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 year ended March 31, 2023, and all information contained in these financial statements rests with the management of the National Security and Intelligence Review Agency (NSIRA) Secretariat. 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 the NSIRA Secretariat’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the NSIRA Secretariat’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 Secretariat 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.

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

John Davies
Executive Director

Marc-André Cloutier
Chief Financial Officer

Ottawa, Canada
September 12, 2023

Statement of Financial Position (Unaudited)

As of March 31 (in thousands of dollars)

	2023	2022
Liabilities
Accounts payable and accrued liabilities (Note 4)	1,433	1,220
Vacation pay and compensatory leave	632	556
Employee future benefits (Note 5b)	229	228
Total liabilities	2,294	2,004
Financial assets
Due from Consolidated Revenue Fund	1,000	692
Accounts receivable and advances (Note 6)	518	637
Total net financial assets	1,518	1,329
Departmental net debt	776	675
Non-financial assets
Prepaid expenses	6	70
Tangible capital assets (Note 7)	4,824	4,734
Total non-financial assets	4,830	4,804
Departmental net financial position	4,054	4,129
Contractual obligations (Note 8)

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

John Davies
Executive Director

Marc-André Cloutier
Chief Financial Officer

Ottawa, Canada
September 12, 2023

Statement of Operations and Departmental Net Financial Position (Unaudited)

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

	2023 Planned Results	2023 Actual	2022 Actual
Expenses
National Security and Intelligence Reviews and Complaints Investigations (Note 9)	10,757	8,359	8,360
Internal Services	17,494	11,227	7,805
Total expenses	28,251	19,586	16,165
Net cost from continuing operations	28,251	19,586	16,165
Net cost of operations before government funding and transfers	28,251	19,586	16,165
Government funding and transfers
Net cash provided by Government of Canada		17,929	17,553
Change in due from Consolidated Revenue Fund		308	(254)
Services provided without charge by other government departments (Note 10a)		1,265	1,242
Transfer of overpayments		9	(15)
Net cost of operations after government funding and transfers	–	75	(2,361)
Departmental net financial position – Beginning of year	–	4,129	1,768
Departmental net financial position – End of year	–	4,054	4,129

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)

	2023	2022
Net cost of operations after government funding and transfers	75	(2,361)
Change due to tangible capital assets
Acquisition of tangible capital assets	755	3,114
Amortization of tangible capital assets	(664)	(528)
Total change due to tangible capital assets	91	2,586
Change due to prepaid expenses	(65)	(22)
Net increase (decrease) in departmental net debt	101	203
Departmental net debt – Beginning of year	675	472
Departmental net debt – End of year	776	675

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)

	2023	2022
Operating activities
Net cost of operations before government funding and transfers	19,586	16,165
Non-cash items:	–	–
Amortization of tangible capital assets	(664)	(528)
Services provided without charge by other government departments (Note 9a)	(1,265)	(1,242)
Transfer of overpayments	(9)	(15)
Variations in Statement of Financial Position:	–	–
Increase (decrease) in accounts receivable and advances	(119)	5
Increase (decrease) in prepaid expenses	(65)	(22)
Decrease (increase) in accounts payable and accrued liabilities	(213)	299
Decrease (increase) in vacation pay and compensatory leave	(76)	(341)
Decrease (increase) in future employee benefits	(1)	88
Cash used in operating activities	17,174	14,439
Capital investing activities	–	–
Acquisitions of tangible capital assets (Note 7)	755	3,114
Cash used in capital investing activities	755	3,114
Net cash provided by Government of Canada	17,929	17,553

Notes to the Financial Statements (Unaudited)

1. Authority and objectives

The agency was established, effective July 12, 2019 under the National Security and Intelligence Review Agency Act (NSIRA Act).

The agency is a division of the federal public administration as set out in column 1 of Schedule I.1 of the Financial Administration Act and reports to Parliament through the Prime Minister.

The mandate of the agency is to review all Government of Canada national security and intelligence activities to ensure that they are lawful, reasonable and necessary.  The agency also investigates public complaints regarding key national security agencies and activities.

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:

National Security and Intelligence Reviews and Complaints Investigations

The National Security and Intelligence Review Agency reviews Government of Canada national security and intelligence activities to assess whether they are lawful, reasonable and necessary. It investigates complaints from members of the public regarding activities of CSIS, CSE or the national security activities of the RCMP, as well as certain other national security-related complaints.  This independent scrutiny contributes to the strengthening of the framework of accountability for national security and intelligence activities undertaken by Government of Canada institutions and supports public confidence in this regard.

