Quarterly Financial Report For the first quarter ended June 30, 2014

Introduction

This quarterly financial report should be read in conjunction with the Main Estimates, Supplementary Estimates for fiscal year 2014-2015 as well as Canada’s Economic Action Plan 2012 (Budget 2012).

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 has not been subject to an external audit or review, but it has been reviewed by members of the Internal Audit Committee of the Public Service Commission (PSC).

Authority and objectives

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

The PSC is mandated to:

  • Make appointments to and within the public service, based on merit and free from political influence. The PSEA provides the authority to the Commission to delegate to deputy heads its authority to make appointments to positions in the public service. This authority is currently delegated to the deputy heads subject to the PSEA, across the federal government;
  • Administer the provisions of the PSEA that are related to the political activities of employees and deputy heads. Part 7 of the PSEA recognizes the right of employees to engage in a political activity, while maintaining the principle of political impartiality in the public service. It also sets out specific roles and responsibilities for employees and for the PSC related to political activities; and
  • Oversee the integrity of the staffing system and, in collaboration with other stakeholders, ensure non-partisanship. This oversight role includes: the regulatory authority and policy-setting function; the ongoing support and guidance, and the monitoring of the staffing performance of delegated organizations; the conduct of audits that provide an independent assessment of the performance and management of staffing activities; and the conduct of investigations of staffing processes and improper political activities by public servants.

A summary description of the PSC's programs can be found in section II of the 2014-2015 Report on Plans and Priorities.

Basis of presentation

Management has prepared this quarterly report using an expenditure basis of accounting for both expenditures and revenues. The accompanying Statement of Authorities includes the organization’s spending authorities granted by Parliament and those used by the organization, consistent with the Main Estimates and Supplementary Estimates for the 2014-2015 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 monies 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 PSC uses the full accrual method of accounting to prepare and present its annual financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis of accounting.

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

This section highlights the significant items that contributed to the net decrease in resources available for the current year and in actual expenditures for the quarter ended June 30, 2014. In reading these highlights, it is important to note that the PSC has the authority to re-spend revenues received from other government departments and agencies in a fiscal year to offset expenditures incurred in that fiscal year arising from the provision of assessment and counselling services and products.

Significant changes to authorities

As at June 30, 2014, the total authorities available for the current year show a decrease of $6.2M, from $89.9M to $83.7M as per Table 1: Statement of Authorities.

The variance is attributable to the following reductions:

  • $4.5M pertaining to the third and last year of savings measures announced in Budget 2012;
  • $1.3M due to a requested re-profile of funds (in 2013-2014, the PSC requested  additional funds of $3.9M to be offset by annual reductions of $1.3M over the next three years) to support the relocation of the PSC’s offices from Ottawa to Gatineau, which took place during the fall of 2013;
  • $0.3M resulting from transfers between departments due to the consolidation of some corporate services; and
  • $0.1M pertaining to the personnel-related cost components such as Canada-Quebec Pension Plans and Employment Insurance.

Significant changes to gross budgetary expenditures

As at June 30, 2014, total gross budgetary expenditures show a decrease of $0.6M from $22.4M to $21.8M as per Table 2: Departmental budgetary expenditures by standard object.

This decrease is explained as follows:

  • The most significant reduction occurred in personnel expenditures resulting from the third and last implementation year of Budget 2012 savings measures. The PSC reduced its workforce by 15% when comparing the first quarter of both fiscal years, representing $2.7M;
  • An increase of $2.3M in other subsidies and payments is due to a one-time transition payment for implementing salary payment in arrears by the Government of Canada;
  • A reduction of $0.3M is attributed to the termination of lease agreements with Public Works and Government Services Canada  for the offices in Ottawa following the move to Gatineau during the fall of 2013; and
  • An increase of $0.1M in acquisition of machinery and equipment is attributed to early payment for a software license fee. In 2014-2015, the PSC was invoiced in the first quarter while in 2013-2014 the vendor exceptionally delayed invoicing until the second quarter.

Significant changes in revenues netted against expenditures

As at June 30, 2014, the PSC forecasted a total of $7.3M in annual re-spendable revenues for the current fiscal year which is consistent with the same quarter last fiscal year.

The collection of Assessment and Counselling Services revenues at the end of the first quarter accounts for 13% of overall revenues anticipated for the current fiscal year.

Risks and uncertainties

The PSC operates in a dynamic and complex environment that requires it to be efficient, adaptive and innovative. It uses integrated risk management, including the annual development of a Corporate Risk Profile, to identify and respond to challenges and opportunities.

The PSC’s key risks and the corresponding mitigation strategies are outlined in section I of the 2014-2015 Report on Plans and Priorities.

Significant changes in relation to operation, personnel and programs

During the period covered by this report, Ms. Christine Donoghue was appointed Senior Vice-President for the Policy Branch and consequently Mr. Gerry Thom returned to his substantive position as Vice-President for the Staffing and Assessment Services Branch and Mr. Stan Lee returned to his substantive position as Director General for the Personnel Psychology Centre and regional offices.

Budget 2012 implementation

This section provides an overview of the savings measures announced in Budget 2012 that are being 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 PSC will achieve Budget 2012 ongoing savings of $9.0M by the end of fiscal year 2014-2015 through a variety of means. These include: redesigning work processes, closing of two regional offices, leveraging advancements in technologies and benefitting from mature methodologies, the development and use of centralized data, finding administrative efficiencies and reducing the size of internal services relative to a smaller PSC. This will set the stage to simplify reporting and accountability structures and for simplified administrative processes.

In the first two years of implementation, the PSC achieved savings of $4.5M, which represents 50% of its three-year reduction. In 2014-2015, fiscal year savings will increase by another $4.5M, to reach the total PSC target of $9.0M in savings and a cumulative reduction of 87 full time equivalents (FTE). The implementation of savings measures is on target.

In addition to the PSC implementing its own expenditure reduction as an organization, Budget 2012 savings measures have had an impact on the Priority Administration Program. The program has experienced increases in the volume of priority persons due to the increase in the number of employees declared surplus. The PSC has identified financial, technological and business/operational risks and has taken steps to mitigate these risks. Examples include: reallocating PSC resources to the Priority Administration Program to support any further changes in volume and implementing an enhanced priority appointment policy framework with related system and communication improvements to ensure the appointment of priority persons.

In parallel, as a result of reductions to the size of the public service, the PSC is experiencing changes in demand for some of its programs and services. This translates to a decline in demand for certain staffing and assessment services and, on the other hand, an increase in demand for policy advice and guidance. The PSC is closely managing this evolving environment and is taking measures to ensure that it remains within its spending authority levels.

Approved by senior officials

Anne-Marie Robinson
President

Omer Boudreau
Chief Financial Officer

Phil Morton, CGA
Deputy Chief Financial Officer

 

Gatineau, Quebec
Date of Publication: August 29, 2014

Table 1: Statement of authorities (unaudited)
  Fiscal Year 2014-2015
(in thousands of dollars)
Fiscal Year 2013-2014
(in thousands of dollars)
Total available for use for the year ending March 31, 2015 Footnote 1 Expenditures during the quarter ended June 30, 2014 Footnote 2 Year to date used at quarter-end Total available for use for the year ending March 31, 2014 Footnote 1 Expenditures during the quarter ended June 30, 2013 Year to date used at quarter-end
Vote 1 – Operating Expenditures $85,929 $18,753 $18,753 $91,019 $19,095 $19,095
Less: Revenues Netted Against Expenditures (14,252) (863) (863) (14,252) (199) (199)
Net Vote 1  – Net
Operating Expenditures
71, 677 17,890 17,890 76,767 18,896 18,896
Statutory - Refund of Previous Year Revenue - 4 4 1 1 1
Statutory - Proceeds from Crown Asset Disposal - - - - - -
Statutory - Employer Contributions to Employee Benefit Plan 12,017 3,004 3,004 13,171 3,293 3,293
Total Budgetary Authorities 12,017 3,008 3,008 13,172 3,294 3,294
Total Authorities $83,693 $20,898 $20,898 $89,940 $22,189 $22,189

Note: Differences are due to rounding

Table 2: Departmental budgetary expenditures by standard object (unaudited)
  Fiscal year 2014-2015
(in thousands of dollars)
Fiscal year 2013-2014
(in thousands of dollars)
Planned expenditures for the year ending March 31, 2015 Expenditures during the quarter ended June 30, 2014 Footnote 3 Year to date used at quarter-end Planned expenditures for the year ended March 31, 2014 Expenditures during the quarter ended June 30, 2013 Year to date used at quarter-end
Personnel $82,548 $18,488 $18,488 $88,866 $21,265 $21,265
Transportation and telecommunications 432 25 25 1,045 37 37
Information 220 38 38 302 12 12
Professional and special services 7,867 580 580 10,509 533 533
Rentals 1,141 190 190 1,659 497 497
Repair and maintenance 1,147 1 1 151 7 7
Utilities, materials and supplies 278 23 23 603 33 33
Acquisition of machinery and
equipment
1,675 107 107 603 2 2
Other subsidies and payments 2,637 2,309 2,309 454 2 2
Total gross budgetary expenditures 97,945 21,761 21,761 104,192 22,388 22,388
Less: Revenues netted against expenditures (14,252) (863) (863) (14,252) (199) (199)
Total net budgetary expenditures $83,693 $20,898 $20,898 $89,940 $22,189 $22,189

Note: Differences are due to rounding

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