Annex – Assessment of Internal Control over Financial Reporting for the fiscal year ending March 31, 2017 (Unaudited)
This document provides summary information on the measures taken by the Office of the Public Sector Integrity Commissioner (the Office) 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
The Office has a well-established governance and accountability structure to support its assessment efforts and oversight of its system of internal control. An internal control management framework, approved by the Commissioner, is in place and includes:
- Organizational accountability structures as they relate to internal control management to support sound financial management, including roles and responsibilities of senior managers in their areas of responsibility for control management;
- A code of values and ethics;
- Ongoing communication and training on statutory requirements, and policies and procedures for sound financial management and control; and
- At least annual monitoring of and regular updates on internal control management, as well as the provision of related assessment results and action plans to the Commissioner and senior management and, as applicable, the Audit and Evaluation Committee.
The Audit and Evaluation Committee provides advice to the Commissioner on the adequacy and functioning of the Office's risk management, control and governance frameworks and processes.
2.2 Service arrangements relevant to financial statements
The Office relies on other organizations for the processing of certain transactions that are recorded in its financial statements as follows:
- Public Services and Procurement Canada centrally administers the payments of salaries and the procurement of goods and services in accordance with the Office’s Delegation of Authority, and provides accommodation services;
- The Treasury Board of Canada Secretariat provides the Office with information used to calculate various accruals and allowances.
- The Canadian Human Rights Commission (CHRC), pursuant to an agreement with the Office, administers and provides services in the area of financial management, information technology, information management, human resources and administration. CHRC has the authority and responsibility to ensure that payments are made in accordance with the terms and conditions set out by the Office. As a result, reliance is placed on the control procedures of CHRC; and
- CHRC provides the Office with a GX financial system platform to capture and report all financial transactions.
3. Departmental assessment results during fiscal year 2016-17
The key findings and significant adjustments required from the current year’s assessment activities are summarized below.
New or significantly amended key controls: In the current year, there were no significantly amended key controls in existing processes which required a reassessment. Design and operating effectiveness testing, in collaboration with CHRC, was conducted on the key controls for a new payroll subsystem. Significant adjustments were not required for the new key controls.
Ongoing monitoring program: As part of its ongoing monitoring plan, the Office completed its reassessment of entity-level controls and the financial controls within the business processes of capital expenditures, operating expenses and payroll expenses. For the most part, the key controls that were tested performed as intended, with remediation required as follows:
- Issues were found in the capital expenditures area related to formal review of purchasing. Procedures will be updated to address the issue.
4. Departmental action plan
4.1 Progress during fiscal year 2016-17
The Office continued to conduct its ongoing monitoring according to the previous fiscal year’s rotational plan as shown in the following table.
Progress During Fiscal Year 2016-17
|Previous year's rotational ongoing monitoring plan for current year||Status|
|Entity-level controls, operating expenses and payroll expenses.||Completed as planned; no remedial actions required.|
|Capital expenses||Completed as planned; remedial actions started|
4.2 Action plan for the next fiscal year and subsequent years
The Office's rotational ongoing monitoring plan over the next three years, based on an annual validation of the high-risk processes and controls and related adjustments to the ongoing monitoring plan as required, is shown in the following table.
Rotational Ongoing Monitoring Plan
|Key control areas||Fiscal year|
|IT general controls||No||Yes||No|
|Master data on vendors||Yes||No||Yes|