Quarterly Financial Report of the
Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
For the Quarter Ended September 30, 2012
Statement outlining results, risks and significant changes in operations, personnel and program
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).
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 operates within the ambit of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its Regulations.
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:
A. 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 2012-13 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 2012-13, 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 Centre 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
This section highlights the significant items that contributed to the net increase or decrease in resources available for the year and actual (or used) expenditures for the quarter ended September 30, 2012. The explanation of variance considers that changes related to expenditures under 25% and amounts under $0.25M for a quarter, or under $1M for the fiscal year (FY), would have a minimal impact on the interpretation of results.
A. Significant Changes to Authorities
FINTRAC’s total authorities available for use at the end of the second quarter of 2012-13 are $56.1M, a decrease of approximately $1M, or 1.7% (a decrease of $2.8M of the budgetary authorities and an increase of $1.8M of the statutory authorities), when compared to the same quarter of the prior year.
View the text equivalent for Comparison of Authorities by Fiscal Year
i. Budgetary Authorities
FINTRAC’s budgetary authorities have decreased by $2.8M when compared to the same period last year. This is primarily due to the following changes:
- An increase in funding of $2.3M to ensure compliance with the PCMLTFA and meet new responsibilities related to tax evasion becoming a predicate offense to money laundering (from $8.0M in FY 2011-12 to $10.5M this year).
- An increase in funds received for eligible paylist expenditures of $0.4M.
- An increase of $1.9M for the fit-up of new offices in FINTRAC’s headquarters building.
- A decrease of $0.6M due to the sunset funding for FINTRAC for the National Anti-Drug Strategy (NADS).
- A decrease in FINTRAC’s Operating Budget Carry-Forward (OBCF) of $0.5M. In fiscal year 2011-12 the reinstatement of ongoing FINTRAC funding of $16.2M was contingent upon the approval of the 10-year evaluation of the Anti-Money Laundering/Anti-Terrorist Financing (AML/ATF) Regime. This funding was provided through Supplementary Estimates A. As the OBCF is calculated using authorities from the Main Estimates, FINTRAC’s OBCF from FY 2011-12 to FY 2012-13 was lower than in previous years.
- A decrease in authorities of $5.3M due to funding transferred to Shared Services Canada (SSC) which has assumed control and supervision of portions of FINTRAC’s IT services.
- A decrease of $0.8M due to a transfer of funds between Operating and Maintenance, and Salary.
ii. Statutory Authorities
FINTRAC’s statutory authorities have increased by $1.8M compared to the previous fiscal year. FINTRAC’s contributions to employee benefit plans (EBP) increased from $3.9M in FY 2011-12 to $5.7M this year.
In fiscal year 2011-12 the reinstatement of ongoing FINTRAC funding of $16.2M was contingent upon the approval of the 10-year evaluation of the AML/ATF Regime. This funding came after the Main Estimates and was provided as part of Supplementary Estimates A. As EBP costs are not normally included as part of Supplementary Estimates exercises, FINTRAC’s EBP expenditure levels will be lower when comparing year over year expenditures.
B. Significant Changes to Budgetary Expenditures by Standard Object
Actual year-to-date expenditures at the end of the second quarter showed a negligible decrease of $0.3M, or 1.2%, from $24.9M in 2011-12 to $24.6M in 2012-13.
The majority of the expenditures by standard object remained constant when compared to the same quarter of the previous fiscal year, and as a percentage of planned expenditures, with a few exceptions detailed below.
i. Planned Expenditures
FINTRAC has increased its rate of spending in the category of Rentals due to increased spending on software maintenance during the first two quarters of this fiscal year.
FINTRAC has also increased its rate of spending in the category of Utilities, Materials and Supplies. However, this is not a factor of increased spending (spending in this category is consistent with the previous fiscal year), rather it is a factor of the planned spending amount. Last year planned spending in this category was much higher due to fit-up costs for office space in one of the satellite offices. This year, planned spending is much lower and therefore spending to date makes up a higher proportion of the planned spending.
ii. Year-to-Date Expenditures
When comparing year-to-date expenditures at Q2 of this fiscal year to last fiscal year, we note increased spending in the category of Rentals ($1.0M or 53%) primarily due to spending on software maintenance. Conversely, there was decreased spending in the category of Repair and Maintenance ($-1.0M or -53%) primarily due to the transfer of hardware maintenance contracts to Shared Services Canada (SSC).
View the text equivalent for Comparison of Year-to-Date Expenditures by Standard Object
|Other subsidies and payments||3||2|
|Acquisition of machinery and equipment||116||540|
|Acquisition of land, buildings and works||0||0|
|Utilities, materials and supplies||180||205|
|Repair and maintenance||881||1,861|
|Professional and special services||1,459||1,302|
|Transportation and communications||479||721|
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.
A. 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.
The government announced through Budget 2010 that operating budgets would be frozen at their 2010-11 levels for fiscal years 2011-12 and 2012-13. Management is continuing to review various management 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:
- Managers have been asked to identify and implement opportunities for efficiencies to offset higher cost of operations; and
- FINTRAC management has developed rigorous control and reporting mechanisms to monitor spending including, for example, additional oversight to ensure that spending for travel, conferences and hospitality remain within sustainable levels.
4. Significant Changes in Relation to Operations, Personnel and Program
A. Key Personnel Change
Effective October 15, 2012, Gérald Cossette became the Director of FINTRAC.
B. Transfer to Shared Services Canada (SSC)
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:
- FINTRAC did not seek renewal of its National Anti-Drug Strategy funding when it sunset in 2011-12. The savings for this proposal of $0.7 million are fully realized in 2012-13.
- FINTRAC will reduce travel and training costs. The savings will be $0.1 million in 2012-13.
- FINTRAC will reduce its use of professional services contracts such as management consultant services, classification services and temporary help. The savings will be $0.1 million in 2012-13.
There are no financial risks or uncertainties related to these savings.
6. Approval by Senior Officials
Date: November 21, 2012
Acting Chief Financial Officer
Date: November 21, 2012
|Fiscal Year 2012-2013||Fiscal Year 2011-2012|
|Total available for use for the year ending March 31, 2013 Footnote1 Footnote2||Used during the quarter ended September 30, 2012||Year to date used at quarter-end||Total available for use for the year ending March 31, 2012 Footnote1||Used during the quarter ended Septebmber 30, 2011||Year to date used at quarter-end|
|Vote 30 - Program expenditures||50,432||11,481||21,719||53,215||12,300||22,922|
|Budgetary statutory authorities
(S) Contributions to employee benefit plans
|Total budgetary authorities||$ 56,130||$ 13,587||$ 24,568||$ 57,108||$ 13,273||$ 24,869|
|Non-budgetary authorities||$ -||$ -||$ -||$ -||$ -||$ -|
|Total authorities||$ 56,130||$ 13,587||$ 24,568||$ 57,108||$ 13,273||$ 24,869|
Note: Totals may not add due to rounding.
|Fiscal Year 2012-2013||Fiscal Year 2011-2012|
|Planned expenditures for the year ending March 31, 2013 Footnote3||Expended during the quarter ended September 30, 2012||Year to date used at quarter-end||Planned expenditures for the year ending March 31, 2012||Expended during the quarter ended September 30, 2011||Year to date used at quarter-end|
|Transportation and communications||1,668||236||479||2,940||332||721|
|Professional and special services||4,596||849||1,459||4,580||851||1,302|
|Repair and maintenance||3,519||875||881||4,148||794||1,861|
|Utilities, materials and supplies||361||105||180||2,299||154||205|
|Acquisition of land, buildings and works||11||0||0||564||0||0|
|Acquisition of machinery and equipment||3,969||96||116||4,169||152||540|
|Other subsidies and payments||10||1||3||0||0||2|
|Total budgetary expenditures||$ 56,130||$ 13,587||$ 24,569||$ 57,108||$ 13,273||$ 24,869|
Note: Totals may not add due to rounding.
- Date Modified: