Quarterly Financial Report of the
Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)

Unaudited

For the Quarter Ended June 30, 2012


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

1. 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. This report should be read in conjunction with the Main Estimates, Supplementary Estimates, as well as Canada’s Economic Action Plan 2012 (Budget 2012).

1.1 Organizational Overview

Further information on the mandate, roles, responsibilities and program of FINTRAC can be found in the FINTRAC 2012-13 Main Estimates, available on the following website:
http://publiservice.tbs-sct.gc.ca/est-pre/20122013/me-bpd/me-bpd-eng.pdf.

Raison d'être

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), Canada's financial intelligence unit, exists to detect and deter money laundering and terrorist financing. FINTRAC reports to the Minister of Finance and was established and operates within the ambit of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its Regulations.

FINTRAC is one of several domestic partners in Canada's Anti-Money Laundering/Anti-Terrorist Financing (AML/ATF) Regime, which also includes the Department of Finance as the policy lead. FINTRAC is also part of the Egmont Group, an international network of financial intelligence units that collaborate to combat money laundering and terrorist activity financing.

FINTRAC's Mission

To contribute to the public safety of Canadians and help protect the integrity of Canada's financial system through the detection and deterrence of money laundering and terrorist financing.

FINTRAC's Vision

To be recognized as a world class financial intelligence unit in the global fight against money laundering and terrorist financing.

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 department's spending authorities granted by Parliament and those used by the department consistent with the Main Estimates and Supplementary Estimates for the 2012-2013 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 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.

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year. Budget 2012 was tabled in Parliament on March 29, after the tabling of the Main Estimates on February 28, 2012. As a result the measures announced in the Budget 2012 could not be reflected in the 2012-13 Main Estimates.

In fiscal year 2012-2013, frozen allotments will be established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012. In future years, the changes to departmental authorities will be implemented through the Annual Reference Level Update, as approved by Treasury Board, and reflected in the subsequent Main Estimates tabled in Parliament.

The Department 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.

The transactions and financial statements of FINTRAC have not been subject to an external audit or review.

2. Highlights of Fiscal Quarter and Fiscal Year to Date (YTD) Results

2.1 Statement of Authorities

2.1.1 Overview

As can be seen in Figure 1, FINTRAC’s total authorities available for use at the end of the first quarter of 2012-2013 are $54.0M, a decrease of $0.9M when compared to the same quarter of 2011-2012.

Figure 1 – FY Comparison of Actual YTD Expenditures and Total Authorities (both to June 30)

2.1.2 Program Expenditures

The primary reason for the decrease in program expenditures is the transfer of $5.7M to Shared Services Canada (SSC) in 2011-12. Other significant changes include:

2.1.3 Statutory Authorities

Authorities for contributions to employee benefit plans (EBP) increased from $3.9M in the first quarter of 2011-12 to $5.7M in the first quarter of 2012-13.

2.2 Statement of Departmental Budgetary Expenditures by Standard Object

Total actual expenditures at the end of the first quarter have decreased by 5.3%, from $11.6M in 2011-2012 to $11.0M in 2012-13.

There was an increase in personnel expenditures of $0.3M or 4%. This increase can be attributed to the additional resources from Budget 2010 received in 2011-12 and 2012-13 with which FINTRAC has employed additional FTEs.

There was also an increase in O&M expenditures in the category of rentals ($0.4M or 51%) which can be attributed to an increase in rentals of office buildings, and renewal of application software licenses.

These increases in personnel expenditures and rentals were offset by decreases in O&M spending in the categories of repairs and maintenance ($-1.1M or -99%) and acquisition of machinery and equipment ($-0.4M or -95%), and can be attributed to renovations at FINTRAC headquarters in 2011-12, as well as the purchase of IM/IT equipment and software licenses that are now under the purview of SSC.

All other expenditures by standard object were consistent with prior year spending trends.

3. Risks and Uncertainties

As Canada’s financial intelligence unit and a partner in Canada’s Anti-Money Laundering/Anti-Terrorist Financing Initiative, FINTRAC is a unique organization that will continue to face unique challenges. In seeking to be proactive in identifying risks and opportunities, FINTRAC must anticipate and assess internal and external risk factors that can affect the design and delivery of its program and the achievement of its strategic outcome. Additionally, FINTRAC must identify factors and risks that could adversely affect its ability to effectively manage its resources. FINTRAC has developed a Corporate Risk Profile (CRP) to identify and manage its key corporate risks. The CRP is reviewed regularly by senior level committees and the business planning process identifies activities to mitigate the risks. This contributes to the decision making processes for investment management and budgeting.

This Departmental Quarterly Financial Report (QFR) reflects the results of the current fiscal period in relation to the Main Estimates and Supplementary Estimates A for which full supply was released on June 29, 2012, including FINTRAC’s operating budget carry forward and paylist requirements.

