DAILY NEWS Nov 27, 2012 3:02 PM - 0 comments

CRTC Releases Quarterly Financial Report

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2012-11-27

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 and Supplementary Estimates A for both the 2011-12 and the 2012-13 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.

 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 Performance Report.

  The CRTC is financed in part by the Government through Parliamentary Appropriations (e.g. Statutory Vote for Employee Benefits Plans (EBP) and Budgetary Vote for investigation and enforcement activities associated with CASL) and the balance by vote-netted fees it collects from the regulated 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 the Part I licence fees collected from broadcasters and a portion of the annual telecommunications fees collected from telecommunications carriers to finance the costs it incurs in regulating the broadcasting and telecommunications industries (i.e. respendable revenue). The balance of these two fees recovers the costs for items funded through appropriations (e.g. EBP) and costs incurred by other government departments on the CRTC’s behalf and are classified as non-respendable revenue.

The vote-netted revenue for the entire year is collected primarily 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 2012-13 RPP.

The CRTC’s quarterly and year-to-date spending are in line with that of the previous fiscal year.

For 2012-13, there is a net decrease in budgetary authorities of $1.4 million compared to the authorities granted in 2011-12 Main Estimates and Supplementary Estimates A. This is due to a decrease in operating and statutory costs. Factors contributing to the net decrease include:

Decreases

$2.5 million related to the National Do Not Call List (DNCL);

$0.4 million in funding related to CASL;

$0.2 million for EBP;

Increases

$1.0 million related to the Operating Budget Carry Forward (Vote 25)

$0.7 million due to a transfer from Industry Canada for hosting the Spam Reporting Center (SRC).

This QFR reflects the results of the current fiscal period in relation to the Main Estimates and Supplementary Estimates A for which full supply was released on June 28, 2012.

 To date, the CRTC’s National Do Not Call List (DNCL) investigation and enforcement activities have been funded by interim measures on a year-to-year basis. Funding approved for 2010-11 and 2011-12 totaled $3.0 million ($2.6 million in voted authorities and $0.4 million for EBP). In addition, for each of these years $0.3 million was approved, and was held centrally in an earmarked reserve, to offset Public Works and Government Services Canada accommodation requirements associated with CRTC’s DNCL investigation and enforcement staff.

In the previous fiscal year (i.e. 2011-12) budgetary authorities for DNCL activities were approved in the first quarter as part of the Supplementary Estimates A process. For fiscal year 2012-13, no funding authorities had been approved for DNCL activities as of the quarter ended September 30, 2012. This being said, the CRTC is continuing its investigation and enforcement activities in the current fiscal year and is working with Industry Canada, Canadian Heritage, and central agencies to implement a short term funding solution for 2012-13 and a longer term funding solution starting in 2013-14.

The longer term funding solution will involve cost recovery of CRTC’s DNCL investigation and enforcement activities from telemarketers. On June 29, 2012 Bill C-38 “An Act to Implement Certain Provisions of the Budget Tabled in Parliament on March 29, 2012 and other measures” received Royal Assent. As part of this Bill, changes to the Telecommunications Act (e.g. section 41.21(1)) were approved that will allow the Commission to make regulations prescribing fees for the purposes of recovering all or a portion of the costs that the Commission determines to be attributable to its responsibilities under section 41.2 of the Act. In accordance with section 41.21(3) of the Act, the CRTC has issued a Notice of Consultation (NoC # 2012-588) on October 23, 2012. In this NoC, the CRTC is seeking comments on the new “Unsolicited Telecommunications Fees Regulations” that, when implemented, will be used to fund the CRTC’s DNCL investigation and enforcement activities. The CRTC is targeting to have these Regulations in place on April 1, 2013, for the 2013-14 fiscal year.

 There have been no significant changes in relation to operations, personnel and programs over the past year with the exception of CASL and the CRTC accepting responsibility for the development and operation of a SPAM reporting center (SRC). An administrative agreement between Industry Canada (IC) and the CRTC provides for a vote transfer from IC to the CRTC in the amount of $0.7million on an annual basis starting in 2012-13. The amount of funding for 2012-13, was approved as part of Supplementary Estimates A.

When CASL comes into effect, it is intended that a SRC will be operational at the same time. The SRC will receive reports and complaints of spam and related electronic threats, collect voluntarily provided or publicly available information as evidence related to potential violations of CASL, store this information in databases and allow access to such databases by enforcement agencies.

 This section provides an overview of the savings measures announced in Budget 2012 that will be implemented in order to refocus government programs.

CRTC will achieve Budget 2012 savings of $0.428 million, starting in 2013-14 and on-going, through efficiency measures and program reductions for its statutory investigation and enforcement activities under Canada’s anti-spam legislation. Prior to the start of fiscal year 2013-14 the CRTC will reassess its resource allocation to determine if the reductions identified as part of Budget 2012 can be achieved by O&M reductions (e.g. through process and/or internal services efficiencies) as opposed to salary reductions which would mitigate the potential impact on the number of cases to be investigated and the overall program effectiveness.

The CRTC will enforce the anti-spam legislation when it comes into effect. The CRTC remains committed to ensuring a safer and more secure online environment for Canadians and will use its remaining resources to effectively target offenders.

There are no financial risks or uncertainties related to these savings.

Other measures referenced in Budget 2012 include the changes to the Telecommunications Act that will allow the CRTC to make fee regulations that would recover its DNCL investigation and enforcement costs from telemarketers. Further information on this item is explained in the section on “Risks and Uncertainties”.

6. Approval by Senior Officials

Approved by:

 Jean-Pierre Blais, Chairman and CEO

Gatineau, Quebec

Date: November 23, 2012

 John Traversy, Secretary General

Gatineau, Quebec

Date: November 23, 2012

Statement of Authorities (unaudited)

Fiscal year 2012-13 (in thousands of dollars) Total available for use for the year ending March 31, 2013* ** Used during the quarter ended

September 30, 2012 Year to date used at quarter-end

Vote 50 – Program expenditures 49,956 11,354 22,145

Less: Revenues netted against expenditures (42,574) (9,298) (42,574)

Net Vote 50 – Program expenditures 7,382 2,056 (20,429)

Statutory authorities – EBP 6,311 1,578 3,156

Total Budgetary Authorities 13,693 3,634 (17,273)

*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.

Fiscal year 2011-12 (in thousands of dollars) Total available for use for the year ending March 31, 2012* Used during the quarter ended

September 30, 2011 Year to date used at quarter-end

Vote 45 – Program expenditures 51,189 12,745 23,476

Less: Revenues netted against expenditures (42,603) (14,798) (42,603)

Net Vote 45 – Program expenditures 8,586 (2,053) (19,127)

Statutory authorities – EBP 6,473 1,618 3,236

Total Budgetary Authorities 15,059 (435) (15,891)

*Includes only Authorities available for use and granted by Parliament at quarter-end.

Departmental budgetary expenditures by Standard Object (unaudited)

Fiscal year 2012-13 (in thousands of dollars) Planned expenditures for the

year ending

March 31, 2013* Used during the quarter ended

September 30, 2012 Year to date used at quarter-end

Expenditures:

Personnel (including EBP) 42,169 10,726 21,572

Transportation and communications 2,398 478 807

Information 1,266 446 760

Professional and special services 6,713 977 1,637

Rentals 364 135 224

Repair and maintenance 1,468 80 138

Utilities, materials and supplies 377 61 109

Acquisition of machinery and equipment 1,510 23 48

Other subsidies and payments 2 6 6

Total gross budgetary expenditures 56,267 12,932 25,301

Less: revenues netted against expenditures

Revenues (Part I Broadcasting licence fees and Telecommunication fees) (42,574) (9,298) (42,574)

Total revenues netted against expenditures (42,574) (9,298) (42,574)

TOTAL NET BUDGETARY EXPENDITURES 13,693 3,634 (17,273)

*Planned expenditures do not reflect measures announced in Budget 2012.

Fiscal year 2011-12 (in thousands of dollars) Planned expenditures for the

year ending

March 31, 2012 Used during the quarter ended

September 30, 2011 Year to date used at quarter-end

Expenditures:

Personnel (including EBP) 44,696 12,338 23,121

Transportation and communications 2,271 500 892

Information 1,460 348 607

Professional and special services 6,421 896 1,536

Rentals 392 37 83

Repair and maintenance 1,107 146 301

Utilities, materials and supplies 416 70 142

Acquisition of machinery and equipment 899 28 30

Other subsidies and payments 0 0 0

Total gross budgetary expenditures 57,662 14,363 26,712

Less: revenues netted against expenditures

Revenues (Part I Broadcasting licence fees and Telecommunication fees) (42,603) (14,798) (42,603)

Total revenues netted against expenditures (42,603) (14,798) (42,603)

TOTAL NET BUDGETARY EXPENDITURES 15,059 (435) (15,891)


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