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. 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 3 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 2022-2023 Departmental Plan. The planned results amounts 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 were prepared for internal management purposes and have not been previously published.

(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) Non-financial assets

All tangible capital assets having an initial cost of $10,000 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.

(g) 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.

(h) Related party transactions

Related party transactions, other than inter-entity transactions, are recorded at the exchange amount.

Inter-entity transactions are transactions between commonly controlled entities. Inter-entity transactions, other than restructuring transactions, are recorded on a gross basis and are measured at the carrying amount, except for the following:

• Services provided on a recovery basis are recognized as revenues and expenses on a gross basis and measured at the exchange amount.
• Certain services received on a without charge basis are recorded for departmental financial statement purposes at the carrying amount.

3. 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)

	2023	2022
Net cost of operations before government funding and transfers	19,586	16,165
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets	(664)	(528)
Services provided without charge by other government departments	(1,265)	(1,242)
Increase / (decrease) in vacation pay and compensatory leave	(76)	(341)
Increase / (decrease) in employee future benefits	(1)	88
Refund of prior years’ expenditures	6	41
Total items affecting net cost of operations but not affecting authorities	(2,000)	(1,982)
Adjustments for items not affecting net cost of operations but affecting authorities
Acquisition of tangible capital assets	755	3,114
Increase / (decrease) in prepaid expenses	(65)	(22)
Accounts receivable and advances	13	15
Total items not affecting net cost of operations but affecting authorities	703	3,107
Current year authorities used	18,289	17,290

(b) Authorities provided and used

(in thousands of dollars)

	2023	2022
Authorities provided:
Vote 1 – Operating expenditures	28,074	30,851
Statutory amounts	1,300	1,176
Less:
Lapsed: Operating	(11,085)	(14,737)
Current year authorities used	18,289	17,290

4. Accounts payable and accrued liabilities

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

(in thousands of dollars)

	2023	2022
Accounts payable – Other government departments and agencies	425	436
Accounts payable – External parties	1,008	784
Total accounts payable	1,433	1,220
Total accounts payable and accrued liabilities	1,433	1,220

5. 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 2022-23 expense amounts to $1,178,731 ($1,072,922 in 2021-22). For Group 1 members, the expense represents approximately 1.02 times (1.01 times in 2021-22) the employee contributions and, for Group 2 members, approximately 1.00 times (1.00 times in 2021-22) 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)

	2023	2022
Accrued benefit obligation – Beginning of year	228	316
Expense for the year	1	(7)
Benefits paid during the year	–	(81)
Accrued benefit obligation – End of year	229	228

6. Accounts receivable and advances

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

	2023	2022
Receivables – Other government departments and agencies	454	546
Receivables – External parties	40	60
Employee advances	24	31
Net accounts receivable	518	637

7. 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 10 years
Other equipment	3 to 30 years
Leasehold improvements	Over the useful life of the improvement or the lease term, whichever is shorter
Assets under construction	once in service, in accordance with asset type

(in thousands of dollars)

	Cost					Accumulated Amortization					Net Book Value
(1) Adjustments include assets under construction that were transferred to the other categories upon completion of the assets.
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	2022	2021 Restated (Note 11)
Informatics hardware	335	–	–	–	335	267	40	–	–	307	28	68
Other equipment	1,124	–	–	–	1,124	422	121	–	–	543	581	703
Leasehold improvements	1,005	–	–	–	1,005	335	503	–	–	838	167	670
Assets under construction	3,293	755	–	–	4,048	–	–	–	–	–	4,048	3,293
Total	5,757	755	–	–	6,512	1,024	664	–	–	1,688	4,824	4,734

8. Contractual obligations

The nature of the NSIRA’s activities may result in some large multi-year contracts and obligations whereby NSRIA 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:

	2024	2025	2026	2027	2028	2029 and subsequent	Total
Acquisition of goods and services	4,725	45	45	45	45	–	4,905
Total	4,725	45	45	45	45	–	4,905

9. Difference between planned and actual spending

The difference between planned and actual spending is mostly due to the lingering impacts of the pandemic on the Secretariat’s ability to progress with its facilities fit-up and expansion plans, as well as on its planned spending on internal services infrastructure and systems. The project has, due to its complexity, supply chain challenges, and compliancy requirements, seen the delivery date pushed back to summer of 2024.

10. Related party transactions

NSIRA is related as a result of common ownership to all government departments, agencies, and Crown corporations. Related parties also include individuals who are members of key management personnel or close family members of those individuals, and entities controlled by, or under shared control of, a member of key management personnel or a close family member of that individual.

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 for other government departments as disclosed below.

(a) Common services provided without charge by other government departments

During the year, the NSIRA received 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 at the carrying value in NSIRA’s Statement of Operations and Departmental Net Financial Position as follows:

(in thousands of dollars)

	2023	2022
Accommodation	500	486
Employer’s contribution to the health and dental insurance plans	765	756
Total	1,265	1,242

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 and audit services provided by the Office of the Auditor General are not included in the Department’s Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with other government departments and agencies

	2023	2022
Expenses	7,324	6,844

11. Segmented information

Presentation by segment is based on the Department’s core responsibility. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in Note 2. The following table presents the expenses incurred and revenues generated for the main core responsibilities, by major object of expense and by major type of revenue. The segment results for the period are as follows:

	National Security and Intelligence Reviews and Complaints Investigations	Internal Services	2023	2022
Expenses
Salaries and employee benefits	7,817	3,200	11,017	10,282
Professional and special services	250	3,422	3,672	3,470
Accommodation	–	519	519	505
Transportation and communications	226	138	364	213
Information	4	13	17	69
Acquisition of machinery and equipment	–	47	47	354
Repair and maintenance	–	3,643	3,643	3,091
Amortization of tangible capital assets	–	664	664	528
Rental	–	215	215	130
Utilities, materials and supplies	2	37	39	30
Other	60	(671)	(611)	(2,507)
Total expenses	8,359	11,227	19,586	16,165
Net cost from continuing operations	8,359	11,227	19,586	16,165

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.

Detailed information on NSIRA authority, mandate, and programs can be found in our Departmental Plan for the 2022 to 2023 fiscal year and our Departmental Results Report for the 2022 to 2023 fiscal year.

2. Departmental system of internal control over financial reporting

In support of an effective system of internal control, NSIRA conducted self-assessments of key control areas that were identified to be assessed in the 2022 to 2023 fiscal year. A summary of the assessment results and action plan is provided in subsection B.2. 

NSIRA completed the assessment of key control areas as indicated in the following table. A summary of the results, action plans, and additional details are also provided.

2.1  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

Readers of this annex may refer to the annexes of the above-noted departments for a greater understanding of the systems of internal control over financial reporting related to these specific services.

Specific Arrangements:

• Prior to fiscal 2021-22, in accordance to a Memorandum of Understanding (MOU) between the two organizations, NSIRA relied on the Privy Council Office (PCO) for the performance of financial services, including relevant control measures.  Effective, April 1, 2021, NSIRA entered into a new MOU with PCO, which reflected a shift whereby NSIRA would work towards financial services self-sufficiency, by fiscal 2022-23 (including a transition period over fiscal 2021-22).
• Treasury Board of Canada Secretariat provides the agency with a SAP financial system platform to capture and report all financial transactions and a PeopleSoft human resources system platform to manage pay and leave transactions

2.2  Assessment results for the 2022 to 2023 fiscal year

NSIRA completed the assessment of key control areas as indicated in the following table. A summary of the results, action plans, and additional details are also provided.

Key Control Areas	Remediation required	Summary results and action plan
Delegation	Yes	Internal controls are functioning as intended, no action plan required.
Transfer Payments	N/A	Not applicable

With respect to the key control areas of the delegation of spending and financial authorities, controls related to spending and financial authorities were functioning well and form an adequate basis for the department’s system of internal control.

3. Departmental action plan

Assessment Plan

NSIRA will assess the performance of its system of internal control by focusing on key control areas over    a cycle of years as shown in the following table.

Key Control Areas	2022-23	2023-24	2024-25	2025-2026	2026-2027
Delegation	No	No	No	No	No
Transfer Payments	Yes	No	No	No	No
Contracting	No	Yes	No	No	No
Year-end Payables	No	Yes	No	No	No
Receivables	No	Yes	No	No	No
Pay Administration	No	No	Yes	No	No
Travel	No	No	Yes	No	No
Financial Management Governance	No	No	Yes	No	No
Hospitality	No	No	No	Yes	No
Fleet Management	No	No	No	Yes	No
Accountable Advances	No	No	No	Yes	No
Acquisition cards	No	No	No	No	Yes
Leave	No	No	No	No	Yes
Special Financial Authorities	No	No	No	No	Yes