Quarterly Financial Report for the quarter ended December 31, 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 jurisdiction 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 budgetary authorities granted at quarter’s end through Main Estimates, Supplementary and transfers from Treasury Board for this fiscal year and the previous fiscal year.

The budgetary authorities decreased by $3.4 million as of December 31, 2012 compared to those of the previous year for the same period, from $187.4 million to $184.0 million.

The following Table 1 highlights the principal items that contributed to the net decrease by standard objects.

Table 1: Budgetary Authorities

	(in thousands of dollars)
	2012–2013	2011–2012	Variance
Total	183,986	187,431	(3,445)
Personnel	127,933	125,525	2,408
Transportation and communications	7,725	7,526	199
Information	969	934	35
Professional and special services	47,696	49,592	(1,896)
Rentals	1,554	2,182	(628)
Repair and maintenance	1,577	2,813	(1,236)
Utilities, materials and supplies	1,178	1,192	(14)
Acquisition of machinery and equipment	2,677	4,652	(1,975)
Other subsidies and payments	6,419	6,757	(338)
Total gross budgetary authorities	197,728	201,173	(3,445)
Less: Revenues netted against expenditures	13,742	13,742	-

Significant changes to budgetary authorities

The overall decrease of $3.4 million is mainly attributable to: a decrease in acquisitions and rentals due to a reduction in funding for the relocation of offices; and a decrease in professional services as a result of the government review exercises. These decreases were offset by an increase in personnel related to additional funding for the hiring of additional prosecutors in Nunavut, and for conducting prosecutions for offences subject to the Mandatory Minimum Penalties.

2. Highlights of budgetary expenditures

Appendix B sets out the ODPP budgetary expenditures by standard object for both 2011–2012 and 2012–2013. The expenditures shown are the planned expenditures for the fiscal year, those expended during the quarter and the year-to-date used at quarter-end.

As of December 31, 2012, the total expenditures represent 60% of the budgetary authorities. They are 0.6% lower compared to the same period last year.

The following Table 2 compares the year-to-date expenditures by standard objects for the quarter ended December 31, 2012 and December 31, 2011.

Table 2: Year-to-date expenditures for the quarter ended December 31:

	(in thousands of dollars)
	2012–2013	2011–2012	Variance
Total	109,831	110,489	(658)
Personnel	85,368	81,579	3,789
Transportation and communications	4,192	4,409	(217)
Information	517	473	44
Professional and special services	24,131	23,013	1,118
Rentals	901	978	(77)
Repair and maintenance	125	1,449	(1,324)
Utilities, materials and supplies	931	782	149
Acquisition of machinery and equipment	438	618	(180)
Other subsidies and payments	1,012	1,816	(804)
Total gross budgetary expenditures	117,615	115,117	2,498
Less: Revenues netted against expenditures	7,784	4,628	3,156

Significant changes to the expenditures

In comparison to the same period last year, the decrease of 0.6% in year-to-date expenditures is mostly attributable to the reduction in budgetary authorities and timing of payments.

The increase in revenue collection for this quarter compared to the same period last year is due to process improvement of the cost recoveries activities.

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 forecast 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 achieved Budget 2012 savings of $8.4 million starting in 2012–2013 by: reducing the funding associated with the Federal Policing Initiative (FPI) in the amount of $7.4 million; reducing its budget for consultants by $0.8 million; and rationalizing the number of print and electronic legal research services to which it subscribes by $0.2 million.

None of the measures affected staff levels and none contain any financial risks or uncertainties.

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 December 31, 2012	Year to date used at quarter-end
Total authorities	183,986	38,658	109,831
Vote 35 – Program expenditures	165,196	33,960	95,738
Budgetary statutory authorities	18,790	4,698	14,093
Total Budgetary authorities	183,986	38,658	109,831
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 December 31, 2011	Year to date used at quarter-end
Total authorities	187,431	35,606	110,489
Vote 35 – Program 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	-	-	-

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 December 31, 2012	Year to date used at quarter-end
Total net budgetary expenditures	183,986	38,658	109,831
Expenditures:
Personnel	127,933	31,021	85,368
Transportation and communications	7,725	1,712	4,192
Information	969	213	517
Professional and special services	47,696	10,201	24,131
Rentals	1,554	571	901
Repair and maintenance	1,577	55	125
Utilities, materials and supplies	1,178	428	931
Acquisition of machinery and equipment	2,677	204	438
Other subsidies and payments	6,419	631	1,012
Total gross budgetary expenditures	197,728	45,036	117,615
Less Revenues netted against expenditures:
Legal Services	13,742	6,378	7,784

Fiscal year 2011–2012
(In thousands of dollars)

	Planned expenditures for the year ended March 31, 2012*	Expended during the quarter ended December 31, 2011	Year to date used at quarter-end
Total net budgetary expenditures	187,431	35,606	110,489
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