Quarterly financial report for the period ended December 31, 2011

Office of the Director of Public Prosecutions 2011-2012

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 investigative agencies and federal organizations 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 Appendix 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.

The net authorities for 2010-2011 are comprised of the Main Estimates, Supplementary Estimates A and B, the carry forward and collective agreement funding. The net authorities for 2011-2012 are comprised of the Main Estimates, Supplementary Estimates B, the carry forward and the pay list reimbursement transfer. The above table reflects an increase of $12.7 million in the ODDP’s total authorities as of December 31, 2011 compared to those of the previous year for the same period, from $174.8 million to $187.4 million.

The following Table 1 highlights the significant items that contributed to the net increase in the net spending authorities between 2011-2012 and 2010-2011 by standard objects.

Table 1: Net Spending Authorities based on Main and Supplementary Estimates
(in thousands of dollars)

	2011-12	2010-11	Variance
Personnel	125,525	118,793	6,732	6%
Professional and special services	49,592	45,647	3,945	9%
Transportation and communications	7,526	6,889	637	9%
Other subsidies and payments	6,757	6,205	552	9%
Acquisition of machinery and equipment	4,652	2,758	1,894	69%
Repair and maintenance	2,813	1,832	981	54%
Rentals	2,182	2,034	148	7%
Utilities, materials and supplies	1,192	1,091	101	9%
Information	934	858	76	9%
Gross Budgetary Authorities	201,173	186,107	15,066	8%
Less: Revenues netted against expenditures	13,742	11,342	2,400	21%
Total Net Budgetary Authorities	187,431	174,765	12,666	7%

Significant Changes to Authorities

The overall increase of 7% is mainly attributable to: a $4.1 million increase of the salary levels for the pay list reimbursement transfer from Treasury Board Secretariat for maternity leave and severance pay; a $5.6 million increase in Information Management /Information Technologies and Accommodations transition funding in 2011-2012; $2.9 million increase for a revised fee schedule for Crown agents and for combating illicit drug production and distribution. The increase in acquisition of machinery and equipment and repair and maintenance costs is due to the increase in budget for Information Management / Information Technologies and Accommodations.

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

Appendix B sets out the ODPP budgetary expenditures by standard object for both this fiscal year and the last one. The expenditures shown are the planned expenditures for the year, those expended during the quarter and the year-to-date used at quarter-end.

As of December 31, 2011 the total expenditures for the year have increased by 8% compared to the same period last year. The total expenditures for the same period correspond to 59% of the net spending authorities in 2011-2012 and 58% in 2010-2011.

The following Table 2 highlights the expenditures by standard object for the period ended December 31, 2011 compared to December 31, 2010.

Table 2: Expenditures during the period ended December 31:
(in thousands of dollars)

	2011-12	2010-11	Variance
Personnel	81,579	72,768	8,811	12%
Professional services	23,013	22,471	542	2%
Transportation and communications	4,409	3,975	434	11%
Information	473	538	(65)	(12)%
Rentals	978	770	208	27%
Repair and maintenance	1,449	73	1,376	1,885%
Utilities, materials and supplies	782	694	88	13%
Acquisition of machinery and equipment	618	676	(58)	(9%)
Other subsidies and payments	1,816	3,388	(1,572)	(46%)
Gross Budgetary Expenditures	115,117	105,353	9,764	9%
Less: Revenues netted against expenditures	4,628	3,406	1,222	36%
Total Budgetary Expenditures	110,489	101,947	8,542	8%

Significant changes to the expenditures

The increase in expenditures of 8% is consistent with the increase in the net budgetary authorities of 7% between 2011-2012 and 2010-2011.

The increase in expenditures for personnel between the fiscal years is attributable to additional Full Time Equivalents (FTEs) and the cash out of the Severance Pay and Termination benefits by authorized employees as per their collective agreements. The increase in repair and maintenance expenditures is due to the office relocation in Edmonton. The decrease in other subsidies and payments is due to the timing of processing payments.

It should be noted that revenues are collected on a quarterly basis, at the end of each quarter. Revenues were collected faster this fiscal year compared to last fiscal year.

Risks and Uncertainties

Dependence on Vote Netted Revenue

To fulfill its mandate, the PPSC is funded through a combination of Parliamentary appropriations and cost recovery. Recovering prosecution costs is therefore necessary to allow us to provide prosecution services to federal departments and agencies so that they can achieve their enforcement objectives.

There are a number of issues with using this funding model in the area of prosecutions.

1. Cost recovery is governed by the Common Services Policy. However, the requirements of this Policy do not correspond to the principle of providing independent prosecution services. Prosecutions are conducted in the name of the Crown and must be conducted in accordance with legal criteria only. It follows that prosecutions are not conducted to serve the interests or meet the requirements and specifications of individual government departments and agencies. While they may be consulted in respect of a prosecution, they can have no control over its initiation, conduct or continuance.
2. Some smaller departments and agencies have expressed concern that they cannot predict or control 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.
3. 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 therefore unable 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 any salary increases and other increased costs from reallocations within their current budget levels. Accordingly, in 2011-2012 the ODPP reallocated $3M from operations & maintenance to salary to cover anticipated expenditures.

Strategic Review and Deficit Reduction Action Plan

As a result of Budget 2010, the ODPP was subject to the Strategic Review in 2010-2011. Reallocation proposals resulting from the review will begin in 2012-2013. The reference level of 2011-2012 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 commencing in the 2012-2013 fiscal year. However, at this time the nature and extent of any reductions are not known.

Action taken to minimize risks and uncertainties

The following actions are being taken to mitigate risks and uncertainties listed above:

• 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 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.

Significant changes in relations to operations, personnel and programs

The ODPP is adjusting 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. The ODPP sought authority to charge and re-spend revenues from internal support services in its Supplementary Estimates C.

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 December 31, 2011	Year to date used at quarter-end
Vote 35 – Net Operating expenditures	169,094	31,022	96,736
Budgetary statutory authorities	18,337	4,584	13,753
Total Budgetary authorities	187,431	35,606	110,489
Non-budgetary authorities	-	-	-
Total authorities	187,431	35,606	110,489

Fiscal year 2010-2011 (in thousands of dollars)

	Total available for use for the year ended March 31, 2011*	Used during the quarter ended December 31, 2010	Year to date used at quarter-end
Vote 35 – Net Operating expenditures	158,748	24,999	89,934
Budgetary statutory authorities	16,017	4,004	12,013
Total Budgetary authorities	174,765	29,033	101,947
Non-budgetary authorities	-	-	-
Total authorities	174,765	29,033	101,947

More information is available in the attached table.

* Includes only Authorities available for use and granted by Parliament at the end of the third quarter.

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 December 31, 2011	Year to date used at quarter-end
Expenditures:
Personnel	125,525	26,620	81,579
Transportation and communications	7,526	2,143	4,409
Information	934	175	473
Professional and special services	49,592	9,424	23,013
Rentals	2,182	392	978
Repair and maintenance	2,813	995	1,449
Utilities, materials and supplies	1,192	315	782
Acquisition of machinery and equipment	4,652	299	618
Other subsidies and payments	6,757	(1,424)	1,816
Total gross budgetary expenditures	201,173	38,939	115,117
Less Revenues netted against expenditures:
Legal Services	13,742	3,333	4,628
Total net budgetary expenditures	187,431	35,606	110,489

Fiscal year 2010-2011 (In thousands of dollars)

	Planned expenditures for the year ended March 31, 2011*	Expended during the quarter ended December 31, 2010	Year to date used at quarter-end
Expenditures:
Personnel	118,793	22,998	72,768
Transportation and communications	6,889	1,592	3,975
Information	858	223	538
Professional and special services	45,647	5,762	22,471
Rentals	2,034	624	770
Repair and maintenance	1,832	39	73
Utilities, materials and supplies	1,091	310	694
Acquisition of machinery and equipment	2,758	389	676
Other subsidies and payments	6,205	(36)	3,388
Total gross budgetary expenditures	186,107	31,901	105,353
Less Revenues netted against expenditures:
Legal Services	11,342	2,868	3,406
Total net budgetary expenditures	174,765	29,033	101,947

* Includes only Authorities available for use and granted by Parliament at the end of the third quarter.