3.1 Risk Factors and Mitigation

To ensure that FINTRAC is able to attract and retain the talent needed to deliver on its mandate, the organization strives to create an engaging work environment that encourages excellence, offers competitive salaries and benefits, provides learning and development opportunities, and demonstrates a commitment to work/life balance. Employee development opportunities are an important consideration for retention and succession management. Individual learning plans support employee performance, and take into account career development objectives. Personnel spending is closely monitored to ensure fiscal stewardship.

Budget 2010 announced that the operating budgets of departments would be frozen at their 2010-11 levels for fiscal years 2011-12 and 2012-13. Management is continuing to review various options to adjust to this constraint in funding. To date, however, the impact on departmental activities has been managed through the following actions and mitigation strategies:

4. Significant Changes in Relation to Operations, Personnel and Program

4.1 Funding Authorities

Through Budget 2010, the Government committed to increase ongoing funding for FINTRAC to enhance the Centre’s ability to ensure compliance with the PCMLTFA and meet new responsibilities related to tax evasion becoming a predicate offence to money laundering. According to the funding profile, FINTRAC received funding of $10.5M in 2012-13 ($5.5M in O&M and $5.0M in Salary and EBP) compared to $8M in 2011-12.

4.2 Operations

Pursuant to s. 31.1 of the Financial Administration Act and Order-in-Council P.C. 2011-1297 effective November 15, 2011, FINTRAC transferred to SSC the control and supervision of portions of its IT services (e.g. e-mail, data centers, and network services/support). As a result, $5.7M ($0.3M in EBP, $1.7M in Salary and $3.7M in O&M) was transferred to SSC on an on-going basis as of April 1, 2012.

5. Budget 2012 Implementation

This section provides an overview of the savings measures announced in Budget 2012 that will be implemented in order to refocus government and programs, which will be achieved in 2012-13; make it easier for Canadians and business to deal with their government; and, modernize and reduce the back office.

FINTRAC will achieve Budget 2012 savings of $3.4 million by fiscal year 2014-15 through efficiency measures and program reductions.

In the first year of implementation, FINTRAC will achieve savings of approximately $0.9 million. Savings will increase to $1.3 million ongoing, beginning in 2013-14. Specifically savings will be achieved in 2012-13 through the following initiatives:

There are no financial risks or uncertainties related to these savings.

6. Approval by Senior Officials

Approval by Senior Officials

___________________
Darlene Boileau
Acting Director
FINTRAC
Ottawa, Canada

August 21, 2012
Date
___________________
Gerry Derouin
Acting Chief Financial Officer
FINTRAC
Ottawa, Canada

August 21, 2012
Date

STATEMENT OF AUTHORITIES (unaudited)
For the quarter ended June 30, 2012

(in thousands of dollars)
  Fiscal Year 2012-2013 Fiscal Year 2011-2012
  Total available for use for the year ending March 31, 2013 Footnote1 Footnote2 Used during the quarter ended June 30, 2012 Year to date used at quarter-end Total available for use for the year ending March 31, 2012 Footnote1 Used during the quarter ended June 30, 2011 Year to date used at quarter-end
Vote 30 - Program expenditures 48,346 9,556 9,556 50,986 10,622 10,622
Budgetary statutory authorities
(S) Contributions to employee benefit plans
5,698 1,425 1,425 3,893 973 973
Total budgetary authorities $ 54,044 $ 10,981 $ 10,981 $ 54,879 $ 11,595 $ 11,595
Non-budgetary authorities $ - $ - $ - $ - $ - $ -
Total authorities $ 54,044 $ 10,981 $ 10,981 $ 54,879 $ 11,595 $ 11,595

Note: Totals may not add due to rounding.

DEPARTMENTAL BUDGETARY EXPENDITURES BY STANDARD OBJECT (unaudited)
For the quarter ended June 30, 2012

(in thousands of dollars)
  Fiscal Year 2012-2013 Fiscal Year 2011-2012
  Planned expenditures for the year ending March 31, 2013 Footnote3 Expended during the quarter ended June 30, 2012 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2012 Expended during the quarter ended June 30, 2011 Year to date used at quarter-end
Expenditures:            
Personnel 37,623 8,678 8,678 33,169 8,363 8,363
Transportation and communications 1,472 243 243 2,674 389 389
Information 207 32 32 500 9 9
Professional and special services 4,227 610 610 4,167 450 450
Rentals 3,421 1,318 1,318 4,290 876 876
Repair and maintenance 3,197 5 5 3,759 1,067 1,067
Utilities, materials and supplies 287 75 75 2,147 51 51
Acquisition of land, buildings and works 0 0 0 461 0 0
Acquisition of machinery and equipment 3,600 20 20 3,711 388 388
Transfer payments 0 0 0 0 0 0
Other subsidies and payments 10 1 1 0 2 2
Total budgetary expenditures $ 54,044 $ 10,981 $ 10,981 $ 54,879 $ 11,595 $ 11,595

Note: Totals may not add due to rounding.

Date Modified: