Quarterly Financial Report for the quarter ended September 30, 2014
1. Introduction
This quarterly financial 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 Treasury Board under the Treasury Board Accounting Standard (TBAS 1.3). It should be read in conjunction with the Main Estimates, Supplementary Estimates for the current year.
The quarterly report has not been subject to an external audit or review.
1.1 Canadian Transportation Agency Mandate
The Canadian Transportation Agency is an independent, quasi-judicial tribunal and economic regulator. It makes decisions and determinations on a wide range of matters within the federal transportation system 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.
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 Agency’s spending authorities granted by Parliament and those used by the Agency, consistent with the Main Estimates and Supplementary Estimates for 2014-2015. 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 monies 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
Details: Graph 1 – Second quarter net budgetary authorities and expenditures per fiscal year
The figure illustrates the Agency’s net budgetary authorities and expenditures for the quarter ending September 30, for fiscal years 2013-2014 and 2014-2015 where budgetary authorities and expenditures, in millions of dollars, is shown on the vertical axis and time period, in fiscal years, is shown on the horizontal axis.
Time period : 2013-2014
Net budgetary authorities : 29.63 million dollars
Expenditures for the quarter ending September 30 : 6.99 million dollars
Time period : 2014-2015
Net budgetary authorities : 28.86 million dollars
Expenditures for the quarter ending September 30 : 6.44 million dollars
2.1 Statement of Authorities
The Canadian Transportation Agency’s total authorities available for use in 2014-2015, totalling $28,858,288, decreased by $773,688 compared to the same period in 2013-2014, as illustrated in the Statement of Authorities and in the Departmental Budgetary Expenditures by Standard Object.
This decrease is mostly related to two factors. The first factor is a decrease in reimbursement made by Treasury Board Secretariat of expenditures related to the payout of severance pay and termination benefits. The second factor relates to a decrease in the budgetary statutory authorities related to employee benefit plans. The rate related to employee benefit plans decreased from 17.4 percent in 2013-2014 to 16.5 percent in 2014-2015.
2.2 Statement of Departmental Budgetary Expenditures by Standard Object
Compared to the previous year, total budgetary expenditures recorded in the second quarter decreased by $549,154, from $6,992,761 to $6,443,607, as illustrated in the budgetary expenditures by Standard Object.
Expenditures related to personnel decreased by $691,166; this difference is mainly attributable to a decrease in expenditures related to payouts for severance pay, termination benefits, and retroactive salary. In 2014-2015 and in future years, there will be a significant decrease in payouts for severance pay and termination benefits, as these payments have largely been made in fiscal years 2012-2013 and 2013-2014.
Non-salary expenditures increased by $142,012; this difference is primarily attributable to the Professional and Special Services category. This is mainly due to investments made for the development of a new shared case management system. With respect to other budgetary expenditures by Standard Object, we anticipated overall expenditures similar to those of the previous fiscal year. Any difference is primarily attributable to the period in which the purchases were settled.
Finally, the amount of year-to-date use at quarter end in Other subsidies and payments totaling $702,829 is largely due to a one-time transition payment for implementing salary payment in arrears by the Government of Canada.
3. Risks and Uncertainties
In 2014-2015, the Agency faces a number of challenges that will put pressure on its budget resources. For the next two years, the Agency will be required to absorb any increases in collective agreement payments without any additional funding from the centre. In addition, the Agency launched its new 2014-2017 Strategic Plan, which comprises a number of major projects to transform and implement increased efficiencies, including a new shared case management system, which will require significant investment.
At the corporate level, the Agency must deal with challenges and risks related to reengineering business processes to integrate information systems and transitioning to new shared services arrangements. During this time of change, the Agency will ensure business continuity and maintain stable operations, while capitalizing on the benefits of new technologies and more effective and efficient processes.
The Agency continues to explore and implement initiatives to leverage technology to increase its efficiency and reduce the administrative costs associated with its back-office functions, such as human resources, finance and records management. Going forward, however, there is uncertainty about the timing of the consolidation of back-office systems, including the cost to be absorbed by departments and agencies to support its implementation. As a result, the Agency continues to monitor its risk exposure and participate in Government of Canada community meetings to stay abreast of any developments in this area.
The Agency also continues to focus on enhancing succession planning and knowledge transfer. Taking its workforce profile information into consideration, the Agency is identifying workforce management priorities that focus on current and future business needs and will need to continue to design human resources strategies to address them efficiently and effectively.
