Quarterly Financial Report for period ending December 31, 2013

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 Canada (CSEC) 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 Communication Security Establishment Canada (CSEC) activities to ensure they comply with the law;
• conducting any investigations deemed necessary in response to complaints about CSEC;
• 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;
• submitting, within 90 days after the end of each fiscal year, an annual report to the Minister on the Commissioner’s activities and findings; and
• reviewing and reporting annually to the Minister on review activities carried out under an (ministerial) authorization.

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 2013-14 Report on Plans and Priorities and in the Main Estimates available on the following web sites: http://www.ocsec-bccst.gc.ca/finance/2013-2014/rpp/index_e.php and www.tbs-sct.gc.ca/ems-sgd/20132014/me-bpd/me-me-bpptb-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 spending authorities granted by Parliament and those used by the Office consistent with the Main Estimates and Supplementary Estimates (as applicable) for both fiscal years. 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 monies 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 illustrated in the chart above, the Office's 2013-14 3^rd quarter spending is up $29 thousand from the previous year. This change can be attributed to the following significant variations in expenditures:

• salaries down $28 thousand – recovery of salary costs related to the secondment of a senior officer more than offset the salary costs of additional staff;
• professional and special services down $5 thousand – slight decrease overall;
• rentals up $72 thousand – increased rent due to additional office space plus delays in billing in the second quarter resulted in 4 months rent being paid in the 3^rd quarter; and
• all other expenditures down $10 thousand – slight decrease overall.

Year to date

As reflected in the attached Statement of Authorities, and illustrated in the chart above, the Office's 2013-14 year to date spending is down $23 thousand from the previous year. This change can be attributed to the following significant variations in expenditures:

• salaries up $72 thousand – the increase is due to additional staff, salary increases and one-time severance payments;
• professional and special services down $10 – slight decrease overall;
• rentals up $119 thousand - increased rent due to additional office space and the timing of payments resulting from late billings;
• acquisition of additional office space down $194 thousand – no current year costs related to leasehold improvements as the construction ended in 2012-13; and
• all other expenditures down $10 thousand – slight decrease overall.

3. Risks and Uncertainties

The Office continues its efforts to further educate the public on the mandate of the office and how it operates, all within the constraints of the Security of Information Act, and provide further opportunities for discussion and exchange of ideas with outside experts in the fields of national security and privacy.

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

With the exception of the appointment of the Honourable Jean-Pierre Plouffe, C.D. as Commissioner on October 9, 2013, there have been no significant changes in the programs and operations.

5. Budget 2012 Implementation

The Office has not been directly affected by the savings measures announced in Budget 2012. However, the Office committed to the Minister to formally review its operations for cost savings following the repayment of reprofiling costs for security retrofit incurred in 2012-13. In the interim, the Office continues to seek more efficient ways to deliver its programs and reduce costs.

Approval by Senior Officials

Original signed by:

Jean-Pierre Plouffe
Commissioner

J. William Galbraith
Chief Financial Officer

Ottawa, Canada
February 24, 2014

Statement of Authorities (unaudited)

Fiscal year 2013-14 (in thousands of dollars)

	Total available for use for the year ending March 31, 2014	Used during the quarter ended Dec 31, 2013	Year to date used at quarter-end
Vote 30 - Program Expenses	2,097	409	1,235
Statutory authorities – Contributions to employee benefit plans	134	33	100
Total Budgetary authorities	2,231	442	1,335
Total authorities	2,231	442	1,335

Fiscal year 2012-2013 (in thousands of dollars)

	Total available for use for the year ended March 31, 2013	Used during the quarter ended Dec 31, 2012	Year to date used at quarter-end
Vote 30 - Program Expenses	2,260	368	1,246
Statutory authorities – Contributions to employee benefit plans	134	45	112
Total Budgetary authorities	2,394	413	1,358
Total authorities	2,394	413	1,358

Table 1: Departmental budgetary expenditures by Standard Object (unaudited)

Fiscal year 2013-2014 (In thousands of dollars)

Expenditures	Planned expenditures for the year ending March 31, 2014	Expended during the quarter ended Dec 31, 2013	Year to date used at quarter-end
Personnel	1,064	233	833
Transportation and communications	15	1	5
Information	24	2	11
Professional and special services	453	90	234
Rentals	347	106	234
Repair and maintenance	4	1	1
Utilities, materials and supplies	17	6	14
Acquisition of land, buildings and works	0	0	0
Acquisition of machinery and equipment	307	3	3
Other subsidies and payments	0	0	0
Total gross budgetary expenditures	2,231	442	1,335
Total net budgetary expenditures	2,231	442	1,335

Fiscal year 2012-2013 (In thousands of dollars)

Expenditures	Planned expenditures for the year ending March 31, 2013	Expended during the quarter ended Dec 31, 2012	Year to date used at quarter-end
Personnel	896	261	761
Transportation and communications	14	5	12
Information	61	1	8
Professional and special services	364	95	244
Rentals	197	34	115
Repair and maintenance	2	0	1
Utilities, materials and supplies	15	4	8
Acquisition of land, buildings and works	830	0	194
Acquisition of machinery and equipment	15	13	15
Other subsidies and payments	0	0	0
Total gross budgetary expenditures	2,394	413	1,358
Total net budgetary expenditures	2,394	413	1,358