Quarterly Financial Report for the quarter ended December 31, 2019

2019-2020

Table of Contents

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. This QFR should be read in conjunction with the Main Estimates. It has not been subject to an external audit or review.

A summary description of the Canadian Radio-television and Telecommunications Commission (CRTC) Raison d’être and core responsibilities can be found in Part II of the Main Estimates

2. Basis of Presentation

This QFR has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the CRTC’s spending authorities granted by Parliament and those used by the department consistent with the Main Estimates for both the 2018-19 and the 2019-20 fiscal years. This QFR 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 CRTC uses the modified 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.

In this QFR, only those revenues netted against expenditures (i.e. respendable revenue) are being reported. All other revenue that is designated as non-respendable revenue is not reported in the quarterly financial reports, but will be reported annually in the Public Accounts of Canada and in the CRTC’s Departmental Results Report (DRR).

3. Highlights of fiscal quarter and fiscal year to date results

The CRTC is financed in part by the Government of Canada through Parliamentary authorities (e.g. Statutory Vote for Employee Benefit Plans (EBP), Budgetary Vote for the Canada’s Anti-Spam Legislation activities and for the Voter Contact Registry). The balance is financed by vote-netted fees it collects from the broadcasting, telecommunications and telemarketing industries.

Vote-netting is a means of funding selected programs or activities wherein Parliament authorizes a department to apply revenues collected from fee payers towards costs directly incurred for specific activities. The CRTC has the authority to use a portion of: a) the Part I licence fees collected from broadcasters; b) the annual telecommunications fees collected from telecommunications carriers; and c) the unsolicited telecommunications fees collected from telemarketers to finance the costs it incurs in discharging its statutory responsibilities under the Broadcasting Act and Telecommunications Act (i.e. respendable revenue). The balance of these three fees recovers the costs for items funded through budgetary authorities (e.g. EBP) and costs incurred by other government departments on the CRTC's behalf and are classified as non-respendable revenue.

The majority of the CRTC’s vote-netted revenue for the year is collected within the first two quarters of each fiscal year. As a result, it is expected that the CRTC quarterly financial reports will always show the net operating expenditures in a credit position. Further details on CRTC fees and revenues can be found in the 2019-20 Departmental Plan in the supplementary information section entitled “Future-Oriented Statement of Operations”.

Authorities

To date in 2019-20, there is a net increase in budgetary authorities of $3.75 million compared to the authorities granted in the 2018-19 Main Estimates. Factors contributing to the net increase include:

Increases

Decreases

Expenditures

The CRTC’s spending for the third quarter ended December 31, 2019 is higher compared to the previous fiscal year. Year-to-date total gross budgetary expenditures for 2019-20 are up ($8.52 million) over the previous fiscal year. The main reason for this difference in spending is an increase of $6.93 million in expenditures attributable to salary related items and an increase of $1.59 million in expenditures attributable to non-salary related items. These increases are primarily attributable to the Broadband Fund project management function and collective agreements signed off in 2018-19.

4. Risks and Uncertainties

The estimated telemarketing and regulatory costs and revenue target for unsolicited telecommunications fees, the CRTC’s National Do Not Call List (DNCL), total $3.3 million per year.  A public notice of these amounts was issued in CRTC Compliance and Enforcement Orders 2018-164 for 2018-19 and 2019-208 for 2019-20.

The CRTC establishes its unsolicited telecommunications fees on an annual basis at levels anticipated to fully recover its approved investigations and enforcement operating costs, however there could be a revenue shortfall if fewer than expected telemarketers subscribed and paid their fees for access to the National DNCL. It is noted that, compared to the same quarter of the previous year, the amount collected to date is slightly lower. However, the CRTC still anticipates collecting 100% of the required $3.3 million budgetary authority to support the CRTC’s National DNCL investigation and enforcement activities for 2019-20 as outlined in paragraph 4 of Compliance and Enforcement Order 2019-208.

Of note, if the amount collected exceed the regulatory costs, as per section 4(3) of the Unsolicited Telecommunications Fees Regulations, the amount in excess will be refunded to telemarketers accordingly.

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

There have been no significant changes in relation to operations, personnel and programs over the past year.

6. Approval by Senior Officials

Approved by:


Ian Scott
Chairperson and Chief Executive Officer
Gatineau, Canada
Date: February 14, 2020


Claude Doucet, CPA, CGA
Chief Financial Officer
Gatineau, Canada
Date: February 13, 2020

Statement of Authorities (unaudited)

Fiscal year 2019-20 (in thousands of dollars)
Total available for use for the year ending March 31, 2020Footnote 1 Used during the quarter ended December 31, 2019 Year to date used at quarter-end
Vote 1 – Program expenditures 70,554 17,180 46,190
Less: Revenues netted against expenditures (63,105) (267) (60,774)
Net Vote 1 – Program expenditures 7,449 16,913 (14,584)
Vote 5 – Protecting Canada’s Critical Infrastructure from Cyber Threats 2,545 0 0
Statutory authorities – EBP 8,075 2,018 6,056
Total Budgetary Authorities 18,069 18,931 (8,528)
Fiscal year 2018-19 (in thousands of dollars)
Total available for use for the year ending March 31, 2019Footnote 1 Used during the quarter ended December 31, 2018 Year to date used at quarter-end
Vote 1 – Program expenditures 59,541 13,434 38,846
Less: Revenues netted against expenditures (51,728) (445) (48,728)
Net Vote 1 – Program expenditures 7,813 12,989 (9,882)
Statutory authorities – EBP 6,505 1,626 4,879
Total Budgetary Authorities 14,318 14,615 (5,003)

Departmental budgetary expenditures by Standard Object (unaudited)

Fiscal year 2019-20 (in thousands of dollars)
Planned expenditures for the year ending March 31, 2020 Used during the quarter ended December 31, 2019 Year to date used at quarter-end
Expenditures:   
Personnel (including EBP) 63,834 16,968 45,299
Transportation and communications 1,909 468 1,163
Information 1,576 132 893
Professional and special services 7,086 1,192 2,806
Rentals 1,258 151 908
Repair and maintenance 276 78 285
Utilities, materials and supplies 472 53 188
Acquisition of machinery and equipment 2,214 154 701
Other subsidies and paymentsFootnote 2 2,549 2 3
Total gross budgetary expenditures 81,174 19,198 52,246
Less: revenues netted against expenditures
Revenues (Part I Broadcasting licence fees, Telecommunications fees and Unsolicited telecommunications fees) (63,105) (267) (60,774)
Total revenues netted against expenditures (63,105) (267) (60,774)
Total net budgetary expenditures 18,069 18,931 (8,528)
Fiscal year 2018-19 (in thousands of dollars)
Planned expenditures for the year ending March 31, 2019 Used during the quarter ended December 31, 2018 Year to date used at quarter-end
Expenditures:  
Personnel (including EBP) 51,445 12,960 38,372
Transportation and communications 2,217 389 980
Information 1,719 370 777
Professional and special services 5,892 939 2,224
Rentals 1,460 148 586
Repair and maintenance 605 97 176
Utilities, materials and supplies 455 54 123
Acquisition of machinery and equipment 2,250 103 486
Other subsidies and payments 3 0 1
Total gross budgetary expenditures 66,046 15,060 43,725
Less: revenues netted against expenditures
Revenues (Part I Broadcasting licence fees, Telecommunications fees, and Unsolicited telecommunications fees) (51,728) (445) (48,728)
Total revenues netted against expenditures (51,728) (445) (48,728)
Total net budgetary expenditures 14,318 14,615 (5,003)
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