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Section IV - Other Items of Interest

Contact Information

Security Intelligence Review Committee
P.O. Box 2430 Station "D"
Ottawa, Ontario
K1P 5W5

Telephone: (613) 990-8441
Facsimile: (613) 990-5230
Internet: www.sirc-csars.gc.ca
E-Mail: ellardm@sirc-csars.gc.ca

Legislation Administered:

Canadian Security Intelligence Service Act

Financial Statements

Statement of Management Responsibility

Security Intelligence Review Committee

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2007 and all information contained in these statements rests with management. These financial statements have been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

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 fulfil its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the department's financial transactions. Financial information submitted to the Public Accounts of Canada and included in the Committee's Departmental Performance Report is consistent with these financial statements.

Management maintains a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are in accordance with the Financial Administration Act, are executed in accordance with prescribed regulations, within Parliamentary authorities, and are properly recorded to maintain accountability of Government funds. Management also seeks to ensure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility, and by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the Committee.

The financial statements of the Committee have not been audited.

Gary Filmon Chair

Susan Pollak Executive Director, Senior Financial Officer

Statement of Operations (Unaudited)

Security Intelligence Review Committee

for the year ended March 31 (in dollars)	2007	2006
Expenses
Salaries and employee benefits	1,958,053	1,955,036
Professional and special services	389,487	365,263
Accommodation	220,000	221,780
Travel and relocation	191,615	204,529
Equipment	65,026	54,512
Information	64,355	127,753
Communication	47,950	55,835
Utilities, material and supplies	15,900	27,490
Equipment rentals	14,766	14,981
Repairs	10,983	14,243
Amortization of capital assets	7,730	8,254
Miscellaneous	2,507	61
Allowance for vacation pay	(37,576)	22,531
Total Operating Expenses	2,950,796	3,072,268
Revenues
Miscellaneous revenues	5	20
Total Revenues	5	20
Net Cost of Operations	2,950,791	3,072,248

The accompanying notes are an integral part of these financial statements

Statement of Financial Position (Unaudited)

Security Intelligence Review Committee

as at March 31 (in dollars)	2007	2006
Assets
Financial assets
Advances	700	700
Accounts receivable	88,040	0
Total financial assets	88,740	700
Non-financial assets
Prepaid expenses	0	75,398
Tangible capital assets (Note 4)	69,423	77,153
Total non-financial assets	69,423	152,551
Total assets	158,163	153,251
Liabilities and equity of Canada
Liabilities
Accounts payable and accrued liabilities	239,779	78,684
Vacation pay	80,845	118,422
Employee severance benefits (Note 5)	321,042	307,056
Total liabilities	641,666	504,162
Equity of Canada	(483,503)	(350,911)
Total liabilities and equity of Canada	158,163	153,251

The accompanying notes are an integral part of these financial statements

Statement of Equity of Canada (Unaudited)

Security Intelligence Review Committee

as at March 31 (in dollars)	2007	2006
Equity of Canada, beginning of year	(350,911)	(547,340)
Net cost of operations	(2,950,791)	(3,072,248)
Current year appropriations used (Note 3)	2,626,834	2,737,884
Revenue not available for spending	(5)	(20)
Change in net position in the Consolidated Revenue Fund (Note 3)	(150,711)	184,935
Services received without charge from other government departments (Note 6)	342,081	345,878
Equity of Canada, end of year	(483,503)	(350,911)

The accompanying notes are an integral part of these financial statements

Statement of Cash Flow (Unaudited)

Security Intelligence Review Committee

for the year ended March 31 (in dollars)	2007	2006
Operating activities
Net cost of operations	2,950,791	3,072,248
Non cash items:
Amortization of tangible capital assets	(7,730)	(8,254)
Services received without charge from other government departments	(342,081)	(345,878)
Variations in Statement of Financial Position:
Increase (decrease) in advances	0	300
Increase in accounts receivable	88,040	0
Increase (decrease) in prepaid expenses	(75,398)	75,398
Decrease (increase) in liabilities	(137,504)	128,985
Cash used by operating activities	2,476,118	2,922,799
Financing activities
Net cash provided by Government of Canada	(2,476,118)	(2,922,799)
	(2,476,118)	(2,922,799)

The accompanying notes are an integral part of these financial statements

Notes to the Financial Statements (Unaudited)

Security Intelligence Review Committee

1. Authority and Purpose

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

The 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. The Committee is empowered to set its own Rules of Procedure, and to employ an executive director and adequate staff to support its activities. The Act requires the 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. The Committee may also require CSIS or the Inspector General appointed under the CSIS Act to conduct a review of specific activities of the Service and provide the Committee with a report of the review.

2. Significant Accounting Policies

The financial statements have been prepared in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

Significant accounting policies are as follows:

(a) Parliamentary appropriations
The Committee is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to the Committee do not parallel financial reporting according to generally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the statement of operations and the statement of financial position are not necessarily the same as those provided through appropriations from Parliament. Note 3 provides a high-level reconciliation between the bases of reporting.

