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

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 statements Footnote 1  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 September 30, 2018.

PCO spent approximately 45% of its authorities available for use by the end of the second quarter, compared to 44% 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 Q2 2018-2019 and 2017-2018

Chart 1
Text version of Chart 1
(in millions)
  2018-19 2017-18
Total Authorities available for use 173.3 184.6
Q2 Expenditures 41.4 51.8
Year-To-Date Expenditures 78.3 81.9

Significant changes to authorities

As per graph 2 below, PCO has authorities available for use of $173.3 million in 2018-19 compared to $184.6 million as of September 30, 2017, for a net decrease of $11.3 million or 6%.

Graph 2: Variance in authorities as at September 30, 2018

Chart 2
Text version of Chart 2
(in millions)
  Vote 1 - Operating Statutory Total budgetary authorities
Fiscal year 2017-18 total available for use for the year ended March 31 2018 168.3 16.3 184.6
Fiscal year 2018-19 total available for use for the year ended March 31 2019 157.3 16.1 173.3

The net decrease in authorities of $11.3 million is mainly explained by:

  • Decrease in authorities
    • $20.2 million for the National Inquiry into Missing and Murdered Indigenous Women and Girls; and
    • $5.6 million for the Access Control and Physical Security Project.
  • Increase in authorities
    • $9.4 million for PCO's information technology modernization project;
    • $3.0 million for collective bargaining adjustments;
    • $1.3 million for implementing the Impact Canada Initiative; and
    • $0.9 million for the 2017-18 Operating Budget Carry Forward that exceeds the 2016-17 Operating Budget Carry Forward.

Significant changes to quarter expenditures by Standard Object

The second quarter expenditures totaled $41.4 million for a net decrease of $10.5 million (20%) when compared to $51.8 million spent during the same period in 2017-18. Table 1 below presents budgetary expenditures by standard object.

Table 1

(in thousands of dollars)
Material Variances to Expenditures by Standard Object Fiscal year 2018-19
Expended during the quarter ended 30-Sept-2018
Fiscal year 2017-18
Expended during the quarter ended 30-Sept-2017
Variance $ Variance %
Personnel 30,523 35,149 (4,626) (13%)
Transportation and communications 1,820 1,402 418 30%
Information 955 607 348 57%
Professional and special services   4,982 11,893 (6,911) (58%)
Rentals 368 323 45 14%
Repair and maintenance 405 1,003 (598) (60%)
Utilities, materials and supplies 217 252 (35) (14%)
Acquisition of machinery and equipment   1,202 644 558 87%
Transfer payments 686 23 663 2,883%
Other subsidies and payments 215 547 (332) (61%)
Total gross budgetary expenditures* 41,373 51,843 (10,471) (20%)
* Details may not add to totals due to rounding

Personnel

The overall decrease of $4.6 million in personnel spending is mainly related to the timimg of the salary recoveries from other departments completed in this quarter and a decrease in contributions to Employee Benefit Plans.

Professional and special services

The decrease in spending of $6.9 million is mainly due to spending for PCO's information technology modernization project, as a number of sub-projects were substantially completed in 2017-18.

Acquisition of machinery and equipment

The increase of $0.6 million is mainly due to spending on telecommunication and security equipment related to Budget 2016 investments.

Transfer payments

The National Inquiry into Missing and Murdered Indigenous Women and Girls increased its transfer payments by $0.7 million.

Significant changes to year-to-date expenditures by Standard Object

The year-to-date expenditures totaled $78.3 million for a net decrease of $3.5 million (4%) when compared to $81.9 million spent during the same period in 2017-18. Table 2 below presents budgetary expenditures by standard object.

Table 2

(in thousands of dollars)
Material Variances to Expenditures by Standard Object YTD Expenditures as of
Sept 30,  2018
YTD Expenditures as of
Sept 30,  2017
Variance $ Variance %
Personnel 60,366 59,434 932 2%
Transportation and communications 2,654 2,259 395 17%
Information 1,477 1,011 466 46%
Professional and special services 9,404 14,739 (5,335) (36%)
Rentals 806 850 (44) (5%)
Repair and maintenance 100 1,033 (933) (90%)
Utilities, materials and supplies 339 324 15 5%
Acquisition of machinery and equipment 1,770 1,160 610 53%
Transfer payments 819 23 796 3,461%
Other subsidies and payments 595 1,027 (432) (42%)
Total gross budgetary expenditures * 78,330 81,860 (3,530) (4%)
* Details may not add to totals due to rounding

Personnel

The overall increase of $0.9 million in personnel spending is mainly related to spending for the National Inquiry into Missing and Murdered Indigenous Women and Girls, offset by salary recovery from other departments.

Professional and special services

The decrease of $5.3 million is mainly due to decreased spending for PCO's information technology modernization project, as a number of sub-projects were substantially completed in 2017-18.

Repair and maintenance

The decrease of $0.9 million is due to spending related to accommodation and building services.

Acquisition of machinery and equipment

The increase of $0.6 million is mainly due to spending on telecommunication and security equipment related to Budget 2016 investments.

Transfer payments

The National Inquiry into Missing and Murdered Indigenous Women and Girls increased its transfer payments by $0.8 million.

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.

In July 2018, the Prime Minister announced the appointment of Dominic Leblanc as the new Minister of Intergovernmental and Northern Affairs and Internal Trade. This appointment marks the first time during his Government's mandate that a Minister other than the Prime Minister has assumed responsibility for the intergovernmental affairs portfolio.

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
November 29, 2018

Annexes A & B

Annex A

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 September 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 September 30, 2017 Year-to-date used at quarter–end
Vote 1 - Net operating expenditures 157,264 37,375 70,335 168,338 44,455 71,986
Budgetary statutory authorities  
Contributions to employee benefits plans 15,727 3,932 7 ,863 15,904 7,308 9,744
Prime Minister - Salary and motor car allowance 178 44 89 174 44 87
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 43 84 35 42
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 173,347 41,373 78,330
184,620 51,843 81,860
Total Authorities 173,347 41,373 78,330
184,620 51,843 81,860
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.

Annex B

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 September 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 September 30, 2017 Year-to-date used at quarter-end
Expenditures  
Personnel 120,697 30,523 60,366 120,168 35,149 59,434
Transportation and communications 6,303 1,820 2 ,654 11,887 1,402 2,259
Information 5,261 9 55 1 ,477 7,148 607 1,011
Professional and special services 32,706 4,982 9 ,404 27,587 11,893 14,739
Rentals 1,807 3 68 8 06 3,215 323 850
Repair and maintenance 2,084 405 100 5,257 1,003 1,033
Utilities, materials and supplies 516 217 3 39 586 252 324
Acquisition of machinery and equipment 4,707 1,202 1 ,770 4,302 644 1,160
Transfer payments - 686 8 19 4,500 23 23
Public debt charges - - - - - -
Other subsidies and payments 351 215 595 44 547 1,027
Total gross budgetary expenditures 174,432 41,373 78,330 184,695 51,843 81,860
Less Revenues netted against expenditures:
  Revenues
(1,085) - - (75) - -
Total revenues netted against expenditures (1,085) - - (75) - -
Total Budgetary Expenditures 173,347 41,373 78,330 184,620 51,843 81,860
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.
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