Quarterly Financial Report for the quarter ended September 30, 2012

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Management Statement for the Quarter Ending September 30, 2012

1. Introduction

The Canadian Transportation Agency is an independent, quasi-judicial tribunal and economic regulator. It makes decisions and determinations on a wide range of matters involving air, rail and marine modes of transportation under the authority of Parliament, as set out in the Canada Transportation Act and other legislation.

Our mandate includes:

  • Economic regulation, to provide approvals, issue licences, permits and certificates of fitness, and make decisions on a wide range of matters involving federal air, rail and marine transportation.
  • Dispute resolution, to resolve complaints about federal transportation services, rates, fees and charges.
  • Accessibility, to ensure Canada’s national transportation system is accessible to all persons, particularly those with disabilities.

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

This quarterly financial report:

  • should be read in conjunction with the Main Estimates and the Supplementary Estimates, if applicable;
  • 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; and
  • has not been subject to an external audit or review.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Agency’s spending authorities granted by Parliament and those used by the Agency, consistent with the Main Estimates and Supplementary Estimates for 2012-2013. 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.

As part of the departmental performance reporting process, the Agency prepares its annual departmental financial statements on a full accrual basis in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector. However, the spending authorities voted by Parliament remain on an expenditure basis.

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

Graph 1 - Second quarter net budgetary authorities, text version available via the link below.

Graph 1 – Text Version: Second quarter net budgetary authorities and expenditures per fiscal year.

Statement of Authorities

The Canadian Transportation Agency’s total authorities available for use in 2012–13, $28.68 million, decreased by approximately $725,000 in comparison with the same quarter of 2011–12, as illustrated in the Statement of Authorities and in Table 1: Departmental Budgetary Expenditures by Standard Object. The primary reason for the change is related to the decrease in Vote 25 – Program expenditures.

Authorities available for use in Vote 25 – Program expenditures have decreased by a total of $643,000 in 2012-13. This decrease is mostly related to $1.0 million in reimbursement done by the Treasury Board Secretariat in 2011-12 for the payout of severance pay and termination benefits to some employees, partially offset by an increase of $373,000 in 2012-13 for the Operating Budget Carry forward.

Statement of Departmental Budgetary Expenditures by Standard Object

Compared to the previous fiscal year, the total gross budgetary expenditures recorded in the second quarter ending on September 30, 2012 decreased by 1.36 million, from 7.89 to 6.53 million dollars, as shown on the budgetary expenditures by standard object table.

This decrease can be explained primarily by the $1,238,000 decrease in personnel expenditures, from 7.01 million dollars in the second quarter of 2011-2012 to 5.78 million dollars for the same quarter in 2012-2013. This difference is primarily attributable to the payments made in 2011-2012 for the payout of severance pay and termination benefits to some employees. The difference in the year to date expenditure variance between the two fiscal years is mainly due to these payments.

3. Risks and Uncertainties

The Agency is primarily funded through voted parliamentary spending authorities and statutory authorities for operating expenditures. Delivering departmental programs and services may depend on several risk factors such as economic fluctuations, political climate, technological and scientific development, government priorities, and central agency or government-wide initiatives.

The Agency is a demand-driven organization with a mandate dependent upon fulfilling service expectations of Canadians with respect to transportation issues. Therefore, changes within the external environment, government policies and the legislative mandate related to transport have an impact on the Agency’s operating environment.

This Departmental Quarterly Financial Report reflects the results of the current fiscal period in relation to the Main Estimates and the Supplementary Estimates A.  These include the reimbursement of the payout of severance pay and termination benefits for some employees for the period between April 1 and July 31st 2012.  The agency is anticipating additional expenditures related to these payouts until the end of the fiscal year, and consequently would be reimbursed for those funds by Treasury Board Secretariat.

Budget 2010 announced that the operating budgets of departments would be frozen at their 2010-2011 levels for the fiscal years 2011-2012 and 2012-2013. Given that over 80 percent of the Agency’s budget is spent on its payroll, significant focus has been placed on careful budget and human resource management.  The Agency is also faced with the challenge of absorbing new mandates in several areas, including rail noise and vibration, mediation, and air price advertising.   The Agency continues to focus on key business, operating and human resource priorities, and included several measures to achieve greater efficiencies, reduce operating costs, and to manage our resources responsibly and effectively.

Management is reviewing various options to adjust to this constraint in funding and potential impacts on Agency activities. The following actions and mitigation strategies are being pursued or are being considered:

  • Proactive involvement in legislative/regulation change process;
  • Active monitoring of industry-related events and communications to gather intelligence on evolving trends in transportation and relevant policy developments;
  • Assessment of client satisfaction survey results to identify changes in expectations, identify areas of service delivery concerns and develop mitigation strategies;
  • Monitoring, gathering and sharing of intelligence on government’s policy and central agency directive changes (e.g. performance and financial reporting, shared services, human resources);
  • Proactive participation in shared services review led by Treasury Board Secretariat and Public Works and Government Services Canada;
  • Effective management of human and financial resources through implementation of the Agency’s HR Plan for the recruitment and retention of staff, and active vacancy management;
  • Reallocated resources to address capacity needs due to increased service demands and new mandates;
  • Actions to address and implement internal audit recommendations made by the Office of the Comptroller General

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

There have been no significant changes in relation to operations, personnel and programs over the last year.

Approval by Senior Officials

Approved by:

Geoffrey C. Hare
Chair and Chief Executive Officer

Linda Harrison
Chief Financial Officer

Gatineau, Canada
November 22, 2012

Statement of Authorities (unaudited)

Fiscal year 2012-2013 (in thousands of dollars)
  Total available for use for the year ending March 31, 2013Note 1Used during the quarter ended September 30, 2012Year to date used at quarter-end
Total authorities 28,683 6,525 12,962
Vote 25 – Program expenditures 25,199 5,654 11,220
Budgetary statutory authorities − Employee Benefit Plans 3,484 871 1,742
Fiscal year 2011-2012 (in thousands of dollars)
  Total available for use for the year ended March 31, 2012Note 2Used during the quarter ended September 30, 2011Year to date used at quarter-end
Total authorities 29,408 7,894 14,117
Vote 25 – Program expenditures 25,842 7,003 12,335
Budgetary statutory authorities − Employee Benefit Plans 3,566 891 1,782

Departmental budgetary expenditures by Standard Object (unaudited)

Fiscal year 2012-2013 (in thousands of dollars)
ExpendituresPlanned expenditures for the year ending  March 31, 2013Expended during the quarter ended September 30, 2012Year to date used  at quarter-end
Total net budgetary expenditures 28,683 6,525 12,962
Personnel 23,496 5,775 11,643
Transportation and communications 631 142 235
Information 301 69 87
Professional and special services 3,334 335 514
Rentals 214 111 239
Repair and maintenance 353 5 7
Utilities, materials and supplies 246 42 85
Acquisition of machinery and equipment 101 46 152
Other subsidies and payments 7 0 0
Fiscal year 2011-2012 (in thousands of dollars)
ExpendituresPlanned expenditures for the year ending March 31, 2012Expended during the quarter ended September 30, 2011Year to date used at quarter-end
Total net budgetary expenditures 29,408 7,894 14,117
Personnel 24,594 7,013 12,744
Transportation and communications 595 147 245
Information 274 62 71
Professional and special services 2,819 312 488
Rentals 140 58 93
Repair and maintenance 252 97 231
Utilities, materials and supplies 216 50 85
Acquisition of machinery and equipment 518 15 20
Other subsidies and payments 0 140 140
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