(b) Net Cash Provided by Government
The Committee operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the committee is deposited to the CRF and all cash disbursements made by the 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 federal government.

(c) Change in net position in the Consolidated Revenue Fund
The change in net position in the Consolidated Revenue Fund is the difference between the net cash provided by Government and appropriations used in a year, excluding the amount of non respendable revenue recorded by the Committee. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.

(d) Expenses
Expenses are recorded when the underlying transaction or expense occurred subject to the following:

• Vacation pay is expensed as the benefits accrue to employees under their respective terms of employment.
  
• Services provided without charge by other government departments for accommodation and the employer's contribution to the health and dental insurance plans are recorded as operating expenses at their estimated cost.

(e) Employee future benefits

1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer administered by the Government of Canada. The Committee's contributions to the Plan are charged to expenses in the year incurred and represent the total obligation to the Plan by the Committee. Current legislation does not require the Committee to make contributions for any actuarial deficiencies of the Plan.
   
2. Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

(f) Tangible capital assets
All tangible capital assets having an initial cost of $3,000 or more are recorded at their acquisition cost. The Committee does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections.

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

Asset class	Amortization period
Informatics	3 years
Other equipment	3 years

(g) Measurement uncertainty
The preparation of these financial statements in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are the liability for employee severance 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.

3. Parliamentary Appropriations

The Committee receives most of its funding through annual Parliamentary appropriations. Items recognized in the statement of operations and the statement of financial position in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, the 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:

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

(in dollars)	2007	2006
Net cost of operations	2,950,791	3,072,248
Adjustments for items affecting net cost of operations but not affecting appropriations:
Services received without charge from other government departments	(342,081)	(345,878)
Vacation pay	37,576	(22,531)
Amortization of tangible capital assets	(7,730)	(8,254)
Employee severance benefits	(13,986)	(34,760)
Adjustment to prior year PAYE's	2,228	76,172
Other	36	887
	(323,957)	(334,364)
Current year appropriations used	2,626,834	2,737,884

(b) Appropriations provided and used

(in dollars)	2007	2006
Operating expenditures - Vote 30	2,600,000	2,500,000
Supplementary Vote 30a	0	0
Transfer from TB - Vote 15	15,000	0
	2,615,000	2,500,000
Lapsed	246,560	29,514
	2,368,440	2,470,486
Contributions to employee benefits plan	258,394	267,398
Current year appropriations used	2,626,834	2,737,884

c) Reconciliation of net cash provided by Government to current year appropriations used

(in dollars)	2007	2006
Net cash provided by Government	2,476,118	2,922,799
Revenue not available for spending	5	20
Change in net position in the Consolidated Revenue Fund
Adjustment to prior year PAYE's	2,228	76,172
Variation in accounts receivable	(88,040)	0
Variation in accounts payable	236,141	(261,321)
Other	382	214
	150,711	(184,935)
Current year appropriations used	2,626,834	2,737,884

4. Tangible Capital Assets

Cost	Opening Balance	Acquisitions	Disposals and write-offs	Closing Balance
(in dollars)
Informatics	447,850	0	0	447,850
Other equipment	105,482	0	0	105,482
	553,332	0	0	553,332
Accumulated amortization	Opening Balance	Amortization	Disposals and write-offs	Closing Balance
(in dollars)
Informatics	426,463	3,082	0	429,545
Other equipment	49,716	4,648	0	54,364
	476,179	7,730	0	483,909
Net book value	77,153			69,423

5. Employee Benefits

(a) Pension benefits
The Committee's employees participate in the Public Service Pension 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 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 Committee contribute to the cost of the Plan. The 2006-07 expense amounts to $190,436 ($197,875 in 2005-06), which represents approximately 2.2 times (2.6 times in 2005-06) the contribution by employees.

(in dollars)	2007	2006
Pension expense	190,436	197,875

The Committee's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

(b) Severance benefits
The Committee provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future appropriations. Information about the severance benefits, measured as at March 31, is as follows:

(in dollars)	2007	2006
Accrued benefit obligation, beginning of year	307,056	272,296
Expense for the year	13,986	34,760
Accrued benefit obligation, end of year	321,042	307,056

6. Related Party Transactions

The Committee is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The Committee enters into transactions with these entities in the normal course of business and on normal trade terms. Also, during the year, the Committee received services which were obtained without charge from other Government departments as presented in part (a).

(a) Services received without charge from other government departments
During the year the Committee received service without charge from other departments. These services have been recognized in the Committee's Statement of Operations as follows:

(in dollars)	2007	2006
Accommodation provided by PWGSC	220,000	221,780
Contributions covering employer's share of employee benefits provided by TB	122,081	124,098
	342,081	345,878

The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge. The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General, are not included as an expense in the Committee's Statement of Operations.

(b) Payables outstanding at year-end with related parties:

(in dollars)	2007	2006
Accounts payable to other government departments and agencies	13,550	0

7. Comparative information

Comparative figures have been reclassified to conform to the current year's presentation.

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