Quarterly Financial Report for the quarter ended September 30, 2016

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 the Treasury Board under the Treasury Board Accounting Standard (TBAS) 1.3. It should be read in conjunction with the Main Estimates and 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 Agency is an independent, quasi-judicial tribunal and regulator with the powers of a superior court.

We operate within the context of the large and complex Canadian transportation system.

The Agency exercises its powers through its Members, who are appointed by the Governor-in-Council.

What we do: our three mandates

  • We help ensure that the national transportation system runs efficiently and smoothly in the economic and social interests of all Canadians; including those who work and invest in it; the producers, shippers, travellers and businesses who rely on it; and the communities where it operates.

  • We protect the human right of persons with disabilities to an accessible transportation network.

  • We provide consumer protection for air passengers.

How we do it: our tools

To help advance these mandates, we have three tools at our disposal:

  • Rule-making: We develop and apply ground rules that establish the rights and responsibilities of transportation service providers and users and that level the playing field among competitors. These rules can take the form of binding regulations or less formal guidelines, codes of practice or interpretation notes.

  • Dispute resolution: We resolve disputes that arise between transportation providers on the one hand, and their clients and neighbours on the other, using a range of tools from facilitation and mediation to arbitration and adjudication.

  • Information provision: We provide information on the transportation system, the rights and responsibilities of transportation providers and users, and the Agency's legislation and services.

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 the 2016-2017 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.

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 using the full accrual method of accounting in accordance with the 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 and expenditures per fiscal year
Graph 1 – Second quarter net budgetary authorities and expenditures per fiscal year
  • Details: Graph 1

    The figure illustrates the Agency's net budgetary authorities and expenditures for the quarter ending September 30, for fiscal years 2015-2016 and 2016-2017 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: 2015-2016
    Net budgetary authorities: 28.90 million dollars
    Expenditures for the quarter ending September 30: 6.83 million dollars 

    Time period: 2016-2017
    Net budgetary authorities: 28.67 million dollars
    Expenditures for the quarter ending September 30: 6.43 million dollars

2.1 Statement of Authorities

The Agency’s total authorities available for use in 2016-2017 totalling $28,666,856, decreased slightly compared to the same period in the previous fiscal year, as illustrated in the Statement of Authorities and in the Departmental Budgetary Expenditures by Standard Object below.

Authorities available for use in Vote 1 – Program expenditures have decreased by a total of $230,444. This decrease is primarily due to a decrease in the operating budget carry forward received in 2016-2017 in comparison to 2015-2016.

2.2 Statement of Departmental Budgetary Expenditures by Standard Object

Total budgetary expenditures recorded in the second quarter are slightly lower in comparison to the same quarter in 2015-2016.  As illustrated in the Departmental Budgetary Expenditures by Standard Object below, the variance amounts to $401,501, from $6,828,108 in 2015-2016 to $6,426,607 in 2016-2017. 

The decrease is primarily due to the decreases in the Personnel and Professional and Special Services expenditure categories, as explained below:

  • Personnel expenditures have decreased by $147,649 from $5,861,212 in 2015-2016 to $5,713,563 in 2016-2017.  The Agency has experienced some unplanned staff turnover which has caused some vacancies in comparison to fiscal year 2015-2016. 
  • Professional and Special Services have decreased by $252,688 from $632,105 in 2015-2016 to $379,417 in 2016-2017.  Although the Agency anticipates overall expenditures to be similar to those of the previous fiscal year, this variance is primarily attributable to the period in which the purchases were settled.

With respect to all other budgetary expenditures by Standard Object, overall expenditures are similar to those of the previous fiscal year.

3. Risks and Uncertainties

The Agency's budget has remained static for the past decade, during which time the Agency has been given new and enhanced mandates by Parliament, including:

  •  enhanced powers regarding railway line transfers and discontinuance, and net salvage value determinations
  • formalized authority to mediate and arbitrate various types of disputes, including new arbitration services for shippers and railway companies on rail level of service, including developing new regulations
  • authority to resolve rail noise and vibration complaints
  • implementing and administering regulations to enable the travelling public to easily determine the total advertised air price and to promote fair competition between advertisers in the air travel industry
  • expanded authority regarding air carriers' communication and application of their terms and conditions of carriage
  • authority to resolve disputes related to the provision of public passenger services using federal railway companies' lines or other assets
  • carrying out responsibilities related to the Fair Rail for Grain Farmers Act, including providing advice on the amount of grain to be moved in Western Canada and developing new regulations
  • carrying out responsibilities related to the Safe and Accountable Rail Act, including applying more stringent rail insurance requirements and handling applications by provinces and municipalities seeking reimbursement of expenses reasonably incurred in responding to fires resulting from rail operations.

Budgetary challenges have been compounded by externally-driven demands, including an increasing number of air travel complaints.  Much of the Agency's workload is a function of the number of applications brought by clients and stakeholders, whether they are seeking dispute-resolution assistance or regulatory determinations.  These clients rightly give high priority to timely service from the Agency.

An independent external review of the Agency's financial situation has found that the organization's resources are stretched and consequently, it has extremely limited flexibility to undertake new mandates or transformation initiatives.

Organizational changes implemented on April 1, 2016, a project to review and modernize the regulations administered by the Agency, and continuing efforts to streamline business processes should help achieve some internal efficiencies, control back-office costs, enhance service delivery, and mitigate budgetary risks.  However, rising demand for Agency services, along with centrally-mandated and sometimes costly initiatives such as the Government of Canada's new shared case management system, will create ongoing resource pressures.

The Agency will continue to monitor and report on corporate risks, and to integrate risk information into planning, priority-setting, and financial decision-making.

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 quarter.

Approval by Senior Officials

Original signed by:


Scott Streiner
Chair and Chief Executive Officer
Gatineau, Canada
November 17, 2016

Original signed by:


Jacqueline Bannister
Chief Financial Officer
Gatineau, Canada
November 17, 2016

Statement of Authorities (unaudited)

Fiscal year 2016-2017
  Total available for use for the year ending March 31, 2017Return to reference * Used during the quarter ended September 30, 2016 Year to date used at quarter-end
Total authorities 28,666,856 6,426,607 12,485,731
Vote 1 – Program expenditures 25,165,099 5,551,168 10,734,853
Budgetary statutory authorities − Employee Benefit Plans 3,501,757 875,439 1,750,878
Fiscal year 2015-2016
  Total available for use for the year ending March 31, 2016Return to reference * Used during the quarter ended September 30, 2015 Year to date used at quarter-end
Total authorities 28,897,300 6,828,108 13,336,585
Vote 1 – Program expenditures 25,477,262 5,973,098 11,626,565
Budgetary statutory authorities − Employee Benefit Plans 3,420,038 855,010 1,710,020

Departmental Budgetary Expenditures by Standard Object (unaudited)

Fiscal year 2016-2017
  Planned expenditures for the year ending March 31, 2017 Expended during the quarter ended September 30, 2016 Year to date used at quarter-end
Total net budgetary expenditures 28,666,856 6,426,607 12,485,731
Expenditures:
Personnel 23,860,812 5,713,563 11,404,126
Transportation and communications 548,784 138,528 223,507
Information 410,582 37,411 69,555
Professional and special services 2,683,573 379,417 548,344
Rentals 577,315 82,912 139,098
Repair and maintenance 56,087 4,626 5,831
Utilities, materials and supplies 189,231 21,290 36,843
Acquisition of machinery and equipment 340,472 48,860 58,427
Other subsidies and payments - - -
Fiscal year 2015-2016
  Planned expenditures for the year ending March 31, 2016 Expended during the quarter ended September 30, 2015 Year to date used at quarter-end
Total net budgetary expenditures 28,897,300 6,828,108 13,336,585
Expenditures:
Personnel 23,777,409 5,861,212 11,633,426
Transportation and communications 552,235 131,053 198,171
Information 413,163 51,265 82,038
Professional and special services 2,984,074 632,105 1,098,543
Rentals 580,945 88,942 170,378
Repair and maintenance 56,440 19,941 20,214
Utilities, materials and supplies 190,421 33,175 58,461
Acquisition of machinery and equipment 342,613 10,415 71,282
Other subsidies and payments - - 4,072
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