Quarterly Financial Report For the quarter ended September 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 September 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 September 30, 2014, total authorities available for the current year, compared to the previous year, show a decrease of $1.7M, from $89.9M to $88.2M as per Table 1: Statement of Authorities.

This variance is attributable to the following:

  • A decrease of $4.5M pertaining to the third consecutive year of savings measures announced in Budget 2012;
  • An increase of $4.5M pertaining to the Operating Budget Carry Forward that was received during the second quarter in the current fiscal year, whereas it had been received during the third quarter in the last fiscal year;
  • A decrease of $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;
  • A decrease of $0.3M resulting from transfers between departments due to the consolidation of some corporate services; and
  • A decrease of $0.1M pertaining to the personnel-related cost components such as Canada-Quebec Pension Plans and Employment Insurance.

Significant changes to gross budgetary expenditures

During the second quarter of 2014-2015, total gross budgetary expenditures show a decrease of $1.9M from $22.7M to $20.8M, as per Table 2: Departmental budgetary expenditures by Standard Object.

The variance is attributable to the following:

  • The most significant decrease occurred in personnel expenditures for a total of $2.4M (or 14%). This results from the implementation of the third consecutive year of Budget 2012 savings measures; and
  • On the other hand, an increase of $0.2M in professional services and $0.3M in rentals is due to the receipt and disbursement of corresponding invoices in two different quarters.

Significant changes in revenues netted against expenditures

As at September 30, 2014, the PSC forecasted a total of $8.5M in annual re-spendable revenues for the current fiscal year, which is similar to the figure at the end of the same quarter last fiscal year.

The collection of Assessment and Counselling Services revenues at the end of the second quarter accounts for 32% of overall revenues anticipated for the current fiscal year, which is comparable to the past 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

There were no significant changes in relation to operations, personnel and programs during the second quarter of 2014-2015.

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 streamline 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). As at the end of the 2014-2015 second quarter, 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 has experienced changes in demand for some of its programs and services. This has translated 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 managing this evolving environment on an ongoing basis.

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: November 28, 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 Used during the quarter ended September 30, 2014 Year to date used at quarter-end Total available for use for the year ending March 31, 2014 Footnote 1 Used during the quarter ended September 30, 2013 Year to date used at quarter-end
Vote 1 – Operating Expenditures $90,468 $17,813 $36,566 $91,019 $19,398 $38,493
Less: Revenues Netted Against Expenditures (14,252) (1,720) (2,583) (14,252) (2,330) (2,529)
Net Vote 1 – Net Operating Expenditures 76,216 16,093 33,983 76,767 17,068 35,964
 
Statutory – Refunds of Previous Years Revenue 4 4 2 1 2
Statutory – Spending of proceeds from the disposal of surplus Crown assets
Statutory – Contributions to Employee Benefit Plans 12,017 3,004 6,008 13,171 3,294 6,586
Total Statutory Authorities 12,021 3,004 6,012 13,173 3,295 6,588
Total Authorities $88,236 $19,097 $39,995 $89,940 $20,363 $42,552

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 September 30, 2014 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2014 Expenditures during the quarter ended September 30, 2013 Year to date used at quarter-end
Personnel $84,846 $18,571 $37,059 $88,866 $21,042 $42,307
Transportation and telecommunications 338 59 84 1,045 53 90
Information 575 94 132 302 49 61
Professional and special services 11,470 1,452 2,032 10,509 1,291 1,824
Rentals 1,963 465 655 1,659 172 669
Repair and maintenance 45 1 2 151 16 23
Utilities, materials and supplies 345 62 85 603 47 80
Acquisition of machinery and equipment 406 41 148 603 6 8
Other subsidies and payments 2,500 72 2,381 454 17 19
Total gross budgetary expenditures 102,488 20,817 42,578 104,192 22,693 45,081
Less: Revenues netted against expenditures (14,252) (1,720) (2,583) (14,252) (2,330) (2,529)
Total net budgetary expenditures $88,236 $19,097 $39,995 $89,940 $20,363 $42,552

Note: Differences are due to rounding

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