Future Oriented Financial Statements for 2011-2012
Statement of Management Responsibility
Departmental management is responsible for these future-oriented financial statements, including responsibility for the appropriateness of the assumptions on which these statements are prepared. These statements are based on the best information available and assumptions adopted as at January 31, 2011 and reflect the plans described in the Report on Plans and Priorities.
The future-oriented financial statements of the Office have not been audited.
Robert Décary
Commissioner
J. William Galbraith
Chief Financial Officer
Ottawa, Canada
Date:
| Estimated | ||
|---|---|---|
| Results 2011 | Forecast 2012 | |
| Expenses | ||
| Review Program | $1,108,689 | $1,138,584 |
| Internal Services | 446,846 | 457,602 |
| Total Expenses | 1,555,535 | 1,596,186 |
| Net Cost of Operations | $1,555,535 | $1,596,186 |
Information for the year ended March 31, 2011 includes actual amounts from April 1, 2010 to January 31, 2011.
Segmented information (Note 9)
The accompanying notes form an integral part of these future-oriented financial statements.
Notes to the Future-oriented Financial Statements (unaudited)
1. Authority and Objectives
The Office of the Communications Security Establishment Commissioner (the Office) was created on June 19, 1996. It was established as a separate agency of government in April 2008. The mandate of the Communications Security Establishment Commissioner is threefold:
- to review the activities of the Communications Security Establishment Canada (CSEC) for compliance with the law and to advise the Minister of National Defence and the Attorney General of Canada of any CSEC activity that the Commissioner believes may not be in compliance with the law;
- to receive complaints about the lawfulness of CSEC activities; and
- to carry out specific duties under the 'public interest defence' provisions of the Security of Information Act.
There are two programs that support the Commissioner in the discharge of his mandate. The review program entails the reviews and studies performed by the Office of the Commissioner and the reports on these reviews and studies that are forwarded by the Commissioner to the Minister of National Defence. The internal services program entails the corporate services in place that support the review program.
2. Significant Assumptions
The future-oriented financial statements have been prepared on the basis of the government priorities and the plans of the Office as described in the Report on Plans and Priorities.
The main assumptions are as follows:
- The Office has initiated a fit-up project for its additional office space. Final costs and completion dates have yet to be finalized; however, the estimated costs of the project will result in 2011-12 forecast appropriations used significantly higher than for 2010-11.
- Expenses, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.
- There has been no forecast of investigative or hearing costs related to the handling complaints, that could be received under the Commissioner's mandate, because only two complaints merited investigation over the 15 year history of the Office. Should a complaint be received, the cost of addressing this complaint could be significant.
- The forecast of 2011-2012 is based on the Main Estimates of 2010-2011.
- Estimated year-end information for 2010-11 is used as the opening position for the 2011-12 forecasts.
These assumptions are adopted as at January 31, 2011.
3. Variations and Changes to the Forecast Financial Information
While every attempt has been made to accurately forecast final results for the remainder of 2010-11 and for 2011-12, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.
In preparing these financial statements, the Office has made estimates and assumptions concerning the future. These estimates and judgments may differ from the subsequent actual results. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Factors that could lead to material differences between the future-oriented financial statements and the historical financial statements include:
- The timing and costs related to the acquisition of materials, equipment and construction costs and other capital assets related to the fit-up may affect the appropriation used in 2011-12.
- Further changes to the operating budget through additional new initiatives or technical adjustments introduced by government later in the year.
- The receipt of a complaint that requires both an investigation and a hearing could result in significant costs.
Once the Report on Plans and Priorities is presented in the spring of 2011, the Office will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.
4. Summary of Significant Accounting Policies
The future-oriented financial statements have been prepared in accordance with the Treasury Board accounting policies stated below, which are based on Canadian generally accepted accounting principles for the public sector. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian generally accepted accounting principles.
Significant accounting policies are as follows:
(a) Parliamentary appropriations - The Office is financed by the Government of Canada through Parliamentary appropriations. The cash accounting basis is used to recognize transactions affecting parliamentary appropriations. The future-oriented financial statements are based on accrual accounting. Consequently, items presented in the Future-oriented Statement of Operations are not necessarily the same as those provided through appropriations from Parliament. Note 5 provides a reconciliation between the bases of reporting.
(b) Net cash provided by Government - the Office operates within the Consolidated Revenue Fund (CRF) which is administered by the Receiver General for Canada. All cash received by the Office is deposited to the CRF and all cash disbursements made by the Office are paid from the CRF. Net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.
(c) Forecasted expenses are recorded on the accrual basis:
Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
A service provided without charge by another government department for the employer's contribution to the health and dental insurance plans is recorded as an operating expense at its estimated cost.
(d) Employee future benefits
- Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer plan administered by the Government of Canada. The Office's contributions to the Plan are charged to expenses in the year incurred and represent the total obligation to the Plan. Current legislation does not require the Office to make contributions for any actuarial deficiencies of the Plan.
- Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.
(e) All tangible capital assets and leasehold improvements having an initial cost of $5,000 or more are recorded at their acquisition cost. The Office does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections.
Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:
| Asset Class | Amortization Period |
|---|---|
| Other equipment including furniture | 5 years |
| Leasehold improvements | remaining term of the lease |
Assets under construction are recorded in the applicable capital asset class in the year that they become available for use and are not amortized until they become available for use.
