Quarterly financial report for the period ended June 30, 2011

Office of the Director of Public Prosecutions

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

Introduction

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. It has not been subject to an external audit or review. This quarterly report should be read in conjunction with the Main Estimates and Supplementary Estimates.

The Office of the Director of Public Prosecutions (ODPP) is an independent prosecution service mandated to prosecute offences under federal jurisdiction. Its sole strategic outcome is the prosecution of criminal and regulatory offences under federal law in a manner that is independent, impartial and fair. Created on December 12, 2006 with the coming into force of the Director of Public Prosecutions Act, it:

• provides legal advice to federal investigative agencies and departments on the criminal law implications of investigations and prosecutions;
• ensures the appropriate enforcement of federal laws through principled and independent decisions by prosecutors; and
• promotes confidence in the administration of justice through professionally conducted prosecutions that result in a judicial determination on the merits of the evidence.

The ODPP has three (3) program activities:

1. Drug, Criminal Code and terrorism prosecution program
   
   This program supports the protection of society against crime through the provision of legal advice and litigation support during police investigations, and the prosecution of: all drug offences under the Controlled Drugs and Substances Act and any related organized crime offences throughout Canada, except in Quebec and New Brunswick, where the Office of the Director of Public Prosecutions prosecutes such offences only where charges are laid by the Royal Canadian Mounted Police; proceeds of crime offences; pursuant to understandings with the provinces, Criminal Code offences where they are related to drug charges; all Criminal Code offences in the three territories; terrorism offences; and war crimes and crimes against humanity offences. This program activity also involves the promotion of federal/provincial/territorial cooperation on criminal justice issues of mutual concern.
2. Regulatory offences and economic crime prosecution program
   
   This program supports the protection of society against crime through the provision of legal advice and litigation support to federal investigative agencies, and the prosecution of: offences under federal statutes aimed at protecting the environment and natural resources as well as the country’s economic and social health (e.g., Fisheries Act, Income Tax Act, Copyright Act, Canada Elections Act, Canadian Environmental Protection Act, Competition Act, Customs Act, Excise Act, and the Excise Tax Act); offences involving fraud against the government; capital market fraud offences; and any organized crime offences related to the foregoing offences. This program also includes the recovery of outstanding federal fines and the promotion of federal/provincial/territorial cooperation on criminal justice issues of mutual concern.
3. Internal services
   
   Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These groups are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Material Management; Internal Audit; Procurement Services; and Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the ODPP's spending authorities granted by Parliament and those used by the ODPP consistent with the Main Estimates and Supplementary Estimates for the 2011-2012 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 moneys 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.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

The ODPP uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

Highlights of net spending authorities

The accompanying Statement of Authorities (see Annex A) includes all authorities granted at quarter end through main and supplementary estimates and Treasury Board allotment transfers by Parliament and those used by the ODPP for this fiscal year and the previous fiscal year.

As of June 30, 2011, the total net authorities available for the year have increased by $8.6M compared to the prior year, from $163.6M to $172.2M in Vote 35 – total authorities.

Table 1 highlights the significant items that contributed to the net increase in the net spending authorities between 2011-12 and 2010-11 by standard objects.

Table 1: Net Spending Authorities based on Main and Supplementary Estimates

(in thousands of dollars)

	2011-12	2010-11	Variance
Personnel	120,207	114,078	6,129	5%
Professional and special services	45,053	41,285	3,768	8%
Transportation and communications	7,149	6,229	920	15%
Other subsidies and payments	6,107	5,612	495	9%
Acquisition of machinery and equipment	2,539	2,504	35	1%
Repair and maintenance	1,501	1,656	(155)	(9%)
Rentals	1,472	1,840	(368)	(20%)
Utilities, materials and supplies	986	986	0	0%
Information	898	775	123	16%
Gross Budgetary Authorities	185,912	174,965	10,947	6%
Less: Revenues netted against expenditures	13,742	11,342	2,400	21%
Total Net Budgetary Authorities	172,170	163,623	8,547	5%

Significant Changes to Authorities

The overall increase of 5% is mainly attributable to increases: in the salary levels to the Law Group; professional services as a result of a revised fee schedule for Crown agents and increased demand for legal expert witnesses; in costs of travelling notably in the northern regions; in printing and translation costs related to an increase of the number of files, and in forecasted revenues to reflect increased demand in services. The major decreases results from the relocation of offices in 2010/11.

Highlights of fiscal quarter and fiscal year to date (YTD) results

The accompanying ODPP budgetary expenditures by standard object (see Appendix B) include for this fiscal year and the previous fiscal year, the planned expenditures for the year and those expended during the quarter and the year-to-date used at quarter-end.

As of June 30, 2011 the total expenditures for the year has increased by 4% compared to the same period last year. The total expenditures for the same period correspond to 21% of the net spending authorities for each fiscal year.

Table 2 highlights the significant items that contributed to the fiscal quarter ended June 30, 2011 compared to June 30, 2010.

Table 2: Expenditures during the period ended June 30:

(in thousands of dollars)

	2011-12	2010-11	Variance
Personnel	26,064	24,901	1,163	5%
Professional services	8,917	8,539	378	4%
Transportation and communications	859	917	(58)	(6%)
Information	132	129	3	2%
Rentals	237	57	180	316%
Repair and maintenance	22	12	10	83%
Utilities, materials and supplies	131	147	(16)	(11%)
Acquisition of machinery and equipment	60	127	(67)	(53%)
Other subsidies and payments (note 1)	(25)	1	(24)	-
Gross Budgetary Expenditures	36,397	34,830	1,567	4%
Less: Revenues netted against expenditures	0	0	0	0%
Total Budgetary Expenditures	36,397	34,830	1,567	4%

Note 1: The credit amount of $25,000 is to an earlier deposit of the funding received from the Department of Public Safety for the National Flagging System. This amount was only deposited in Q2 during last fiscal year.

Significant changes to the expenditures

The main increases in expenditures between the fiscal years are related to better planning of the rentals of machinery and equipment as well as the repairs and maintenance of equipment. The negative variances are due to the delay in spending during the special warrant periods.

The increase in expenditures is consistent with the increase in the net budgetary authorities of 5% between 2011-12 and 2010-11.

It is to note that revenues are collected on a quarterly basis, at the end of each quarter. Therefore, no revenues were collected in the first quarter.

Risks and Uncertainties

Dependence on other departments and agencies (Vote netted Revenue)

Four departments are responsible for legislation that generate the bulk of demands for pre-charge advice and prosecution resources. Given the volume and frequency of these demands, these departments have instituted planning mechanisms that assist in the regular communications with the ODPP as to what investigations and prosecutions are expected. This ability to plan and communicate results in the ability to budget for prosecution related costs and ensure that costs are paid in a timely fashion.

Some smaller departments and agencies have expressed concern that they cannot predict or control and the prosecution costs in cases that flow from statutes for which they are responsible. This is particularly a problem for departments/agencies that do not encounter prosecutions regularly, and that have not set aside a budget for prosecution costs. Given the uncertainties associated with investigations and prosecutions, it is difficult to predict what costs might flow from regulatory prosecutions. In some years there may be no cases referred to the ODPP for prosecution, while in others there may be very large cases brought to the ODPP’s attention, either upon the laying of charges, or else, to seek charge review and advice. Given the independence of the prosecution function, once a prosecution is commenced, it must be continued so long as the test to prosecute is met and therefore not stopped due to concern from a department or agency over costs.

Some departments and agencies which do not have an enforcement mandate object in principle to paying prosecution costs. The investigations in these cases are typically undertaken by the RCMP or provincial or municipal police forces with minimal or no consultation with the federal department whose minister is responsible for administering the legislation. They are thereforeunable to budget for or forecast any prosecution costs.

Workload

The ODPP’s workload depends on the number of cases referred to it for prosecution by the police and other investigative agencies (whether federal, provincial or municipal) that lay charges under federal statutes. While the ODPP can look to past trends and does engage in joint planning with the major investigative agencies, its workload is dependent on the decisions of the agencies in respect of their priorities, tactics and allocation of resources. The result is that the ODPP’s workload can fluctuate unpredictably.

Resourcing issues

The Government has imposed a freeze on departmental operating budgets, thereby requiring federal organizations to fund salary increases and other costs from reallocations within their current budget levels. Accordingly, the ODPP must reallocate resources in order to fund the growth in legal staff arising from increases in workload intake over which it has no control, and to cover overtime costs for the Law Group (according to the terms of a new collective agreement).

Strategic Review and Deficit Reduction Action Plan

Budget 2010 announced that the ODPP was subject to the Strategic Review in 2010/11. Treasury Board accepted the comprehensive review and supported the reallocation proposals beginning in 2012/13. The reference level of 2011/12 has not been affected.

Budget 2011 announced that departmental budgets would be examined through a Deficit Reduction Action Plan. Pursuant to this review, it is expected that future years' budgets will be reduced for fiscal years commencing in 2012-13. However, at this time the nature and extent of any reductions are not known.

Action taken to minimize risks and uncertainties

In relation to the dependence on other departments and agencies, to minimize the risk of not recovering for services provided, the ODPP has developed and is entering into Memoranda of Understanding (agreements) with its concerned departments and agencies, which include workload projections, invoicing and payment, dispute resolution and other relevant clauses.

With regard to the workload, the ODPP is meeting with its concerned agencies, investigative agencies and other stakeholders to better foresee and plan.

Concerning the resourcing issue following the operating budget freeze, the ODPP developed new internal regulations on all human resources actions that imply a salary cost.

The ODPP is currently working on the Deficit Reduction Action Plan review to propose options to government to meet its reduction target.

Significant changes in relations to operations, personnel and programs

The ODPP will have to adjust to the creation of a new occupational group for law managers. This new group of lawyers will be distinct from lawyers who are practitioners.

The ODPP has allocated annual budgets for travel, hospitality and conferences as required under the new Treasury Board Policy on the management of expenditures on Travel, Hospitality and Conference. The monitoring of the spending will be done through/via the monthly Financial Situation Report (FSR).

The ODPP provides internal support services to the Department of Justice in the northern territories. As per the forthcoming Treasury Board Directive on Interdepartmental Provision of Internal Support Services, the ODPP will have to seek authority to charge and re-spend revenues from internal support services. This will be done via the Estimates process.

Approval by Senior Officials

Approved by:

 

__________________________
Brian Saunders
Director of Public Prosecutions

 

__________________________
Lucie Bourcier
Chief Financial Officer

Ottawa, Canada

__________________________
Date

Appendix A

Statement of Authorities (unaudited)

Fiscal year 2011-2012 (in thousands of dollars)

	Total available for use for the year ending March 31, 2012*	Used during the quarter ended June 30, 2011	Year to date used at quarter-end
Vote 35 – Net Operating expenditures	153,833	31,813	31,813
Budgetary statutory authorities	18,337	4,584	4,584
Total Budgetary authorities	172,170	36,397	36,397
Non-budgetary authorities	-	-	-
Total authorities	172,170	36,397	36,397

Fiscal year 2010-2011 (in thousands of dollars)

	Total available for use for the year ended March 31, 2011 *	Used during the quarter ended June 30, 2010	Year to date used at quarter-end
Vote 35 – Net Operating expenditures	147,606	30,826	30,826
Budgetary statutory authorities	16,017	4,004	4,004
Total Budgetary authorities	163,623	34,830	34,830
Non-budgetary authorities	-	-	-
Total authorities	163,623	34,830	34,830

More information is available in the attached table.
* Includes only Authorities available for use and granted by Parliament at quarter-end.

Appendix B

Departmental budgetary expenditures by Standard Object (unaudited)

Fiscal year 2011-2012 (in thousands of dollars)

	Planned expenditures for the year ending March 31, 2012	Expended during the quarter ended June 30, 2011	Year to date used at quarter-end
Expenditures:
Personnel	120,207	26,064	26,064
Transportation and communications	7,149	859	859
Information	898	132	132
Professional and special services	45,053	8,917	8,917
Rentals	1,472	237	237
Repair and maintenance	1,501	22	22
Utilities, materials and supplies	986	131	131
Acquisition of machinery and equipment	2,539	60	60
Other subsidies and payments	6,107	(25)	(25)
Total gross budgetary expenditures	185,912	36,397	36,397
Less Revenues netted against expenditures:
Legal Services	13,742	-	-
Total net budgetary expenditures	172,170	36,397	36,397

Fiscal year 2010-2011 (in thousands of dollars)

	Planned expenditures for the year ended March 31, 2011	Expended during the quarter ended June 30, 2010	Year to date used at quarter-end
Expenditures:
Personnel	114,078	24,901	24,901
Transportation and communications	6,229	917	917
Information	775	129	129
Professional and special services	41,285	8,539	8,539
Rentals	1,840	57	57
Repair and maintenance	1,656	12	12
Utilities, materials and supplies	986	147	147
Acquisition of machinery and equipment	2,504	127	127
Other subsidies and payments	5,612	1	1
Total gross budgetary expenditures	174,965	34,830	34,830
Less Revenues netted against expenditures:
Legal Services	11,342	-	-
Total net budgetary expenditures	163,623	34,830	34,830