Quarterly Financial Report For the quarter ended September 30, 2014

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.

The Office of the Director of Public Prosecutions (ODPP) is an independent prosecution service mandated to prosecute criminal and regulatory offences under federal jurisdiction. Its sole strategic outcome is the prosecution of these offences in a manner that is independent, impartial and fair. The ODPP plays an integral role in the criminal justice system, promoting due process and working to safeguard the rights of all those who come into contact with the justice system.

The benefits to Canadians from the work carried out by the ODPP include:

• provision of timely and independent advice to federal investigative agencies and government departments on the criminal law implications of investigations and prosecutions;
• principled and independent decisions by prosecutors; and
• confidence in the administration of justice through professionally conducted prosecutions that result in judicial determinations on the merits of the evidence.

The ODPP has one strategic outcome and two program activities in addition to internal services:

• Strategic Outcome: Criminal and regulatory offences under federal law are prosecuted in an independent, impartial and fair manner.
• 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 Québec and New Brunswick, where the ODPP 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.
• Regulatory Offences and Economic Crime Prosecution Program: This program supports the protection of Canadian 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 1999, Competition 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.
• 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.

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. This quarterly report has been prepared using a 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.

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

Total Spending Authorities

At the end of the second quarter of 2014–2015, the ODPP had a total funding of $174,272 thousand available for use as detailed in Table 1 and Appendix A. This amount represents the 2014–2015 Main Estimates and the operating budget carry forward from last fiscal year. The increase of $4,882 thousand (or 3%) compared to total spending authorities at the same time in fiscal year 2013–2014 is mainly due to additional funding received for renewed collective agreements and an increase in revenues from the provision of prosecution services recovered from other government departments and agencies.

Total Expenditures

As indicated in Table 2, during the second quarter of 2014–2015, the ODPP spent $35,676 thousand compared to $45,103 thousand for the same period in 2013–2014, hence a decrease of $9,427 thousand (or 21%):

• $4,880 thousand in personnel costs due to a reduction of the payments for severance pay and for retroactive pay increases paid in 2013-2014;
• $5,101 thousand in other O&M costs due to a reduction of expenditures for the relocation of offices that occurred in 2013–2014 and due to timing of payments for the provision of prosecution services by crown agents; and
• $554 thousand in revenues due to the timing of invoices and recoveries from other government departments and agencies.

Total YTD

At the end of September 2014, the ODPP spent $77,073 thousand (or 44%) from its total authorities of $174,272 thousand as shown in Table 3. At the same period last year, the ODPP had spent 49% of its total authorities due to additional payments for severance pay and for retroactive pay increases.

Appendices A and B provide further details.

D. Risks and Uncertainties

The ODPP’s key corporate risks are identified and assessed through an annual update of the Corporate Risk Profile. This year, a number of key risks could have financial impacts should they materialize. Strategies have been put in place to mitigate them.

Funding is the highest priority for action and the contributing factors are:

• Treasury Board has imposed another two-year operating budget freeze requiring departments/agencies to cover salary increases from within budget. The ODPP is now at the limit of what it can absorb within its current budget. Measures are being taken to reduce costs so as to operate within its reference levels in 2014–2015.
• Our inability to recover all prosecution costs associated with regulatory prosecutions given that some departments refuse to pay on the basis that they did not ask for a service, have no funding for the work and no control over the investigations leading to a prosecution. In the above situations, the ODPP has no option but to absorb the non-recoverable costs.

To minimize the risk, the ODPP created committees to control spending and staffing actions. It is also working closely with investigative agencies to anticipate and plan for resource-intensive actions by police.

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

Budget 2010 (Strategic Review)

The ODPP achieved the reductions of Budget 2010 by:

• Rationalizing its activities in the North - $0.5 million;
• Eliminating the contingency reserve for the initiative “Integrated Market Enforcement Teams” - $1.5 million;
• Proposing the outsourcing of the collection of the outstanding federal fines - $1.6 million.

The only proposal that is still outstanding is the outsourcing of the fine recovery program. The ODPP proposed to have the collection of outstanding federal fines conducted by outside entities under ODPP supervision as a means of increasing the collection of fines and thereby increasing their deterrent effect as well as public confidence in the administration of justice. As a result, the ODPP’s reference levels were permanently reduced by $1.6 million which corresponded to the savings in salary costs and other FTE-related costs of the 19 FTEs dedicated to the program. The collection of the outstanding federal fines is expected to begin in the next fiscal year.

Budget 2012 Implementation

Budget 2012 announced saving measures 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 the reductions by:

• Reducing the funding associated with the Federal Policing Initiative ($7.4 million);
• Reducing its budget for consultants ($0.8 million); and
• Rationalizing the number of print and electronic legal research services to which it subscribes ($0.2 million).

None of the measures affected staff levels and none contain any financial risks for the fiscal year 2014–2015.

Accounting treatment – Salary payment

In April 2014, the Government of Canada implemented payment in arrears for salary payments. Previously, pay was calculated and processed two weeks in advance of the work being performed. Now employees will be paid for the period that concluded two weeks before the payment is issued. Hence, new employees will have to wait four weeks before receiving a salary payment.

The Government has decided not to recover from existing employees for the pay in advance. Instead a one-time transition payment to existing employees was processed in the pay system in May 2014 to bring the pay period to two weeks prior to the date the payment is received. Unlike new employees, existing employees did not have to wait four weeks to receive a salary payment when the transition to payment in arrears occurred. Existing employees continue to receive a salary payment every two weeks, therefore, they will not be entitled to a "regular" salary payment two weeks after they depart from the public service. Instead, a final payment will be made to cover the difference between their current salary at departure and the transition payment which was issued in May 2014.

Approval by Senior Officials

________________________
Brian Saunders
Director of Public Prosecutions


Ottawa, Canada


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Date

_______________________
Lucie Bourcier CPA, CGA
Chief Financial Officer

Appendix A

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

Appendix B