Quarterly Financial Report for the Quarter ended June 30, 2011

1. Introduction

This quarterly financial report has been prepared by the management of the Transportation Appeal Tribunal of Canada "TATC" and Transport Canada as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by Treasury Board Accounting Standard 1.3.  This quarterly report should be read in conjunction with the Main Estimates and Supplementary Estimates.

1.1 Authority, Mandate and Program Activities

A summary description of TATC's program activities can be found in Part II of the Main Estimates.

1.2 Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting.  The accompanying Statement of Authorities includes TATC's spending authorities granted by Parliament and those used by the Tribunal consistent with the Main Estimates and Supplementary Estimates for the 2011-2012 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.

TATC 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 and published in the Departmental Performance Report.  However, the spending authorities voted by Parliament remain on an expenditure basis.

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

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

2.1 Statement of Authorities

The statement (attached at the end) illustrates authorities used for the quarter as well as authorities used to date for both the current and previous fiscal year. TATC's authorities available for use at the end of the 1stquarter 2011-2012 decreased by approximately $2,000 when compared to the same quarter of the previous fiscal year. This is explained by a decrease of the operating expenditures (vote 65) by approximately $8,000, and an increase of the statutory authorities available for use for employee pay benefits by approximately $6,000.

The authorities used during the first quarter of 2011-2012 for program expenditures and statutory items were approximately $56,000 higher than in the same quarter of 2010-2011. This increase can be explained by a higher volume of Review Hearings that led to an increase in expenditures on such items as professional services and transportation.

This statement also illustrates that the authorities used in the first quarter of 2011-2012, expressed as a percentage of authorities available for the whole year, were higher than in Q1 2010-2011. Approximately 24% of authorities available for use were expended during the 1st quarter 2011-2012, whereas only 20% were expended in the first quarter of 2010-2011.

2.2 Statement of Departmental Budgetary Expenditures by Standard Object

In the quarter ended June 30th, 2011 total expenditures of the TATC were up by approximately $56,000 when compared with the same period of 2010-2011. This is primarily the result of:

  • Increase in personnel expenditures by $28,500:

    This variance is explained by an additional term position to assist in the additional workload pressures under the Review and Appeal Hearing's program.  

  • Increase of transportation and communications expenditures by $30,600:

    This variance is the result of an increase in Appeal Hearings which requires 3 part time Members to travel. Furthermore, the Tribunal has enacted a policy to request transcripts from both Appeal and Review Hearings. This practice is new to the Tribunal as previous transcripts were only requested for review Hearings.  An additional cost is incurred in this policy as every transcript requires translation.

  • Increase of professional services expenditures by $30,300:

    Several positions remained vacant. At the same time, there was an increase in the number of Review and Appeal Hearings. As a result, professional services expenditures increased as internal resources of TATC were insufficient to keep up with the volume of Review and Appeal Hearings.

  • Decrease in acquisition of machinery and equipment by approximately $31,900.

    The variance in the purchase of machinery and equipment at quarter-end is largely explained by the payables at year-end "PAYE's". 2009-2010 PAYE's have not been cleared until the end of 3rd quarter 2010-2011. As a result, expenditure on machinery and equipment in the 1st quarter 2010-2011 was temporarily overstated by approximately $20,400. Excluding PAYE transactions, actual variance would be approximately $11,500.

All other variances in expenditures by standard object were in line with spending patterns of previous years.

3. Risks and Uncertainties

Budget 2010 announced that the operating budgets of departments would be frozen at their 2010-11 levels for the fiscal years 2011-12 and 2012-13. TATC has implemented strategies to manage the operating budget freeze within the Tribunal department. These strategies include expenditure restraint in discretionary spending and re-allocating planned spending from lower to higher priorities.

The objective of the TATC is to provide the aviation, marine and rail communities with the opportunity to have enforcement and licensing decisions of the Minister of Transport reviewed by an independent quasi-judicial body.  Also, Transport Canada's decision not to issue or amend a Canadian Aviation Document "CAD" is within the Tribunal's jurisdiction.

The Tribunal has developed a Corporate Risk profile to manage its risks that includes finding, especially the Marine with the right balance between Tribunal resources and the increasing volume of Review and Appeal Hearings, which is impacted by changing industry standards, laws and regulations, and new safety and security requirements. The risks and uncertainties that could impact the Tribunal's financial plan for the current year are summarized below:

Risk

Key Mitigation

  • Funding risk 
  • In collaboration with Transport Canada, TATC manages the risk of a funding shortfall. TATC is also working to revise and improve the funding model  
  • Changing business volume
  • Keeping track of historical Review and Appeal volumes to determine human resources needs. Keeping up-to-date inventory of external legal professionals.
  • Shortage of human resources and continued delivery of programs
  • TATC offers deployment and assignment opportunities for employees of other government departments. Also, TATC relies on external legal professional to assist on issues arising from Review and Appeal Hearings.  

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

In 2011-2012 the Tribunal's activities remained substantially the same as in the previous year.  However, there is an increase in the number of Review and Appeal Hearings, which can be attributed to the Marine sector.

Approved by:

Richard Hall,

Chairperson, TATC
Ottawa, Canada
Date

André Morency,

Chief Financial Officer, Transport Canada
Ottawa, Canada
Date

Statement of Authorities (unaudited)

  Fiscal year 2011-2012 Fiscal year 2010-2011
(in dollars) Total available for use for the year ending March 31, 2012 * Used during the quarter ended June 30, 2011 Year to date (YTD) used at quarter-end Total available for use for the year ended March 31, 2011 * Used  during the quarter ended
June 30, 2010
Year to date (YTD) used  at quarter-end
Vote 65 - Operating expenditures 1,284,898 309,221 309,221 1,292,701 254,650 254,650
Budgetary statutory authorities            
Employee Benefit Plan 129,762 32,441 32,441 123,879 30,970 30,970
Total authorities 1,414,660 341,662 341,662 1,416,580 285,620 285,620

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

Departmental Budgetary Expenditures by Standard Object (unaudited)

  Fiscal year 2011-2012 Fiscal year 2010-2011
(In dollars) Planned expenditures for the year ending March 31, 2012 Expended during the quarter ended June 30th, 2011 Year to date used  at quarter-end Planned expenditures for the year ending March 31, 2011 Expended during the quarter ended June 30th, 2010 Year to date used  at quarter-end
Expenditures:            
Personnel 850,660 205,208 205,208 852,580 176,636 176,636
Transportation and communications 122,000 48,976   48,976   115,000 18,325 18,325
Information 27,000 195 195 30,000 - -
Professional and special services 357,000 80,800 80,800 359,000 50,552 50,552
Rentals 24,000 4,969 4,969 24,000 4,777 4,777
Repair and maintenance 6,000 - - 8,000 - -
Utilities, materials and supplies 28,000 994 994 28,000 1,584 1,584
Acquisition of machinery and equipment - 520 520 - 32,454 32,454
Other subsidies and payments - 314 314 - 1,606 1,606
Total gross budgetary expenditures    1,414,660  341,976  341,976 1,416,580 285,934 285,934