Quarterly Financial Report - For the period ending September 30, 2020

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

1. Introduction

This quarterly financial report (QFR) 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. The report should be read in conjunction with the Main Estimates for 2020-21. The quarterly report has not been subject to an external audit or review.

1.1 Mandate

The Minister of Public Safety and Emergency Preparedness is the minister responsible for the Royal Canadian Mounted Police (RCMP). The responsibilities of the RCMP are set out in section 18 of the Royal Canadian Mounted Police Act. The RCMP's mandate is multi-faceted, it includes preventing and investigating crime; maintaining peace and order; enforcing laws; contributing to national security; ensuring safety of state officials, visiting dignitaries and foreign missions; and providing vital operational support services to other police and law enforcement agencies within Canada and abroad.

Further information on the mandate, roles, responsibilities and programs of the RCMP can be found in the Part II of the Main Estimates.

1.2 Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the RCMP's spending authorities granted by Parliament and those used by the department consistent with the Main Estimates and Supplementary Estimates "A". 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 money 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.

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

2. Highlights of the fiscal quarter and fiscal year-to-date (YTD) results

For the period ending September 30, 2020, the RCMP had $3,521.8 million in total authorities available for use, which represents a decrease of $138.4 million or (4%) when compared at the same quarter in the previous year. The RCMP's authorities have decreased in the Operating (Vote 1), the Capital (Vote 5) and within Statutory authorities totalling $201.5 million. These decreases are offset by an increase of $63.1 million in Grant and Contributions (Vote 10).

The RCMP's expenditures were $1,866.9 million at the end of the second quarter of the year, representing a decrease of $68.3 million or 4% from the same period in the previous year. Decreases in Operating and Capital expenditures totalled $153.4 million offset by an increase of $85.1 million in Grants and Contribution as well as Statutory expenditures, as shown in Table 1.

Table 1: Summary of second quarter and fiscal year-to-date (in thousands of dollars)Table 1 note 1
Authorities 2020-21 Authorities as at September 30, 2020 2019-20 Authorities as at September 30, 2019 Variance in authorities % Year-to-date expenditures as at September 30, 2020 Year-to-date expenditures as at September 30, 2019 Variance in expenditures %
Vote 1- Net Operating expenditures 2,478,055 2,599,580 (121,525) −5% 1,369,386 1,520,082 (150,696) −10%
Vote 5 - Capital expenditures 224,419 302,267 (77,848) −26% 65,590 68,302 (2,712) −4%
Vote 10 - Grants and contributions 349,604 286,473 63,131 22% 203,917 137,400 66,517 48%
Budgetary statutory authorities 469,700 471,876 (2,176) 0% 227,999 209,449 18,550 9%
Total authorities 3,521,778 3,660,196 (138,418) −4% 1,866,892 1,935,233 (68,341) −4%

Table 1 note

Table 1 note 1

Totals may not add due to rounding.

Return to table 1 note 1 referrer

2.1 Statement of authorities

Comparison of total budgetary authorities as of September 30, 2019 and September 30, 2020 (in thousands of dollars)

A decrease of $138.4 million in the authorities available for use is due to the reduced supply of the Main Estimates. The COVID-19 pandemic limited sessions in the Spring for Parliament to study supply and the Standing Orders of the House of Commons were amended to extend the study period into the Fall. The RCMP is expected to receive full supply for the 2020-21 Main Estimates in December 2020.

Table 2: Cumulative variance in authorities available for use in 2020-21 in comparison to 2019-20Table 2 note 2
Based on the end of the second quarter (September) (in thousands of dollars) Total authorities available for use Year over year variance
2020-21 2019-20 Authorities Percentage
Gross Operating expenditures 4,122,137 4,379,279 (257,142) −6%
Less: Vote Netted Revenues 1,644,082 1,779,699 (135,617) −8%
Vote 1 - Net Operating expenditures 2,478,055 2,599,580 (121,525) −5%
Vote 5 - Capital expenditures 224,419 302,267 (77,848) −26%
Vote 10 - Grants and contributions 349,604 286,473 63,131 22%
Pensions and other employee benefits - Members of the Force 373,034 398,283 (25,249) −6%
Contributions to employee benefit plans (public servants) 82,252 61,214 21,038 34%
Pensions under the Royal Canadian Mounted Police Pension Continuation Act 6,750 6,750 - 0%
Proceeds from the Disposal of Crown Assets under the Surplus Crown Assets Act 7,663 5,629 2,034 36%
Statutory Authorities 469,700 471,876 (2,176) 0%
Total budgetary authorities 3,521,778 3,660,196 (138,418) −4%
Table 2 notes
Table 2 note 2

Totals may not add due to rounding.

Return to table 2 note 2 referrer

For more information on the authority changes that affect the RCMP, we would direct the reader to the RCMP's 2020-21 Main Estimates.

2.1.1 Variance to the Net Operating Vote

The Net Operating Vote is $121.5 million (or 5%) lower than the same period last year. The decrease is largely attributed to the RCMP receiving 11/12th of the approved Main Estimates in 2020-21, in comparison to full supply in 2019-20. Should full supply be approved by the Government, the RCMP will receive an additional $217.6 million, representing an increase in year-over-year authorities.

2.1.2 Variance to the Capital Vote

The Capital Vote is $77.8 million (or 26%) lower than the same period last year. This decrease is largely attributed to the RCMP receiving 9/12th of the approved Main Estimates in 2020-21, in comparison to full supply in 2019-20. Should full supply be approved by the Government, the RCMP will receive an additional $62.3 million, which is in line with the 2019-20 second quarter authorities.

2.1.3 Variance to the Grants and Contributions Vote

The Grants and Contributions Vote is $63.1 million (or 22%) higher than the same period last year. The increase is the result of RCMP receiving $203.1 million in support of the Grant to compensate members of the RCMP for injuries received in the performance of duty received in 2020-21 Supplementary Estimates A, offset by the RCMP receiving 9/12th of the approved Main Estimates in 2020-21.

2.2 Statement of departmental budgetary expenditures by standard object

Net Expenditures by standard object at the end of the second quarter 2020-21 were $68.3 million (or 4%) lower than the previous year. This variance is the result of increased gross budgetary expenditures of $3.3M largely the result timing of expenditures incurred under the Grant to Compensate Members Injured in the Performance of Their Duties, as well as the timing of Payments in Lieu of Taxes. These costs were offset by additional vote netted revenues of $71.7 million (or 13%) when compared to the previous year. The changes in revenue are mainly driven by timing differences in Vote Netted Revenues collected for Contract Policing activities. A detailed review by standard object emphasizes some significant variances described below and displayed in Annex B.

Table 3: Expended by standard object at quarter end (in thousands of dollars)Table 3 note 3 Table 3 note 4
Standard objects 2020-21 2019-20 Variance %
Personnel 1,691,039 1,684,305 6,734 0%
Transportation and communications 74,433 123,249 (48,816) −40%
Information 1,298 1,149 149 13%
Professional and special services 203,363 232,289 (28,926) −12%
Rentals 49,088 49,766 (678) −1%
Purchased Repair and maintenance 34,225 42,352 (8,127) −19%
Utilities, materials and supplies 62,026 72,321 (10,295) −14%
Acquisition of land, buildings and works 24,044 27,876 (3,832) −14%
Acquisition of machinery and equipment 78,563 72,916 5,647 8%
Transfer payments 206,540 140,351 66,189 47%
Public debt charges 327 352 (25) −7%
Other subsidies and payments 63,370 38,043 25,327 67%
Total gross budgetary expenditures 2,488,316 2,484,969 3,347 0%
Less: Revenues and other reductions 621,424 549,736 71,688 13%
Total net budgetary expenditures 1,866,892 1,935,233 (68,341) −4%
Table 3 notes
Table 3 note 3

Totals may not add due to rounding

Return to table 3 note 3 referrer

Table 3 note 4

The gross budgetary expenditures represent all RCMP programs and are not directly correlated to revenue trends as revenues are primarily related to the RCMP contract policing activities.

Return to table 3 note 4 referrer

2.2.1 Variance by Transportation and Communications

Transportation and communications expenditures have decreased by $48.8 million (or 40%) over the same period last year. This decrease is mainly attributed to the temporary reduction in travel and relocations, in addition to delayed training as measures were implemented to contain the spread of COVID-19.

2.2.2 Variance by Information

Information increased by $0.1 million (or 13%) over the same period last year. This was mainly related to the RCMP providing firearm license holders information regarding the announcement by the Government of Canada to banning models and variants of assault-style firearms.

2.2.3 Variance by Professional and Special Services

Professional and special services decreased by $28.9 million (or 12%) when compared to 2019-20. The decrease is primarily due to the timing of health costs incurred in comparison to the same period last year. Additionally, COVID-19 has delayed certain activities across programs leading to reduced expenditures in the second quarter such as external training.

2.2.4 Variance by Purchased Repair and Maintenance

Purchase Repair and Maintenance decreased by $8.1 million (or 19%) compared to 2019-20. This is mainly attributed to lower lifecycle expenditures for buildings within the Contract Policing program in comparison to 2019-20. In addition, there were lower vehicle repairs in comparison to the previous fiscal year.

2.2.5 Variance by Utilities

Utilities expenditures have decreased by $10.3 million (or 14%) compared to 2019-20. The decrease in expenditures is primarily due to lower fuel prices and reduced consumption as a result of slower operational tempo in comparison to the previous years. Additionally, there are reduced building expenses as many employees are working remotely during COVID-19, and reduced food expenditures at the RCMP's training facilities while training has been deferred.

