Quarterly Financial Report for period ending September 30, 2015

1. Introduction

1.1 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.

1.2 Authority, Mandate and Program

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

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 programs of the Office can be found in the Office's 2015-16 Report on Plans and Priorities and in the Main Estimates available on the following web sites: http://www.ocsec-bccst.gc.ca/finance/2015-2016/rpp/index_e.php and http://www.tbs-sct.gc.ca/rpp/2015-2016/index-eng.asp

1.3 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 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. 

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 in Table 1 Departmental budgetary expenditures by Standard Object (below) and illustrated in the chart (above), the Office's quarterly spending in 2015-16 is up $102 thousand from the previous year. 

This change can be attributed to the following factors:

• an increase of $44 thousand for salaries and benefits due to secondment costs related to an additional employee, slight increase due to statutory costs and performance pay, and the absence of transition payments related to the implementing salary payments in arrears;
• an increase of $76 thousand for rent – delays in PWGSC billings for rent resulted in all six months being paid in the second quarter;
• an increase of $1 thousand for all other expenditures – an increase in the cost of repairs from the previous quarter of 2014-15;
• a decrease of $12 thousand in travel costs – travel costs in 2014-15 included the costs of travel to London, England for the IIRAC (International Intelligence Review Agencies Conference);
• a decrease of $7 thousand for professional services – cost of translation is down from the previous year by $4 thousand and the cost of all other professional services is down an additional $3 thousand; and
• all other costs remain the same.

Year to date

As illustrated in the chart above and reflected in the attached Statement of Authorities and in Table 1 Departmental budgetary expenditures by Standard Object, the Office's year to date 2015-16 spending is down $19 thousand from the previous year. 

This change can be attributed to the following significant variations in expenditures:

• a decrease in transportation costs of $18 thousand, - primarily due to attendance at the 2014 IIRAC (International Intelligence Review Agencies Conference) in London, England;
• an overall decrease in professional services of $12 thousand – delays in billings for review services and human resources and lower translation costs – down $18 thousand - were offset by slight increases in the cost of staff development, legal services and financial services – up $6 thousand;
• an increase in salary and benefits of $6 thousand – a slight increase due to staff changes and salary increases;
• an increase in communication costs in 2015-16 of $3 thousand related to the annual report and the web site;
• an increase of $2 thousand in office supplies; and
• the year to date total of all other costs was the same between the two years.

It should also be noted that the Authorities in the Statement of Authorities and the Planned Expenditures in Table 1: Departmental budgetary expenditures by Standard Object have been adjusted to account for the receipt of the operating budget carry-forward ($92,351) carried over from fiscal year 2014-15.

3. Risks and Uncertainties

Assurance and Transparency

To the greatest extent possible within the confines of the Security of Information Act my office must continue to provide information and explanation on the activities of CSE in order that Canadians can be confident that the activities of CSE are being rigorously reviewed and that their privacy is being protected.

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

There were no significant changes in relation to operations, personnel and programs.

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 in 16-17 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.

Original signed by:

Jean-Pierre Plouffe, C.D.
Commissioner

William Galbraith
Chief Financial Officer         

Ottawa, Canada
October 28, 2015

STATEMENT OF AUTHORITIES (unaudited)

Fiscal year 2015-16 (in thousands of dollars)

	Total available for use for the year ending March 31, 2016	Used during the quarter ended Sept 30, 2015	Year to date used at quarter-end
Vote 1 - Program Expenses	1,942	550	864
Statutory authorities – Contributions to employee benefit plans	181	45	90
Total Budgetary authorities	2,123	595	954
Total authorities	2,123	595	954

Fiscal year 2014-15 (in thousands of dollars)

	Total available for use for the year ended March 31, 2015	Used during the quarter ended Sept 30, 2014	Year to date used at quarter-end
Vote 1 - Program Expenses	1,847	448	884
Statutory authorities – Contributions to employee benefit plans	177	45	89
Total Budgetary authorities	2,024	493	973
Total authorities	2,024	493	973

Table 1: Departmental budgetary expenditures by Standard Object (unaudited)

Fiscal year 2015-16 (In thousands of dollars)

Expenditures:	Planned expenditures for the year ending March 31, 2016	Expended during the quarter ended Sept 30, 2015	Year to date used at quarter-end
Personnel	1,258	389	687
Transportation and communications	40	3	9
Information	17	7	12
Professional and special services	470	63	110
Rentals	310	127	127
Repair and maintenance	1	1	1
Utilities, materials and supplies	17	5	8
Acquisition of land, buildings and works	0	0	0
Acquisition of machinery and equipment	10	0	0
Other subsidies and payments	0	0	0
Total gross budgetary expenditures	2,123	595	954
Total net budgetary expenditures	2,123	595	954

Fiscal year 2014-15 (In thousands of dollars)

Expenditures:	Planned expenditures for the year ending March 31, 2015	Expended during the quarter ended Sept 30, 2014	Year to date used at quarter-end
Personnel	1,252	345	681
Transportation and communications	36	15	27
Information	17	7	9
Professional and special services	378	70	122
Rentals	310	51	128
Repair and maintenance	3	0	0
Utilities, materials and supplies	16	5	6
Acquisition of land, buildings and works	0	0	0
Acquisition of machinery and equipment	12	0	0
Other subsidies and payments	0	0	0
Total gross budgetary expenditures	2,024	493	973
Total net budgetary expenditures	2,024	493	973