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

Unaudited

For the Quarter Ended December 31, 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).

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:
http://publiservice.tbs-sct.gc.ca/est-pre/20122013/me-bpd/me-bpd-eng.pdf.

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.

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.

This quarterly financial report has 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 December 31, 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 third quarter of 2012-13 are $56.4M, a decrease of approximately $4.2M, or 6.9% (a decrease of $6.0M of the budgetary authorities and an increase of $1.8M of the statutory authorities), when compared to the same quarter of the prior year.

Comparison of Authorities by Fiscal Year
View the text equivalent for Comparison of Authorities by Fiscal Year
Comparison of Authorities by Fiscal Year
  2012-13 2011-12
Budgetary Authorities 50.7 56.7
Statutory Authorities 5.7 3.9
i. Budgetary Authorities

FINTRAC’s budgetary authorities have decreased approximately by $6.0M when compared to the same period last year. This is primarily due to the following changes:

ii. Statutory Authorities

FINTRAC’s statutory authorities have increased by $1.8M compared to the same quarter in 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. EBP is not included as part of Supplementary Estimates exercises, rather an adjustment is made at year-end. Therefore, FINTRAC’s EBP expenditure levels will be lower when comparing year over year expenditures until the fourth quarter.

B. Significant Changes to Budgetary Expenditures by Standard Object

Actual year-to-date expenditures at the end of the third quarter showed a decrease of $3.5M, or 8.8%, from $39.9M in 2011-12 to $36.4M 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

As noted in the Q2 Quarterly Financial Report, FINTRAC has 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 Q3 of this fiscal year to last fiscal year, we note increased spending in the category of Rentals ($1.2M) and decreased spending in the category of Repair and Maintenance ($1.0M). The offsetting changes in these categories are due to a change in the Chart of Accounts for fiscal year 2012-13. Previously software maintenance was coded to the Standard Object for Repair and Maintenance; it is now coded to the Standard Object for Rentals. There was also decreased spending in the category of Acquisition of Machinery and Equipment ($1.1M or 77%) primarily due to increased spending in this category for the renovations at FINTRAC headquarters in the previous fiscal year.

This fiscal year there was a decrease spending in the category of Personnel ($2.7M). This is due to increased expenditures last fiscal year related to the immediate settlement of severance pay and termination benefits.

Comparison of Year-to-Date Expenditures by Standard Object (O&M)
View the text equivalent for Comparison of Year-to-Date Expenditures by Standard Object
Comparison of Year-to-Date Expenditures by Standard Object
  2012-13 2011-12
Acquisition of machinery and equipment 313 1,370
Acquisition of land, buildings and works 0 0
Utilities, materials and supplies 280 248
Repair and maintenance 1,207 2,191
Rentals 4,142 2,952
Professional and special services 2,516 2,146
Information 124 115
Transportation and communications 801 1,216

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 is in the process of being updated. 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:

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.

Effective January 28, 2013, Hélène Filion became the Chief Financial Officer of FINTRAC.

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



Gérald Cossette
Director
FINTRAC
Ottawa, Canada

Date: February 7, 2013



Hélène Filion
Chief Financial Officer
FINTRAC
Ottawa, Canada

Date: February 7, 2013


STATEMENT OF AUTHORITIES (unaudited)
For the quarter ended December 31, 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 Used during the quarter ended December 31, 2012 Year to date used at quarter-end Total available for use for the year ending March 31, 2012 Footnote2 Used during the quarter ended December 31, 2011 Footnote3 Year to date used at quarter-end Footnote3
Vote 30 - Program expenditures 50,723 10,426 32,145 56,712 14,112 37,034
Budgetary statutory authorities
(S) Contributions to employee benefit plans
5,698 1,424 4,273 3,893 973 2,920
Total budgetary authorities $ 56,421 $ 11,851 $ 36,418 $ 60,605 $ 15,085 $ 39,953
Non-budgetary authorities $ - $ - $ - $ - $ - $ -
Total authorities $ 56,421 $ 11,851 $ 36,418 $ 60,605 $ 15,085 $ 39,953

Note: Totals may not add due to rounding.


DEPARTMENTAL BUDGETARY EXPENDITURES BY STANDARD OBJECT (unaudited)
For the quarter ended December 31, 2012

(in thousands of dollars)
  Fiscal Year 2012-2013 Fiscal Year 2011-2012
  Planned expenditures for the year ending March 31, 2013 Footnote4 Expended during the quarter ended December 31, 2012 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2012 Footnote5 Expended during the quarter ended December 31, 2011 Footnote6 Year to date used at quarter-end Footnote6
Expenditures:            
Personnel 38,279 8,542 27,034 36,666 11,417 29,710
Transportation and communications 1,668 322 801 2,940 495 1,216
Information 240 59 124 550 66 115
Professional and special services 4,596 1,057 2,516 4,580 845 2,146
Rentals 3,769 1,248 4,142 4,688 1,057 2,952
Repair and maintenance 3,519 326 1,207 4,148 330 2,191
Utilities, materials and supplies 361 100 280 2,299 43 248
Acquisition of land, buildings and works 11 0 0 564 0 0
Acquisition of machinery and equipment 3,969 197 313 4,169 831 1,370
Transfer payments - 0 0 0 0 0
Other subsidies and payments 10 0 3 0 2 4
Total budgetary expenditures $ 56,421 $ 11,851 $ 36,419 $ 60,605 $ 15,085 $ 39,953

Note: Totals may not add due to rounding.


Date Modified: