Intergovernmental Affairs and Minister of the Economic Development Agency of Canada for the Regions of Quebec - Salary and motor car allowance - - - - - -
Leader of the Government in the House of Commons - Salary and motor car allowance 86 - - 84 - -
Minister of Democratic Institutions - Salary and motor car allowance 86 22 22 84 7 7
Minister of State (Democratic Reform) - Motor car allowance - - - - - -
Minister of State and Chief Government Whip - Motor car allowance - - - - - -
Spending of proceeds from the disposal of surplus Crown assets 6 - - 34 - -
Total budgetary authorities 166,017 36,957 36,957 179,329 30,017 30,017
Total Authorities 166,017 36,957 36,957 179,329 30,017 30,017
Note 1: Includes only Authorities available for use and granted by Parliament at quarter-end for each respective fiscal year.
Note 2: Details may not add to totals due to rounding.

Departmental budgetary expenditures by Standard Object (unaudited) (note 2)

(in thousands of dollars)
Fiscal year 2018-2019 Fiscal year 2017-2018
Planned expenditures for the year ending March 31, 2019 (note 1) Expended during the quarter ended June 30, 2018 Year-to-date used at quarter-end Planned expenditures for the year ending March 31, 2018 (note 1) Expended during the quarter ended June 30, 2017 Year-to-date used at quarter-end
Expenditures  
Personnel 119,541 29,843 29,843 115,784 24,285 24,285
Transportation and communications 6,303 835 835 11,626 857 857
Information 5,261 521 521 7,148 403 403
Professional and special services 26,531 4,422 4,422 26,949 2,846 2,846
Rentals 1,807 439 439 3,210 527 527
Repair and maintenance 2,084 (305) (305) 5,257 31 31
Utilities, materials and supplies 516 122 122 583 73 73
Acquisition of machinery and equipment 4,707 568 568 4,302 516 516
Transfer payments - 132 132 4,500 - -
Public debt charges - - - - - -
Other subsidies and payments 351 380 380 44 480 480
Total gross budgetary expenditures 167,102 36,957 36,957 179,404 30,017 30,017
Less Revenues netted against expenditures:
  Revenues
(1,085) - - (75) - -
Total revenues netted against expenditures (1,085) - - (75) - -
Total Budgetary Expenditures 166,017 36,957 36,957 179,329 30,017 30,017
Note 1: Includes only Authorities available for use and granted by Parliament at quarter-end for each respective fiscal year (Frozen budget of $349K included for 2018-19).
Note 2: Details may not add to totals due to rounding.
Note 3: Standard Object for Repair and maintenance - Overestimated recovery transaction with another department to be adjusted in the second quarter report.

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