Quarterly Financial Report - For the quarter ended December 31, 2017

Table of Contents

Introduction

This quarterly 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 Directive on Accounting Standards, GC 4400 Departmental Quarterly Financial Report. This quarterly financial report should be read in conjunction with the Main Estimates and the Supplementary Estimates, as well as previous Quarterly Financial Reports.

A summary description of the Security Intelligence Review Committee (SIRC) program activities can be found in Part II of the Main Estimates. For information on the mandate of SIRC, please visit its website at http://www.sirc-csars.gc.ca.

This quarterly report has not been subject to an external audit or review.

Mandate

The Security Intelligence Review Committee (SIRC) is an independent review body which reports to Parliament of Canada on the operations of the Canadian Security Intelligence Service (CSIS). The Prime Minister is responsible for SIRC.

Parliament has given CSIS powers to enhance the security of Canadians. SIRC reports on whether these powers are used appropriately and in accordance with the rule of law in order to protect Canadians' rights and freedoms. To do this, SIRC examines past operations of CSIS and conducts investigations. It has absolute authority to examine all information concerning CSIS activities, no matter how sensitive and highly classified that information may be. The result of this work, edited to protect national security and personal privacy, are summarized in its Annual Report to Parliament.

SIRC’s work is designed first and foremost to inform Canadians on whether CSIS investigates threats to national security in a manner that respects Canada’s core democratic values. It also serves to provide expert advice to policymakers and lawmakers on CSIS’s performance. The Canadian Security Intelligence Service Act (CSIS Act) continues to guide SIRC’s work in assessing CSIS’s performance against the mandate and authorities conferred upon it by Parliament.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the department’s spending authorities granted by Parliament and those used by the department, consistent with the 2017-18 Main Estimates, Supplementary Estimates (A) and TB Central Votes for the same year. This quarterly report has been prepared using a special purpose financial reporting framework (cash basis) 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.

SIRC 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.

Highlights of Fiscal Quarter and Fiscal Year to Date Results

This section highlights the significant items that contributed to the net increase or decrease in authorities available for the year and actual expenditures for the quarter ended December 31, 2017.

SIRC spent approximately 51% of its authorities by the end of the third quarter, compared to 34% in the same quarter of 2016-17 (see graph 1 below).

Graph 1: Comparison of Total Authorities and Total Net Budgetary Expenditures as of Q3 2017-2018 and 2016-2017 (in millions of dollars)
2017-18 2016-17
Total Authorities 7.1 7.3
Q3 Expenditures 1.5 1.0
Year-to-date expenditures 3.6 2.5

Significant changes to authorities

As per graph 2 below as at December 31, 2017 and Table 2, presented at the end of this document, SIRC has authorities available for use of $7,145,516 in 2017-18 compared to $7,265,926 as of December 31, 2016, for a net decrease of $120,410 or 2%.

Graph 2: Variance in Authorities as at December 31, 2017 (in millions of dollars)
Vote 1 - Operating Statutory Total budgetary authorities
Fiscal year 2016-17 total available for use for the year ended 31-Mar-17 6.7 0.6 7.3
Fiscal year 2017-18 total available for use for the year ended 31-Mar-18 6.6 0.5 7.1

SIRC's authorities as at December 31, 2017 are very similar to that of same period in the previous fiscal year. The decrease of $120,410 or 2% is mainly related to spending for SIRC's relocation and modernization project as well as a decrease in the EBP rate.

Significant changes to quarter expenditures

The third quarter expenditures recorded from October 1, 2017 to December 31, 2017 increased by $465,406 or 46%, from previous year at the same time (from $1,009,685 for 2016-17 to $1,475,091 for 2017-18). Table 1 below presents budgetary expenditures by standard object.

Table 1
Material Variances to Expenditures by Standard Object
(in thousands of dollars)		 Fiscal year 2017-18
Expended during the quarter ended
31-Dec-2017		 Fiscal year 2016-17
Expended during the quarter ended
31-Dec-2016		 Variance $ Variance %
Personnel 992 753 239 32%
Transportation and communications 69 78 (9) (12%)
Information 56 7 49 700%
Professional and special services 81 125 (44) (35%)
Rentals 2 28 (26) (93%)
Repair and maintenance 190 - 190 -
Utilities, materials and supplies 9 6 3 50%
Acquisition of machinery and equipment 66 7 59 843%
Other subsidies and payments 10 5 5 100%
Total gross budgetary expenditures 1,475 1,009 466 46%

* Details may not add to totals due to rounding

Information

The increase of $48,749 is mainly related to the acquisition of IT-related information services in support of the modernization of SIRC’s IT infrastructure.

Repair and maintenance

The increase of $189,773 is due to the acquisition of communications and networking equipment related to SIRC’s relocation project.

Acquisition of machinery and equipment

The increase of $58,996 is mainly explained by the renewal of computer and networking equipment related to SIRC’s relocation project.

Significant changes to Year-to-date expenditures

Year-to-date expenditures recorded as of December 31, 2017 increased by $1,083,961 or 43%, from previous year at the same time (from $2,498,403 for 2016-17 to $3,582,364 for 2017-18). Table 2 below presents budgetary expenditures by standard object.

Table 2
Material Variances to Expenditures by Standard Object
(in thousands of dollars)		 YTD Expenditures as of
31-Dec-2017		 YTD Expenditures as of
31-Dec-2016		 Variance $ Variance %
Personnel 2,538 1,959 579 30%
Transportation and communications 194 182 12 7%
Information 69 14 55 393%
Professional and special services 348 228 120 53%
Rentals 30 38 (8) (21%)
Repair and maintenance 190 1 189 18900%
Utilities, materials and supplies 21 20 1 5%
Acquisition of machinery and equipment 182 45 137 304%
Other subsidies and payments 11 11 0 0%
Total gross budgetary expenditures 3,582 2,498 1,084 43%
* Details may not add to totals due to rounding

Personnel

The increase of $579,374 is mainly related to activities to support the increase in the complexity and volume of workload related to SIRC's review of the expanded operations of CSIS and employee benefit plans in accordance with Treasury Board Secretariat guidelines.

Information

The increase of $54,484 is mainly related to the acquisition of IT-related information services in support of the modernization of SIRC’s IT infrastructure.

Repair and maintenance

The increase of $188,571 is due to the acquisition of communications and networking equipment related to SIRC’s relocation project.

Acquisition of machinery and equipment

The increase of $136,504 is mainly explained by the renewal of computer and networking equipment related to SIRC’s relocation project.

Risks and Uncertainties

This Departmental Quarterly Financial Report (QFR) reflects the results of the current fiscal period in relation to the 2017-18 Main Estimates and 2017-18 Supplementary Estimates (A) (full supply for these Estimates were released on June 23, 2017).

SIRC continues to adapt its operations to the rapid pace of change in the security intelligence environment.

SIRC is closely monitoring pay transactions to identify and address over and under payments in a timely manner and continues to apply ongoing mitigating controls which were implemented in 2016.

Significant Changes in Relation to Operations, Personnel and Programs

SIRC's activities have increased in volume and complexity due to the Canadian Security Intelligence Services (CSIS) expanded mandate. SIRC accessed funds through the 2017-18 Main Estimates and reprofiled funds through 2017-18 Supplementary Estimates (A). These funds are being used for the Relocation and IM/IT modernization project and to further enhance on a short basis SIRC's coverage of CSIS activities.

Approved by Senior Officials: (original signed by)


Original signed by
_________________________
Hon. Pierre Blais, P.C.
Chair


Original signed by
_________________________
Chantelle Bowers
Executive Director
Chief Financial Officer

Ottawa, Canada
February 28, 2018

Statement of Authorities (unaudited) (note 2)

Statement of Authorities (unaudited) (note 2)
(In thousands of dollars) Fiscal year 2017–2018 Fiscal year 2016–2017
Total available for use for the year ending March 31, 2018
(note 1)		 Used during the quarter ended December 31, 2017 Year to date used at quarter end Total available for the year ending March 31, 2017
(note 1)		 Used during the quarter ended December 31, 2016 Year to date used at quarter end
Vote 1 - Net operating expenditures 6,600 1,339 3,174 6,641 901 2,282
Contributions to employee benefit plans 546 136 409 625 108 216
Total budgetary authorities 7,146 1,475 3,582 7,266 1,009 2,498
Total Authorities 7,146 1,475 3,582 7,266 1,009 2,498

Table 1: Departmental budgetary expenditures by Standard Object (unaudited) (note 2)

Table 1: Departmental budgetary expenditures by Standard Object (unaudited) (note 2)
(In thousands of dollars) Fiscal year 2017–2018 Fiscal year 2016–2017
Planned expenditures for the year ending March 31, 2018
(note 1)		 Used during the quarter ended December 31, 2017 Year to date used at quarter end Planned expenditures for the year ending March 31, 2017
(note 1)		 Used during the quarter ended December 31, 2016 Year to date used at quarter end
Expenditures
Personnel 4,015 992 2,538 4,012 753 1,959
Transportation and communications 213 69 194 236 78 182
Information 47 56 69 47 7 14
Professional and special services 944 81 348 730 125 228
Rentals 100 2 30 42 28 38
Repair and maintenance 4 190 190 2 - 1
Utilities, materials and supplies 26 9 21 78 6 20
Acquisition of land, buildings and works 97 - - - - -
Acquisition of machinery and equipment 1,700 66 182 2,119 7 45
Other subsidies and payments - 10 11 - 5 11
Total gross budgetary expenditures 7,146 1,475 3,582 7,266 1,010 2,498
Total Authorities 7,146 1,475 3,582 7,266 1,010 2,498
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