Quarterly Financial Report for period ending December 31, 2011
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 an external audit or review.
1.2 Authority, Mandate and Program
The Commissioner derives his authority and mandate from the National Defence Act:
- reviewing Communication Security Establishment Canada (CSEC) activities to ensure they comply with the law;
- conducting any investigations deemed necessary in response to complaints about CSEC; and
- informing the Minister of National Defence and the Attorney General of Canada of any CSEC activities that may not be in compliance with the law.
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
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 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.
2. Highlights of fiscal quarter and fiscal year to date (YTD) results
Authorities and planned expenditures
Authorities have been increased to reflect the operating budget carry-forward and the transfer from Treasury Board to cover the costs of severance payments made by the Office.
3rd quarter spending
As reflected in the attached Statement of Authorities, the Office’s total 3rd quarter spending is up $97 thousand from same quarter the previous year. The significant details of the quarterly variance are as follows. Salary costs are up $184 thousand, a combination of additional staff and the payment of severance pay in the current quarter. Information costs were up $6 thousand as work on the annual report was started earlier than the previous year. Professional and special service costs are down $64 thousand from the 3rd quarter of the year previous year as a result of the following: greater efficiencies in the performance of reviews reduced costs by $39 thousand; no requirement for legal services saved $4 thousand over the 3rd quarter of the previous year; a reduced requirement for training and development as staff gained in experience generated savings of $12 thousand; and timing differences in the billings for accounting and informatics services reduced costs $9 thousand over the previous year’s quarter. Rentals are down $29 thousand as a result of late billings and payments for accommodation costs.
Year to date spending
The Office’s year to date spending is up $45 thousand. The significant details of the year to date variance are as follows. Personnel costs are up $115 thousand as a result of two additional staff, salary increases, and a decrease in severance pay. Professional and special service costs are down $76 thousand as a result of the following: greater efficiencies in the performance of reviews with a savings of $44 thousand over the previous year; gaining of experience by staff with a corresponding reduction of $17 thousand in advisory services and training and development costs; no requirement for legal services in the current year with a savings of $8 thousand; and a temporary reduction of informatics services costs of $7 thousand because of late billings in the current year. Rental costs are up $9 thousand owing to a delay in 2010-11 billings and subsequent payments in the previous year. Expenditures on transportation and communication, information services, supplies and equipment resulted in a reduction of $3 thousand over the previous year.
3. 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, and 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 the fit-up will start in the 4th quarter and run into the first two quarters of 2012 – 2013.
4. 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
February 27, 2012
Statement of Authorities (unaudited)
| Total available for use for the year ending March 31, 2012 | Used during the quarter ended Dec 31, 2011 | Year to date used at quarter-end | |
|---|---|---|---|
| Vote 25 - Program Expenses | 2,172 | 525 | 1,156 |
| Statutory authorities – Contributions to employee benefit plans | 137 | 46 | 103 |
| Total Budgetary authorities | 2,309 | 571 | 1,259 |
| Total authorities | 2,309 | 571 | 1,259 |
| Total available for use for the year ended March 31, 2011 | Used during the quarter ended Dec 31, 2010 | Year to date used at quarter-end | |
|---|---|---|---|
| Vote 25 - Program Expenses | 1,971 | 442 | 1,119 |
| Statutory authorities – Contributions to employee benefit plans | 130 | 32 | 94 |
| Total Budgetary authorities | 2,101 | 474 | 1,214 |
| Total authorities | 2,101 | 474 | 1,214 |
Departmental budgetary expenditures by standard object (unaudited)
| Expenditures | Planned expenditures for the year ending March 31, 2012 | Expended during the quarter ended Dec 31, 2011 | Year to date used at quarter-end |
|---|---|---|---|
| Personnel | 1,002 | 361 | 841 |
| Transportation and communications | 177 | 3 | 8 |
| Information | 79 | 6 | 17 |
| Professional and special services | 807 | 151 | 258 |
| Rentals | 165 | 46 | 125 |
| Repair and maintenance | 5 | 0 | 0 |
| Utilities, materials and supplies | 15 | 2 | 8 |
| 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 | 2,309 | 571 | 1,259 |
| Total net budgetary expenditures | 2,309 | 571 | 1,259 |
| Expenditures | Planned expenditures for the year ending March 31, 2011 | Expended during the quarter ended Dec 31, 2010 | Year to date used at quarter-end |
|---|---|---|---|
| Personnel | 892 | 177 | 726 |
| Transportation and communications | 177 | 2 | 10 |
| Information | 79 | 16 | |
| Professional and special services | 709 | 215 | 334 |
| Rentals | 159 | 75 | 116 |
| Repair and maintenance | 5 | 0 | 0 |
| Utilities, materials and supplies | 65 | 5 | 12 |
| 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 | 474 | 1,214 |
| Total net budgetary expenditures | 2,101 | 474 | 1,214 |
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