Quarterly Financial Report for the quarter ended September 30, 2012

Office of the Director of Public Prosecutions

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

A. 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 as well as Canada’s Economic Action Plan 2012 (Budget 2012).

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; Corporate Counsel Office; 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.

B. 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 the operating budget carry forward for the 2012-2013 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.

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year. Budget 2012 was tabled in Parliament on March 29, after the tabling of the Main Estimates on February 28, 2012. As a result the measures announced in the Budget 2012 could not be reflected in the 2012-13 Main Estimates.

In fiscal year 2012-2013, frozen allotments will be established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012. In future years, the changes to departmental authorities will be implemented through the Annual Reference Level Update, as approved by Treasury Board, and reflected in the subsequent Main Estimates tabled in Parliament.

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.

C. Highlights of fiscal quarter and fiscal year to date results

1. Highlights of net spending authorities

The accompanying Statement of Authorities (see Appendix A) includes all authorities granted at quarter end through Main Estimates and the operating budget carry forward and those used by the ODPP for this fiscal year and the previous fiscal year.

The net authorities for 2011-2012 and 2012-2013 are comprised of the Main Estimates and the operating budget carry forward. The ODDP’s total authorities increased by $2.8 million as of September 30, 2012 compared to those of the previous year for the same period, from $178.4 million to $181.2 million.

The following Table 1 highlights the significant items that contributed to the net increase in the net spending authorities between 2012-2013 and 2011-2012 by standard objects.

Table 1: Net Spending Authorities based on Main Estimates

	(in thousands of dollars)
Total net budgetary authorities	181,154	178,431	2,723
	2012-2013	2011-2012	Variance
Personnel	125,552	124,683	869
Transportation and communications	7,512	7,313	199
Information	947	921	26
Professional and special services	47,613	46,588	1,025
Rentals	1,554	1,482	72
Repair and maintenance	1,577	1,504	73
Utilities, materials and supplies	1,045	1,013	32
Acquisition of machinery and equipment	2,677	2,562	115
Other subsidies and payments	6,419	6,107	312
Total gross budgetary authorities	194,896	192,173	2,723
Less: Revenues netted against expenditures	13,742	13,742	-

Significant changes to authorities

The overall increase of $2.8 million is mainly attributable to: funding for the hiring of additional prosecutors in Nunavut, funding to bolster the combat against the laundering of proceeds of crime and the financing of terrorist activities, funding to support the appointment of Crown Witness Coordinators under the Victims of Crime Initiative, and a higher operating budget carry forward amount in 2012-2013.

2. Highlights of budgetary expenditures

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 September 30, 2012, the total expenditures for the year have decreased by 5% compared to the same period last year. The total expenditures for the same quarter ending September 30, 2012 correspond to 39% of the net spending authorities in 2012-2013 and 42% in 2011-2012.

The following Table 2 compares the expenditures by standard object for the quarter ending September 30, 2012 and to September 30, 2011.

Table 2: Expenditures during the quarter ended September 30:

	(in thousands of dollars)
Total net budgetary expenditures	71,173	74,884	(3,711)
	2012-2013	2011-2012	Variance
Personnel	54,347	54,960	(613)
Transportation and communications	2,480	2,265	215
Information	304	298	6
Professional and special services	13,929	13,589	340
Rentals	330	586	(256)
Repair and maintenance	70	454	(384)
Utilities, materials and supplies	503	467	36
Acquisition of machinery and equipment	234	319	(85)
Other subsidies and payments	381	3,241	(2,860)
Total gross budgetary expenditures	72,578	76,179	(3,601)
Less: Revenues netted against expenditures	1,405	1,295	110

Significant changes to the expenditures

The decrease in expenditures of 5% between 2012-2013 and 2011-2012 is mostly attributable to the timing of processing payments.

D. Risks and Uncertainties

1. Dependence on Vote Netted Revenue

To fulfill its mandate, the ODPP 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.

To minimize the risk of not recovering for prosecution services, the ODPP is entering into Memoranda of Understanding (agreements) with departments and agencies. The Memoranda includes clauses governing roles and responsibilities, workload projections, and invoicing and payment.

2. Workload

The ODPP’s workload depends on the number of cases referred to it for prosecution by the police (whether federal, provincial or municipal) and other investigative agencies 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.

To help mitigate the risks and uncertainties, the ODPP is meeting with its concerned agencies, investigative agencies and other stakeholders to better foresee and plan.

3. 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, the ODPP reallocated $3 million from operations & maintenance to salary to cover anticipated expenditures.

To help mitigate risks and uncertainties, the ODPP also introduced new internal procedures governing all human resources actions that involve a salary cost.

E. Significant changes in relations to operations, personnel and programs

Budget 2010 (Strategic Review)

As a result of Budget 2010, the ODPP was subject to the Strategic Review in 2011-2012. Reallocation proposals resulting from the review began in 2012-2013 in the order of $0.5 million from the rationalization of some of its operations in the North. Savings will be from the cost of Crown housing, isolated post allowances and benefits, and travel expenses.

F. Budget 2012 Implementation

This section provides an overview of the savings measures announced in Budget 2012 that will be implemented in order to refocus government and programs; make it easier for Canadians and business to deal with their government; and modernize and reduce the back office.

The ODPP will achieve Budget 2012 savings of $8.4 million starting in 2012-2013 through efficiency measures, scaling back where the need is reduced and transforming how it works internally.

There will be a reduction of funding associated with the Federal Policing Initiative (FPI) in the amount of $7.4 million. As no new federal investigators will be hired, the ODPP is able to handle the current volume of FPI related prosecutions. This measure will not affect ODPP staff levels.

The ODPP will reduce its costs associated with the use of consultants by $0.8 million, and generate savings of $0.2 million annually by rationalizing the number of print and electronic legal research services to which it subscribes. This measure will not affect ODPP staff levels.

There are no financial risks or uncertainties related to these savings.

Approval by Senior Officials

Approved by:

________________________
Brian Saunders
Director of Public Prosecutions

_______________________
Lucie Bourcier CPA, CGA
Chief Financial Officer

Ottawa, Canada

________________________
Date

Appendix A

Statement of Authorities (unaudited)

Fiscal year 2012-2013
(in thousands of dollars)

	Total available for use for the year ending March 31, 2013* **	Used during the quarter ended September 30, 2012	Year to date used at quarter-end
Total authorities	181,154	38,439	71,173
Vote 35 – Program expenditures	162,364	33,741	61,778
Budgetary statutory authorities	18,790	4,698	9,395
Total Budgetary authorities	181,154	38,439	71,173
Non-budgetary authorities	-	-	-

Fiscal year 2011-2012
(in thousands of dollars)

	Total available for use for the year ended March 31, 2012 *	Used during the quarter ended September 30, 2011	Year to date used at quarter-end
Total authorities	178,431	38,487	74,884
Vote 35 – Program expenditures	160,094	33,903	65,716
Budgetary statutory authorities	18,337	4,584	9,168
Total Budgetary authorities	178,431	38,487	74,884
Non-budgetary authorities	-	-	-

Appendix B

Departmental budgetary expenditures by Standard Object (unaudited)

Fiscal year 2012-2013
(In thousands of dollars)

	Planned expenditures for the year ending March 31, 2013*	Expended during the quarter ended September 30, 2012	Year to date used at quarter-end
Expenditures:
Total net budgetary expenditures	181,154	38,439	71,173
Personnel	125,552	27,591	54,347
Transportation and communications	7,512	1,595	2,480
Information	947	178	304
Professional and special services	47,613	9,375	13,929
Rentals	1,554	180	330
Repair and maintenance	1,577	33	70
Utilities, materials and supplies	1,045	312	503
Acquisition of machinery and equipment	2,677	202	234
Other subsidies and payments	6,419	378	381
Total gross budgetary expenditures	194,896	39,844	72,578
Less Revenues netted against expenditures:
Legal Services	13,742	1,405	1,405

Fiscal year 2011-2012
(In thousands of dollars)

	Planned expenditures for the year ended March 31, 2012*	Expended during the quarter ended September 30, 2011	Year to date used at quarter-end
Expenditures:
Total net budgetary expenditures	178,431	38,487	74,884
Personnel	124,683	28,896	54,960
Transportation and communications	7,313	1,406	2,265
Information	921	166	298
Professional and special services	46,588	4,672	13,589
Rentals	1,482	349	586
Repair and maintenance	1,504	432	454
Utilities, materials and supplies	1,013	336	467
Acquisition of machinery and equipment	2,562	259	319
Other subsidies and payments	6,107	3,266	3,241
Total gross budgetary expenditures	192,173	39,782	76,179
Less Revenues netted against expenditures:
Legal Services	13,742	1,295	1,295