Quarterly Financial Report for the Quarter Ended June 30, 2023

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

List of charts
List of tables
List of acronyms and abbreviations
Introduction
Highlights of fiscal quarter and fiscal year-to-date results
Risks and uncertainties
Significant changes in relation to operations, personnel and programs
Annex A: Statement of Authorities (unaudited)
Annex B: Budgetary expenditures by standard object (unaudited)

List of charts

Chart 1: Highlights of the fiscal quarter and the fiscal year-to-date

List of tables

Table 1: Cumulative variance in authorities available for use in 2023-24 in comparison to 2022-23 (in thousands of dollars)
Table 2: Expenditure of fiscal quarter (in thousands of dollars)
Table 3: Expended by standard object at quarter end (in thousands of dollars)
Table 4: Statement of Authorities (unaudited) (in thousands of dollars)
Table 5: Departmental budgetary expenditures by standard object (unaudited) (in thousands of dollars)

List of acronyms and abbreviations

CA: Chartered Accountant
CPA: Chartered Professional Accountant
DNA: Deoxyribonucleic acid
IT: Information technology
RCMP: Royal Canadian Mounted Police

1. Introduction

This quarterly financial 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. The report should be read in conjunction with the Main Estimates for 2023-24. The quarterly report has not been subject to an external audit or review.

1.1 Mandate

The Minister of Public Safety is the minister responsible for the Royal Canadian Mounted Police. The responsibilities of the RCMP are set out in section 18 of the Royal Canadian Mounted Police Act. The RCMP's mandate is multi-faceted, it includes preventing and investigating crime; maintaining peace and order; enforcing laws; contributing to national security; ensuring safety of state officials, visiting dignitaries and foreign missions; and providing vital operational support services to other police and law enforcement agencies within Canada and abroad.

Further information on the mandate, roles, responsibilities and programs of the RCMP can be found in the Main Estimates (Part II of Estimates) and the Departmental Plan and Departmental Results Report (Part III of Estimates).

1.2 Basis of presentation

This quarterly report has been prepared by management using the expenditure basis of accounting. The accompanying Statement of Authorities includes the RCMP's spending authorities granted by Parliament and those used by the department consistent with the Main Estimates and Supplementary Estimates (A). 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 RCMP 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 a cash expenditure basis.

The RCMP is funded through annual appropriations and is, therefore, impacted by any changes in funding approved through Parliament. In addition, it receives a significant portion of funding through vote netted revenue from the provision of policing services to provinces, territories, municipalities and first nations communities, as well as from cost sharing agreements with provinces and territories for the provision of DNA analysis by the RCMP. The RCMP also receives vote netted revenue authorities to bill Parliamentary Protective Service for the provision of security services throughout the Parliamentary precinct and the grounds of Parliament Hill and for the administration of the RCMP's Pension Plan.

The RCMP's authorities are allocated in a number of discrete envelopes with varying sources of funds. A number of Special Purpose Allotments have been created over the years to manage the various programs and/or initiatives.

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

The following section provides financial results and explanations for the quarter ended June 30, 2023 as compared to the quarter ended June 30, 2022. The following graph illustrates the net budgetary authorities and expenditures for the quarter ended June 30, 2023 for the department's combined Vote 1 - Operating, Vote 5 - Capital, Vote 10 - Grants and Contributions and statutory elements.

Chart 1: Highlights of the fiscal quarter and the fiscal year-to-date

	2023-24	2022-23
Net budgetary authorities	$4,648.6 million	$4,235.4 million
First quarter expenditures	$1,440.1 million	$1,267.2 million

2.1 Significant changes to authorities

For the period ending June 30, 2023, the RCMP has $4,648.6 million in total authorities. This amount includes the Main Estimates, Supplementary Estimates (A), and proceeds from the disposal of Crown assets.

As illustrated in the table below, total authorities as at June 30, 2023 increased by $413.2 million compared to the first quarter of fiscal 2022-23.

Table 1: Cumulative variance in authorities available for use in 2023-24 in comparison to 2022-23 (in thousands of dollars) ^{table 1 footnote 1}
Based on the end of the third quarter (December)	Total authorities available for use		Year over year variance
Based on the end of the third quarter (December)	2023-24	2022-23	Authorities	Percentage
Gross operating expenditures	5,157,082	4,788,422	368,660	8%
Less: Vote netted revenues	2,026,937	1,771,565	255,372	14%
Vote 1 - Net operating expenditures	3,130,145	3,016,857	113,288	4%
Vote 5 - Capital expenditures	284,091	262,730	21,361	8%
Vote 10 - Grants and contributions	660,740	428,273	232,467	54%
Total voted authorities	4,074,976	3,707,860	67,116	10%
Pensions and other employee benefits - Members of the Force	483,366	455,479	27,887	6%
Contributions to employee benefit plans (public servants)	84,830	66,826	18,004	27%
Pensions under the Royal Canadian Mounted Police Pension Continuation Act	5,000	5,000		0%
Proceeds from the disposal of Crown assets under the Surplus Crown Assets Act	410	261	149	57%
Statutory authorities	573,606	527,566	46,040	9%
Total budgetary authorities	4,648,582	4,235,426	413,156	10%

Table 1 footnotes

Table 1 footnote 1

Totals may not add due to rounding.

Return to table 1 footnote 1 referrer

2.2 Explanation of changes in voted and statutory authorities

2.2.1 Vote 1 - Gross operating expenditures

The organization's Vote 1 increased by $368.7 million compared to the first quarter of 2022-23, mainly due to:

An increase of $255.3 million in Vote Netted Revenues as a result of higher ongoing collections from Contract Policing Partners resulting from the National Police Federation collective bargaining.
An increase of $78.5 million in funding for occupational and supplemental health costs for Members as designated under the Royal Canadian Mounted Police Act.
An increase of $19.8 million in compensation adjustments for public service employees and members of the RCMP.
A net increase of $15.1 related to following projects and initiatives:
- Increase of $13.5 million for aviation safety and security modernisation initiatives.
- Increase of $11.5 million in funding to address systemic racism in the RCMP.
- Increase of $6.3 million in funding for the renewal of the federal framework for the legalization and regulation of cannabis.
- Increase of $5.8 million in funding to address the Freedom Convoy and Emergencies Act related activities.
- Decrease of $9.7 million in funding for Canada's firearm control framework.
- Decrease of $9.0 million in funding to provide a national body-worn camera program for frontline. officers to improve public transparency and accountability of the Royal Canadian Mounted Police.
- Decrease of $3.3 million in funding to other previously approved and new initiatives.

2.2.2 Vote netted revenues

The organization's Vote Netted Revenues authority increased by $255.3 million compared to the first quarter of 2022-23 as a result of anticipated higher ongoing collections from Contract Policing Partners resulting from the National Police Federation collective bargaining.

2.2.3 Vote 5 - Gross capital expenditures

The organization's Vote 5 increase of $21.4 million, compared to first quarter of 2022-23, mainly due to:

An increase of $20.8 million in funding for real property and movable assets, as a result of a reprofile to address supply chain delays.
An increase of $11.0 million in funding to implement the National Cybercrime Solution Information Management and Information Technology Project.
A decrease of $7.8 million in funding in support of ensuring security and prosperity in the digital age initiative.
A decrease of $2.6 million in funding to other previously approved initiatives.

2.2.4 Vote 10 - Grants and Contributions

The organization's Vote 10 increase of $232.5 million, compared to first quarter of 2022-23, mainly due to:

A net increase of $229.0 million in funding to compensate members of the Royal Canadian Mounted Police for injuries received in the performance of duty.
An increase of $3.1 million in contribution funding to enhance Canada's firearms control framework.
An increase of $0.4 million in grant funding to address systemic racism and discrimination in the Royal Canadian Mounted Police.

2.2.5 Statutory (Employee Benefits Plan)

The organization's Employee Benefits Plan authority increased by $46.0 million compared to the first quarter of 2022-23, mainly due to:

An increase of $38.7 million in Employee Benefit Plans as a result of changes to collective agreements, changes in the attribution of RCMP members and Public Service Employees costs, as well as changes in their respective rates.
An increase of $5.7 million in Public Service Employees and Members of the Force Employee Benefits Plan related to new and previously approved initiatives.
An increase of $1.5 million related to Compensation adjustments for public service employees and members of the RCMP.
An increase of $0.1 million related to the Proceeds from the Disposal of Crown Assets under the Surplus Crown Assets Act.

2.3 Explanation of significant variances from previous year expenditures

As demonstrated in table 2 below, the total year-to-date expenditures, for the period ended June 30, 2023, have increased by $172.9 million (or 14%) compared to previous year.

Table 2: Expenditure of fiscal quarter (in thousands of dollars)
Expenditures during the quarter ended June 30	2023-24	2022-23	Variance	Percentage
Vote 1 - Net Operating expenditures	1,107,209	989,243	117,966	12%
Vote 5 - Capital expenditures	41,966	27,438	14,528	53%
Vote 10 - Grants and contributions	145,810	145,195	615	0%
Budgetary statutory authorities	145,081	105,295	39,786	38%
Total authorities	1,440,066	1,267,171	172,895	14%

The growth in net budgetary expenditures is mainly due to the timing of revenue collections from Contract Policing Partners ($92.2 million), higher personnel costs ($19 million) and employee benefit plan costs ($39.7 million) as a result of population growth coupled with the ratification of new collective bargaining agreements.

The RCMP continues to experience increases in overall expenditures related to the implementation of newly approved initiatives and mandated responsibilities. More specifically, in the first quarter, increases in expenditures were incurred in support of Canada's International Police Peacekeeping commitments, and Information Technology and Database Development as well as Maintenance services.

Lastly, supply chain issues and the cost of inflation has resulted in a steep rise in the price of goods and services. It is observed that multiple standard objects had significant increases in year-over-year expenditures primarily for these reasons.

2.4 Expenditures by standard object at quarter end (in thousands of dollars)

Table 3: Expended by standard object at quarter end (in thousands of dollars) ^{table 3 footnote 1} ^{table 3 footnote 2}
Standard objects	2023-24	2022-23	Variance	Percentage
Personnel	1,033,008	978,071	54,937	6%
Transportation and communications	66,900	57,773	9,127	16%
Information	844	438	406	93%
Professional and special services	147,281	137,855	9,426	7%
Rentals	27,854	26,298	1,556	6%
Repair and maintenance	18,058	15,300	2,758	18%
Utilities, materials and supplies	37,798	38,595	(797)	(2%)
Acquisition of land, buildings and works	10,480	14,866	(4,386)	(30%)
Acquisition of machinery and equipment	43,343	35,792	7,551	21%
Transfer payments	146,520	146,179	341	0%
Public debt charges	137	146	(9)	(6%)
Other subsidies and payments	14,431	14,664	(233)	(2%)
Total gross budgetary expenditures	1,546,654	1,465,977	80,677	6%
Less: Revenues and other reductions	106,588	198,806	(92,218)	(46%)
Total net budgetary expenditures	1,440,066	1,267,171	172,895	14%

Table 3 footnotes

Table 3 footnote 1

Totals may not add due to rounding.

Return to table 3 footnote 1 referrer

Table 3 footnote 2

There is not a direct correlation between total expenditure and revenue trends as expenditures reflect total RCMP, whereas revenues are related primarily to contract policing activities.

Return to table 3 footnote 2 referrer

2.5 Expenditure analysis by standard object

2.5.1 Personnel

The increase in expenditures by $54.9 million (or 6%) is attributed to higher pay expenditures for Regular Members and Public Servants. With the ratification of various collective agreements, the RCMP has seen year-over-year increases with regard to personnel expenditures, including associated employee benefits plan expenditures, through the first quarter of the fiscal year 2023-24 in comparison to 2022-23.

2.5.2 Transport and communications

The increase in expenditures by $9.1 million (or 16%) is mainly related to the continued increases related to the implementation of newly approved initiatives and mandated responsibilities, as well as the rise in training and travel costs in 2023-24, which was partially offset by net decreases in transfers and relocations.

2.5.3 Information

The increase in expenditures by $0.41 million (or 93%) is mainly attributed to the printing services for firearms communications regarding recent announcements and an increase in the use of electronic publications.

2.5.4 Purchased repair and maintenance

The increase in expenditures by $2.8 million (or 18%) is mainly due to the various life cycle costs for assets, including Heating Ventilation and Air Conditioning, vehicle maintenance and structural repairs.

2.5.5 Acquisition of land, buildings and works

The decrease in expenditures by $4.4 million (or 30%) is mainly due to the timing of payments related to various capital projects.

2.5.6 Acquisition machinery and equipment

The increase in expenditures by $7.6 million (or 21%) is mainly due to incremental costs for the acquisition of vehicles, and increased costs related to equipment, office expenses and computer acquisitions, offset by a decrease in acquisition of software.

2.5.7 Revenues and other reductions

The increase in Vote netted revenues by $92.2 million (or 46%) is primarily related to the timing of billing and collections from contract partners.

3. Risks and uncertainties

The RCMP's risk environment, as noted in the 2021-24 Corporate Risk Profile, continues to help guide funding decisions. Five risks in particular have been identified with a High-risk rating:

Recruitment, retention and modernized skillsets - the Risk that the RCMP will be unable to adequately attract and retain diverse groups of employees with the appropriate skills, attributes, characteristics and mindset to police the crimes of the future; and
Expanding commitments - Risk that the RCMP's commitments continue to expand without sufficient resources, impeding its ability to deliver on priorities and core services.
IT Infrastructure and Systems - the Risk that the RCMP's IT infrastructure, systems and applications will become increasingly inadequate to support the administrative and operational requirements of the organization.
Technology - Risk that the RCMP may not have the technology to sufficiently combat the changing nature of crime.
Employee wellness - Maximize opportunities to promote and optimize employee wellness as well as support employees who experience stress, trauma or serious injury as a result of the nature of policing work and the environments in which they operate.

Other risks noted in the Corporate Risk Profile are: strategic decision-making; transformation resistance; and, intelligence and information sharing.

Additionally, the operational nature of the RCMP is impacted by inflationary increases to cost of goods and services, and due to the size of the organization these types of increases have significant impacts on expenditures.

Quarterly monitoring of all identified corporate risks and their mitigations is ongoing.

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

In May 2023, Alison Whelan, previously the Chief Strategic Policy and External Relations Officer, became the Senior Assistant Deputy Minister - Reform, Accountability and Culture.

4.1 Approved by senior officials

Approved by:

_____________________________

Mike Duheme, Commissioner