In recent months, the Agency was asked to take on additional mandates related to transportation legislation, both of which have been absorbed without additional funding. The Fair Rail Freight Service Act (Bill C-52) amended the Canada Transportation Act to allow shippers to request arbitration if no agreement can be reached with a railway company on service levels. Moreover, the Agency was given the authority to decide on objections from the railways.
In addition, the Fair Rail for Grain Farmers Act (Bill C-30) gives the Agency the authority to extend the interswitching distance limits beyond what is currently in legislation, order railway companies to compensate any shippers adversely affected for any expenses that they incurred as a result of the railway company's failure to fulfill its service obligations, and apply administrative monetary penalties that will be used to enforce railway company compliance with arbitration decisions.
As the Agency's budget allocation has remained essentially flat for the past eight years, these ongoing challenges bring with them the risk that the Agency may not have sufficient funds to ensure that high-priority and ongoing Agency objectives are met on time.
As a mitigation strategy , the Agency will continue to implement stronger linkages between planning and priority-setting and related financial decision-making to realign its resources to manage these challenges and meet its regulatory responsibilities. In addition, the Agency will continue to monitor and report on these initiatives to enable early identification of areas requiring attention and ensure that resources are being used efficiently and effectively.
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
Gatineau, Canada
November 21, 2014
Christine Guérette, CPA, CGA
Chief Financial Officer
Gatineau, Canada
November 21, 2014
Statement of Authorities (unaudited)
| Total available for use for the year ending March 31, 2015Note 1 | Used during the quarter ended September 30, 2014 | Year to date used at quarter-end | |
|---|---|---|---|
| Vote 25 – Program expenditures | 25,507,036 | 5,605,794 | 11,721,704 |
| Budgetary statutory authorities − Employee Benefit Plans | 3,351,252 | 837,813 | 1,675,626 |
| Total authorities | 28,858,288 | 6,443,607 | 13,397,330 |
| Total available for use for the year ended March 31, 2014Note 2 | Used during the quarter ended September 30, 2013 | Year to date used at quarter-end | |
|---|---|---|---|
| Vote 25 – Program expenditures | 26,124,776 | 6,115,961 | 12,345,522 |
| Budgetary statutory authorities − Employee Benefit Plans | 3,507,200 | 876,800 | 1,753,600 |
| Total authorities | 29,631,976 | 6,992,761 | 14,099,122 |
Departmental budgetary expenditures by Standard Object (unaudited)
| Expenditures | Planned expenditures for the year ending March 31, 2015 | Expended during the quarter ended September 30, 2014 | Year to date used at quarter-end |
|---|---|---|---|
| Personnel | 23,661,869 | 5,748,245 | 11,387,678 |
| Transportation and communications | 495,067 | 144,646 | 213,282 |
| Information | 487,221 | 113,458 | 256,603 |
| Professional and special services | 3,334,987 | 347,314 | 619,001 |
| Rentals | 501,708 | 37,652 | 154,336 |
| Repair and maintenance | 80,295 | 12,087 | 14,225 |
| Utilities, materials and supplies | 147,296 | 26,104 | 42,790 |
| Acquisition of machinery and equipment | 139,802 | 3,289 | 6,586 |
| Other subsidies and payments | 10,043 | 10,812 | 702,829 |
| Total net budgetary expenditures | 28,858,288 | 6,443,607 | 13,397,330 |
| Expenditures | Planned expenditures for the year ending March 31, 2014 | Expended during the quarter ended September 30, 2013 | Year to date used at quarter-end |
|---|---|---|---|
| Personnel | 24,531,777 | 6,439,411 | 12,820,897 |
| Transportation and communications | 541,986 | 140,138 | 224,120 |
| Information | 301,418 | 77,778 | 109,059 |
| Professional and special services | 2,826,158 | 230,815 | 656,135 |
| Rentals | 234,212 | 65,726 | 228,803 |
| Repair and maintenance | 343,914 | 5,906 | 6,716 |
| Utilities, materials and supplies | 236,381 | 28,185 | 38,180 |
| Acquisition of machinery and equipment | 541,243 | 4,802 | 15,212 |
| Other subsidies and payments | 74,887 | 0 | 0 |
| Total net budgetary expenditures | 29,631,976 | 6,992,761 | 14,099,122 |
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