Future-Oriented Financial Statement 2013-2014

For the years ending March 31, 2013 and March 31, 2014

Statement of Management Responsibility

Departmental management is responsible for these futureoriented 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 November 30, 2012 and reflect the plans described in the Report on Plans and Priorities.

Hon. Charles Strahl
Chair

Ottawa, Canada
Date

Michael E. Doucet
Executive Director,
Senior Financial Officer

Ottawa, Canada
Date

Future-Oriented Statement of Financial Position (Unaudited)

Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to November 30, 2012. The information for the remainder of the fiscal year 2012-13 and for fiscal year 2013-14 are based on estimates.

Contractual obligations (note 10)

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

Hon. Charles Strahl
Chair

Ottawa, Canada
Date

Michael E. Doucet
Executive Director,
Senior Financial Officer

Ottawa, Canada
Date

Future-Oriented Statement of Operations and Departmental Net Financial Position (Unaudited)

Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to November 30, 2012. The information for the remainder of the fiscal year 2012-13 and for fiscal year 2013-14 are based on estimates.

Segmented information (note 12)

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

Future-Oriented Statement of Change in Departmental Net Debt (Unaudited)

Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to November 30, 2012. The information for the remainder of the fiscal year 2012-13 and for fiscal year 2013-14 are based on estimates.

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

Future-Oriented Statement of Cash Flow (Unaudited)

Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to November 30, 2012. The information for the remainder of the fiscal year 2012-13 and for fiscal year 2013-14 are 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.

To achieve its strategic outcome and to deliver results for Canadians, the Security Intelligence Review Committee articulates its plans and priorities based on core program activities included below.

1.1 Reviews

The Purpose of the Review Program is to conduct reviews of CSIS activities to ensure that CSIS performs its duties and functions appropriately and effectively, and in accordance with legislation, policy and Ministerial Direction. Through a comprehensive and multifaceted program of research, Security Intelligence Review Committee staff examines various aspects of CSIS's operations and activities to prepare a retrospective analysis for the Committee's approval.

1.2 Complaints

The purpose of the Complaints Program is to receive and investigate complaints about CSIS brought forward by individuals or groups. When doing so, the Security Intelligence Review Committee acts as an independent, quasijudicial administrative tribunal pursuant to the CSIS Act. The Security Intelligence Review Committee conducts investigations in relation to: complaints ''with respect to any act or thing done by the Service'' as described in the CSIS Act; complaints about denials of security clearances to federal government employees and contractors; referrals from the Canadian Human Rights Commission in cases where the complaint relates to the security of Canada; and, reports made pursuant to S.19 of the Citizenship Act.

1.3 Internal Services

This activity captures all of the corporate costs associated with the day to day operations of the organization (e.g. informatics, asset management, accommodation, security, corporate reporting, information management, etc.). Also, the administration of meetings attended by Committee Members, are captured within this Program Activity.

2. Methodology and significant assumptions

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

The information in the estimated results for fiscal year 201213 is based on actual results as at November 30, 2012 and forecasts for the remainder of the fiscal year. Estimated year end information for 201213 is used as the opening position for the 201314 planned results, and forecasts have been made for the planned results for the 201314 fiscal year.

The main assumptions underlying the forecasts are as follows:

1. The Security Intelligence Review Committee’s activities will remain substantially the same as 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.

These assumptions are adopted as at November 30, 2012.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to forecast final results for the remainder of 201213 and for 201314, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing these futureoriented 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 futureoriented financial statements and the historical financial statements include:

1. The timing and amounts of equipment acquisitions and disposals may affect 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 appropriations 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 futureoriented financial statements have been prepared in accordance with the Treasury Board Accounting Standards in effect in 2012. These Government's accounting policies are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

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 Security Intelligence Review Committee do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Future-Oriented Statement of Operations and Departmental Net Financial Position and in 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 or to the CRF
   
   Amounts due from or to the CRF are the result of timing differences at yearend 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 authorities to discharge its liabilities.
   
   
4. Expenses – Expenses are recorded on an accrual basis:
   • Vacation pay is accrued as the benefits are earned by employees under their respective terms of employment.
   • Services provided without charge by other government departments for accommodation and employer contributions to the health and dental insurance plans are recorded as operating expenses at their estimated cost.
5. Employee future benefits
   1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension 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. 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 futureoriented financial statements of the Government of Canada, as the Plan's sponsor.
   2. Severance benefits: Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. 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 receivable
   
   Accounts receivables are stated at the lower of cost and net recoverable value; a valuation allowance is recorded for accounts receivable where recovery is considered uncertain.
   
   
7. Tangible capital assets
   
   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 straightline basis over the estimated useful life of the asset as follows:
   
   

   Amortization of 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 futureoriented 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 annual parliamentary authorities. Items recognized in the Future-Oriented Statements of Operations and Departmental Net Financial Position and Futureoriented Statements of 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:

6. Accounts payable

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

7. Employee future benefits

a) 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 Security Intelligence Review Committee contribute to the cost of the Plan. The 201213 forecast expenses amounts to $277,870 ($316,884 in 201314), which represents approximately 1.8 times the contributions by 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 futureoriented financial statements of the Government of Canada, as the Plan’s sponsor.

b) Severance benefits:

The Security Intelligence Review Committee provides severance benefits to its employees based on eligibility, years of service and salary at termination of employment. These severance benefits are not prefunded. Benefits will be paid from future authorities. Information about the severance benefits, estimated as at the date of these statements, is as follows:

As part of collective agreement negotiations with certain employee groups, and changes to conditions of employment for executives and certain nonrepresented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.

8. Accounts receivables

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

9. Tangible capital assets

10. Contractual Obligations

The nature of the Security Intelligence Review Committee’s activities can result in some large multiyear 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 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 the Privy Council Office related to the provision of finance and administration services which is included in section b). 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, 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 and Departmental Net Financial Position as follows:

The Government has centralized some of its administrative activities for efficiency, costeffectiveness 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 costs of these services, such as the payroll and cheque issuance services provided by Public Works and Government Services Canada are not included in the Security Intelligence Review Committee's Future-Oriented Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties:

Expenses disclosed in (b) exclude common services provided without charges which are already disclosed in (a).

12. Segmented information

Presentation by segment is based on the Security Intelligence Review Committee’s program alignment 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 programs, by major object of expenses. The segment results for the period are as follows: