Quarterly Financial Report - For the period ending September 30, 2020
Table of contents
Statement outlining results, risks and significant changes in operations, personnel and program
1. Introduction
This quarterly financial report (QFR) 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 2020-21. The quarterly report has not been subject to an external audit or review.
1.1 Mandate
The Minister of Public Safety and Emergency Preparedness is the minister responsible for the Royal Canadian Mounted Police (RCMP). 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 Part II of the Main Estimates.
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 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.
2. Highlights of the fiscal quarter and fiscal year-to-date (YTD) results
For the period ending September 30, 2020, the RCMP had $3,521.8 million in total authorities available for use, which represents a decrease of $138.4 million or (4%) when compared at the same quarter in the previous year. The RCMP's authorities have decreased in the Operating (Vote 1), the Capital (Vote 5) and within Statutory authorities totalling $201.5 million. These decreases are offset by an increase of $63.1 million in Grant and Contributions (Vote 10).
The RCMP's expenditures were $1,866.9 million at the end of the second quarter of the year, representing a decrease of $68.3 million or 4% from the same period in the previous year. Decreases in Operating and Capital expenditures totalled $153.4 million offset by an increase of $85.1 million in Grants and Contribution as well as Statutory expenditures, as shown in Table 1.
| Authorities | 2020-21 Authorities as at September 30, 2020 | 2019-20 Authorities as at September 30, 2019 | Variance in authorities | % | Year-to-date expenditures as at September 30, 2020 | Year-to-date expenditures as at September 30, 2019 | Variance in expenditures | % |
|---|---|---|---|---|---|---|---|---|
| Vote 1- Net Operating expenditures | 2,478,055 | 2,599,580 | (121,525) | −5% | 1,369,386 | 1,520,082 | (150,696) | −10% |
| Vote 5 - Capital expenditures | 224,419 | 302,267 | (77,848) | −26% | 65,590 | 68,302 | (2,712) | −4% |
| Vote 10 - Grants and contributions | 349,604 | 286,473 | 63,131 | 22% | 203,917 | 137,400 | 66,517 | 48% |
| Budgetary statutory authorities | 469,700 | 471,876 | (2,176) | 0% | 227,999 | 209,449 | 18,550 | 9% |
| Total authorities | 3,521,778 | 3,660,196 | (138,418) | −4% | 1,866,892 | 1,935,233 | (68,341) | −4% |
Table 1 note
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2.1 Statement of authorities
Comparison of total budgetary authorities as of September 30, 2019 and September 30, 2020 (in thousands of dollars)
A decrease of $138.4 million in the authorities available for use is due to the reduced supply of the Main Estimates. The COVID-19 pandemic limited sessions in the Spring for Parliament to study supply and the Standing Orders of the House of Commons were amended to extend the study period into the Fall. The RCMP is expected to receive full supply for the 2020-21 Main Estimates in December 2020.
| Based on the end of the second quarter (September) (in thousands of dollars) | Total authorities available for use | Year over year variance | ||
|---|---|---|---|---|
| 2020-21 | 2019-20 | Authorities | Percentage | |
| Gross Operating expenditures | 4,122,137 | 4,379,279 | (257,142) | −6% |
| Less: Vote Netted Revenues | 1,644,082 | 1,779,699 | (135,617) | −8% |
| Vote 1 - Net Operating expenditures | 2,478,055 | 2,599,580 | (121,525) | −5% |
| Vote 5 - Capital expenditures | 224,419 | 302,267 | (77,848) | −26% |
| Vote 10 - Grants and contributions | 349,604 | 286,473 | 63,131 | 22% |
| Pensions and other employee benefits - Members of the Force | 373,034 | 398,283 | (25,249) | −6% |
| Contributions to employee benefit plans (public servants) | 82,252 | 61,214 | 21,038 | 34% |
| Pensions under the Royal Canadian Mounted Police Pension Continuation Act | 6,750 | 6,750 | - | 0% |
| Proceeds from the Disposal of Crown Assets under the Surplus Crown Assets Act | 7,663 | 5,629 | 2,034 | 36% |
| Statutory Authorities | 469,700 | 471,876 | (2,176) | 0% |
| Total budgetary authorities | 3,521,778 | 3,660,196 | (138,418) | −4% |
Table 2 notes
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For more information on the authority changes that affect the RCMP, we would direct the reader to the RCMP's 2020-21 Main Estimates.
2.1.1 Variance to the Net Operating Vote
The Net Operating Vote is $121.5 million (or 5%) lower than the same period last year. The decrease is largely attributed to the RCMP receiving 11/12th of the approved Main Estimates in 2020-21, in comparison to full supply in 2019-20. Should full supply be approved by the Government, the RCMP will receive an additional $217.6 million, representing an increase in year-over-year authorities.
2.1.2 Variance to the Capital Vote
The Capital Vote is $77.8 million (or 26%) lower than the same period last year. This decrease is largely attributed to the RCMP receiving 9/12th of the approved Main Estimates in 2020-21, in comparison to full supply in 2019-20. Should full supply be approved by the Government, the RCMP will receive an additional $62.3 million, which is in line with the 2019-20 second quarter authorities.
2.1.3 Variance to the Grants and Contributions Vote
The Grants and Contributions Vote is $63.1 million (or 22%) higher than the same period last year. The increase is the result of RCMP receiving $203.1 million in support of the Grant to compensate members of the RCMP for injuries received in the performance of duty received in 2020-21 Supplementary Estimates A, offset by the RCMP receiving 9/12th of the approved Main Estimates in 2020-21.
2.2 Statement of departmental budgetary expenditures by standard object
Net Expenditures by standard object at the end of the second quarter 2020-21 were $68.3 million (or 4%) lower than the previous year. This variance is the result of increased gross budgetary expenditures of $3.3M largely the result timing of expenditures incurred under the Grant to Compensate Members Injured in the Performance of Their Duties, as well as the timing of Payments in Lieu of Taxes. These costs were offset by additional vote netted revenues of $71.7 million (or 13%) when compared to the previous year. The changes in revenue are mainly driven by timing differences in Vote Netted Revenues collected for Contract Policing activities. A detailed review by standard object emphasizes some significant variances described below and displayed in Annex B.
| Standard objects | 2020-21 | 2019-20 | Variance | % |
|---|---|---|---|---|
| Personnel | 1,691,039 | 1,684,305 | 6,734 | 0% |
| Transportation and communications | 74,433 | 123,249 | (48,816) | −40% |
| Information | 1,298 | 1,149 | 149 | 13% |
| Professional and special services | 203,363 | 232,289 | (28,926) | −12% |
| Rentals | 49,088 | 49,766 | (678) | −1% |
| Purchased Repair and maintenance | 34,225 | 42,352 | (8,127) | −19% |
| Utilities, materials and supplies | 62,026 | 72,321 | (10,295) | −14% |
| Acquisition of land, buildings and works | 24,044 | 27,876 | (3,832) | −14% |
| Acquisition of machinery and equipment | 78,563 | 72,916 | 5,647 | 8% |
| Transfer payments | 206,540 | 140,351 | 66,189 | 47% |
| Public debt charges | 327 | 352 | (25) | −7% |
| Other subsidies and payments | 63,370 | 38,043 | 25,327 | 67% |
| Total gross budgetary expenditures | 2,488,316 | 2,484,969 | 3,347 | 0% |
| Less: Revenues and other reductions | 621,424 | 549,736 | 71,688 | 13% |
| Total net budgetary expenditures | 1,866,892 | 1,935,233 | (68,341) | −4% |
Table 3 notes
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2.2.1 Variance by Transportation and Communications
Transportation and communications expenditures have decreased by $48.8 million (or 40%) over the same period last year. This decrease is mainly attributed to the temporary reduction in travel and relocations, in addition to delayed training as measures were implemented to contain the spread of COVID-19.
2.2.2 Variance by Information
Information increased by $0.1 million (or 13%) over the same period last year. This was mainly related to the RCMP providing firearm license holders information regarding the announcement by the Government of Canada to banning models and variants of assault-style firearms.
2.2.3 Variance by Professional and Special Services
Professional and special services decreased by $28.9 million (or 12%) when compared to 2019-20. The decrease is primarily due to the timing of health costs incurred in comparison to the same period last year. Additionally, COVID-19 has delayed certain activities across programs leading to reduced expenditures in the second quarter such as external training.
2.2.4 Variance by Purchased Repair and Maintenance
Purchase Repair and Maintenance decreased by $8.1 million (or 19%) compared to 2019-20. This is mainly attributed to lower lifecycle expenditures for buildings within the Contract Policing program in comparison to 2019-20. In addition, there were lower vehicle repairs in comparison to the previous fiscal year.
2.2.5 Variance by Utilities
Utilities expenditures have decreased by $10.3 million (or 14%) compared to 2019-20. The decrease in expenditures is primarily due to lower fuel prices and reduced consumption as a result of slower operational tempo in comparison to the previous years. Additionally, there are reduced building expenses as many employees are working remotely during COVID-19, and reduced food expenditures at the RCMP's training facilities while training has been deferred.
2.2.6 Variance by Acquisition of land, buildings and works
Acquisitions of Land, Buildings and Works expenditures have decreased by $3.8 million (or 14%) when compared to the same period in 2019-20. This decrease primarily relates to projects completed in the first quarter of 2019-20 that did not occur in the same period in this fiscal year such as the indoor range and integrated training centre in the RCMP's training academy (DEPOT), as well as the construction of the National Operations Centre.
2.2.7 Variance by Transfer payments
Transfer payments have increased by $66.2 million (or 47%) when compared to 2019-20. This increase is primarily due to the timing of Veterans' Affairs Canada charging the RCMP for expenses incurred under the Grant to Compensate Members Injured in the Performance of Their Duties.
2.2.8 Variance by Other subsidies and payments
Other subsidies and payments have increased by $25.3 million (or 67%) when compared to 2019-20. This increase is primarily due to the timing of Payment in Lieu of Taxes (PILT) in comparison to the previous year and items being cleared from suspense accounts into other standard objects, as well an increase in claim payments related to the Merlo Davidson Class Action Settlement.
2.2.9 Variance by Revenues and other reductions
Vote netted revenues collected in the second quarter of 2020-21 increased by $71.7 million (or 13%) compared to the same period last year. The increase is related primarily to timing differences in revenue collections related to Contract Policing. The RCMP's Canadian Police College revenues have decreased due to the current environment of physical distancing and limited group settings, impacting the number of courses which can be offered.
3. Risks and uncertainties
The Departmental QFR reflects the results of the current fiscal period in relation to Interim Supply of the Main Estimates, Operational Budget and Capital Budget Carry Forwards and the Supplementary Estimates "A".
The RCMP is funded through annual appropriations and are, therefore, impacted by any changes in funding approved through Parliament. In addition, it receives a significant portion of funding through vote netted revenue (VNR) 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 VNR authorities to bill Parliamentary Protective Service (PPS) for the provision of security services throughout the Parliamentary precinct and the grounds of Parliament Hill.
On October 6, 2016, the RCMP announced that a settlement agreement had been reached between the RCMP and the plaintiffs in the Merlo and Davidson lawsuits filed on behalf of current and former female regular members, civilian members and public service employees. The settlement agreement was approved by the Federal Court and includes an independent claims process with compensation for women working, or having worked, at the RCMP who experienced harassment, bullying or discrimination based on their gender or sexual orientation during their employment from September 16, 1974 until May 30, 2017. The assessment of claims is the responsibility of an Independent Assessor appointed by the Federal Court. The window in which class members could file claims ran from August 12, 2017 to May 22, 2018. According to statistics posted on the Independent Assessor's website, a total of 3,086 claims were filed. All claims have now been assessed and compensation awards have been paid to successful claimants in accordance with the terms of the settlement.
In recent years, the RCMP's reference levels have been constrained by government-wide spending reduction exercises which have resulted in significant financial pressures. In order to assess the financial integrity issues faced by the RCMP and serve as the basis for longer term strategic recommendations to the Minister of Public Safety and Emergency Preparedness, a comprehensive resourcing review was undertaken, and a final report was completed in May 2017. The review findings have been assessed and the RCMP returned to Treasury Board with a fulsome Departmental Review in the fall of 2018 that included short, medium and long-term proposals to address its ongoing resourcing issues. Since then, announcements in Budget 2019 and the Economic and Fiscal Update 2020 identified funding to support and enhance RCMP operations and will help address key resourcing issues.
4. Significant changes in relation to operations, personnel and programs
4.1 Operations
In comparison to the end of the second quarter of 2019-20, certain activities continue to be delayed as a result of the impacts of COVID-19. The RCMP continues to assess the evolving circumstances of COVID-19 and is adjusting its operations accordingly.
4.2 Personnel
Subsequent to the end of the second quarter, there have not been any changes to the senior ranks of the department.
4.3 Programs
There has been no significant change in relation to programs in the second quarter of 2020-21.
Approved by senior officials
Approved by:
Original signed by
Brenda Lucki
Commissioner
Original signed by
Jen O'Donoughue
Chief Financial Officer
Ottawa, Canada
Date: November 20, 2020
Annex A: Statement of authorities (unaudited)
| Total available for use for the year ending March 31, 2021Table 4 note 5 | Used during the quarter ended September 30, 2020 | Year to date used at quarter-end | |
|---|---|---|---|
| Gross Operating expenditures | 4,122,137 | 1,040,427 | 1,990,810 |
| Less: Vote Netted Revenues | 1,644,082 | 464,228 | 621,424 |
| Vote 1 - Net Operating expenditures | 2,478,055 | 576,199 | 1,369,386 |
| Vote 5 - Capital expenditures | 224,419 | 50,053 | 65,590 |
| Vote 10 - Grants and contributions | 349,604 | 136,310 | 203,917 |
| Pensions and other employee benefits - Members of the Force | 373,034 | 71,899 | 178,307 |
| Contributions to employee benefit plans (public servants) | 82,252 | 20,334 | 40,668 |
| Pensions under the Royal Canadian Mounted Police Pension Continuation Act | 6,750 | 1,290 | 2,624 |
| Refunds of amounts credited to revenues in previous years | 0 | 41 | 71 |
| Proceeds from the Disposal of Crown Assets under the Surplus Crown Assets Act | 7,663 | 6,227 | 6,329 |
| Court Awards | 0 | 0 | 0 |
| Statutory Authorities | 469,700 | 99,791 | 227,999 |
| Total budgetary authorities | 3,521,778 | 862,353 | 1,866,892 |
Table 4 notes
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| Total available for use for the year ending March 31, 2020Table 5 note 6 | Used during the quarter ended September 30, 2019 | Year to date used at quarter-end | |
|---|---|---|---|
| Gross Operating expenditures | 4,379,279 | 1,075,596 | 2,069,818 |
| Less: Vote Netted Revenues | 1,779,699 | 279,771 | 549,736 |
| Vote 1 - Net Operating expenditures | 2,599,580 | 795,825 | 1,520,082 |
| Vote 5 - Capital expenditures | 302,267 | 42,662 | 68,302 |
| Vote 10 - Grants and contributions | 286,473 | 69,629 | 137,400 |
| Pensions and other employee benefits - Members of the Force | 398,283 | 80,315 | 172,689 |
| Contributions to employee benefit plans (public servants) | 61,214 | 14,930 | 29,860 |
| Pensions under the Royal Canadian Mounted Police Pension Continuation Act | 6,750 | 1,507 | 2,951 |
| Refunds of amounts credited to revenues in previous years | 0 | 22 | 152 |
| Proceeds from the Disposal of Crown Assets under the Surplus Crown Assets Act | 5,629 | 3,618 | 3,797 |
| Court Awards | 0 | 0 | 0 |
| Statutory Authorities | 471,876 | 100,392 | 209,449 |
| Total budgetary authorities | 3,660,196 | 1,008,508 | 1,935,233 |
Table 5 notes
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Annex B: Budgetary expenditures by standard object (unaudited)
| Planned expenditures for the year ending March 31, 2021 | Expended during the quarter ended September 30, 2020 | Year to date used at quarter-end | |
|---|---|---|---|
| Expenditures: | |||
| Personnel | 3,270,851 | 852,612 | 1,691,039 |
| Transportation and communications | 204,159 | 34,084 | 74,433 |
| Information | 3,799 | 467 | 1,298 |
| Professional and special services | 478,004 | 131,226 | 203,363 |
| Rentals | 136,564 | 31,496 | 49,088 |
| Repair and maintenance | 96,812 | 21,770 | 34,225 |
| Utilities, materials and supplies | 144,606 | 35,315 | 62,026 |
| Acquisition of land, buildings and works | 81,899 | 18,920 | 24,044 |
| Acquisition of machinery and equipment | 248,590 | 48,245 | 78,563 |
| Transfer payments | 356,354 | 137,599 | 206,540 |
| Public debt charges | 234 | 163 | 327 |
| Other subsidies and payments | 143,988 | 14,684 | 63,370 |
| Total gross budgetary expenditures | 5,165,860 | 1,326,581 | 2,488,316 |
| Less Revenues netted against expenditures: | |||
| Vote Netted Revenues | 1,644,082 | 464,228 | 621,424 |
| Total Revenues netted against expenditures: | 1,644,082 | 464,228 | 621,424 |
| Total net budgetary expenditures | 3,521,778 | 862,353 | 1,866,892 |
| Planned expenditures for the year ending March 31, 2020 | Expended during the quarter ended September 30, 2019 | Year to date used at quarter-end | |
|---|---|---|---|
| Expenditures: | |||
| Personnel | 3,498,548 | 863,786 | 1,684,305 |
| Transportation and communications | 223,634 | 55,789 | 123,249 |
| Information | 4,801 | 680 | 1,149 |
| Professional and special services | 506,739 | 121,597 | 232,289 |
| Rentals | 141,330 | 27,294 | 49,766 |
| Repair and maintenance | 107,398 | 26,382 | 42,352 |
| Utilities, materials and supplies | 153,834 | 38,816 | 72,321 |
| Acquisition of land, buildings and works | 103,927 | 19,750 | 27,876 |
| Acquisition of machinery and equipment | 280,247 | 42,883 | 72,916 |
| Transfer payments | 293,224 | 71,136 | 140,351 |
| Public debt charges | 352 | 176 | 352 |
| Other subsidies and payments | 125,861 | 19,990 | 38,043 |
| Total gross budgetary expenditures | 5,439,895 | 1,288,279 | 2,484,969 |
| Less Revenues netted against expenditures: | |||
| Vote Netted Revenues | 1,779,699 | 279,771 | 549,736 |
| Total Revenues netted against expenditures: | 1,779,699 | 279,771 | 549,736 |
| Total net budgetary expenditures | 3,660,196 | 1,008,508 | 1,935,233 |
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