Quarterly Financial Report for period ending September 30, 2011

Statement outlining results, risks and significant changes in operations, personnel and program

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 an external audit or review.

Authority, Mandate and Program

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

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 Commissioner’s 2011-12 Report on Plans and Priorities and Main Estimates available on the following websites: http://www.tbs-sct.gc.ca/rpp/2011-2012/inst/srt/srt00-eng.asp and http://www.tbs-sct.gc.ca/est-pre/20112012/me-bpd/docs/me-bpd-eng.pdf and http://www.ocsec-bccst.gc.ca

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 the 2011-2012 fiscal year. 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 money 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, as it was in the Spring of 2011, 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.

Highlights of fiscal quarter and fiscal year to date (YTD) results

2nd quarter spending

As reflected in the attached Statement of Authorities, the Office’s total 2nd quarter spending is up $7 thousand from same quarter the previous year. The details of the quarterly variance are as follows. Salary costs are down over $15 thousand, a combination of performance pay in the current quarter and severance pay in the year previous. Professional and special service costs (legal, organizational review and management consulting) are down $14 thousand from the 2nd quarter of the year previous year as these were based on unique requirements of the previous quarter. Rentals are up $38 thousand but this is as a result of the Office’s occupancy instrument being renegotiated in 10-11 and late billings for accommodation costs.

Year to date spending

The Office’s year to date spending is down $51 thousand. The details of the year to date variance are as follows. Salary is down $69 thousand as a result of performance pay and severance pay in 2010-11. Information costs are down $5 thousand as work was completed on a comprehensive communication plan in 10-11. Professional and special service costs are down $12 thousand owing to one-time service requirements in 2010-11.  Rental costs are up $38 thousand owing to a delay in 2010-11 billings in the previous year.

Risks and Uncertainties

Review Capability and Capacity

Risks and uncertainties remain the same. As CSEC’s operations grow and increase in complexity, the Commissioner’s office must ensure that its review capabilities can meet this growth in size and complexity. Review methodologies must be regularly assessed for effectiveness and efficiency and review officers must maintain a high level of professionalism and proficiency as well as training to keep up to date with technology and policy. The Office intends to engage the services of additional review professionals but has been unable to do so because of a lack of office space.

Accommodations

The Office requires additional office space. It is, however, a slow process, demanding extensive collaboration with Public Works and building management, to both acquire the required space and to ensure that it meets the stringent security requirements of the Office. Until the additional space is acquired, the Office will not be able to engage the staff necessary for both its review and internal service activities. It appears that RFPs (requests for proposals) for the fit-up will be issued in the 3rd quarter and that construction will quickly follow.

Significant changes in relation to operations, personnel and programs

There were no significant changes in operations, personnel and programs during the quarter.

Approval by Senior Officials

Original signed by:

Robert Décary, Q.C.
Commissioner

J. William Galbraith
Chief Financial Officer 

Ottawa, Canada
November 25, 2011

Statement of Authorities (unaudited) (in thousands of dollars)

  Fiscal year 2011-12
Total available for use for the year ending March 31, 2012 Used during the quarter ended Sept 30, 2011 Year to date used at quarter-end
Vote 25 - Program Expenses 1,971 362 632
Statutory authorities – Contributions to employee benefit plans 137 34 57
Total Budgetary authorities 2,108 396 689
Total authorities 2,108 396 689
  Fiscal year 2010-2011
Total available for use for the year ended March 31, 2011  Used during the quarter ended Sept 30, 2010 Year to date used at quarter-end
Vote 25 - Program Expenses 1,971 358 677
Statutory authorities – Contributions to employee benefit plans 130 31 63
Total Budgetary authorities 2,101 389 740
Total authorities 2,101 389 740

Departmental budgetary expenditures by standard object (unaudited) (In thousands of dollars)

Expenditures  Fiscal year 2011-2012
Planned expenditures for the year ending March 31, 2012 Expended during the quarter ended Sept 30, 2011 Year to date used at quarter-end 
Personnel 899 237 480
Transportation and communications 177 2 5
Information 79 11 11
Professional and special services 709 65 107
Rentals 165 78 79
Repair and maintenance 5 0 0
Utilities, materials and supplies 15 1 5
Acquisition of land, buildings and works 0 0 0
Acquisition of machinery and equipment 59 2 2
Other subsidies and payments 0 0 0
Total gross budgetary expenditures 2,108 396 689
Total net budgetary expenditures 2,108 396 689
 Expenditures
 Fiscal year 2010-2011
Planned expenditures for the year ending March 31, 2011 Expended during the quarter ended Sept 30, 2010 Year to date used at quarter-end
Personnel 892 252 549
Transportation and communications 177 4 8
Information 79 11 16
Professional and special services 709 79 119
Rentals 159 39 41
Repair and maintenance 5 0 0
Utilities, materials and supplies 65 4 7
Acquisition of land, buildings and works 0 0 0
Acquisition of machinery and equipment 15 0 0
Other subsidies and payments 0 0 0
Total gross budgetary expenditures 2,101 389 740
Total net budgetary expenditures 2,101 389 740
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