Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) Quarterly Financial Report for the Quarter Ended
June 30, 2013

Unaudited


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 2013-14 Main Estimates, available on the following website:
http://www.tbs-sct.gc.ca/ems-sgd/20132014/me-bpd/me-bpd-eng.pdf.

A. Organizational Overview

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 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.

B. 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 2013-14 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.

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

A. Statement of Authorities

i. Overview

FINTRAC's total authorities available for use at the end of the first quarter of 2013-14 are $51.3M, a decrease of $2.7M or 5.0%, when compared to the same quarter of 2012-13.

Comparison of Authorities by Fiscal Year
this graphic illustrates the comparison of authorities by fiscal year
View the text equivalent for Comparison of Authorities by Fiscal Year
Comparison of Authorities by Fiscal Year
  2013-14 2012-13
Budgetary Authorities 45.7 48.3
Statutory Authorities 5.7 5.7
ii. Budgetary Authorities

FINTRAC's budgetary authorities have decreased by $2.7M when compared to the same period last year due primarily to the following changes:  

iii. Statutory Authorities

Authorities for contributions to employee benefit plans (EBP) remained stable in the first quarter of 2012-13 and in the first quarter of 2013-14.

B. Statement of Departmental Budgetary Expenditures by Standard Object

Total actual expenditures at the end of the first quarter have increased by $1.3M or 11.7%, from $11.0M in 2012-13 to $12.3M in 2013-14.

i. Planned Expenditures

FINTRAC has decreased its planned spending in the category of Professional and Special Services, in line with FINTRAC's Budget 2012 savings measures.

FINTRAC has also decreased its planned spending in the categories of Repair and Maintenance and Utilities, Materials and Supplies. Last year planned spending in these categories was unusually high due to fit-up costs for FINTRAC Headquarters.

ii. Year-to-Date Expenditures

FINTRAC has increased its personnel spending by $0.9M or 10%. FINTRAC has grown as a result of increased funding from Budget 2010 and now, in 2013-14, has a full staffing complement.

We note increased spending in the category of Acquisition of Machinery and Equipment ($0.1M or 331%) primarily due to an electrical upgrade, as well as increased spending in the category of Rentals ($0.4M or 28%) related to the timing of software licensing and maintenance renewals. Conversely, there was a decrease in the category of Utilities, Materials and Supplies ($-0.1M or -69%).

Comparison of Year-to-Date Expenditures by Standard Object
this graphic illustrates the comparison of year-to-date expenditures by standard object
View the text equivalent for Comparison of Year-to-Date Expenditures by Standard Object
Comparison of Year-to-Date Expenditures by Standard Object
  2013-14 2012-13
Other subsidies and payments 3 1
Transfer payments 0 0
Acquisition of machinery and equipment 88 20
Acquisition of land, buildings and works 0 0
Utilities, materials and supplies 23 75
Repair and maintenance 19 5
Rentals 1,686 1,318
Professional and special services 614 610
Information 20 32
Transportation and communications 254 243

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 20, 2013.

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.

With the cost containment measures outlined in Budget 2010, the government-wide deficit reduction action plan (DRAP) and with FINTRAC's growth in personnel in recent years due to additional resources from Budget 2010, it is expected that there will be increasing pressures in operating budget authorities over the next fiscal years. 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. 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. In accordance with the funding profile, FINTRAC received funding of $10.0M in 2013-14 ($5.0M in O&M and $5.0M in Salary and EBP) compared to $10.5M in 2012-13.

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.

Beginning in fiscal year 2013-14, savings have increased to $1.3 million ongoing. These savings will be achieved 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: August 22, 2013



Hélène Filion
Chief Financial Officer
FINTRAC
Ottawa, Canada

Date: August 22, 2013


STATEMENT OF AUTHORITIES (unaudited) Footnote1
For the quarter ended June 30, 2013

(in thousands of dollars)
  Fiscal Year 2013-14 Fiscal Year 2012-13
  Total available for use for the year ending March 31, 2014See the note below for Total available for use for the year ending March 31, 2013, Footnote 1 Used during the quarter ended June 30, 2013 Year to date used at quarter-end Total available for use for the year ending March 31, 2013See the note below for Total available for use for the year ending March 31, 2013, Footnote 1 Used during the quarter ended June 30, 2012 Year to date used at quarter-end
Vote 30 - Program expenditures 45,684 10,854 10,854 48,346 9,556 9,556
Budgetary statutory authorities
(S) Contributions to employee benefit plans
5,659 1,415 1,415 5,698 1,425 1,425
Total budgetary authorities $ 51,343 $ 12,269 $ 12,269 $ 54,044 $ 10,981 $ 10,981
Non-budgetary authorities $ - $ - $ - $ - $ - $ -
Total authorities $ 51,343 $ 12,269 $ 12,269 $ 54,044 $ 10,981 $ 10,981

Note: Totals may not add due to rounding.


DEPARTMENTAL BUDGETARY EXPENDITURES BY STANDARD OBJECT (unaudited)
For the quarter ended June 30, 2013

(in thousands of dollars)
  Fiscal Year 2013-14 Fiscal Year 2011-12
  Planned expenditures for the year ending March 31, 2014 Expended during the quarter ended June 30, 2013 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2013 Expended during the quarter ended June 30, 2012 Year to date used at quarter-end
Expenditures:            
Personnel 38,179 9,568 9,568 37,623 8,678 8,678
Transportation and communications 983 254 254 1,472 243 243
Information 146 20 20 207 32 32
Professional and special services 3,166 614 614 4,227 610 610
Rentals 2,949 1,686 1,686 3,421 1,318 1,318
Repair and maintenance 2,786 19 19 3,197 5 5
Utilities, materials and supplies 89 23 23 287 75 75
Acquisition of land, buildings and works - 0 0 0 0 0
Acquisition of machinery and equipment 3,041 88 88 3,600 20 20
Transfer payments - 0 0 0 0 0
Other subsidies and payments 4 -3 -3 10 1 1
Total budgetary expenditures $ 51,343 $ 12,269 $ 12,269 $ 60,605 $ 10,981 $ 10,981

Note: Totals may not add due to rounding.

Date Modified: