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Quarterly Financial Report

Quarterly Financial Report - For the Quarter ended June 30th, 2012

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

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, and in the form and manner prescribed by the Treasury Board. This quarterly report should be read in conjunction with the 2011-12 Main Estimates and Supplementary Estimates (A) and (B).

The quarterly report has not been subject to an external audit or review.

• 1.1 Library and Archives Canada's Mandate

  Library and Archives Canada is a departmental organization within the Department of Canadian Heritage. The Library and Archives of Canada Act came into force in 2004 and created LAC. LAC's 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-peration 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 department, 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 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.

  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.

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 June 30th, is $118.186 million in 2012-2013 and $113.059 million in 2011-2012. The following graph outlines the detailed breakdown of Authorities by fiscal year:

  Detailed breakdown of Authorities	For the Quarter ended June 30th, 2012	For the Quarter ended June 30th, 2011
  Main Estimates:	117,743,529	112,959,833
  Supplementary Estimates (A):	222,903	0
  Proceeds from the disposal of surplus Crown Assets:	219,606	99,349
  	118,186,038	113,059,182

  
  
  

  The overall increase of $5.127 million of total authorities between the two fiscal years is mainly due to the following:
  
  

  • An increase of $8.741 million for the conversion of a facility in Gatineau, Quebec as a Collection Storage Facility with a high density shelving system;
  • a decrease of $3.623 million for the permanent transfer to Shared Services Canada for the Administrative Services Review (ASR);
  • a net decrease of $455 thousand for Employee Benefits Plan (statutory) and funding received for Collective Bargaining;
  • an increase of $223 thousand for a transfer from Canadian Heritage for film acquisition and preservation activities under the Preservation and Access Component of the Canadian Feature Film Policy;
  • an increase of $121 thousand for the permanent transfer from Public Works and Government Services Canada related to the custodianship of the Nitrate Film Preservation Facility; and
  • an increase of $120 thousand from the disposal of surplus of Crown Assets.

• 2.2 Statement of Departmental Budgetary Expenditures by Standard Object
  
  The year-to-date used amounts as at June 30th are comparable to those of the previous year for the same period except for the following variances:
  A significant difference lies in "personnel" expenditures. This decrease of $2.973 million ($18.747 million in 2012-2013 and $21.720 million in 2011-2012) is mainly explained by the fact that the recovery of costs associated with the interdepartmental memorandum of understanding between LAC and other government departments related to accession, reference and disposition services were signed and therefore collected as at June 30th, in 2012-2013. These interdepartmental memorandums of understanding were not signed at comparable date last year.

  In 2012-2013, the significant increase of $1.684 million ($1.684 million in 2012-2013 and $0 million in 2011-2012) in "Acquisition of land, buildings and works" is mainly explained by the capital expenditures related to the construction for the conversion of a facility in Gatineau, Quebec as a Collection Storage Facility with a high density shelving system. The construction of this facility started at the end of January 2012 which explained why no capital expenditures were accounted for at this date last fiscal year.

  As a result of the creation of Shared Services Canada (SSC) on August 4th, 2011 and the subsequent passing of the Order-in-Council on November 15th, 2011 certain responsibilities across 43 departments and agencies were transferred to SSC. These expenditures mainly lie under Standing Objects "Transportation and communications", "Rentals" and "Repairs and maintenance" which are no longer paid by LAC in 2012-13 but were accounted for at this date last fiscal year.

3. Risks and Uncertainties

There are four strategic risks associated with LAC's mandate and strategic outcomes: the risk that essential documentary heritage is not acquired; the risk that documentary heritage is not preserved for future generations; the risk that documentary heritage is not accessible to Canadians; and the risk that Government of Canada information resources are not managed properly. Another operational risk is that following the emergence of new technologies, LAC faces an overabundance of documentary heritage. Modernization initiated by LAC in 2009 is a response to these strategic risks, through which LAC is reviewing all aspects of its business 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 types of respendable revenue. However, the amount of such revenue is negligible.

As announced in the Federal Budget 2012, LAC's annual departmental budget will be reduced by $9.6 million by 2014-2015, which represents a decrease of approximately 10% of its total budget. LAC's most significant expenditures are for its personnel. Considering that departments no longer receive funding for wage and salary increases resulting from collective agreements, this has an important impact on the use of LAC's operating vote. LAC has estimated the impact of this government-wide initiative to be approximately $1 million per year and aggregating cumulatively over the next few years.

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. 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. It will make it possible to meet the growing expectation for ready access to documentary heritage that captures the diversity of the whole 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 re-grouped the modernization innovation initiatives into six organizational priorities (previously called the corporate priorities) which were set out in the 2011-2012 Report on Plans and Priorities. All six organizational priorities will essentially continue, with modifications to titles that reflect the progress to full-scale implementation.

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) process, LAC set priorities to guide its resource reallocations (note 1). As a result, LAC is focusing resources toward the implementation of two key deliverables: the service delivery model, and the review of its methods and tools for effective management of government information. The PRISM process was also instrumental in shaping the LAC response to the Government's commitments to identify program and operating efficiencies.

5. Budget 2012 Implementation

This section gives an overview of the cost-saving measures announced in Budget 2012, which will be implemented in order to refocus the government and its programs, to make it easier for Canadians and businesses to interact with their government and to modernize and streamline administrative services.

Budget for acquisitions: the $350,000 budget to purchase documents from private archives and special collections of national interest was abolished. In future, these purchases will be made within LAC's regular acquisition process based on available resources.

National Archival Development Program (NADP): negotiations were held between Library and Archives Canada and the Canadian Council of Archives (CCA), which administers this program for LAC, in order to find an arrangement that would be acceptable to both parties. An agreement is well on its way to being accepted by the CCA, and the Council will be compensated for losses suffered when the contribution program was closed.

The reduction in spending related to the five other LAC programs targeted in Budget 2012 affects salaries because staff is being cut. LAC implemented 34 selection of employees for retention or lay-off processes. All these processes are at an advanced stage and should be finished by the autumn.

Work force adjustment comes with a major financial risk because a significant number of employees who did not receive a guarantee of a reasonable employment offer seem to choose Option B, support for transition. LAC is watching developments in this area closely in order to implement any necessary mitigation measures.

6. Approval by Senior Officials

Statement of Authorities (unaudited)
(in dollars)

	Fiscal year 2012-2013			Fiscal year 2011-2012
	Total available for us e for the year ending March 31, 2013 * **	Used during the quarter ended June 30, 2012	Year to date used at quarter-end	Total available for use for the year ending March 31, 2012 *	Used during the quarter ended June 30, 2011	Year to date used at quarter-end
Vote 55 (2012-2013) and Vote 50 (2011-2012) - Net Operating Expenditures	87,338,359	17,119,255	17,119,255	90,855,167	21,444,287	21,444,287
Vote 60 (2012-2013) and Vote 55 (2011-2012) - Capital expenditure	19,352,500	1,684,659	1,684,659	10,350,000	0	0
Budgetary statutory authorities - Contributions to the Employee benefit plans and spending of proceeds from the disposal of surplus Crown Assets	11,495,179	2,818,893	2,818,893	11,854,015	2,938,667	2,938,667
Total Budgetary authorities	118,186,038	21,622,807	21,622,807	113,059,182	24,382,954	24,382,954
Non-budgetary authorities	0	0	0	0	0	0
Total authorities	118,186,038	21,622,807	21,622,807	113,059,182	24,382,954	24,382,954

* 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)

	Fiscal year 2012-2013			Fiscal year 2011-2012
	Planned expenditures for the year ending March 31, 2013 * **	Expended during the quarter ended June 30, 2012	Year to date used at quarter-end	Planned expenditures for the year ending March 31, 2012 *	Expended during the quarter ended June 30, 2010	Year to date used at quarter-end
Expenditures:
Personnel	75,341,328	18,746,987	18,746,987	77,058,364	21,719,741	21,719,741
Transportation and communications	2,389,360	195,473	195,473	2,408,903	342,910	342,910
Information	354,204	38,341	38,341	778,878	6,179	6,179
Professional and special services	10,626,080	409,389	409,389	11,558,661	1,085,811	1,085,811
Rentals	2,456,381	42,125	42,125	1,829,630	668,594	668,594
Repair and maintenance	1,722,523	190,979	190,979	2,092,691	170,749	170,749
Utilities, materials and supplies	1,866,533	84,617	84,617	3,013,474	215,316	215,316
Acquisition of land, buildings and works	19,352,500	1,684,659	1,684,659	10,350,000	0	0
Acquisition of machinery and equipment	2,843,392	158,349	158,349	2,772,581	87,233	87,233
Transfer payments	1,746,000	0	0	1,746,000	0	0
Other subsidies and payments	37,737	132,151	132,151	0	181,948	181,948
Total gross budgetary expenditures	118,736,038	21,683,070	21,683,070	113,609,182	24,478,481	24,478,481
Less Revenues netted against expenditures:
Respendable revenue	550,000	60,263	60,263	550,000	95,527	95,527
Total Revenues netted against expenditures:	550,000	60,263	60,263	550,000	95,527	95,527
Total net budgetary expenditures	118,186,038	21,622,807	21,622,807	113,059,182	24,382,954	24,382,954

* 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.

Quarterly Financial Report