Quarterly Financial Report for the period ending December 31, 2020

Introduction
Highlights of fiscal quarter and fiscal year-to-date (YTD) results
Risks and uncertainties
Significant changes in relation to operations, personnel and programs
Annex A: Statement of authorities (unaudited)
Annex B: Budgetary expenditures by standard object (unaudited)

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

1. Introduction

This quarterly financial report (QFR) 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. The report should be read in conjunction with the Main Estimates for 2020-21. The quarterly report has not been subject to an external audit or review.

1.1 Mandate

The Minister of Public Safety and Emergency Preparedness is the minister responsible for the Royal Canadian Mounted Police (RCMP). The responsibilities of the RCMP are set out in section 18 of the Royal Canadian Mounted Police Act. The RCMP's mandate is multi-faceted, it includes preventing and investigating crime; maintaining peace and order; enforcing laws; contributing to national security; ensuring safety of state officials, visiting dignitaries and foreign missions; and providing vital operational support services to other police and law enforcement agencies within Canada and abroad.

Further information on the mandate, roles, responsibilities and programs of the RCMP can be found in the Part II 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 RCMP's spending authorities granted by Parliament and those used by the department consistent with the Main Estimates and Supplementary Estimates "A" and "B". 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 money 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.

The RCMP uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on a cash expenditure basis.

2. Highlights of the fiscal quarter and fiscal year-to-date (YTD) results

For the period ending December 31, 2020, the RCMP had $3,934.0 million in total authorities available for use, which represents a decrease of $40.1 million or (1%) when compared at the same quarter in the previous year. The RCMP's authorities have decreased within the Capital (Vote 5), Grant and Contributions (Vote 10) and within Statutory authorities for a total of $42.8 million. These decreases are offset by an increase of $2.7 million in Operating (Vote 1).

The RCMP's expenditures were $2,770.1 million at the end of the third quarter of the year, representing a decrease of $82.8 million or 3% from the same period in the previous year. Decreases in Operating, Capital and Grants and Contribution expenditures totalled $106.1 million offset by an increase of $23.3 million in Statutory expenditures, as shown in Table 1.

Table 1: Summary of third quarter and fiscal year-to-date (in thousands of dollars)^{Table 1 note 1}
Authorities	2020-21 Authorities as at December 31, 2020	2019-20 Authorities as at December 31, 2019	Variance in authorities	%	Year-to-date expenditures as at December 31, 2020	Year-to-date expenditures as at December 31, 2019	Variance in expenditures	%
Vote 1- Net Operating expenditures	2,765,814	2,763,082	2,732	0%	2,116,296	2,151,584	(35,288)	−2%
Vote 5 - Capital expenditures	294,176	324,208	(30,032)	−9%	115,579	118,422	(2,843)	−2%
Vote 10 - Grants and contributions	398,439	408,065	(9,626)	-2%	206,717	274,719	(68,002)	-25%
Budgetary statutory authorities	475,601	478,782	(3,181)	-1%	331,488	308,147	23,341	8%
Total authorities	3,934,030	3,974,137	(40,107)	−1%	2,770,080	2,852,872	(82,792)	−3%
Table 1 note Table 1 note 1 Totals may not add due to rounding. Return to table 1 note 1 referrer

2.1 Statement of authorities

Comparison of Total Budgetary Authorities as of December 31, 2019 and December 31, 2020 (in thousands of dollars)

For the period ending December 31, 2020, the RCMP has $3,934.0 million in total authorities available for use. This amount includes the Main Estimates, Supplementary Estimates (A), Supplementary Estimates (B), Operating Budget Carry Forward, Capital Budget Carry Forward, in-year statutory adjustments and proceeds collected from the disposal of Crown assets.

Total authorities have decreased by $40.1 million, when compared to the previous years. The decrease is made up of a year-over-year decrease of $30.0 million in Vote 5 – Capital, a $9.6 million decrease in Vote 10 – Grants and Contributions, and a $3.2 million decrease in Budgetary statutory authorities. These decreases are partially offset by an increase of $2.7 million in Vote 1 – Operating expenditures.

These changes in authorities are related to decreases in the RCMP's 2020-21 Main Estimates, Operating and Capital Budget Carry Forwards, paylist requirements, compensation adjustments, and other in-year adjustments. These decreases are partially offset by increases in the Supplementary Estimates, 2019 Budget Implementation Vote adjustments and in the proceeds collected from disposal of Crown Assets. A change in the Supplementary Estimates process resulted in two Supplementary Estimates being included by the end of the third quarter authorities in 2020-21, as opposed to only one in the same period last year.

Table 2: Cumulative variance in authorities available for use in 2020-21 in comparison to 2019-20^{Table 2 note 2}
Based on the end of the third quarter (December) (in thousands of dollars)	Total authorities available for use		Year over year variance
	2020-21	2019-20	Authorities	Percentage
Gross Operating expenditures	4,558,204	4,542,781	15,423	0%
Less: Vote Netted Revenues	1,792,390	1,779,699	12,691	1%
Vote 1 - Net Operating expenditures	2,765,814	2,763,082	2,732	0%
Vote 5 - Capital expenditures	294,176	324,208	(30,032)	−9%
Vote 10 - Grants and contributions	398,439	408,065	(9,626)	-2%
Pensions and other employee benefits - Members of the Force	373,034	401,974	(28,940)	−7%
Contributions to employee benefit plans (public servants)	82,858	62,907	19,951	32%
Pensions under the Royal Canadian Mounted Police Pension Continuation Act	6,750	6,750	-	0%
Proceeds from the Disposal of Crown Assets under the Surplus Crown Assets Act	12,959	7,151	5,808	81%
Statutory Authorities	475,601	478,782	(3,181)	-1%
Total budgetary authorities	3,934,030	3,974,137	(40,107)	−1%
Table 2 notes Table 2 note 2 Totals may not add due to rounding. Return to table 2 note 2 referrer

For more information on the authority changes that affect the RCMP, we would direct the reader to the RCMP's 2020-21 Main Estimates.

2.1.1 Variance to the Net Operating Vote

The Net Operating Vote is relatively unchanged from the same period last year. There was an increase of $2.7 million (or 0%).

2.1.2 Variance to the Capital Vote

The Capital Vote is $30.0 million (or 9%) lower than the same period last year. This decrease is mainly due to a decrease of $13.4 million from the Capital Budget Carry Forward, and a decrease of $14.5 million from the Supplementary Estimates (A) and (B). The decreases relate to a number of projects which are at various stages of completion including, the National Operations Centre, National Cybercrime Coordination Centre, and the indoor range and integrated training centre at the RCMP's training academy (DEPOT).

2.1.3 Variance to the Grants and Contributions Vote

The Grants and Contributions Vote is $9.6 million (or 2%) lower than the same period last year, which is related to the decreased funding to compensate members of the RCMP for injuries received in the performance of their duties. In 2019-20, the RCMP had sought additional funding to support Veterans Affairs Canada measures to accelerate the reduction of RCMP backlogged cases.

2.2 Statement of departmental budgetary expenditures by standard object

Net Expenditures by standard object at the end of the third quarter 2020-21 were $82.8 million (or 3%) lower than the previous year. This variance is the result of decreased gross budgetary expenditures of $139.5 million largely the result of timing of transfer payments incurred under the Grant to Compensate Members Injured in the Performance of Their Duties. Additionally, Transportation and communications costs have decreased as result of reduced operational travel, employee relocations and training due to measures implemented to contain the spread of COVID-19. These costs were partially offset by a decrease in vote netted revenues of $56.7 million (or 5%) lower when compared to the previous year. The changes in revenue are mainly driven by timing differences in Vote Netted Revenues collected for Contract Policing activities. A detailed review by standard object emphasizes some significant variances described below and displayed in Annex B.

Table 3: Expended by standard object at quarter end (in thousands of dollars)^{Table 3 note 3} ^{Table 3 note 4}
Standard objects	2020-21	2019-20	Variance	%
Personnel	2,580,787	2,563,724	17,063	1%
Transportation and communications	120,750	181,065	(60,315)	-33%
Information	1,900	1,668	232	14%
Professional and special services	335,995	341,296	(5,301)	-2%
Rentals	101,616	98,988	2,628	3%
Purchased Repair and maintenance	59,824	66,660	(6,836)	-10%
Utilities, materials and supplies	102,343	109,619	(7,276)	-7%
Acquisition of land, buildings and works	38,457	51,342	(12,885)	-25%
Acquisition of machinery and equipment	135,957	122,436	13,521	11%
Transfer payments	210,539	279,256	(68,717)	-25%
Public debt charges	489	526	(37)	-7%
Other subsidies and payments	82,174	93,785	(11,611)	-12%
Total gross budgetary expenditures	3,770,831	3,910,365	(139,534)	-4%
Less: Revenues and other reductions	1,000,751	1,057,493	(56,742)	-5%
Total net budgetary expenditures	2,770,080	2,852,872	(82,792)	-3%
Table 3 notes Table 3 note 3 Totals may not add due to rounding Return to table 3 note 3 referrer Table 3 note 4 The gross budgetary expenditures represent all RCMP programs and are not directly correlated to revenue trends as revenues are primarily related to the RCMP contract policing activities. Return to table 3 note 4 referrer

2.2.1 Variance by Personnel

Personnel costs increased by $17.1 million (or 1%) over the same period last year. This increase is mainly attributed to increases to the RCMP's Public Service Employees and Member Employee Benefit Plan costs.

2.2.2 Variance by Transportation and communications

Transportation and communications expenditures have decreased by $60.3 million (or 33%) over the same period last year. This decrease is mainly attributed to the temporary reduction in travel and relocations, in addition to delayed training as measures were implemented to contain the spread of COVID-19.

2.2.3 Variance by Information

Information increased by $0.2 million (or 14%) over the same period last year. This was mainly related to the RCMP providing firearm license holders information regarding the announcement by the Government of Canada banning models and variants of assault-style firearms.

2.2.4 Variance by Purchased Repair and Maintenance

Purchase Repair and Maintenance decreased by $6.8 million (or 10%) compared to 2019-20. This is mainly attributed to lower lifecycle expenditures and repairs for buildings within the Contract Policing program in comparison to 2019-20.

2.2.5 Variance by Acquisition of land, buildings and works

Acquisitions of Land, Buildings and Works expenditures have decreased by $12.9 million (or 25%) when compared to the same period in 2019-20. This decrease primarily relates to projects completed in the prior year that did not occur in the same period in this fiscal year such as the indoor range and integrated training centre in the RCMP's training academy (DEPOT), as well as the construction of the National Operations Centre. The decrease is partially offset by the increased construction activities for the Rocky Harbour, Pelican Narrows and Norway House detachments.

2.2.6 Variance by Acquisition of Machinery and Equipment

Acquisitions of Machinery and Equipment have increased by $13.5 million (or 11%) in comparison to the same period last year, primarily as a result of the timing of bulk purchases, such as computer equipment and software. In addition, there was an increase in expenses related to office equipment, furniture and fixtures to support measures taken to limit the spread of COVID-19.

2.2.7 Variance by Transfer payments

Transfer payments have decreased by $68.7 million (or 25%) when compared to 2019-20. This decrease is primarily related to timing differences of Veterans Affairs Canada charging the RCMP for expenses incurred under the Grant to Compensate Members Injured in the Performance of Their Duties.

2.2.8 Variance by Other subsidies and payments

Other subsidies and payments have decreased by $11.6 million (or 12%) when compared to 2019-20. This is primarily due a decrease in claim payments related to the completed Merlo Davidson Class Action Settlement in comparison to the same period in 2019-20.

2.2.9 Variance by Revenues and other reductions

Vote netted revenues collected in the third quarter of 2020-21 decreased by $56.7 million (or 5%) compared to the same period last fiscal year. The decrease is related primarily to timing differences in revenue collections related to Contract Policing. In addition, the RCMP's Canadian Police College revenues have decreased due to the current environment of physical distancing and limited group settings, impacting the number of courses which can be offered.

3. Risks and uncertainties

The Departmental QFR reflects the results of the current fiscal period in relation to Interim Supply of the Main Estimates, Operational Budget and Capital Budget Carry Forwards and the Supplementary Estimates "A" and "B".

The RCMP is funded through annual appropriations and are, therefore, impacted by any changes in funding approved through Parliament. In addition, it receives a significant portion of funding through vote netted revenue (VNR) from the provision of policing services to provinces, territories, municipalities and first nations communities, as well as from cost sharing agreements with provinces and territories for the provision of DNA analysis by the RCMP. The RCMP also receives VNR authorities to bill Parliamentary Protective Service (PPS) for the provision of security services throughout the Parliamentary precinct and the grounds of Parliament Hill.

On October 6, 2016, the RCMP announced that a settlement agreement had been reached between the RCMP and the plaintiffs in the Merlo and Davidson lawsuits filed on behalf of current and former female regular members, civilian members and public service employees. The settlement agreement was approved by the Federal Court and includes an independent claims process with compensation for women working, or having worked, at the RCMP who experienced harassment, bullying or discrimination based on their gender or sexual orientation during their employment from September 16, 1974 until May 30, 2017. The assessment of claims is the responsibility of an Independent Assessor appointed by the Federal Court. The window in which class members could file claims ran from August 12, 2017 to May 22, 2018. According to statistics posted on the Independent Assessor's website, a total of 3,086 claims were filed. All claims have now been assessed and compensation awards have been paid to meritorious claimants in accordance with the terms of the settlement.

In recent years, the RCMP's reference levels have been constrained by government-wide spending reduction exercises which have resulted in significant financial pressures. Announcements in Budget 2019 and the Economic and Fiscal Snapshot 2020 identified funding to support and enhance RCMP operations and will help address key resourcing issues.

4. Significant changes in relation to operations, personnel and programs

4.1 Operations

In comparison to the end of the third quarter of 2019-20, certain activities continue to be delayed as a result of the impacts of COVID-19. The RCMP continues to assess the evolving circumstances of COVID-19 and is adjusting its operations accordingly.

4.2 Personnel

Subsequent to the end of the third quarter, there have not been any changes to the senior ranks of the department.

4.3 Programs

There has been no significant change in relation to programs in the third quarter of 2020-21.

Approved by senior officials

Approved by:

Original signed by

Brenda Lucki
Commissioner