Quarterly Financial Report For the quarter ended December 31 2017 (unaudited)

• 1. Introduction
  • 1.1 Authority and objectives
  • 1.2 Basis of presentation
  • 1.3 Financial structure
• 2. Highlights of fiscal quarter and fiscal year-to-date results
  • 2.1 Significant changes to authorities
  • 2.2 Significant variances in expenditures from prior year
• 3. Risks and uncertainties
• 4. Significant changes in relation to operations, personnel and programs
• 5. Approved by senior officials
• 6. Statement of Authorities (unaudited)
• 7. Departmental budgetary expenditures by standard object (unaudited)

1. Introduction

This quarterly financial report should be read in conjunction with the Main Estimates and Supplementary Estimates for fiscal year 2017-18. It 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 and it has been reviewed by the Internal Audit Committee of the Public Service Commission (the Commission.

This quarterly report has not been subject to an external audit or review.

1.1 Authority and objectives

The Commission is an independent agency established under the Public Service Employment Act and listed in schedules I.1 and IV of the Financial Administration Act.

A summary description of the Commission's programs can be found in its 2017-18 Departmental Plan.

1.2 Basis of presentation

This quarterly report has been prepared by management, using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Commission's spending authorities granted by Parliament and those used by the Commission, consistent with the Main Estimates and Supplementary Estimates for the 2017-18 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 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 Commission 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.

1.3 Financial structure

The Commission has a financial structure comprised of voted budgetary authorities for program expenditures and statutory authorities for contributions to employee benefit plans.

In addition, the Commission has the authority to re-spend certain revenues received from other government departments and agencies in a fiscal year to offset expenditures incurred in that same year, for the provision of assessment and counselling products and services .

2. Highlights of fiscal quarter and fiscal year-to-date results

This section highlights the significant items that contributed to the change in resources available for the current year and in actual expenditures for the quarter ended December 31, 2017.

The following graph provides a comparison of the net budgetary authorities available for spending and the expenditures for the quarters ended December 31, 2017 and December 31, 2016, for the Commission’s combined Vote 1 – Program Expenditures and Statutory Authorities.

2.1 Significant changes to authorities

For the period ended December 31 of both the current year and the previous year, the budgetary authorities granted to the Commission include the Main Estimates, the Operating Budget Carry Forward and the Supplementary Estimates (B).

As shown in Section 6: Statement of Authorities, there has been an increase of $3,046,000 in authorities available for use in the current year, as compared to the previous year.

The variance is mainly due to additional funding of $2,887,000 received from the Treasury Board of Canada Secretariat to cover higher current salary rates and retroactive salary payments following the implementation of new collective agreements.

2.2 Significant variances in expenditures from prior year

As shown in Section 7: Departmental budgetary expenditures by standard object, total budgetary expenditures used during the quarter increased from $19,314,000 in 2016-17 to $19,979,000 in 2017-18; a variance of $665,000 or 3.4%. This variance is explained by a number of factors.

There was an increase of $750,000 in personnel, mainly resulting from higher current salary rates and retroactive salary payments following the implementation of new collective agreements.

There was also an increase of $620,000 in professional and special services. This variance is mainly the result of two factors.

There was an increase of $333,000 in legal services, mainly due to a change in Justice Canada’s billing method for legal services that now requires the Commission to make monthly payments rather than instalment payments in advance. There were no payments for legal services made in the 3rd quarter of 2016-17.

There was also an increase of $288,000 in all other professional services, mainly due to an increase in information technology (IT) consultants, driven by the need to deliver on various business projects that require IT-enabled solutions, as well as professional services for the relocation of the Commission’s data centre.

The above increases were offset by a decrease of $474,000 in rentals, mainly due to timing differences in the payment cycle for various software licences and a decrease of $279,000 in other subsidies and payments resulting from differences in the timing of when the Public Service Pay Centre recognized salary overpayments.

Also as shown in Section 7: Departmental budgetary expenditures by standard object, total budgetary expenditures used at quarter-end increased from $57,536,000 in 2016-17 to $62,034,000 in 2017-18; a variance of $4,498,000 or 7.8%. This variance is explained by a number of factors.

There was an increase of $3,960,000 in personnel, mainly resulting from higher current salary rates and retroactive salary payments following the implementation of new collective agreements.

There was also an increase of $475,000 in other subsidies and payments, due to a higher number of salary overpayments recognized by the Public Service Pay Centre compared to last year.

The above increases were offset by a number of decreases. There was a decrease of $356,000 in professional and special services, mainly due to a change in Justice Canada’s billing method for legal services that now requires the Commission to make monthly payments rather than instalment payments in advance. There was also a decrease of $204,000 in rentals, mainly due to timing differences in the payment cycle for various software licences.

There was a decrease of $625,000 in revenues netted against expenditures, mainly due to a lower demand for assessment products and services. This has the effect of increasing total budgetary expenditures used at quarter-end.

3. Risks and uncertainties

The Commission operates in a dynamic and complex environment that requires it to be efficient, adaptive and innovative. It uses integrated risk management, including a Corporate Risk Profile that is updated annually, to identify and respond to challenges and opportunities.

The Commission’s key risks and the corresponding mitigation strategies are outlined on the PSC website.

4. Significant changes in relation to operations, personnel and programs

There were no significant changes to operations or programs during the 3rd quarter of 2017-18.

5. Approved by senior officials

Approved by:

Original signed by :

Stan Lee
Acting President

Original signed by :

Philip Morton, CPA, CGA
Chief Financial Officer

Gatineau, Canada
February 13, 2018

6. Statement of Authorities (unaudited)

1. 1. Includes only authorities available for use and granted by Parliament at quarter-end.

7. Departmental budgetary expenditures by standard object (unaudited)

7. Departmental budgetary expenditures by standard object (unaudited) (continued)