2.2.6 Variance by Acquisition of land, buildings and works

Acquisitions of Land, Buildings and Works expenditures have decreased by $3.8 million (or 14%) when compared to the same period in 2019-20. This decrease primarily relates to projects completed in the first quarter of 2019-20 that did not occur in the same period in this fiscal year such as the indoor range and integrated training centre in the RCMP's training academy (DEPOT), as well as the construction of the National Operations Centre.

2.2.7 Variance by Transfer payments

Transfer payments have increased by $66.2 million (or 47%) when compared to 2019-20. This increase is primarily due to the timing of Veterans' Affairs Canada charging the RCMP for expenses incurred under the Grant to Compensate Members Injured in the Performance of Their Duties.

2.2.8 Variance by Other subsidies and payments

Other subsidies and payments have increased by $25.3 million (or 67%) when compared to 2019-20. This increase is primarily due to the timing of Payment in Lieu of Taxes (PILT) in comparison to the previous year and items being cleared from suspense accounts into other standard objects, as well an increase in claim payments related to the Merlo Davidson Class Action Settlement.

2.2.9 Variance by Revenues and other reductions

Vote netted revenues collected in the second quarter of 2020-21 increased by $71.7 million (or 13%) compared to the same period last year. The increase is related primarily to timing differences in revenue collections related to Contract Policing. The RCMP's Canadian Police College revenues have decreased due to the current environment of physical distancing and limited group settings, impacting the number of courses which can be offered.

3. Risks and uncertainties

The Departmental QFR reflects the results of the current fiscal period in relation to Interim Supply of the Main Estimates, Operational Budget and Capital Budget Carry Forwards and the Supplementary Estimates "A".

The RCMP is funded through annual appropriations and are, therefore, impacted by any changes in funding approved through Parliament. In addition, it receives a significant portion of funding through vote netted revenue (VNR) from the provision of policing services to provinces, territories, municipalities and first nations communities, as well as from cost sharing agreements with provinces and territories for the provision of DNA analysis by the RCMP. The RCMP also receives VNR authorities to bill Parliamentary Protective Service (PPS) for the provision of security services throughout the Parliamentary precinct and the grounds of Parliament Hill.

On October 6, 2016, the RCMP announced that a settlement agreement had been reached between the RCMP and the plaintiffs in the Merlo and Davidson lawsuits filed on behalf of current and former female regular members, civilian members and public service employees. The settlement agreement was approved by the Federal Court and includes an independent claims process with compensation for women working, or having worked, at the RCMP who experienced harassment, bullying or discrimination based on their gender or sexual orientation during their employment from September 16, 1974 until May 30, 2017. The assessment of claims is the responsibility of an Independent Assessor appointed by the Federal Court. The window in which class members could file claims ran from August 12, 2017 to May 22, 2018. According to statistics posted on the Independent Assessor's website, a total of 3,086 claims were filed. All claims have now been assessed and compensation awards have been paid to successful claimants in accordance with the terms of the settlement.

In recent years, the RCMP's reference levels have been constrained by government-wide spending reduction exercises which have resulted in significant financial pressures. In order to assess the financial integrity issues faced by the RCMP and serve as the basis for longer term strategic recommendations to the Minister of Public Safety and Emergency Preparedness, a comprehensive resourcing review was undertaken, and a final report was completed in May 2017. The review findings have been assessed and the RCMP returned to Treasury Board with a fulsome Departmental Review in the fall of 2018 that included short, medium and long-term proposals to address its ongoing resourcing issues. Since then, announcements in Budget 2019 and the Economic and Fiscal Update 2020 identified funding to support and enhance RCMP operations and will help address key resourcing issues.

4. Significant changes in relation to operations, personnel and programs

4.1 Operations

In comparison to the end of the second quarter of 2019-20, certain activities continue to be delayed as a result of the impacts of COVID-19. The RCMP continues to assess the evolving circumstances of COVID-19 and is adjusting its operations accordingly.

4.2 Personnel

Subsequent to the end of the second quarter, there have not been any changes to the senior ranks of the department.

4.3 Programs

There has been no significant change in relation to programs in the second quarter of 2020-21.

Approved by senior officials

Approved by:

Original signed by

Brenda Lucki
Commissioner

Original signed by

Jen O'Donoughue
Chief Financial Officer

Ottawa, Canada

Date: November 20, 2020

Annex A: Statement of authorities (unaudited)

Fiscal year 2020-2021 (in thousands of dollars)
Total available for use for the year ending March 31, 2021Table 4 note 5 Used during the quarter ended September 30, 2020 Year to date used at quarter-end
Gross Operating expenditures 4,122,137 1,040,427 1,990,810
Less: Vote Netted Revenues 1,644,082 464,228 621,424
Vote 1 - Net Operating expenditures 2,478,055 576,199 1,369,386
Vote 5 - Capital expenditures 224,419 50,053 65,590
Vote 10 - Grants and contributions 349,604 136,310 203,917
Pensions and other employee benefits - Members of the Force 373,034 71,899 178,307
Contributions to employee benefit plans (public servants) 82,252 20,334 40,668
Pensions under the Royal Canadian Mounted Police Pension Continuation Act 6,750 1,290 2,624
Refunds of amounts credited to revenues in previous years 0 41 71
Proceeds from the Disposal of Crown Assets under the Surplus Crown Assets Act 7,663 6,227 6,329
Court Awards 0 0 0
Statutory Authorities 469,700 99,791 227,999
Total budgetary authorities 3,521,778 862,353 1,866,892

Table 4 notes

Table 4 note 5

Includes only Authorities available for use and granted by Parliament at quarter-end as well as a statutory authority for Proceeds from the Disposal of Crown Assets

Return to table 4 note 5 referrer

Fiscal year 2019-2020 (in thousands of dollars)
Total available for use for the year ending March 31, 2020Table 5 note 6 Used during the quarter ended September 30, 2019 Year to date used at quarter-end
Gross Operating expenditures 4,379,279 1,075,596 2,069,818
Less: Vote Netted Revenues 1,779,699 279,771 549,736
Vote 1 - Net Operating expenditures 2,599,580 795,825 1,520,082
Vote 5 - Capital expenditures 302,267 42,662 68,302
Vote 10 - Grants and contributions 286,473 69,629 137,400
Pensions and other employee benefits - Members of the Force 398,283 80,315 172,689
Contributions to employee benefit plans (public servants) 61,214 14,930 29,860
Pensions under the Royal Canadian Mounted Police Pension Continuation Act 6,750 1,507 2,951
Refunds of amounts credited to revenues in previous years 0 22 152
Proceeds from the Disposal of Crown Assets under the Surplus Crown Assets Act 5,629 3,618 3,797
Court Awards 0 0 0
Statutory Authorities 471,876 100,392 209,449
Total budgetary authorities 3,660,196 1,008,508 1,935,233

Table 5 notes

Table 5 note 6

Includes only Authorities available for use and granted by Parliament at quarter-end as well as a statutory authority for Proceeds from the Disposal of Crown Assets

Return to table 5 note 6 referrer

Annex B: Budgetary expenditures by standard object (unaudited)

Fiscal year 2020-2021 (in thousands of dollars)
Planned expenditures for the year ending March 31, 2021 Expended during the quarter ended September 30, 2020 Year to date used at quarter-end
Expenditures:
Personnel 3,270,851 852,612 1,691,039
Transportation and communications 204,159 34,084 74,433
Information 3,799 467 1,298
Professional and special services 478,004 131,226 203,363
Rentals 136,564 31,496 49,088
Repair and maintenance 96,812 21,770 34,225
Utilities, materials and supplies 144,606 35,315 62,026
Acquisition of land, buildings and works 81,899 18,920 24,044
Acquisition of machinery and equipment 248,590 48,245 78,563
Transfer payments 356,354 137,599 206,540
Public debt charges 234 163 327
Other subsidies and payments 143,988 14,684 63,370
Total gross budgetary expenditures 5,165,860 1,326,581 2,488,316
Less Revenues netted against expenditures:
Vote Netted Revenues 1,644,082 464,228 621,424
Total Revenues netted against expenditures: 1,644,082 464,228 621,424
Total net budgetary expenditures 3,521,778 862,353 1,866,892
Fiscal year 2019-2020
Planned expenditures for the year ending March 31, 2020 Expended during the quarter ended September 30, 2019 Year to date used at quarter-end
Expenditures:
Personnel 3,498,548 863,786 1,684,305
Transportation and communications 223,634 55,789 123,249
Information 4,801 680 1,149
Professional and special services 506,739 121,597 232,289
Rentals 141,330 27,294 49,766
Repair and maintenance 107,398 26,382 42,352
Utilities, materials and supplies 153,834 38,816 72,321
Acquisition of land, buildings and works 103,927 19,750 27,876
Acquisition of machinery and equipment 280,247 42,883 72,916
Transfer payments 293,224 71,136 140,351
Public debt charges 352 176 352
Other subsidies and payments 125,861 19,990 38,043
Total gross budgetary expenditures 5,439,895 1,288,279 2,484,969
Less Revenues netted against expenditures:
Vote Netted Revenues 1,779,699 279,771 549,736
Total Revenues netted against expenditures: 1,779,699 279,771 549,736
Total net budgetary expenditures 3,660,196 1,008,508 1,935,233
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