Quarterly Financial Report for period ending December 31, 2015

Statement Outlining Results, Risks and Significant Changes in Operations, Personnel and Program

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 Communications Security Establishment Commissioner was created to review the activities of 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/hgw-cgf/finances/pgs-pdg/gepme-pdgbpd/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's spending authorities granted by Parliament and those used by the Office consistent with the Main Estimates and Supplementary Estimates (as applicable) for the 2015 -2016 fiscal years. 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 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

Third 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 third quarter spending in 2015-16 is down $2 thousand from the same quarter of the previous year. 

This change can be attributed to the following factors:

• a decrease of $13 thousand for rent – delays in Public Works and Government Services Canada billings for rent;
• a decrease of $6 thousand for professional services – cost of translation is down from the previous year;
• a decrease in all other costs of $12 thousand - a decrease of $8 thousand for equipment as tempest computers were purchased in the 3^rd quarter of last year and a decrease of $2 thousand for each of supplies and information services;
• an increase of $27 thousand for salaries and benefits is due primarily to the recovery in the 4^th quarter of salary costs for the third quarter for an employee on secondment; and
• a slight increase in travel costs of $2 thousand.

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 $21 thousand from the previous year. 

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

• a decrease in transportation costs of $16 thousand, - primarily due to attendance at the 2014 IIRAC (International Intelligence Review Agencies Conference) in London, England;
• an overall decrease in professional services of $18 thousand – delays in billings for human resource services and lower translation costs;
• a decrease in rental costs of $14 thousand, the majority of this was due to the late billing by Public Works and Government Services Canada for office accommodation;
• a decrease in other costs of $6 thousand – both information services and repairs were each up $1 thousand but there was a reduction of $8 thousand because of equipment purchases in the 3^rd quarter of last year;
• an increase in salary and benefits of $33 thousand – the increase is due to the recovery of 3^rd quarter salary costs in the 4^th quarter (see quarterly summary above) as well as slight increases in salaries and benefits.

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 feel 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. Approval by Senior Officials

Original signed by:

The Honorable Jean-Pierre Plouffe, C.D.
Commissioner                                                           

William Galbraith
Chief Financial Officer

Ottawa, Canada
March 03, 2016

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 Dec 31, 2015	Year to date used at quarter-end
Vote 1 - Program Expenses	1,942	410	1,274
Statutory authorities – Contributions to employee benefit plans	181	46	136
Total Budgetary authorities	2,123	456	1,410
Total authorities	2,123	456	1,410

Fiscal year 2014-15 (in thousands of dollars)

	Total available for use for the year ended March 31, 2015	Used during the quarter ended Dec 31, 2014	Year to date used at quarter-end
Vote 1 - Program Expenses	1,939	414	1,298
Statutory authorities – Contributions to employee benefit plans	177	44	133
Total Budgetary authorities	2,116	458	1,431
Total authorities	2,116	458	1,431

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 Dec 31, 2015	Year to date used at quarter-end
Personnel	1,258	290	977
Transportation and communications	40	7	16
Information	17	0	12
Professional and special services	470	90	200
Rentals	310	65	192
Repair and maintenance	1	0	1
Utilities, materials and supplies	17	4	12
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	456	1,410
Total net budgetary expenditures	2,123	456	1,410

Fiscal year 2014-15 (In thousands of dollars)

Expenditures	Planned expenditures the year ending March 31, 2015	Expended during the quarter ended Dec 31, 2014	Year to date used at quarter-end
Personnel	1,255	263	944
Transportation and communications	36	5	32
Information	17	2	11
Professional and special services	467	96	218
Rentals	310	78	206
Repair and maintenance	3	0	0
Utilities, materials and supplies	16	6	12
Acquisition of land, buildings and works	0	0	0
Acquisition of machinery and equipment	12	8	8
Other subsidies and payments	0	0	0
Total gross budgetary expenditures	2,116	458	1,431
Total net budgetary expenditures	2,116	458	1,431