Quarterly Financial Report for period ending September 30, 2012

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 (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 Commission's 2012-13 Report on Plans and Priorities and Main Estimates available on the following websites:  http://www.tbs-sct.gc.ca/rpp/2012-2013/inst/srt/set00-eng.asp and http://www.tbs-sct.gc.ca/est-pre/20122013/me-bpd/docs/me-bpd-eng.pdf.

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 2012-2013 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, 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. 

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year.  Budget 2012 was tabled in Parliament on March 29, after the tabling of the Main Estimates on February 28, 2012.  As a result the measures announced in the Budget 2012 could not be reflected in the 2012-13 Main Estimates.

In fiscal year 2012-2013, frozen allotments will be established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012.  In future years, the changes to departmental authorities will be implemented through the Annual Reference Level Update, as approved by Treasury Board, and reflected in the subsequent Main Estimates tabled in Parliament.

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, the Office's 2012-13 2^nd quarter spending is up $240 thousand from the previous year.  The significant variations can be attributed to:

• salaries (+$32 thousand – timing of performance pay and statutory increases);
• professional and special services (+$33 thousand)
  • one time costs in support of the IIRAC conference in Ottawa +$50 thousand;
  • reduction in translation and other professional services -$15 thousand;
• rentals (-$23 thousand – timing differences in the payment of rental costs); and
• acquisition of buildings (+$194 thousand – current year costs related to leasehold improvements to office space).

Year to date

As reflected in the attached Statement of Authorities, the Office's 2012-13 year to date  spending is up $256 thousand from the previous year.  The significant variations can be attributed to:

• salaries (+20 thousand – timing of performance pay and statutory increases)
• professional and special services (+$42 thousand)
  • one time costs in support of the IIRAC conference in Ottawa +$50 thousand;
  • reduction in translation and other professional services -$8 thousand; and
• acquisition of buildings (+$194 thousand – current year costs related to leasehold improvements to office space).

3. Risks and Uncertainties

Accommodations

Work on accommodations is almost complete. Once completed, the Office will explore opportunities to engage the staff necessary for both its review and internal service activities.

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

With the exception of the costs related to leasehold improvements, there were no significant changes in relation to operations, personnel and programs.

Approval by Senior Officials

Original signed by:

Robert Décary, Q.C.
 Commissioner                                   

J. William Galbraith
Chief Financial Officer

Ottawa, Canada
November 22, 2012

STATEMENT OF AUTHORITIES (unaudited) (in thousands of dollars)

	Fiscal year 2012-13			Fiscal year 2011-2012
	Total available for use for the year ending March 31, 2013	Used during the quarter ended Sept 30, 2012	Year to date used at quarter-end	Total available for use for the year ended March 31, 2012	Used during the quarter ended Sept 30, 2011	Year to date used  at quarter-end
Vote 25 - Program Expenses	2,069	596	878	1,971	362	632
Statutory authorities – Contributions to employee benefit plans	134	34	67	137	34	57
Total Budgetary authorities	2,203	630	945	2,108	396	689
Total authorities	2,203	630	945	2,108	396	689

Table 1: Departmental budgetary expenditures by Standard Object (unaudited) (In thousands of dollars)

Expenditures	Fiscal year 2012-2013			Fiscal year 2011-2012
	Planned expenditures for the year ending March 31, 2013	Expended during the quarter ended Sept 30, 2012	Year to date used at quarter-end	Planned expenditures for the year ending March 31, 2012	Expended during the quarter ended Sept 30, 2011	Year to date used at quarter-end
Personnel	896	269	500	899	237	480
Transportation and communications	14	4	7	177	2	5
Information	61	5	7	79	11	11
Professional and special services	364	98	149	709	65	107
Rentals	197	55	81	165	78	79
Repair and maintenance	2	1	1	5	0	0
Utilities, materials and supplies	15	2	4	15	1	5
Acquisition of land, buildings and works	639	194	194	0	0	0
Acquisition of machinery and equipment	15	2	2	59	2	2
Other subsidies and payments	0	0	0	0	0	0
Total gross budgetary expenditures	2,203	630	945	2,108	396	689
Total net budgetary expenditures	2,203	630	945	2,108	396	689