Quarterly Financial Report ending June 30, 2017

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

1. Introduction

1.1 Background to the Quarterly Financial Report

As per GC 4400, Departmental Quarterly Report, 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 2017–2018 Departmental Plan and in the Main Estimates.

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 2017–2018 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 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 results 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

First Quarter/ Year to Date

As reflected in the Statement of Authorities and the Departmental budgetary expenditures by Standard Object (below), the Office's first quarter/year to date spending in 2017–2018 is down $78 thousand from the same quarter/year to date of the previous year. 

This change can be attributed to the following factors:

• a decrease of $76 thousand for rent — due to delays in Public Services and Procurement Canada billings for rent in 2017–2018;
• a decrease of $18 thousand for salaries and benefits - due primarily to the departure on an employee early in the quarter as well as a decrease in statutory payments for employee benefits;
• Information costs have increased by $15 thousand – due to the increased costs of publishing the annual report ($5 thousand) and the initiation of a research paper ($10 thousand); and
• a slight increase in other costs of $1 thousand.

3. Risks and Uncertainties

Bill C-59

On June 20, 2017, Bill C-59, an act respecting national security matters, was given first reading in the House of Commons.  Under the proposed legislation, when the legislation comes into force, the Commissioner of the Communications Security Establishment becomes the Intelligence Commissioner, the Office of the Communications Security Establishment Commissioner becomes the Office of the Intelligence Commissioner, the employees of the Office of the Communications Security Establishment Commissioner become employees of the Office of the Intelligence Commissioner and the money remaining from the appropriation to the Office of the Communications Security Establishment Commissioner is deemed to be an amount appropriated to the Office of the Intelligence Commissioner. 

With no certainty as to when and in what final form the legislation will come into force, the Office continues to conduct reviews and support the Commissioner in the discharge of his mandate.

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

There are no significant changes to the review program and the operations related to the program.  The office is in the process of staffing two senior positions.

5. Approval by Senior Officials

Originals signed by:

The Honorable Jean-Pierre Plouffe
Commissioner

J. William Galbraith
Chief Financial Officer

Ottawa, Canada
August 29, 2017

Statement of Authorities (unaudited)

Fiscal year 2017–18 (in thousands of dollars)

	Total available for use for the year ending March 31, 2018	Used during the quarter ended June 30, 2017	Year to date used at quarter-end
Vote 1 - Program Expenses	1,940	336	336
Statutory authorities – Contributions to employee benefit plans	169	42	42
Total Budgetary authorities	2,109	378	378
Total authorities	2,109	378	378

Fiscal year 2016–17 (in thousands of dollars)

	Total available for use for the year ended March 31, 2017	Used during the quarter ended June 30, 2016	Year to date used at quarter-end
Vote 1 - Program Expenses	1,942	410	410
Statutory authorities – Contributions to employee benefit plans	181	46	46
Total Budgetary authorities	2,123	456	456
Total authorities	2,123	456	456

Departmental budgetary expenditures by Standard Object (unaudited)

Fiscal year 2017–18 (In thousands of dollars)

Expenditures:	Planned expenditures for the year ending March 31, 2018	Expended during the quarter ended June 30, 2017	Year to date used at quarter-end
Personnel	1,246	299	299
Transportation and communications	31	8	8
Information	65	19	19
Professional and special services	392	50	50
Rentals	318	0	0
Repair and maintenance	3	0	0
Utilities, materials and supplies	29	2	2
Acquisition of land, buildings and works	0	0	0
Acquisition of machinery and equipment	25	0	0
Other subsidies and payments	0	0	0
Total gross budgetary expenditures	2,109	378	378
Total net budgetary expenditures	2,109	378	378

Fiscal year 2016–17 (In thousands of dollars)

Expenditures:	Planned expenditures for the year ending March 31, 2017	Expended during the quarter ended June 30, 2016	Year to date used at quarter-end
Personnel	1,263	317	317
Transportation and communications	35	6	6
Information	25	4	4
Professional and special services	449	48	48
Rentals	315	76	76
Repair and maintenance	3	0	0
Utilities, materials and supplies	20	5	5
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	2,125	456	456
Total net budgetary expenditures	2,125	456	456