Quarterly Financial Report for period ending September 30, 2013

1. Introduction

Background to the Quarterly Report

As per the Treasury Board Accounting Standard (TBAS) 1.3, the Office of the Communications Security Establishment Commissioner (Office) is submitting its quarterly report.

This section of the quarterly financial report should be read in conjunction with the Main Estimates (and as applicable - Supplementary Estimates and previous interim reports for the current year).  The report 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 quarterly financial report has not been subject to external audit or review.

Authority, Mandate and Program

The position of the Communications Security Establishment Commissioner was created to review the activities of Communications Security Establishment Canada (CSEC) to determine whether it performs its duties and functions in accordance with the laws of Canada.  This includes having due regard for the privacy of Canadians.

The Commissioner derives his authority and mandate from the National Defence Act:

• reviewing CSEC activities to ensure they comply with the law;
• conducting any investigations deemed necessary in response to complaints about CSEC;
• informing the Minister of National Defence and the Attorney General of Canada of any CSEC activities that the Commissioner believes may not be in compliance with the law;
• submitting, within 90 days after the end of each fiscal year, an annual report to the Minister on the Commissioner’s activities and findings to be tabled in Parliament; and
• reviewing and reporting annually to the Minister on review activities carried out under an (ministerial) authorization.

In addition the Commissioner also has a mandate under the Security of Information Act to receive information from persons who are permanently bound to secrecy seeking to release special operational information on the grounds that it is in the public interest. Further information on the mandate, roles, responsibilities and program of the Office can be found in the Office’s 2013-14 Report on Plans and Priorities and in the Main Estimates available on the following web sites:  http://www.tbs-sct.gc.ca/rpp/2013-2014/index-fra.asp?acr=1987  et http://www.tbs-sct.gc.ca/est-pre/20132014/me-bpd/docs/me-bpd-fra.pdf

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting.  The accompanying Statement of Authorities includes the Office spending authorities granted by Parliament and those used by the department consistent with the Main Estimates and Supplementary Estimates (as applicable) for both fiscal years. This quarterly report has been prepared using a special purpose financial reporting framework, as prescribed by Treasury Board, 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 Office 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

Second Quarter

As reflected in the attached Statement of Authorities, and illustrated in the chart above, the Office's 2013-14 2^nd quarter spending is down $108 thousand from the previous year.  This change can be attributed to the following significant variations in expenditures:

• leasehold improvements – down $ 194 thousand – no current quarter costs related to leasehold improvements as the construction ended in 2012-13
• professional and special services down $17 thousand – a one-time payment of $ 50,000 in 12-13 in support of IIRAC conference was not repeated in 13-14 but this was offset in part by overall increase of almost $33 thousand due to increases in human resource services, financial management services, temporary help services and translation services
• salaries – up $57 thousand – 3 additional staff and the return in the month of September of a senior officer from an interchange agreement with another department; and
• rentals – up $46 thousand – increased rent due to additional office space; all of the additional rent applicable to the 1^st quarter was billed in 2nd quarter due to delays in billings.

Year to date

As reflected in the attached Statement of Authorities, and illustrated in the chart above, the Office's 2013-14 year to date  spending is down $52 thousand from the previous year.  This change can be attributed to the following significant variations in expenditures:

• leasehold improvements – down $194 thousand – no current year costs related to leasehold improvements as the construction ended in 2012-13
• salaries – up $ 100 thousand – as stated for the second quarter, 3 additional staff and the return in the month of September of a senior officer from an interchange agreement; and
• rentals – up $ 47 thousand -  increased rent due to additional office space.

3. Risks and Uncertainties

There are no risks and uncertainties at this time.

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

The Honourable Jean-Pierre Plouffe, C.D. was appointed Commissioner on October 18, 2013. The Office has added an additional staff member in internal services.  As well, a senior officer returned from an interchange agreement in September. With the staffing of 3 positions and the return from an interchange agreement of a senior officer during 2013-14, the Office intends to adjust planned spending in 14-15 to reflect the permanent increase in personnel. There have been no significant changes in the programs and operations.

5. Budget 2012 Implementation

The Office has not been directly affected by the savings measures announced in Budget 2012.  However, the Office committed to the Minister to formally review its operations for cost savings following the repayment of reprofiling costs for security retrofit incurred in 2012-13.  In the interim, the Office continues to seek more efficient ways to deliver its programs and reduce costs.

Approval by Senior Officials

Original signed by:

Jean-Pierre Plouffe, C.D.
Commissioner

J. William Galbraith
Chief Financial Officer    

Ottawa, Canada
December 2, 2013

STATEMENT OF AUTHORITIES (unaudited) (in thousands of dollars)

	Fiscal year 2013-14			Fiscal year 2012-2013
	Total available for use for the year ending March 31, 2014	Used during the quarter ended Sept 30, 2013	Year to date used at quarter-end	Total available for use for the year ended March 31, 2013	Used during the quarter ended Sept 30, 2012	Year to date used  at quarter-end
Vote 30 - Program Expenses	1,979	489	826	2,260	596	878
Statutory authorities – Contributions to employee benefit plans	134	33	67	134	34	67
Total Budgetary authorities	2,113	522	893	2,394	630	945
Total authorities	2,113	522	893	2,394	630	945

Table 1: Departmental budgetary expenditures by Standard Object (unaudited) (In thousands of dollars)

Expenditures	Fiscal year 2013-2014			Fiscal year 2012-2013
	Planned expenditures for the year ending March 31, 2014	Expended during the quarter ended Sept 30, 2013	Year to date used at quarter-end	Planned expenditures for the year ending March 31, 2013	Expended during the quarter ended Sept 30, 2012	Year to date used at quarter-end
Personnel	904	326	600	896	269	500
Transportation and communications	21	2	4	14	4	7
Information	20	7	9	61	5	7
Professional and special services	838	81	144	364	98	149
Rentals	292	101	128	197	55	81
Repair and maintenance	3	0	0	2	1	1
Utilities, materials and supplies	27	5	8	15	2	4
Acquisition of land, buildings and works	0	0	0	830	194	194
Acquisition of machinery and equipment	8	0	0	15	2	2
Other subsidies and payments	0	0	0	0	0	0
Total gross budgetary expenditures	2,113	522	893	2,394	630	945
Total net budgetary expenditures	2,113	522	893	2,394	630	945