5. Parliamentary Appropriations
The Office receives its funding through annual Parliamentary appropriations. Items recognized in the statement of operations and the statement of financial position in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, the Office has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:
(a) Authorities requested
| (in dollars) | ||
|---|---|---|
| Estimated 2011 | Forecast 2012 | |
| Authorities requested | ||
| Vote 20 - Operating expenditures | 1,970,519 | 1,970,519 |
| Statutory amounts | 130,000 | 137,124 |
| Vote 20 - Operating Budget carry forward | 68,226 | - |
| Forecast authorities available | 2,168,745 | 2,107,643 |
Forecast authorities requested for the year ending March 31, 2012 are the planned spending amounts presented in the 2011-12 Report on Plans and Priorities. Estimated authorities requested for the year ending March 31, 2011 include amounts presented in the 2011-12 Main Estimates and Supplementary Estimates (A) and (B), planned for presentation in Supplementary Estimates (C) and estimates to be allocated at year-end from Treasury Board central votes.
(b) Reconciliation of net cost of operations to requested authorities:
| (in dollars) | ||
|---|---|---|
| Estimated 2011 | Forecast 2012 | |
| Net cost of operations | 1,555,535 | 1,596,186 |
| Adjustments for items affecting net cost of operations but not affecting authorities | ||
| Add (Less): | ||
| Services provided without charge by other government departments | (57,463) | (60,634) |
| Amortization of tangible capital assets | (2,843) | (7,750) |
| (Increase) decrease in employee severance benefits liability | 6,920 | (10,159) |
| Decrease in vacation pay and compensatory leave liability | 47,689 | - |
| 1,549,838 | 1,517,643 | |
| Adjustments for items not affecting net cost of operations but affecting authorities: | ||
| Acquisitions of tangible capital assets | 590,000 | |
| Forecast current year lapse | 618,907 | - |
| Forecast authorities available | 2,168,745 | 2,107,643 |
6. Tangible Capital Assets (in dollars)
| Capital Asset Class | Cost | |||
|---|---|---|---|---|
| Opening Balance | Acquisitions | Disposals and write-offs | Closing Balance | |
| Other equipment including furniture | 10,890 | 20,000 | - | 30,890 |
| Leasehold improvements | 8,085 | 570,000 | - | 578,085 |
| Total | 18,975 | 590,000 | - | 608,975 |
| Accumulated Amortization | ||||
|---|---|---|---|---|
| Opening Balance | Amortization | Disposals and write-offs | Closing Balance | |
| Informatics Hardware | 2,542 | 6,178 | - | 8,720 |
| Leasehold improvements | 3,144 | 1,572 | - | 4,716 |
| Total | 5,686 | 7,750 | - | 13,436 |
| Net Book Value | ||
|---|---|---|
| 2011 | 2012 | |
| Informatics Hardware | 8,348 | 22,170 |
| Leasehold improvements | 4,941 | 573,369 |
| Total | 13,289 | 595,539 |
Leasehold improvements represent the cost of fit-up for additional office space; amortization of these improvements is scheduled to start in 2012-13.
7. Employee Benefits
(a) Pension benefits: The Office's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Quebec Pension Plans benefits and they are indexed to inflation.
Both the employees and the Office contribute to the cost of the Plan. The forecast expenses are $91,260 in 2010-11 and $96,261 in 2011-12, representing approximately 1.9 times the contributions of employees.
The Office's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.
(b) Severance benefits
The Office provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future appropriations. Information about the severance benefits, estimated as at the date of these statements, is as follows:
| Estimated (in dollars) | ||
|---|---|---|
| Results 2011 | Forecast 2012 | |
| Accrued benefit obligation, beginning of the year | 191,005 | 184,085 |
| Expense for the year | (6,920) | 10,159 |
| Expected benefits payments during the year | - | - |
| Accrued benefit obligation, end of the year | 184,085 | 194,244 |
8. Related party transactions
The Office is related as a result of common ownership to all Government of Canada departments, agencies and Crown Corporations. The Office enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the department will have received services which were obtained without charge from other Government departments as disclosed below
(a) Common services provided without charge by other government departments
During the year, the Office is forecasted to receive without charge from another government department the employer's contribution to the health and dental insurance plans. This service without charge has been recognized in the Office's future-oriented Statement of Operations as follows:
| Estimated (in dollars) | ||
|---|---|---|
| Results 2011 | Forecast 2012 | |
| Employer's contribution to the health and dental insurance plans | 57,463 | 60,634 |
| Total | 57,463 | 60,634 |
The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge. The cost of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada, are not included as an expense in the Office's Future-oriented Statement of Operations.
(b) Other transactions with related parties
| Estimated (in dollars) | ||
|---|---|---|
| Results 2011 | Forecast 2012 | |
| Expenses - Other government departments and agencies | 331,000 | 343,000 |
9. Segmented information
| Estimated (in dollars) | ||||
|---|---|---|---|---|
| Results 2011 | Forecast 2012 | |||
| Review Program | Internal Services Program | Total | ||
| Operating Expenses | ||||
| Salaries and employee benefits | 808,891 | 745,284 | 175,979 | 921,263 |
| Professional and special services | 472,620 | 240,500 | 189,500 | 430,000 |
| Accommodation | 155,310 | 120,000 | 40,000 | 160,000 |
| Utilities, materials and supplies | 62,091 | - | 15,173 | 15,173 |
| Transportation and telecommunications | 15,283 | 2,400 | 14,600 | 17,000 |
| Information | 21,934 | 15,400 | 6,600 | 22,000 |
| Amortization of tangible capital assets | 2,843 | - | 7,750 | 7,750 |
| Rentals | 16,063 | 15,000 | 5,000 | 20,000 |
| Repairs and maintenance | 500 | - | 3,000 | 3,000 |
| Total Operating Expenses | 1,555,535 | 1,138,584 | 457,602 | 1,596,186 |
| Net Cost of Operations | 1,555,535 | 1,138,584 | 457,602 | 1,596,186 |
- Date modified: