Quarterly Financial Report for the period ending June 30, 2021

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 2021-22. 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 Main Estimates (Part II of Estimates) and the Departmental Plan and Departmental Results Report (Part III of 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". 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 June 30, 2021, the RCMP had $3,676.3 million in total authorities available for use, which represents an increase of $258.8 million (or 8%) when compared at the same quarter in the previous year. The RCMP's authorities have increased in the Operating (Vote 1), Capital (Vote 5) and Grant and Contributions (Vote 10) totalling $372.1 million. These increases are offset by a decrease of $113.3 million in Statutory authorities.

The RCMP's expenditures were $1,091.3 million in the first quarter of the year, representing an increase of $86.7M (or 9%) from the previous year's first quarter, 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	2021 - 22 Authorities as at June 30, 2021	2020 - 21 Authorities as at June 30, 2020	Variance in authorities	%	Expenditures during the quarter ended in June 30, 2021	Expenditures during the quarter ended in June 30, 2020	Variance in expenditures	%
Vote 1- Net Operating expenditures	2,642,743	2,411,295	231,448	10%	810,854	793,187	17,667	2%
Vote 5 - Capital expenditures	251,946	186,957	64,989	35%	24,278	15,537	8,741	56%
Vote 10 - Grants and contributions	425,273	349,604	75,669	22%	120,555	67,607	52,948	78%
Budgetary statutory authorities	356,318	469,655	(113,337)	-24%	135,604	128,208	7,396	6%
Total authorities	3,676,280	3,417,511	258,769	8%	1,091,291	1,004,539	86,752	9%
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

The RCMP's 2021-22 Main Estimates are $76.8 million lower than the 2020-21 Main Estimates mainly due to a decrease in the statutory employee benefits and Grants and Contributions, which are partially offset by increases in the Operating Vote and Capital Vote.

However, as of June 30, the total authorities available for use in 2021-22 increased by $258.8 million from 2020-21 as a result of the reduced supply of the Main Estimates in the first quarter of 2020-21. In 2020-21, due to the COVID-19 pandemic and limited sessions in the spring for Parliament to study supply, the Standing Orders of the House of Commons were amended to extend the study period into the Fall. The RCMP received full supply for the 2020-21 Main Estimates in December 2020, whereas in 2021-22, the RCMP received full supply of the Main Estimates by the end of the first quarter. The two charts below show the changes in Authorities by Vote year over year.

Table 2: Cumulative variance in authorities available for use in 2021-22 in comparison to 2020-21^{Table 2 note 2}
Based on the end of the first quarter (June) (in thousands of dollars)	Total authorities available for use		Year over year variance
	2021-22	2020-21	Authorities	Percentage
Gross operating expenditures	4,422,442	4,055,377	367,065	9%
Less: Vote netted revenues	1,779,699	1,644,082	135,617	8%
Vote 1 - Net operating expenditures	2,642,743	2,411,295	231,448	10%
Vote 5 - Capital expenditures	251,946	186,957	64,989	35%
Vote 10 - Grants and contributions	425,273	349,604	75,669	22%
Total voted authorities	3,319,962	2,947,856	372,106	13%
Pensions and other employee benefits - Members of the Force	247,036	373,035	(125,999)	-34%
Contributions to employee benefit plans (public servants)	96,226	82,252	13,974	17%
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	6,306	7,618	(1,312)	-17%
Total statutory authorities	356,318	469,655	(113,337)	-24%
Total budgetary authorities	3,676,280	3,417,511	258,769	8%
Table 2 notes Table 2 note 2 Totals may not add due to rounding. Return to table 2 note 2 referrer

Table 3: Year over year changes in authorities by vote (in thousands of dollars)
Explanation of Authority Changes ^{Table 3 note 3} (2021-22 compared to 2020-21)
Vote 1 - Net operating expenditures
Compensation and Modernization adjustment for various Public Servants and Civilian Members	26.4
RCMP's Foundational Improvements for Federal Policing	12.4
Ensuring Security and Prosperity in the Digital age phase II	8.2
Creation of the Independent Centre for Harassment Resolution	4.7
Other increases related to previously approved initiatives	4.4
Funding to strengthen Royal Canadian Mounted Police operations	(18.1)
Funding profile change for the class action legal settlement	(24.0)
Amount related to the timing the authorities granted by Parliament	217.6
Sub-total net operating expenditures	231.4
Vote 5 - Capital expenditures
Ensuring Security and Prosperity in the Digital age phase II	8.2
RCMP's Foundational Improvements for Federal Policing	2.6
Funding profile change for various previously approved initiatives	(1.8)
Renewing the radio system for Ontario, Quebec and the National Capital Region	(6.3)
Amount related to the timing the authorities granted by Parliament	62.3
Sub-total capital expenditures	65.0
Vote 10 - Grants and contributions
Funding for the Grant to compensate members of the RCMP for injuries received in the performance of duty	26.8
Amount related to the timing the authorities granted by Parliament	48.8
Sub-total grants and contributions	75.6
Statutory
Increase in Public Service Employees and Members of the Force Employee Benefits Plan related to new and previously approved initiatives	7.9
Proceeds from Disposal of Crown Assets	(1.3)
Public Service Employees and Members of the Force Employee Benefits Plans related to changes in the effective EBP rate	(119.9)
Sub-total statutory	(113.3)
Grand total	258.7
Table 3 notes Table 3 note 3 Amounts displayed in this table represent planned changes to funding profiles, as well as variances due to the timing the authorities are granted by Parliament. As such, the negative amounts do not represent cuts to program spending. Return to table 3 note 3 referrer

For more information on the authority changes that affect the RCMP, we would direct the reader to the RCMP's 2021-22 Main Estimates.

2.2 Statement of departmental budgetary expenditures by standard object

Net budgetary expenditures at the end of the first quarter 2021-22 were $86.8 million (or 9%) higher than the previous year. This variance is the result of an increase in gross budgetary expenditures of $150.1 million (or 13%), which was offset by an increase in vote netted revenues of $63.3 million (or 40%) from the previous year.

Table 4: Expended by standard object at quarter end (in thousands of dollars) ^{Table 4 note 4} ^{Table 4 note 5}
Standard objects	2021-22	2020-21	Variance	%
Personnel	894,145	838,427	55,718	7%
Transportation and communications	53,490	40,349	13,141	33%
Information	400	831	(431)	-52%
Professional and special services	105,600	72,138	33,462	46%
Rentals	23,192	17,592	5,600	32%
Purchased repair and maintenance	18,099	12,455	5,644	45%
Utilities, materials and supplies	34,223	26,711	7,512	28%
Acquisition of land, buildings and works	10,617	5,124	5,493	107%
Acquisition of machinery and equipment	29,944	30,318	(374)	-1%
Transfer payments	121,689	68,941	52,748	77%
Public debt charges	154	164	(10)	-6%
Other subsidies and payments	20,244	48,686	(28,442)	-58%
Total gross budgetary expenditures	1,311,797	1,161,736	150,061	13%
Less: Revenues and other reductions	220,506	157,196	63,310	40%
Total net budgetary expenditures	1,091,291	1,004,540	86,751	9%
Table 4 notes Table 4 note 4 Totals may not add due to rounding. Return to table 4 note 4 referrer Table 4 note 5 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 4 note 5 referrer

In 2020-21, the federal and provincial and territorial governments implemented various measures to curb the spread of COVID-19, which resulted in several activities within the RCMP being halted at the onset of the pandemic. As restrictions loosened in 2021-22, the RCMP is experiencing increase in operations, leading to the rise in the overall expenditures. It is observed that multiple standard objects had significant increases in year-over-year expenditures primarily for this reason.

2.2.1 Variance by Personnel

The increase in expenditures by $55.7 million (or 7%) is attributed to higher pay expenditures for Public Service Employees (PSE). As a number of collective agreements were ratified in the past years, newly implemented rates of pay for various PSE occupational groups increased the overall expenditures. Also, an increase in Member Extra Duty Pay due to faster operational tempo in 2021-22 further increased Personnel expenditures.

2.2.2 Variance by Transportation and communications

The increase in expenditures by $13.1 million (or 33%) is mainly due to the loosening of pandemic restrictions.

2.2.3 Variance by Information

The decrease in expenditures by $0.4 million (or 52%) is mainly related to one-time expenditures in 2020-21, as the RCMP provided firearm license holders information regarding the announcement by the Government of Canada to banning models and variants of assault-style firearms.

2.2.4 Variance by Professional and special services

The increase in expenditures by $33.5 million (or 46%) is mainly related to the increased operational tempo in 2021-22, and timing differences in invoicing for legal services, which occurred in the second quarter of 2020-21.

2.2.5 Variance by Rentals

The increase in expenditures by $5.6 million (or 32%) is mainly due to the loosening of pandemic restrictions.

2.2.6 Variance by Purchased repair and maintenance

The increase in expenditures by $5.6 million (or 45%) is mainly due to the loosening of pandemic restrictions.

2.2.7 Variance by Utilities, materials and supplies

The increase in expenditures by $7.5 million (or 28%) is mainly due to the loosening of pandemic restrictions.

2.2.8 Variance by Acquisition of land, buildings and works

The increase in expenditures by $5.5 million (or 107%) is mainly due to the increased operational tempo and an increase of real property projects in support of Contract Policing.

2.2.9 Variance by Transfer payments

The increase in expenditures by $52.7 million (or 77%) is primarily related to an increase in disability pension payments under the Grant to compensate members of the RCMP for injuries received in the performance of duty.

2.2.10 Variance by Other subsidies and payments

The decrease in expenditures by $28.4 million (or 58%) is primarily due to the timing of items being cleared from suspense accounts into other standard objects such as legal services, as well as decreased claims payments related to the Merlo Davidson Class Action Settlement.

2.2.11 Variance by Revenues and other reductions

The increase in Vote netted revenues by $63.3 million (or 40%) is primarily due to the timing differences in revenue collections related to Contract Policing.

3. Risks and uncertainties

The Departmental QFR reflects the results of the current fiscal period in relation to the Main Estimates and the Supplementary Estimates "A".

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 included 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 was the responsibility of an Independent Assessor appointed by the Federal Court. Claims were filed between August 12, 2017 and May 22, 2018. As of August 14, 2020, all 3,086 claims that were submitted had been assessed. On November 19, 2020, the Assessor's final report was released that set out his observations and recommendations stemming from his work in assessing claims. All Compensation awards to successful claims in Merlo/Davidson have now been paid.

The Tiller class action concerns women who worked or volunteered in RCMP workplaces but who were not employed by the RCMP (e.g., municipal employees, contractors) and who experienced gender or sexual orientation based harassment and discrimination from RCMP members and employees between September 16, 1974 and July 5, 2019. A settlement that provides for a claims process based on the one used in the Merlo/Davidson settlement was approved by the Federal Court on March 10, 2020. Claims were filed between July 16, 2020 and April 22, 2021. Claims are currently being assessed by the Independent Assessors; as claims are decided, compensation awards are paid to successful claimants in accordance with the terms of the settlement.

On June 28, 2021, the Government of Canada announced that it had reached a tentative agreement with the National Police Federation (NPF) to establish the first ever collective agreement for RCMP members and reservists. If members and reservists vote in favor and the agreement is ratified, the current and retroactive compensation costs could have a material impact on the 2021-22 expenditures.

In recent years, the RCMP's reference levels have been constrained by government-wide spending reduction exercises which have resulted in significant financial pressures. In order to assess the financial integrity issues faced by the RCMP and serve as the basis for longer term strategic recommendations to the Minister of Public Safety and Emergency Preparedness, a comprehensive resourcing review was initiated in Budget 2016 and completed in May 2017, during which the Treasury Board committed to addressing integrity issues to ensure that the RCMP can deliver mission-critical services to Canadians. The review findings have been assessed and the RCMP returned to Treasury Board with a fulsome Departmental Review in the fall of 2018 that included short, medium and long-term proposals to address its ongoing resourcing issues. Recent announcements in identified funding to support and enhance RCMP operations.

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

4.1 Operations

In comparison to the first quarter of 2020-21, certain activities resumed as a result of the loosened COVID-19 restrictions. 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 first quarter, the following changes to the senior ranks of the department have occurred:

Patrick Vézina, previously acting as Associate Assistant Deputy Minister within the Tax Law Services Portfolio of the Canada Revenue Agency becomes Executive Director and Senior General Counsel of the Legal Services Unit of the Royal Canadian Mounted Police.
Ian Raskin, previously Chief Audit and Evaluation Executive and Director General of the Office of Audit and Evaluation of the Canadian Institutes of the Health Research becomes Chief Audit and Evaluation Executive of the Internal Audit, Evaluation and Review Branch of the Royal Canadian Mounted Police.
Deputy Commissioner Kevin Jones, the RCMP's Chief Action, Innovation and Modernization (AIM) Officer, retired from the Royal Canadian Mounted Police on July 30, 2021, after 33 years of serving Canadians as a regular member. As of July 12, 2021, leadership for the AIM office was realigned under the Chief Strategic Policy and External Relations Officer, Alison Whelan.

4.3 Programs

There has been no significant change in relation to programs in the first quarter of 2021-22.

Approved by senior officials

Approved by:

Original signed by

Brenda Lucki
Commissioner