Quarterly Financial Report for the quarter ended June 30, 2020
2020-2021
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 2019-20 and the 2020-21 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 2020-21 Departmental Plan in the supplementary information section entitled “Future-Oriented Statement of Operations”.
In response to the crisis resulting from the COVID-19 world pandemic, the Government of Canada provided financial relief to broadcasters by remitting the Part I broadcasting licence fees in respect to the fiscal year 2020–21, with the commitment to transfer necessary funds to the CRTC to support its operations.
Authorities
To date in 2020-21, there is a net increase in budgetary authorities of $24.73 million compared to the authorities granted in the 2019-20 Main Estimates. Factors contributing to the net increase include:
Increases
- An increase of $22.20 million for the COVID-19 Support for the Broadcasting Industry Measure.
- An increase of $4.80 million in statutory authorities related to employee benefit plans.
- An increase of $0.14 million due to a permanent conversion from operating to personnel expenditures.
- An increase of $0.08 million related to collective agreements.
- An increase of $0.06 million in program spending for activities related to Internal Services.
Decreases
- A decrease of $2.55 million for activities related to Protecting Canada’s Critical Infrastructure from Cyber Threats which was earmarked in Budget 2019 in support of pending new Critical Cyber Systems Legislation that has yet to be introduced by the Government.
Expenditures
The CRTC’s spending for the first quarter ended June 30, 2020 is higher compared to the previous fiscal year. Year-to-date total gross budgetary expenditures for 2020-21 are up ($0.49 million) over the previous fiscal year. The main reason for this difference in spending is an increase in expenditures attributable to salary related items.
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 2019-208 for 2019-20 and 2020-149 for 2020-21.
Due to the economic impact of the COVID-19 quarantine protocols, current revenues for 2020-21 are moderately below anticipated levels when compared to the same quarter of the previous year. However, there are already indications that revenues are stabilizing and on the rise. 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 2020-21 as outlined in paragraph 4 of Compliance and Enforcement Order 2020-149.
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: August 18, 2020
Claude Doucet, CPA, CGA
Chief Financial Officer
Gatineau, Canada
Date: August 12, 2020
Statement of Authorities (unaudited)
| Total available for use for the year ending March 31, 2021Footnote 1 | Used during the quarter ended June 30, 2020 | Year to date used at quarter-end | |
|---|---|---|---|
| Vote 1 – Program expenditures | 85,555 | 14,342 | 14,342 |
| Less: Revenues netted against expendituresFootnote 2 | (58,302) | (30,919) | (30,919) |
| Net Vote 1 – Program expenditures | 27,253 | (16,577) | (16,577) |
| Statutory authorities – EBP | 12,873 | 1,936 | 1,936 |
| Total Budgetary Authorities | 40,126 | (14,641) | (14,641) |
| Total available for use for the year ending March 31, 2020Footnote 1 | Used during the quarter ended June 30, 2019 | Year to date used at quarter-end | |
|---|---|---|---|
| Vote 1 – Program expenditures | 66,064 | 13,768 | 13,768 |
| Less: Revenues netted against expenditures | (61,292) | (60,507) | (60,507) |
| Net Vote 1 – Program expenditures | 4,772 | (46,739) | (46,739) |
| Vote 5 – Protecting Canada’s Critical Infrastructure from Cyber Threats | 2,545 | 0 | 0 |
| Statutory authorities – EBP | 8,075 | 2,019 | 2,019 |
| Total Budgetary Authorities | 15,392 | (44,720) | (44,720) |
Departmental budgetary expenditures by Standard Object (unaudited)
| Planned expenditures for the year ending March 31, 2021 | Used during the quarter ended June 30, 2020 | Year to date used at quarter-end | |
|---|---|---|---|
| Expenditures: | |||
| Personnel (including EBP) | 60,057 | 14,902 | 14,902 |
| Transportation and communications | 1,734 | 149 | 149 |
| Information | 1,300 | 318 | 318 |
| Professional and special services | 4,968 | 308 | 308 |
| Rentals | 1,104 | 531 | 531 |
| Repair and maintenance | 331 | 43 | 43 |
| Utilities, materials and supplies | 276 | 2 | 2 |
| Acquisition of machinery and equipment | 1,325 | 25 | 25 |
| Other subsidies and payments | 3 | 0 | 0 |
| Total gross budgetary expenditures | 71,098 | 16,278 | 16,278 |
| Less: revenues netted against expenditures | |||
| Revenues (Part I Broadcasting licence feesFootnote 2, Telecommunications fees and Unsolicited telecommunications fees) | (58,302) | (30,919) | (30,919) |
| Total revenues netted against expenditures | (58,302) | (30,919) | (30,919) |
| Total net budgetary expenditures | 12,796 | (14,641) | (14,641) |
| Planned expenditures for the year ending March 31, 2020 | Used during the quarter ended June 30, 2019 | Year to date used at quarter-end | |
|---|---|---|---|
| Expenditures: | |||
| Personnel (including EBP) | 60,853 | 14,010 | 14,010 |
| Transportation and communications | 1,683 | 351 | 351 |
| Information | 1,381 | 265 | 265 |
| Professional and special services | 6,482 | 596 | 596 |
| Rentals | 1,107 | 430 | 430 |
| Repair and maintenance | 241 | 72 | 72 |
| Utilities, materials and supplies | 416 | 24 | 24 |
| Acquisition of machinery and equipment | 1,973 | 39 | 39 |
| Other subsidies and paymentsFootnote 3 | 2,548 | 0 | 0 |
| Total gross budgetary expenditures | 76,684 | 15,787 | 15,787 |
| Less: revenues netted against expenditures | |||
| Revenues (Part I Broadcasting licence fees, Telecommunications fees, and Unsolicited telecommunications fees) | (61,292) | (60,507) | (60,507) |
| Total revenues netted against expenditures | (61,292) | (60,507) | (60,507) |
| Total net budgetary expenditures | 15,392 | (44,720) | (44,720) |
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