Future Oriented Statement of Operations 2014-2015

For the years ending March 31, 2014 and March 31, 2015

Statement of Management Responsibility

Departmental management is responsible for the future-oriented statement of operations, including responsibility for the appropriateness of the assumptions on which this statement is prepared. This statement is based on the best information available and assumptions adopted as at September 30, 2013 and reflects the plans described in the Report on Plans and Priorities.

The Honourable Deborah Grey, P.C., O.C.
Interim Chair

Ottawa, Canada
February 26, 2014

Michael E. Doucet
Executive Director
Chief Financial Officer

Ottawa, Canada
February 26, 2014

Future-Oriented Statement of Operations (Unaudited)

Information for the year ended March 31, 2014 includes actual amounts from April 1, 2013 to September 30, 2013. The information for the remainder of the fiscal year 2013-14 and for fiscal year 2014-15 are based on forecasts.

The accompanying notes form an integral part of this future-oriented statement of operations.

Notes to the Future-Oriented Statement of Operations

1. Authority and Objectives

The Security Intelligence Review Committee is an independent, external review body which reports to Parliament on the operations of the Canadian Security Intelligence Service (CSIS).

The Security Intelligence Review Committee derives its powers from the Canadian Security Intelligence Service Act promulgated on July 16, 1984. The first Chair and Members were appointed by His Excellency the Governor General of Canada on November 30, 1984. The 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 the Security Intelligence Review Committee, not later than September 30 in each fiscal year, to report to the Minister of Public Safety and Emergency Preparedness, 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.

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

1.1 Reviews

The Purpose of the Review Program is to conduct reviews of CSIS activities to ensure effectiveness, appropriateness and compliance. Develop an annual research plan identifying reviews to be conducted each year, provide a retrospective examination and assessment of specific CSIS investigations and operations, examine information concerning CSIS activities, assess CSIS compliance, and issue findings and recommendations. The Security Intelligence Review Committee reviews the CSIS Director's annual report to the Minister of Public Safety and provides the Minister with a certificate stating the extent to which it is satisfied with the content of the report.

The overall objective of this program is to provide Parliament, the Minister of Public Safety and Canadians with a comprehensive picture of CSIS's operational activities, and assurance that CSIS is acting lawfully.

1.2 Complaints

The purpose of the Complaints Program is to investigate into complaints concerning CSIS made by either individuals or groups as per the CSIS Act. Under Section 41 of the CSIS Act , the Security Intelligence Review Committee investigates ''any act or thing done by the Service''; under Section 42, the Security Intelligence Review Committee investigates complaints about denials of security clearances to federal government employees and contractors. The Security Intelligence Review Committee may also conduct an investigation in relation to referrals from the Canadian Human Rights Commission and Minister's reports in regards to the Citizenship Act.

1.3 Internal Services

Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These groups are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Material Services; Acquisition Services; and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

2. Methodology and Significant Assumptions

The future-oriented statement of operations has 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 information in the estimated results for fiscal year 2013-14 is based on actual results as at September 30, 2013 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2014-15 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 for the previous year.
2. Expenses, including the determination of amounts internal and external to the government, are based on forecasted or historical information.

These assumptions are adopted as at September 30, 2013.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to forecast final results for the remainder of 2013-14 and for 2014-15, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing this future-oriented statement of operations, 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 statement of operations and the historical statement of operations include:

1. The timing and amounts of equipment acquisitions may affect amortization expenses.
2. 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 in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

4. Summary of Significant Accounting Policies

The future-oriented statement of operations has been prepared using Government's accounting policies that came into effect for the 201112 fiscal year which 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:

(a) Expenses

Expenses are recorded on an accrual basis. Expenses for the Security Intelligence Review Committee's operations are recorded when goods are received or services are rendered including services provided without charge for accommodation and employee contributions to health and dental insurance plans, which are recorded as expenses at their estimated cost. Vacation pay as well as severance benefits are accrued and expenses are recorded as the benefits are earned by employees under their respective terms of employment.

Expenses also include amortization of tangible capital assets which are capitalized at their acquisition cost. Amortization of tangible capital assets is done on a straightline basis over the estimated useful life of the asset.

(b) Employee future benefits

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 contribution. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

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.

(c) 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:

(d) Measurement uncertainty

The preparation of this future-oriented statement of operations requires management to make estimates and assumptions that affect the reported amounts of expenses reported in the future-oriented statement of operations. At the time of the preparation of this statement, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are the liability for employee future benefits and the useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the future-oriented statement of operations in the year they become known.

5. 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. Items recognized in the Future-Oriented Statement of Operations in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, the Security Intelligence Review Committee has different net cost of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

a) Reconciliation of net cost of operations to requested authorities

b) Authorities requested

6. Forecasted Expenses

The following table presents the forecasted expenses incurred by major object. The results for the period are as follows:

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 2013-14 forecast expense amounts to $290,879 ($276,807 in 2014-15), which represents approximately 1.7 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 future-oriented statement of operations 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.

As part of 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.

Information about the severance benefits, estimated as at the date of this statement, is as follows:

8. 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:

9. 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 the expenses of the section b) of this note. 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, 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.

(b) Other transactions with related parties:

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