Public Safety Canada Quarterly Financial Report
For the quarter ended September 30, 2015

1.0 Introduction

This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act, in the form and manner prescribed by the Treasury Board Accounting Standard 1.3.  This quarterly financial report should be read in conjunction with the Main Estimates, Supplementary Estimates (A), as well as Canada's Economic Action Plan 2013 (Budget 2013) and Canada's Economic Action Plan 2014 (Budget 2014) and Canada's Economic Action Plan 2015 (Budget 2015). 

This quarterly financial report has not been subject to an audit.  However, it has been reviewed by the Departmental Audit Committee prior to approval by senior officials.

1.1 Authority, Mandate and Program

Public Safety Canada plays a key role in discharging the Government's fundamental responsibility for the safety and security of its citizens. The Department of Public Safety and Emergency Preparedness Act 2005 and the Emergency Management Act 2007 set out three fundamental roles for the Department: (i) support the Minister's responsibility for all matters related to public safety and emergency management, except those assigned to another federal minister, (ii) exercise national leadership for national security and emergency preparedness; and (iii) coordinate the efforts of Public Safety Portfolio agencies, as well as provide guidance on their strategic priorities.

The Department provides strategic policy advice and support to the Minister of Public Safety and Emergency Preparedness on a range of issues, including: national security, border strategies, countering crime and emergency management. The Department also delivers a number of grant and contribution programs related to emergency management, national security, and community safety.

Further information on the mandate, roles, responsibilities and program of Public Safety can be found in the 2015-16 Report on Plans and Priorities and the 2015-16 Main Estimates.

1.2 Basis of Presentation

This quarterly report has been prepared using an expenditure basis of accounting.  The accompanying Statement of Authorities includes the Department's spending authorities granted by Parliament, or received from Treasury Board Central Votes, and those used by the Department consistent with the Main Estimates and the Supplementary Estimates (A) for the 2015-16 fiscal year.  This quarterly report has been prepared using a special purpose financial reporting framework designed to meet the information needs concerning the use of spending authorities.

The authority of Parliament is required before funds can be spent by the Government.  Approvals are given in the form of annual limits provided through Appropriation Acts or through legislation in the form of statutory spending authority for specific purposes.

As part of the departmental performance reporting process, Public Safety prepares its annual departmental financial statements on a full accrual basis in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector.  However, the spending authorities voted by Parliament remain on an expenditure basis, as do the expenditures presented in this report. 

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1st, preceding the new fiscal year.

1.3 Public Safety Canada Financial Structure

Public Safety has a financial structure composed mainly of voted budgetary authorities that include Vote 1 – Operating Expenditures, Vote Netted Revenues and Vote 5 – Grants and Contributions.  The Department's statutory authorities consist of Contributions to Employee Benefit Plans (EBP) and Minister of Public Safety and Emergency Preparedness – Salary and motor car allowance.

About 87.8 percent of the Department's budget is devoted to delivering transfer payment programs related to emergency management, national security and community safety.  The largest programs include payments made pursuant to the Disaster Financial Assistance Arrangements (DFAA), the First Nations Policing Program (FNPP), the National Crime Prevention Strategy (NCPS) as well as the National Disaster Mitigation Program (NDMP).

2.0 Highlights of Fiscal Quarter and Fiscal Year-to-Date (YTD) Results

The numbers presented in the report are in accordance with the government-wide chart of accounts for Canada for 2015-16 and Treasury Board Accounting Standard 1.3.

The following graph provides a comparison of the net budgetary authorities and expenditures as of September 30, 2015 and September 30, 2014 for the Department's combined Vote 1, Vote 5 and Statutory Votes. 

Image Description

Budgetary Authorities and Expenditures Comparison

Starting from the left hand side, the “first” column in the graph indicates that the Department authorities are at $1,138.2 million for fiscal year 2015-16. The year-to-date expenditures of $103.2 million reported at the end of the second quarter of the 2015-16 fiscal year are shown under the “second” column.   The expenditures of $54.2 million for the period ended September 30, 2015 (i.e. second quarter) are presented under the “third” column.  The fourth column in the graph depicts the 2014-15 authorities which were at $1,222,4 million at the end of September 2014.  The 2014-15 year-to-date expenditures of $100.4 million are shown under the “fifth” column.  The Departments' actual expenditures incurred in the second quarter of 2014-15 were $49.9 million and are shown under the “sixth” column of the graph.

Note: The 2015-16 Supplementary Estimates ‘‘A'' (SEA) resulted in a net total amount of ($17.9M).  The Department's appropriations have decreased by $41.5M for a transfer to the Royal Canadian Mounted Police for the First Nations Community Policing Service which is partially offset by increases of $23.6M for other items included in SEA.     

2.1 Significant Changes to Authorities

For the period ending September 30, 2015, the authorities provided to the Department included Main Estimates, Supplementary Estimates (A), and the Treasury Board Central Vote transfer for the Operating Budget Carry-Forward.  The 2014-15 authorities for the same period included the same types of authorities. The Statement of Authorities presents a net decrease of $84.2 million or a decrease of 6.9 percent  in Public Safety's total authorities as at September 30, 2015 compared to those of the previous year for the same period (from $1,222.4 million to $1,138.2 million).

This change in authorities is comprised of an increase in Vote 1 – Operating Expenditures ($3.6 million), a decrease in Vote 5 – Grants and Contributions ($88.2 million) and an increase in Budgetary Statutory Authorities ($0.4 million).

Vote 1 - Operating Expenditures

The Department's Vote 1 increased by $3.6 million or 3.0 percent, mainly due to:

• An increase of $3.5 million for funding the National Disaster Mitigation Program announced in Budget 2014;
• An increase of $1.1 million for the Operating Budget Carry-Forward (OBCF) from 2014-15 to 2015-16;
• An increase of $0.3 million to address family violence and violent crimes against Aboriginal women and girls;
• An increase of $0.3 million for funding the Kanishka Project Research Initiative, which supports research on pressing questions for Canada on terrorism and counter-terrorism;
• A decrease of $0.6 million previously required to fund the Division 9 – Immigration & Refugee Protection Act;
• A decrease of $0.5 million in support of the Government of Canada's provision of federal services to the Toronto 2015 Pan American and Parapan American Games;
• A decrease of $0.4 million for the Beyond the Border initiatives; and
• A decrease of $0.1 million for a transfer to Canada's School of Public Service to support their new funding model.

Vote 5 - Grants and Contributions (G&C)

The Department's Vote 5 decreased by $88.2 million or 8.1 percent, mainly due to:

• A decrease of $95.0 million as a result of time-limited program (sunset program) in support of Financial Assistance to the province of Quebec for Lac-Mégantic;
• A decrease of $50.8 million as a result of time-limited program (sunset program) of  support to Provinces and Territories for the 2011 Flood Mitigation Investment;
• A decrease of $41.5 million for a transfer to Royal Canadian Mounted Police (RCMP) for the First Nations Community Policing Service;
• An increase of $86.4 million to supplement Public Safety's existing reference levels for the Disaster Financial Assistance Arrangements (DFAA) contribution program for non-discretionary requirements to address existing and future obligations under the DFAA;
• An increase of $11.2 million for the National Disaster Mitigation Program announced in Budget 2014; and
• An increase of $1.1 million to supplement the First Nations Policing Program, the majority of which is to maintain funding for policing agreements with First Nation and Inuit communities.

Budgetary Statutory Authorities

The increase of $0.4 million or 3.0 percent in 2015-16 is in most part related to the EBP costs associated with the change in the Department budgetary requirements for salary and EBP rate.  

2.2 Explanation of Significant Variances from Previous Year Expenditures

The total year-to-date (YTD) expenditures increased by $2.8 million, or 2.8 percent, in 2015-16, compared to 2014-15, from $100.4 million to $103.2 million.  This increase is mostly due to higher spending in Transfer Payments, which increased by $10.5 million or 28.4 percent from $37.1 million in 2014-15 to $47.6 million in 2015-16. For a detailed explanation of variances in expenditures in the first quarter, please refer to the Quarterly Financial Report for the quarter ended June 30, 2015. The cumulative effect of these variances, as well as the variances in the second quarter detailed below, explain the increase in YTD expenditures.

Compared to the previous year, the total expenditures in the second quarter, ending September 30, 2015, have increased by $4.3 million, from $49.9 million to $54.2 million as per the table of  Departmental Budgetary Expenditures by Standard Object. This represents an increase of 8.7 percent against expenditures recorded for the same period in 2014-15.

This overall increase in spending in the second quarter is a combination of a decrease in Vote 1 – Operating Expenditures of $3.1 million (from $28.6 million to $25.5 million), an increase in Vote 5 – Grants and Contributions of $7.4 million (from $17.6 million to $25.0 million).

Personnel expenditures, which include expenditures related to EBP and the Minister's salary and motor car allowance, have decreased by $1.5 million, compared to those of the previous year for the same period (from $25.2 million to $23.7 million).  Expenses under Personnel were lower than those incurred at the same period last year due to higher than normal attrition in the wake of the departmental realignment.   

Other operating expenditures have decreased by $1.5 million, compared to those of the previous year for the same period (from $7.2 million to $5.7 million).  The decrease is mainly due to lower expenditures related to Professional and Special Services explained by payments for legal services provided by Justice Canada as well as payments for IT services.  

Transfer payments expenses increased by $7.4 million or 42.0 percent in the second quarter of 2015-16 compared to those of the previous year for the same period (from $17.6 million to $25.0 million). This variance is due mainly to higher expenditures for the First Nations Policing Program incurred in the second quarter of 2015-16.     

3.0 Risks and Uncertainty

The Department's mandate spans from public safety and security, intelligence and national security functions, social interventions for youth-at-risk, to readiness for all manner of emergencies.  Public Safety is called to rapidly respond to emerging threats and ensure the safety and security of Canadians.  The Department ability to deliver its programs and services is subject to several risk sources, such as, the rapidly changing asymmetrical threat environment, its ability to respond to natural or man-made disasters, government priorities, and government-wide or central agency initiatives. To deliver this mandate effectively, the collaboration of many departments and agencies, provincial and territorial governments, international partners, private sector and first responders is required.  Without the collaboration of all these partners, the Department is at risk in the delivery of its mandate and objectives, making the effectiveness of these relationships crucial.

Fiscal Restraint

Public Safety continues to face pressures that have been previously identified.  Collectively these pressures have reduced the Department's funding base and its flexibility to reallocate funding to achieve expected results.   

In recognition of this tightening fiscal environment, Public Safety examined all of its departmental program spending, balancing resource allocations against identified priorities by shifting from lower to higher priorities.  The Department continues to explore actions to mitigate and manage the impact of the changing fiscal environment on the organization.  As such, the Department announced in December 2013 a realignment of departmental functions (of note, details on the realignment of departmental functions are found in the Significant Changes in Relation to Operations section).

2013 Operating Budget Freeze

In keeping with the Government's commitment to implement measures to return to balanced budgets in 2015, Economic Action Plan 2014 (Budget 2014) announced a number of whole-of government initiatives to control the size and cost of government operations.

The November 2013 Update of Economic and Fiscal Projections reintroduced a freeze on departmental operating budgets. This freeze applies for two years beginning in 2014–15. The operating budget freeze is expected to generate government-wide savings of roughly $550 million in 2014–15 and $1.1 billion in 2015–16, by introducing a number of whole-of government initiatives to contain costs and increase efficiencies.  One of these initiatives is related to compensation adjustments.

Compensation Adjustment

These savings will be mainly managed by requiring organizations to absorb the ongoing impact of wage and salary increases that take effect during the freeze period.

2014-15 marked the beginning of a new round of collective bargaining between the Government of Canada and federal public service bargaining agents. The Government continues to work with these bargaining agents to renew all 27 of its collective agreements. 

As the outcome of these negotiations is unsure, Public Safety's share of the impact has been estimated at $1.6 million.

To mitigate this risk, the Department was able to create a Frozen Allotment of $934K from its 2014-15 surpluses for the 2014-15 incremental compensation adjustment amounts. This surplus will be used to fund partially the 2015-16 costs of collective agreement renewals.

4.0 Significant Changes in Relation to Operations, Programs and Personnel

There has been one significant change in relation to operations in the second quarter of 2015-16.

Effective July 24, 2015, the National Search and Rescue Secretariat (NSS) has been transferred from the Department of National Defence to Public Safety Canada. 

The employees of NSS are now part of the Emergency Management and Programs Branch.

The NSS plays an important role in policy development and manages Canada's National Search and Rescue Program. The Secretariat works closely with the Search and Rescue community, all levels of government as well as first responders to coordinate and improve search and rescue activities across Canada.

Under the responsibility of Public Safety Canada, the NSS will continue its role as a central coordinator for the National Search and Rescue Program. The Department of National Defence will keep its lead role for the delivery of airborne search and rescue operations, just as the Canadian Coast Guard will remain responsible for maritime search and rescue.

The move of the Secretariat to Public Safety Canada is an opportunity to leverage the Department's expertise and leadership in coordinating with government institutions and cooperating with non-government stakeholders on emergency management matters.

4.1 Significant Changes in Relation to Operations

Departmental Realignment

As of June 30, 2015, the majority of executive placements related to the realignment have been carried out.

Implementation of the non-executive realignment is well underway. The latest update indicates that significant progress was made to find placements/solutions for employees occupying positions impacted by the departmental realignment of functions; 73% of impacted employees had been matched or placed indeterminately in an end state position, had found employment elsewhere, or had plans to retire in the next three years.  This is well ahead of schedule. Through branch management committees, the Resource Management Committee (RMC) and the departmental Realignment Committee, regular discussions, options and strategies are reviewed to continue placing the remainder of the impacted employees.

While reviewing the structure, the department was able to reallocate existing resources to create additional junior level positions. As of June 30, 2015, 49% of new or vacant end-state positions had been matched with existing employees or staffed. This clearly illustrates the need to recruit new employees within PS, over and above the placement of impacted employees. The Department is running multiple collective staffing processes for various groups and levels to fill those gaps.

The RMC continued to act as a forum for departmental consultation and deliberation on the realignment in order to coordinate approaches across the department, engage with employees and share successful practices. Unions are at the table to discuss concerns raised by their members. The RMC meetings, along with the regular Labour Management Consultation Committee (LMCC) meetings, ensure ongoing communication with the unions, thus enabling the department to understand and address issues and concerns as they arise.

4.2 Significant Changes in Relation to Programs

Disaster Financial Assistance Arrangements

The Disaster Financial Assistance Arrangements (DFAA) contribution program was established in 1970 to provide a consistent and equitable mechanism for federal sharing of provincial and territorial costs for natural disaster response and recovery where such costs would place an undue burden on a provincial or territorial economy.

There are currently 64 natural disasters for which Orders-in-Council (OiCs) have been approved, authorizing the provision of federal financial assistance under DFAA, and for which final payments have not yet been made. Taking into account all the expected DFAA final payments, the total estimated outstanding federal liability at the end of the second quarter is $1.7 billion, the majority of which is expected to be paid out over the next five years.

The five most significant events represent 71 percent of Public Safety's current liabilities under the DFAA. They are the Alberta 2013 June Flood estimated at $659 million, the Manitoba 2011 Spring Flood at $174 million, the Saskatchewan 2011 Spring Flood at $145 million, the Ontario 2013 December Ice Storm at $120 million and the Saskatchewan 2007 Spring/Summer Rainstorm at $72 million.

4.3 Significant Changes in Relation to Personnel

On September 8, 2015, Ms. Lynda Clairmont, Senior Assistant Deputy Minister of the National and Cyber Security Branch was appointed Senior Assistant Deputy Minister for Aboriginal Affairs and Northern Development Canada (AANDC).

On September 21, 2015, Mr. Gary Robertson, Assistant Deputy Minister of the National Cyber and Security Branch was appointed Assistant Deputy Minister, Labour Program at Employment and Social Development Canada (ESDC).

On September 16, 2015, Ms. Rosemary Stephenson retired from the Public Service.  Ms. Stephenson held the position of Chief Audit and Evaluation Executive since April 27, 2009.

Effective September 30, 2015, Mr. Denis Gorman was appointed Chief Audit and Evaluation Executive in replacement of Ms. Stephenson.

On September 14, 2015, Mr. Michael Sousa joined Public Safety as the Executive Director and Senior General Counsel of Legal Services.

5.0 Approval by Senior Officials

Approved by:

Original signed by

François Guimont, Deputy Minister
Public Safety Canada 
Ottawa (Canada)
November 18, 2015

Original signed by

Mark Perlman, CPA, CMA, Chief Financial Officer and Assistant Deputy Minister of the Corporate Management Branch
Public Safety Canada
Ottawa (Canada)
November 18, 2015

6.0 Statement of Authorities (unaudited)

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

(2) Authorities available for use, expenditures for the second quarter and year to date expenditures exclude amounts for the National Search and Rescue Secretariat (NSS).

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

7.0 Departmental budgetary expenditures by Standard Object (unaudited)

(1) Includes only planned expenditures against authorities for use and granted by Parliament at quarter end.

(2) Authorities available for use, expenditures for the second quarter and year to date expenditures exclude amounts for the National Search and Rescue Secretariat (NSS).

(1) Includes only planned expenditures against authorities for use and granted by Parliament at quarter end.

Date modified:

2015-12-14