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Financial Statements: NSIRA 2019–20

Date of Publishing:

Statement of Management Responsibility Including Internal Control over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the period starting July 12, 2019 and ending March 31, 2020, and all information contained in these financial statements rests with the management of the National Security and Intelligence Review Agency (NSIRA). These financial statements have been prepared by management using the Government of Canada’s accounting policies, which are based on Canadian public sector accounting standards.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management’s best estimates and judgment, and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of NSIRA’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in NSIRA’s Departmental Results Report, is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting (ICFR) designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the NSIRA and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.

The system of ICFR is designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

A risk-based assessment of the system of ICFR for the year ended March 31, 2020 was completed in accordance with the Treasury Board Policy on Financial Management and the results and action plans are summarized in the Annex.

The financial statements of the National Security Intelligence Review Agency have not been audited.

John Davies
Executive Director

Pierre Souligny
Chief Financial Officer

Ottawa, Canada
October 8, 2020

Statement of Financial Position (Unaudited)

As of March 31 (in thousands of dollars)

  For the Period July 12, 2019 through March 31, 2020
2019
Liabilities
Accounts payable and accrued liabilities (Note 5) 1,560
Vacation pay and compensatory leave 323
Employee future benefits (Note 6b) 146
Total liabilities 2,029
Financial assets
Due from Consolidated Revenue Fund 1,536
Accounts receivable and advances (Note 7) 90
Total net financial assets 1,626
Departmental net debt 403
Non-financial assets
Prepaid expenses 109
Tangible capital assets (Note 8) 967
Total non-financial assets 1,076
Departmental net financial position 673

Contractual obligations (note 9)

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

John Davies
Deputy Head

Pierre Souligny
Chief Financial Officer

Ottawa, Canada
December 10, 2021

Statement of Operations and Departmental Net Financial Position (Unaudited)

For the Year Ended March 31 (in thousands of dollars)

  Planned Results 2020 For the period July 12, 2019 through March 31, 2020
2019
Expenses
Assist the National Security Intelligence Review Agency 3,671
Internal Service 2,659
Total expenses 6,330
Net cost from continuing operations 6,330
Net cost of operations before government funding and transfers 6,330
Government funding and transfers
Net cash provided by Government of Canada   3,919
Change in due from Consolidated Revenue Fund   1,536
Services provided without charge by other government departments (Note 10a)   611
Transfer of assets and liabilities from other government departments   937
Net cost of operations after government funding and transfers   (673)
Departmental net financial position – Beginning of year  
Departmental net financial position – End of year   673

Segmented information (note 11)

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

Statement of Change in Departmental Net Debt (Unaudited)

For the Year Ended March 31 (in thousands of dollars)

  For the period July 12, 2019 through March 31, 2020 2019
Net cost of operations after government funding and transfers (673)
Change due to tangible capital assets
Acquisition of tangible capital assets 14
Transfer of tangible capital asset to/from other government department 953
Total change due to tangible capital assets 967
Change due to prepaid expenses 109
Net increase (decrease) in departmental net debt 403
Departmental net debt – Beginning of year
Departmental net debt – End of year 403

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

Statement of Cash Flows (Unaudited)

For the Year Ended March 31 (in thousands of dollars)

  For the Period July 12, 2019 through March 31, 2020 2019
Operating activities
Net cost of operations before government funding and transfers 6,330
Non-cash items:
Amortization of tangible capital assets
Transfer of tangible capital assets to/from other government department 953
Services provided without charge by other government departments (Note 9a) (611)
Transfer of overpayments
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances 90
Increase (decrease) in prepaid expenses 109
Decrease (increase) in accounts payable and accrued liabilities (1,560)
Decrease (increase) in vacation pay and compensatory leave (323)
Decrease (increase) in future employee benefits (146)
Cash used in operating activities 3,905
Capital ingesting activities
Acquisitions of tangible capital assets (Note 8) 14
Cash used in capital investing activities 14
Net cash provided by Government of Canada 3,919

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

Notes to the Financial Statements (Unaudited)

1. Authority and objectives

On July 12, 2019 Bill C-59 enacted the National Security and Intelligence Review Agency Act (NSIRA Act), and repealed the provisions of the Canadian Security Intelligence Service Act (CSIS Act) which governed the activities of Security Intelligence Review Committee (SIRC). The National Security Intelligence Review Agency (NSIRA) has a statutory mandate to review the activities of the Canadian Security Intelligence Service (CSIS) and the Communications Security Establishment (CSE), as well as the national security and intelligence activities of all other federal departments and agencies. To fulfill its review mandate, NSIRA has unfettered access to classified information other than Cabinet confidences. In addition, NSIRA inherited the complaints investigation functions of the SIRC, which was responsible for hearing complaints from members of the public regarding the actions of CSIS, as well as those related to the revocation or denial of security clearances. Going forward, it will also hear complaints regarding the CSE, as well as national security-related complaints regarding the Royal Canadian Mounted Police (RCMP).

To achieve its strategic outcome and deliver results for Canadians, NSIRA articulates its plans and priorities based on the core responsibility and program inventory included below:

Assist the NSIRA

Support the Conduct of Reviews and Investigations, and the Development of Reports

The secretariat will assist NSIRA members in fulfilling the agency’s mandate. The Secretariat will conduct a range of activities to support the agency, including accessing relevant information and providing strategic and expert advice in the conduct of reviews, quasi-judicial investigation of complaints and the development of reports. It will also provide administrative support in arranging for briefings, hearings and consultations with stakeholders and international counterparts, and support to ensure compliance with security requirements.

Internal Services

Internal support 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; Materiel 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. Government Reorganization

Through the enactment of the NSIRA Act and the repeal of the CSIS Act, the activities and the responsibilities of the defunct SIRC were transferred to NSIRA. As a result, the net assets of $2,349,184 and net liabilities of $1,412,420 have been transferred to the NSIRA, resulting in an adjustment to NSIRA’s net financial position of $936,764.

These financial statements represent the partial year results of operations for the period July 12, 2019 through March 31, 2020, and the financial position of the NSIRA as at March 31, 2020, including all transferred assets and liabilities.

3. Summary of significant accounting policies

These financial statements are prepared using NSIRA’s accounting policies stated below, 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) Parliamentary authorities

NSIRA is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to NSIRA 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 Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 4 provides a reconciliation between the bases of reporting. The planned results amounts in the ”Expenses” and ”Revenues” sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-Oriented Statement of Operations included in the 2019-2020 Departmental Plan. Planned results are not presented in the ”Government funding and transfers” section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2019-2020 Departmental Plan.

(b) Net cash provided by Government of Canada

NSIRA operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by NSIRA is deposited to the CRF, and all cash disbursements made by NSIRA 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.

(c) Amounts due from or to the CRF

Amounts due from or 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 NSIRA is entitled to draw from the CRF without further authorities to discharge its liabilities.

(d) Expenses

  • Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.
  • Services provided without charge by other government departments for accommodation, employer contributions to the health and dental insurance plans and workers’ compensation are recorded as operating expenses at their carrying value.

(e) Employee future benefits

  • Pension benefits: Eligible employees participate in the Public Service Pension Plan, a pension plan administered by the Government. NSIRA’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. NSIRA’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.
  • Severance benefits: The accumulation of severance benefits for voluntary departures ceased for applicable employee groups. The remaining obligation for employees who did not withdraw benefits is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

(f) Accounts receivable

Accounts receivable are initially recorded at cost and when necessary, an allowance for valuation is recorded to reduce the carrying value of accounts receivable to amounts that approximate their net recoverable value.

(g) Non-financial assets

All tangible capital assets having an initial cost of $5,000 or more are recorded at their acquisition cost. Tangible capital assets do not include immovable assets located on reserves as defined in the Indian Act, works of art, museum collection and Crown land to which no acquisition cost is attributable; and intangible assets.

Inventories are valued at cost and are comprised of spare parts and supplies held for future program delivery and are not primarily intended for resale. Inventories that no longer have service potential are valued at the lower of cost or net realizable value.

(h) Measurement uncertainty

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported and disclosed amounts of assets, liabilities, revenues and expenses reported in the financial statements and accompanying notes at March 31. The estimates are based on facts and circumstances, historical experience, general economic conditions and reflect the Government’s best estimate of the related amount at the end of the reporting period. The most significant items where estimates are used are contingent liabilities, 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 financial statements in the year they become known.

4. Parliamentary authorities

NSIRA receives most of its funding through annual Parliamentary authorities. Items recognized in the Statement of Operations and Departmental Net Financial Position and the Statement of Financial Position in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, NSIRA 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:

(a) Reconciliation of net cost of operations to current year authorities used

(in thousands of dollars)

  For the priod July 12, 2019 to March 31, 2020 2019
Net cost of operations before government funding and transfers 6,330
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets
Services provided without charge by other government departments (611)
Increase / (decrease) in vacation pay and compensatory leave (76)
Increase / (decrease) in employee future benefits (72)
Refund of prior years’ expenditures (1)
Total items affecting net cost of operations but not affecting authorities (760)
Adjustments for items not affecting net cost of operations but affecting authorities
Acquisition of tangible capital assets 14
Increase / (decrease) in prepaid expenses 28
Accounts receivable and advances 13
Total items not affecting net cost of operations but affecting authorities 55
Current year authorities used 5,625

(b) Authorities provided and used

(in thousands of dollars)

  For the period July 12, 2019 to March 31, 2020 2019
Authorities provided:
Vote 1 – Operating expenditures 22,468
Statutory amounts 371
Less:
Lapsed: Operating (17,214)
Current year authorities used 5,625

5. Accounts payable and accrued liabilities

The following table presents details of NSIRA’s accounts payable and accrued liabilities.

  For the Period July 12, 2019 to March 31, 2020
2019
Authorities provided:
Accounts payable – Other government departments and agencies 306
Accounts payable – External parties (8)
Accounts payable and accrued liabilities transferred in from other government department (note 2) 1,262
Total accounts payable 1,560
Total accounts payable and accrued liabilities 1,560

6. Employee future benefits

(a) Pension benefits

NSIRA’s employees participate in the Public Service Pension Plan (the ”Plan”), which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of two 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 Plan benefits and they are indexed to inflation.

Both the employees and the Agency contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Economic Action Plan 2012, employee contributors have been divided into two groups – Group 1 related to existing plan members as of December 31, 2012 and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.

The 2019-20 expense amounts to $325,594 ($0 in 2018-19). For Group 1 members, the expense represents approximately 1.01 times (1.01 times in 2018-19) the employee contributions and, for Group 2 members, approximately 1.00 times (1.00 times in 2018-19) the employee contributions.

NSIRA’s responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the Consolidated Financial Statements of the Government of Canada, as the Plan’s sponsor.

(b) Severance benefits

Severance benefits provided to NSIRA’s employees were previously based on an employee’s eligibility, years of service and salary at termination of employment. However, since 2011 the accumulation of severance benefits for voluntary departures progressively ceased for substantially all employees. Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service. By March 31, 2018, substantially all settlements for immediate cash out were completed. Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities.

The changes in the obligations during the year were as follows:

(in thousands of dollars)

  For the Period July 12, 2019 to March 31, 2020 2019
Accrued benefit obligation – Beginning of year
Accrued benefit obligation transferred in from other government department 74
Expense for the year 72
Accrued benefit obligation – End of year 146

7. Accounts receivable and advances

The following table presents details of NSIRA’s accounts receivable and advances balances:

(in thousands of dollars)

  For the Period July 12, 2019 to March 31, 2020 2019
Receivables – Other government departments and agencies (21)
Receivables – External parties 11
Employee advances 2
Accounts receivable and advances transferred in from other government department 98
Net accounts receivable 90

8. Tangible capital assets

Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:

Asset Class Amortization Period
Informatics hardware 3 to 5 years
Other equipment 10 to 15 years

(in thousands of dollars)

  Cost Accumulated Amortization Net Book Value
Capital Asset Class Opening Balance Acquisitions Adjustments (1) Disposal and Write- Offs Closing Balance Opening Balance Amortization Adjustments (1) Disposals and Write- Offs Closing Balance For the period July 12, 2019 to March 31, 2020
2019
Informatics hardware 279 279 120 120 159
Other equipment 14 998 1,012 204 204 808
Total 14 1,277 1,291 324 324 967

9. Contractual obligations

The nature of NSIRA’s activities may result in some large multi-year contracts and obligations whereby NSIRA will be obligated to make future payments in order to carry out its programs or when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

  2021 2022 2023 2024 2025 2026 and subsequent Total
Professional and special services 117 117
Information 32 32
Repair and maintenance 74 74
Transportation and communications 32 32
Total 7,906 255

NSIRA is related as a result of common ownership to all government departments, agencies, and Crown Corporations.

NSIRA enters into transactions with these entities in the normal course of business and on normal trade terms.

During the year, NSIRA 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, NSIRA received services without charge from certain common service organizations, related to accommodation, the employer’s contribution to the health and dental insurance plans and workers’ compensation coverage. These services provided without charge have been recorded at the carrying value in NSIRA’s Statement of Operations and Departmental Net Financial Position as follows:

(in thousands of dollars)

  For the Period July 12, 2019 to March 31, 2020
2019
Accommodation 316
Employer’s contribution to the health and dental insurance plans 295
Total 611

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 costs of these services, such as the payroll and cheque issuance services provided by Public Services and Procurement Canada are not included in NSIRA’s Statement of Operations and Departmental Net Financial Position. The costs of information technology infrastructure services provided by Shared Services Canada, following the transfer of responsibilities in November 2011 are also not included in NSIRA’s Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with other government departments and agencies

  For the Period July 12, 2019 to March 31, 2020
2019
Expenses 2,235

11. Segmented information

Presentation by segment is based on NSIRA’s Departmental Results Framework. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 3. The following table presents the expenses incurred and revenues generated for the main program alignments, by major object of expense and by major type of revenue. The segment results for the period are as follows:

  Assist the NSIRA Internal Services For the period July 12, 2019 to March 31, 2020 2019
Expenses
Salaries and employee benefits 2,971 1,025 3,996
Professional and special services 160 1,201 1,361
Accommodation 316 316
Transportation and communications 103 122 225
Information 13 65 78
Acquisition of machinery and equipment 20 53 73
Repair and maintenance 115 115
Rental 1 50 51
Utilities, materials and supplies 10 30 40
Other 76 (1) 75
Total expenses 3,670 2,660 6,330
Net cost from continuing operations 3,670 2,660 6,330

Annex to the Statement of Management Responsibility Including Internal Control over Financial Reporting for Fiscal Year 2021-22 (unaudited)

1. Introduction

This document provides summary information on measures taken by the National Security Intelligence Review Agency (NSIRA) to maintain an effective system of internal control over financial reporting (ICFR) including information on internal control management, assessment results and related action plans.

2. Departmental system of internal control over financial reporting

2.1  Internal Control Management

NSIRA recognizes the importance of setting the tone from the top to help ensure that staff at all levels understand their roles in maintaining effective financial systems of ICFR and are well equipped to exercise these responsibilities effectively. In accordance with a Memorandum of Understanding, NSIRA’s financial transactions are processed by the Privy Council Office (PCO) within their financial system and are for the most part subject to the same control environment.

NSIRA relies on PCO control measures to a large extent, but also recognizes the importance of ensuring that it implements its own complementary measures. To this end, NSIRA ensures that all managers with financial delegation have completed the appropriate training course prior to exercising their delegation. NSIRA has implemented a rigourous governance and accountability structure to support the oversight of its system of internal control, which includes:

  • Values and ethics framework;
  • Organizational accountability structures as they relate to internal control management to support sound financial management including roles and responsibilities for senior managers in their areas of responsibility;
  • Evidence of effective planning and reporting activities which includes multiple financial reviews and regular financial reporting to all managers including senior management;
  • Integrated risk management and on-going quality assurance and monitoring activities;
  • On-going communication and training on statutory requirements, policies, and procedures for sound financial management and control; and
  • Monitoring and regular updates as needed on internal control management plus assessment results and action.

2.2  Service Arrangements relevant to financial statements

NSIRA relies on other organizations for the processing of certain transactions that are recorded in its financial statements, and relies on these service providers to ensure an adequate system of ICFR is maintained over services provided to NSIRA.

Common Arrangements:
  • Public Services and Procurement Canada, which administers the payment of salaries and the procurement of goods and services, and provides accommodation services
  • Shared Services Canada, which provides IT infrastructure services
  • Treasury Board of Canada Secretariat, which provides information on public service insurance and centrally administers payment of the employer’s share of contributions toward statutory employee benefit plans
Specific Arrangements:
  • As aforementioned, NSIRA’s financial transactions are processed by PCO within their financial system and are for the most part subject to the same control environment. These services are the subject of a MOU between the two organizations.

3. Departmental assessment results during fiscal year 2019-20

New or significantly amended key controls

As a result of the Covid-19 pandemic, select business processes were modified to enable them to remain operational and effective while key staff work remotely. Digital signatures were introduced consistent with the approach identified by the Office of the Comptroller General to enable financial and other authorizations to continue to operate efficiently and effectively at NSIRA. This impacted multiple processes relying on the use of signatures including expenditures, delegation of authority, and procurement. Year-end close processes were modified as needed due to the requirement for staff to work remotely, however the impacts were not significant. Changes to the resulting redesigned processes have been documented.

On-going monitoring program

NSIRA continues to ensure its compliance with Treasury Board Guidelines

4. Departmental action plan

4.1  Progress during fiscal year 2019-20

NSIRA’s management team, along with the support of the Privy Council Office, has maintained a financial system and an internal control mechanism that ensures that financial information is understandable, relevant, reliable and comparable.

4.2  Departmental action plan for the next fiscal year and subsequent fiscal years

We understand our responsibility in terms of appropriate financial comptrollership and communication with the public, and we will continue to ensure that financial controls are in place and rigourous reporting process are in place going forward.

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Date Modified:

Quarterly Report: For the quarter ended September 30th, 2019

Date of Publishing:

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 2019-20 Main Estimates.

A summary description of the National Security and Intelligence Review Agency (NSIRA) program activities can be found in Part II of the Main Estimates. For information on the mandate of NSIRA, please visit its website at http://www.nsira-ossnr.gc.ca.

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

Mandate

On June 21, 2019 the National Security and Intelligence Review Agency Act received Royal Assent as part of former Bill C-59, the National Security Act. This new legislation, which came into force on July 12, 2019, significantly alters Canada’s review framework for national security in Canada, and builds on earlier decisions to create a National Security and Intelligence Committee of Parliamentarians (NSICOP). The NSIRA replaces Security Intelligence Review Committee (SIRC), which reviewed the Canadian Security Intelligence Service (CSIS) and it also replaces the Office of the CSE Commissioner (OCSEC), which reviewed the Communications Security Establishment (CSE).

The National Security and Intelligence Review Agency (NSIRA) is an independent and external review body which reports to Parliament. The NSIRA reviews all Government of Canada national security and intelligence activities to ensure that they are lawful, reasonable and necessary. The NSIRA also hears public complaints regarding key national security agencies and activities.

The NSIRA will report its findings and recommendations on an annual basis to Parliament. The NSIRA’s first annual public report will be tabled in 2020. The NSIRA may also report to Parliament more frequently should urgent or important matters arise. The NSIRA is also required to produce an annual report for Parliament on the disclosure of information under the Security of Canada Information Disclosure Act.

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 2019-20 Main Estimates . 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.

NSIRA 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 the 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 September 30, 2019.

NSIRA spent approximately 34% of its authorities by the end of the second quarter, compared to 40% in the same quarter of 2018-19 (see graph 1 below).

Graph 1: Comparison of total authorities and total net budgetary expenditures, Q2 2019–20 and Q2 2018–19

Graph: Comparison of total authorities and total net budgetary expenditures - Text version follows
Comparison of total authorities and total net budgetary expenditures, Q2 2019–20 and Q2 2018–19
  2019-20 2018-19
Total Authorities $5.3 $5.3
Q2 Expenditures $1.0 $1.1
Year-to-Date Expenditures $1.8 $2.1

Significant changes to authorities

As per graph 2 below as at September 30, 2019 and Table 1, presented at the end of this document, there was no change in the total authorities available for use by NSIRA compared to previous year, at $5.3 million.

Graph 2: Variance in authorities as at September 30, 2019

Graph: Variance in authorities as at September 30, 2019 - Text version follows
Variance in authorities as at September 30, 2029 (in millions)
  Fiscal year 2018-19 total available for use for the year ended March 31, 2019 Fiscal year 2019-20 total available for use for the year ended March 31, 2020
Vote 1 – Operating $4.8 $4.8
Statutory $0.5 $0.5
Total budgetary authorities $5.3 $5.3

Significant changes to quarter expenditures

The second quarter expenditures totaled $1,001M for a decrease of $112K (10%) when compared to $1,113M spent during the same period in 2018-19. Table 1 below presents budgetary expenditures by standard object.

Table 1

Material Variances to Expenditures by Standard Object Fiscal year 2019-20: expended during the quarter ended September 30, 2019 Fiscal year 2018-19: expended during the quarter ended September 30, 2018 Variance $ Variance %
Personnel 761 890 (129) (14%)
Transportation and communications 55 94 (39) (41%)
Information 0 0 0 0%
Professional and special services 91 77 14 18%
Rentals 14 5 9 180%
Repair and maintenance 6 4 2 50%
Utilities, materials and supplies 3 1 2 200%
Acquisition of machinery and equipment 23 13 10 77%
Other subsidies and payment 47 29 18 62%
Total gross budgetary expenditures 1,001 1,113 (112) (10%)

Personnel

The decrease of $129,000 is mainly related to the timing of salary recovery invoices.

Rentals

The increase of $9,000 is mainly explained by newly acquired Software Licenses.

Utilities, Materials and Supplies

The decrease of $6K is explained by a reallocation of expenses between standard objects.

Acquisition of machinery and equipment

The increase of $10,000 is mainly explained by growing operations of NSIRA, which necessitated procurement of additional equipment.

Other Subsidies and payments

This increase of $18,000 is mostly due to multiple Salary Overpayments processed in the second quarter of 2019-20.

Significant changes to year-to-date expenditures

The year-to-date expenditures totaled $1,802M for a decrease of $336K (16%) when compared to $2,138M spent during the same period in 2018-19. Table 2 below presents budgetary expenditures by standard object.

Table 2

Material Variances to Expenditures by Standard Object YTD Expenditures as of September 30, 2019 YTD Expenditures as of September 30, 2018 Variance $ Variance %
Personnel 1,310 1,583 (273) (17%)
Transportation and communications 85 141 (56) (40%)
Information 4 28 (24) (86%)
Professional and special services 178 180 (2) (1%)
Rentals 39 22 17 77%
Repair and maintenance 7 19 (12) (63%)
Utilities, materials and supplies 7 3 4 133%
Acquisition of machinery and equipment 28 113 (85) (75%)
Other subsidies and payment 144 49 95 194%
Total gross budgetary expenditures 1,802 2,138 (336) (16%)

Personnel

The decrease of $273,000 is mainly related to multiple Salary Overpayments processed in the first two quarters of 2019-20.

Transportation and communications

The decrease of $56,000 is mainly explained by the employee relocation costs related to an international secondment agreement in 2018.

Information

The decrease of $24,000 is mainly explained by the earlier production of the SIRC Annual Report in June 2018.

Rentals

The increase of $17,000 is mainly explained by newly acquired Software Licenses.

Repair and Maintenance

The decrease of $12,000 is due to SIRC’s end of year 2017-18 relocation project, as well as minor repairs and maintenance to the new SIRC office in the beginning of 2018-19.

Utilities, materials and supplies

The increase of $4,000 is explained by increased need of supplies due to the growing operations of NSIRA.

Acquisition of machinery and equipment

The decrease of $85,000 is mainly related to the Network Infrastructure upgrade project in 2018- 19.

Other Subsidies and payments

The increase of $95,000 is mainly explained by multiple Salary Overpayments processed in the first two quarters of 2019-20.

Risks and uncertainties

This Departmental Quarterly Financial Report (QFR) reflects the results of the current fiscal period in relation to the 2019-20 Main Estimates (full supply for these Estimates were released in June 2019).

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

NSIRA 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

On June 21, 2019 the bill C-59 to create the National Security and Intelligence Review Agency, or NSIRA, received Royal Assent. NSIRA is responsible for reviewing intelligence and national security activities across government. This new expanded mandate is expected to bring big changes to Operations and Personnel in the years to come. 

NSIRA replaces SIRC, which reviewed the Canadian Security Intelligence Service (CSIS) and it also replaces the Office of the CSE Commissioner (OCSEC), which reviewed the Communications Security Establishment (CSE). NSIRA also inherits the complaints investigation functions of SIRC, which was responsible for hearing public complaints concerning the actions of CSIS, and complaints related to the Government of Canada security clearance process, as well as specific matters and reports referred under the Citizenship Act and the Canadian Human Rights Act. NSIRA’s complaint mandate has also expanded to include hearing public complaints regarding the CSE, as well as certain complaints regarding the Royal Canadian Mounted Police (RCMP) where there is a national security nexus.

As SIRC transitions to NSIRA in 2019–20, it will need to engage in aggressive hiring efforts to discharge its expanded mandate.

NSIRA accessed funds through the 2019-20 Main Estimates.

Approved by senior officials:

John Davies
Executive Director

Chantelle Bowers
A/Deputy Executive Director and Senior General Counsel, A/Chief Financial Officer

Appendix

Statement of authorities (Unaudited)

(in thousands of dollars)

  Fiscal year 2019–20 Fiscal year 2018–19
  Total available for use for the year ending March 31, 2020 (note 1) Used during the quarter ended September 30, 2019 Year to date used at quarter-end Total available for use for the year ending March 31, 2019 (note 1) Used during the quarter ended September 30, 2018 Year to date used at quarter-end
Vote 1 – Net operating expenditures 4,809 869 1,538 4,804 981 1,875
Budgetary statutory authorities
Contributions to employee benefit plans 526 131 263 527 132 263
Total budgetary authorities 5,334 1,000 1,801 5,331 1,113 2,138

Note 1: Pursuant to Bill C‐59 effective July 12, 2019, National Security and Intelligence Review Agency was created. It replaces the Security Intelligence Review Committee. Final expenditures for fiscal year 2019‐20 of the former Security Intelligence Review Committee will be determined at year‐end.

Note 2: Includes only Authorities available for use and granted by Parliament at quarter‐end

Note 3: Details may not add to totals due to rounding

Departmental budgetary expenditures by standard object (unaudited)

(in thousands of dollars)

  Fiscal year 2019–20 Fiscal year 2018–19
  Planned expenditures for the year ending March 31, 2020 (note 1) Expended during the quarter ended September 30, 2019 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2019 Expended during the quarter ended September 30, 2018 Year to date used at quarter-end
Expenditures
Personnel 4,142 761 1,310 3,989 890 1,583
Transportation and communications 232 55 85 223 94 141
Information 76 4 73 28
Professional and special services 465 91 178 544 77 180
Rentals 70 14 39 67 5 22
Repair and maintenance 4 6 7 3 4 19
Utilities, materials and supplies 29 3 7 28 1 3
Acquisition of machinery and equipment 315 23 28 303 13 113
Other subsidies and payments 2 47 144 2 29 49
Total gross budgetary expenditures 5,334 1,000 1,801 5,331 1,113 2,138

Note 1: Includes only authorities available for use and granted by Parliament as at quarter-end.

Note 2: Details may not sum to totals due to rounding.

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