Future-Oriented Financial Statement 2012-2013

For the years ending March 31, 2012 and March 31, 2013

Statement of Management Responsibility

Departmental management is responsible for the 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, 2012 and reflect the plans described in the Report on Plans and Priorities.

Ottawa, Ontario
Date

Future-Oriented Statement of Financial Position (Unaudited)
As at March 31

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to January 31, 2012. The information for the remainder of the fiscal year 2011-12 and for fiscal year 2012-13 is based on estimates.

Contractual obligations (Note 10).

The accompanying notes form an integral part of these future-oriented financial statements.

Future-Oriented Statement of Operations (Unaudited)
for the year ending March 31

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to January 31, 2012. The information for the remainder of the fiscal year 2011-12 and for fiscal year 2012-13 is based on estimates.

Segmented information (Note 12)

The accompanying notes form an integral part of these future-oriented financial statements.

Future-Oriented Statement of Equity of Canada (Unaudited)
for the year ending March 31

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to January 31, 2012. The information for the remainder of the fiscal year 2011-12 and for fiscal year 2012-13 is based on estimates.

The accompanying notes form an integral part of these future-oriented financial statements.

Future-Oriented Statement of Cash Flow (Unaudited)
for the year ending March 31

Information for the year ended March 31, 2012 includes amounts from April 1, 2011 to January 31, 2012. The information for the remainder of the fiscal year 2011-12 and for fiscal year 2012-13 is based on estimates.

The accompanying notes form an integral part of these future-oriented financial statements.

Notes to Future-Oriented Financial Statements (Unaudited)
for the year ending March 31

1. Authority and Objectives

The Security Intelligence Review Committee was created to provide external review to the Canadian Security Intelligence Service (CSIS) performance of its duties and functions; and to examine complaints by individuals or reports by Ministers related to the security of Canada.

The Security Intelligence Review Committee derives its powers from the Canadian Security Intelligence Service (CSIS) Act promulgated on July 16, 1984. The first Chair and Members were appointed by His Excellency the Governor General on November 30, 1984. Security Intelligence Review Committee is empowered to set its own Rules of Procedures, and to employ an executive director and adequate staff to support its activities. The Act requires Security Intelligence Review Committee to report annually to the Solicitor General of Canada who must, in turn, table the report in each House of Parliament on any of the first fifteen days on which that House is sitting after the day the Minister receives it. Security Intelligence Review Committee may also require CSIS or the Inspector General appointed under the CSIS Act to conduct a review of specific activities on the Service and provide Security Intelligence Review Committee with a report of the review.

2. Methodology and significant assumptions

The future-oriented financial statements have been prepared on the basis of the government priorities and the plans of the Security Intelligence Review Committee as described in the Report on Plans and Priorities.

The main assumptions are as follows:

1. The Security Intelligence Review Committee’s activities will remain substantially the same as for the previous year.
2. Expenses, including the determination of amounts internal and external to the government, are based on forecasted or historical information. The general historical pattern is expected to continue.
3. Estimated year-end information for 2011-12 is used as the opening position for the 2012-13 planned results.

These assumptions are adopted as at January 31, 2012.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results for the remainder of 2011-12 and for 2012-13, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing these future-oriented financial statements, the Security Intelligence Review Committee has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions 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:

1. The timing and number of equipment acquisitions and disposals may affect gains/losses and amortization expenses.
2. Implementation of new collective agreements.
3. Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.

Once the Report on Plans and Priorities is presented, the Security Intelligence Review Committee will not be updating the forecasts for any changes to authorities 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 in effect for the 2011-2012 fiscal year. These accounting policies stated below, 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:

1. Parliamentary authorities – The Security Intelligence Review Committee is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the department do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items presented in the Future-oriented Statement of Operations and the Future-oriented Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a reconciliation between the bases of reporting.
2. Net Cash Provided by Government – The Security Intelligence Review Committee operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Security Intelligence Review Committee is deposited to the CRF and all cash disbursements made by the Security Intelligence Review Committee are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the Government.
3. Amounts due from/to the CRF - are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that the Security Intelligence Review Committee is entitled to draw from the CRF without further parliamentary expenditure authorities to discharge its liabilities.
4. Expenses – are recorded on an accrual basis:
   Vacation pay and compensatory leave are accrued as the benefits are earned under the respective terms of employments.
   Services provided without charge by other government departments for accommodation and the employer’s contribution to the health and dental insurance plans are reported as operating expenses at their estimated cost.
5. Employee future benefits
   1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer plan administered by the Government. The Security Intelligence Review Committee’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Current legislation does not require the Security Intelligence Review Committee to make contributions for any actuarial deficiencies of the Plan.
   2. 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.
6. Accounts receivables - are stated at the lower of cost and net recoverable value; a valuation allowance is recorded for receivables where recovery is considered uncertain.
7. Tangible capital assets – All tangible capital assets having an initial cost of $3,000 or more are recorded at their acquisition cost. The Security Intelligence Review Committee 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-lines basis over the estimated useful life of the asset as follows:
   

   7. Tangible Capital Assets

   Asset Class	Amortization Period
   Informatics hardware	3 years
   Informatics Software	3 years
   Other equipment	3 years

8. Measurement uncertainty - The preparation of these future-oriented financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses reported in the future-oriented financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. Actual results could significantly differ from those estimated.

5. Parliamentary Authorities

The Security Intelligence Review Committee receives most of its funding through expenditure authorities provided by Parliament. Items recognized in the Future-oriented Statement of Operations and Financial Position in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, the Security Intelligence Review Committee 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:

Authorities presented reflect current forecasts of statutory items, approved initiatives included and expected to be included in Estimates documents and, when reasonable estimates can be made, estimates of amounts to be allocated from Treasury Board central votes.

6. Accounts receivable

The following table presents details of the Security Intelligence Review Committee’s accounts receivable balances:

7. Tangible Capital Assets

8. Accounts payable

The following table presents details of the Security Intelligence Review Committee’s accounts payable:

9. Employee Benefits

1. Pension benefits: The Security Intelligence Review Committee’s employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government. 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/Québec Pension Plans benefits and they are indexed to inflation.
   Both the employees and the department contribute to the cost of the Plan. The forecasted expenses are $265,298 in 2011-12 and $275,947 in 2012-13, representing approximately 1.9 times the contributions of employees.
   The Security Intelligence Review Committee’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.
2. Severance benefits: The Security Intelligence Review Committee 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 authorities. Information about the severance benefits, estimated as the date of these statements, is as follows:
   

   Severance benefits

   	Estimated Results 2012	Planned Results 2013
   	(in thousands of dollars)
   Accrued benefits obligation, beginning of year	318	205
   Expense for the year	(298)	6
   Expected benefits payments during the year	185	-
   Accrued benefits obligation, end of year	205	211

10. Contractual Obligations

The nature of the Security Intelligence Review Committee’s activities can result in some large multi-year contracts and obligations whereby the Security Intelligence Review Committee will be obligated to make future payments when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

11. Related Party Transactions

The Security Intelligence Review Committee is related, as a result of common ownership, to all Government of Canada departments, agencies, and Crown corporations. The Security Intelligence Review Committee enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, the Security Intelligence Review Committee has an agreement with Privy Council Office related to the provision of finance and administration services. During the year, the Security Intelligence Review Committee received common 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 Security Intelligence Review Committee receives services without charge from certain common service organizations, related to accommodation and the employer's contribution to the health and dental insurance plans. These services provided without charge have been recorded in the Security Intelligence Review Committee's Future-oriented Statement of Operations as follows:

The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The cost of these services, such as the payroll and cheque issuance services provided by Public Works and Government Services Canada is not included in the Security Intelligence Review Committee's Future-oriented Statement of Operations.

(b) Other transactions with related parties:

12. Segmented information

Presentation by segment is based on the Security Intelligence Review Committee’s program activity architecture. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 4. The following table presents the forecasted expenses incurred generated for the main program activities, by major object of expenses. The segment results for the period are as follows: