Quarterly Financial Report for the Quarter Ended September 30, 2012

Statement Outlining Results, Risks and Significant Changes in Operations, Personnel and Programs

1. Introduction

 
This quarterly report has been prepared by Library and Archives Canada (LAC) as required by section 65.1 of the Financial Administration Act (FAA) and in the form and manner prescribed by the Treasury Board (TB). This quarterly report should be read in conjunction with the Main Estimates and Supplementary Estimates (A) as well as Canada's Economic Action Plan 2012 (Budget 2012) for fiscal year 2012–2013.
 
The quarterly report has not been subject to an independent audit or review.

1.1 Library and Archives Canada's Mandate

 
Library and Archives Canada is a portfolio organization of the Department of Canadian Heritage. Created in 2004 under the Library and Archives of Canada Act, its mandate is as follows:
  • to preserve the documentary heritage of Canada for the benefit of present and future generations;
  • to be a source of enduring knowledge accessible to all, contributing to the cultural, social and economic advancement of Canada as a free and democratic society;
  • to facilitate in Canada co-operation among communities involved in the acquisition, preservation, and diffusion of knowledge; and
  • to serve as the continuing memory of the Government of Canada and its institutions.

1.2 Basis of Presentation

 
This quarterly report has been prepared by LAC using an expenditure basis of accounting. The accompanying Statement of Authorities includes LAC's spending authorities granted by Parliament and those used by the institution, consistent with the Main Estimates and Supplementary Estimates (A) for the 2012–2013 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 monies 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.

LAC 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.

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 2012–2013 Main Estimates.
 
In fiscal year 2012–2013, frozen allotments will be established by Treasury Board authority in departmental votes to prohibit the spending of funds identified as savings 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.

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

2.1 Statement of Authorities

 
As reflected in the attached Statement of Authorities, total authorities available for use as of September 30 are $119.7 million in 2012–2013, and $116.7 million in 2011–2012. The following graph outlines the detailed breakdown of authorities by fiscal year:
 
Detailed Breakdown of Authorities
(in dollars)

The following table indicates the detailed breakdown of authorities. Displayed are the numbers, in dollars, for detailed authorities for the quarters ending September 30, 2012, and September 30, 2011.
 
Detailed breakdown of Authorities
For the quarter ended September 30, 2012
For the quarter ended September 30, 2011
Main Estimates
117,743,529
112,959,833
Supplementary Estimates (A)
222,903
0
Proceeds from the disposal of surplus Crown assets
281,127
125,686
Vote 25–Operating Budget Carry Forward
1,438,721
3,637,980
Total authorities available for use
119,686,280
116,723,499

The overall net increase of $2.9 million in total available authorities for use between the two fiscal years is mainly due to the following:
  • an increase of $8.7 million for the conversion of a facility in Gatineau, Quebec, as a collection storage facility with a high-density shelving system;
  • a decrease of $3.6 million for the permanent transfer of resources to Shared Services Canada (SSC) for the Administrative Services Review (ASR);
  • a decrease of $2.2 million received as Operating Budget Carry Forward;
  • a net decrease of $0.5 million in employee benefits plans (statutory) and funding received for collective agreements;
  • an increase of $0.2 million for the transfer of resources from Canadian Heritage for film acquisition and preservation activities under the Preservation and Access Component of the Canadian Feature Film Policy;
  • an increase of $0.1 million for the permanent transfer of resources from Public Works and Government Services Canada related to the custodianship of the Nitrate Film Preservation Facility; and
  • an increase of $0.2 million from the disposal of surplus Crown assets.

2.2 Statement of Departmental Budgetary Expenditures by Standard Object


The year-to-date expenditures for the quarter ended September 30 are comparable to those of the same quarter in 2011–2012, except for the following variances: 
 
There is a significant difference in Personnel expenditures. The decrease of $4.8 million ($41.2 million in 2012–2013 and $46.0 million in 2011–2012) is mainly explained by:
  • a decrease of $4.2 million paid out in severance pay to LAC employees following the ratification of new collective agreements; and
  • a net decrease of $0.6 million in salary expenditures related to workforce adjustment such as transition support measures as well as savings resulting from employee departures.
A significant increase of $8.2 million ($8.2 million in 2012–2013 and $0 million in 2011–2012) in expenditures for Acquisition of Land, Buildings and Works is mainly explained by capital expenditures related to construction work carried out to convert a facility in Gatineau, Quebec, to a collection storage facility with a high-density shelving system. This construction work started in late January 2012, which explains why no capital expenditures were reported at this date last fiscal year.
 
A significant decrease of $1.7 million ($1.6 million in 2012–2013 and $3.3 million in 2011–2012) in Professional and Special Services is due primarily to the awarding of fewer contracts for management and information technology consulting services and temporary help services. Furthermore, LAC's new multi-tenant building situation enables it to share a portion of its commissionaire costs with other tenants.
 
A significant decrease of $1.1 million ($25 thousand in 2012–2013 and $1.2 million in 2011–2012) in Transfer Payments resulting from Economic Action Plan 2012 (Budget 2012) Implementation is related to the elimination of the National Archival Development Program (NADP).
 
As a result of the creation of SSC on August 4, 2011, and the subsequent passing of Order-in-Council P.C. 2011–1297 on November 15, 2011, certain responsibilities across 43 departments and agencies were transferred to SSC. Consequently, LAC had no expenditures related to these responsibilities in 2012–2013 (although it did for this quarter in 2011–2012). These mainly relate to Transportation and Communications; Rentals; Repair and Maintenance; and Acquisition of Machinery and Equipment.
 
In 2012–2013, to ensure compliance with new requirements from the Receiver General for Canada, LAC performed a realignment of expenditures, resulting in negative expenditures for the quarter ending September 30, 2012, under standard objects Repair and Maintenance and Acquisition of Machinery and Equipment.

3. Risks and Uncertainties

 
Based on its mandate and strategic outcomes, LAC has identified four strategic risks:
 
  • Essential documentary heritage is not acquired;
  • Documentary heritage is not preserved for future generations;
  • Documentary heritage is not accessible to Canadians; and
  • Government of Canada information resources are not managed properly.
With the advent of new technologies, LAC faces another operational risk: the overabundance of documentary heritage. In response to these strategic risks, LAC initiated modernization in 2009, through which it is reviewing all of its activities to establish clear policy direction, effective governance, and deliberative decision-making processes.
 
LAC is financed mainly through Parliamentary authorities for its operating expenditures, capital expenditures, and grants and contributions expenditures. LAC is also partially funded through specified sources of respendable revenue. However, the amount of such revenue is negligible.
 
As announced in Budget 2012, LAC's annual departmental budget will be reduced by $9.6 million by 2014–2015, a decrease of approximately 10% of its total budget. Personnel represents the single largest category of expenditures for LAC. Considering that departments no longer receive funding for compensation adjustments related to negotiated collective agreements, this has an important effect on the use of LAC's operating vote. LAC estimates the impact of this government-wide initiative to be about $1 million per year and aggregating cumulatively over the next few years. LAC is managing the implementation of these measures through continuing realignment of its resources. This is achieved through reallocations of budget within LAC, supported by rigorous monitoring of staffing and expenditures in line with effective business, human resources and financial strategic planning.

4. Significant Changes in Relation to Operations, Personnel and Programs

 
The modernization process of LAC continues to drive organizational priorities for 2012–2013 and beyond. As outlined in the 2011–2012 Report on Plans and Priorities (RPP), it is LAC's response to a world in which digital technologies have transformed the nature and volume of information resources and the ways in which the vast majority of Canadians create, research, access and use information. This will enable LAC to meet the public's ever-increasing demand for quick access to documentary heritage that captures the diversity of Canadian society.
 
The process began with analytical and conceptual work in 2009. By 2010–2011, LAC identified and began to act on a set of 12 modernization innovation initiatives to translate the underlying concepts into ambitious shifts to its core business for progress with clear results.
 
LAC regrouped the modernization innovation initiatives into six organizational priorities (previously called the corporate priorities), which were set out in the 2011–2012 RPP. All six organizational priorities will essentially continue, with changes to titles that reflect the progress to full-scale implementation.
 
  1. LAC will begin to implement a new service delivery model to improve access to its holdings;
  2. LAC will develop and implement a whole-of-society model to frame appraisal and acquisition decisions;
  3. LAC will adopt a more collaborative approach to fulfilling its mandate;
  4. LAC will review how it describes and organizes its information resources to improve content distribution and access;
  5. LAC will adapt how it manages its holdings;
  6. LAC will adopt a new model for internal operations and will ensure that its workforce has appropriate skills to deliver on its mandate.
The changes needed to deliver on these priorities require shifts in how LAC manages and uses resources. Under its Program Reinvestment in Support of Modernization (PRISM)1 process, LAC set priorities to guide its resource reallocations. As a result, LAC is focusing on the implementation of its key deliverables.
 

5. Budget 2012 Implementation

 
This section provides an overview of the cost-saving measures announced in Budget 2012. The total cost-saving measures for LAC are $3.5 million in 2012–2013; $6.6 million in 2013–2014; $9.6 million in 2014–2015 and ongoing. These measures will be implemented in order to refocus government and programs; make it easier for Canadians and businesses to deal with their government; and modernize and reduce the back office.
 
Budget for acquisitions: The $0.4 million dedicated budget to purchase documents and special collections was eliminated. In future, these purchases will be made within LAC's regular investment decision process based on available resources.
 
National Archival Development Program (NADP): The NADP was terminated in Budget 2012 and certain wind-down costs were incurred in 2012–2013.
 
Reduced spending related to the five other LAC programs affected by Budget 2012 impacts salaries due to workforce reduction.
 
Workforce adjustment comes with financial uncertainty due to options offered to employees under the relevant policies and collective agreements. LAC continues to monitor these situations carefully to adjust its budgetary plans accordingly.
 
Approval by Senior Officials
 
Approved by:
 

__________________________________________
Daniel J. Caron, Ph.D.
Deputy Head and Librarian and Archivist of Canada
  and Chair, Heads of Federal Agencies
November 29, 2012
 

__________________________________________
Mark C. Melanson, CGA
Chief Financial Officer
November 27, 2012 
 
 
Statement of Authorities (unaudited)
(in dollars)
 
This table indicates authorities. Displayed are the numbers, in dollars, for fiscal year 2012–2013, including the total available for use for the year ending March 31, 2013; the total used during the quarter ended September 30, 2012; and the total year to date used at quarter-end. Displayed are the numbers, in dollars, for fiscal year 2011–2012, including the total available for use for the year ending March 31, 2012; the total used during the quarter ended September 30, 2011; and the total year to date used at quarter-end.
 
Authorities
Fiscal year 2012–2013: Total available for use for the year ending March 31, 2013 * **
Fiscal year 2012–2013: Used during the quarter ended September 30, 2012
Fiscal year 2012–2013: Year to date used at quarter-end
Fiscal year 2011–2012:
Total available for use for the year ending March 31, 2012 *
Fiscal year 2011–2012:
Used during the quarter ended September 30, 2011
Fiscal year 2011–2012:
Year to date used at quarter-end
Vote 55 (2012–2013) and Vote 50 (2011–2012) - Net Operating Expenditures
88,777,080
22,147,217
39,266,472
94,493,147
27,595,241
49,039,528
Vote 60 (2012–2013) and Vote 55 (2011–2012) - Capital expenditures
19,352,500
6,513,901
8,198,560
10,350,000
0
0
Budgetary statutory authorities - Contributions to employee benefit plans and spending of proceeds from the disposal of surplus Crown assets
11,556,700
2,818,893
5,637,786
11,880,352
2,938,666
5,877,333
Total budgetary authorities
119,686,280
31,480,011
53,102,818
116,723,499
30,533,907
54,916,861
Non-budgetary authorities
0
0
0
0
0
0
Total authorities
119,686,280
31,480,011
53,102,818
116,723,499
30,533,907
54,916,861
* Includes only Authorities available for use and granted by Parliament at quarter-end.
** Total available for use does not reflect measures announced in Budget 2012
 
Departmental Budgetary Expenditures by Standard Object (unaudited)
(in dollars)
 
This table indicates departmental budgetary expenditures. Displayed are the numbers, in dollars, for expenditures by standard object; total gross budgetary expenditures; total gross budgetary expenditures less revenues netted against expenditures; and total net budgetary expenditures for fiscal year 2012–2013; numbers are arranged by total planned expenditures for the year ending March 31, 2013; the total expended during the quarter ended September 30, 2012; and the total year to date used at quarter-end. Displayed are the numbers, in dollars, for expenditures by standard object; total gross budgetary expenditures; total gross budgetary expenditures less revenues netted against expenditures; and total net budgetary expenditures for fiscal year 2011–2012; numbers are arranged by total planned expenditures for the year ending March 31, 2012; the total expended during the quarter ended September 30, 2011; and the total year to date used at quarter-end.
 
 
Fiscal year 20122013: Planned expenditures for the year ending March 31, 2013 * **
Fiscal year 20122013: Expended during the quarter ended September 30, 2012
Fiscal year 20122013: Year to date used at quarter-end
Fiscal year 20112012: Planned expenditures for the year ending March 31, 2012 *
Fiscal year 20112012: Expended during the quarter ended September 30, 2011
Fiscal year 20112012: Year to date used at quarter-end
Expenditures:
Personnel
75,341,328
22,409,091
41,156,078
77,058,364
24,269,501
45,989,242
Transportation and communications
2,546,662
174,467
369,940
2,772,701
592,792
935,702
Information
377,523
39,363
77,704
888,017
35,547
41,726
Professional and special services
11,325,346
1,245,906
1,655,295
13,304,891
2,256,717
3,342,528
Rentals
2,641,627
621,812
663,937
2,097,457
649,575
1,318,169
Repair and maintenance
1,835,924
-102,133
88,846
2,420,109
271,287
442,036
Utilities, materials and supplies
1,998,565
159,535
244,152
3,463,201
382,992
598,308
Acquisition of land, buildings and works
19,352,500
6,513,901
8,198,560
10,350,000
0
0
Acquisition of machinery and equipment
3,030,584
-56,473
101,876
3,172,759
513,714
600,947
Transfer payments
1,746,000
25,035
25,035
1,746,000
1,168,128
1,168,128
Other subsidies and payments
40,221
492,411
624,562
0
471,527
653,475
Total gross budgetary expenditures
120,236,280
31,522,915
53,205,985
117,273,499
30,611,780
55,090,261
Less Revenues netted against expenditures:
Respendable revenue
550,000
42,904
103,167
550,000
77,873
173,400
Total Revenues netted against expenditures:
550,000
42,904
103,167
550,000
77,873
173,400
Total net budgetary expenditures
119,686,280
31,480,011
53,102,818
116,723,499
30,533,907
54,916,861
* Includes only Authorities available for use and granted by Parliament at quarter-end.
** Planned expenditures do not reflect measures announced in Budget 2012
.

1 PRISM is an organization-wide reinvestment process that will optimally allocate LAC's resources towards its business priorities. These reallocations will allow LAC to continue its work, as well as undertake some new initiatives that are required to support the development of the documentary heritage under its stewardship, its preservation, as well as its accessibility to ever-growing numbers of Canadians.
 
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