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Report of the Audit Committee to the Chief Electoral Officer of Canada for Fiscal Year 2010–2011

1. Introduction

The Audit Committee of the Office of the Chief Electoral Officer of Canada (Elections Canada) was established three years ago in compliance with the provisions of the Federal Accountability Act. It is composed of external members, and its purpose is to provide the Chief Electoral Officer (CEO) with independent advice on matters relating to management controls and reporting of plans and results. This report outlines the Committee's activities of the past fiscal year, as required by its Terms of Reference.

2. Membership and Meetings

The Committee was chaired by Mr. Marc Mayrand, Chief Electoral Officer of Canada, and its members are Messrs. W.E.R. Little, J.-C. Bouchard and P.G. Boomgaardt. A representative of the Office of the Auditor General (OAG) is routinely invited, and this person attended all meetings during the year. The Chief Audit Executive and Internal Audit staff attended all meetings as observers and to answer questions from the members. As needed, members of senior management and staff attended to make presentations and respond to matters raised by the members.

The Committee met four times during the past fiscal year: in June 2010, August 2010, November 2010 and January 2011; all members attended each meeting. The January 2011 meeting included an in-camera session attended only by external members and the CEO.

3. Terms of Reference

Effective June 2010, the Committee adopted a revised Terms of Reference in response to the Treasury Board Policy on Internal Audit, issued in July 2009. The Committee is mandated to provide advice on eight key areas of management.

4. Eight Areas of Oversight Responsibility

4.1 Values and Ethics

In November, the Committee was briefed on Elections Canada's progress in implementing the action plans that respond to the recommendations of its self-assessment of management of values and ethics (V&E), carried out in 2009. It was noted that the new Public Service Code of Conduct had not yet been finalized and that Elections Canada delayed finalizing the new framework to ensure its conformity with the Code.

With respect to the unique issues posed by the large number of workers required to help conduct elections, the Committee discussed the fact that returning officers are provided with V&E information to use in the recruitment process. A number of matters concerning field staff and consultants remained to be finalized. The Committee made some suggestions and will continue to monitor further implementation of the action plans over the coming year.

4.2 Risk Management

During its first two years, the Committee devoted considerable attention to the risks faced by Elections Canada and its approach to mitigating these risks to ensure that the agency's mandate is delivered effectively. In the past year, the Committee focused on the financial risk strategy, referred to in the recently completed A-base review. During the January 2011 meeting, the Committee received updates on implementation plans, written in response to the recommendations of the A-base review, in the form of a score card presentation. The Committee also discussed the implications of a multi-year projection of salary expenditures and the unique challenges and responsibilities posed by having both annual and statutory appropriations.

The Committee heard a presentation on the ongoing developments in Information Technology (IT) – its business continuity planning and the management of IT projects.

It also reviewed the risk assessment produced by Internal Audit as part of its planning efforts and heard from the OAG on its risk assessment of the audit of Elections Canada's financial statements.

4.3 Management Control Framework

The Committee received a briefing on the implementation of the Policy on Internal Control at Elections Canada. The Policy reaffirms that it is the responsibility of the CEO to ensure that effective risk-based internal controls are in place; it also emphasizes that controls over financial reporting must be assessed. Although the provisions for monitoring by the Office of the Comptroller General (OCG) do not apply to Elections Canada or other agents of Parliament, the staff is making full use of all relevant guidance provided by the OCG.

As previously noted, over the three years of its existence, the Committee has been apprised of key management issues and what procedures have been adopted to mitigate concerns and produce the desired results. Special attention has been directed to the issues implicit in Elections Canada's two parliamentary funding streams – annually voted appropriations and a statutory authority. The Committee was updated on the activities of the IT group and commended the team for its direction and progress.

The Deputy Chief Electoral Officer, Electoral Events advised the Committee of Elections Canada's plans for electoral redistribution (2011–2014), including providing support for the ten federal electoral boundaries commissions.

The Committee heard a presentation on "Human Resources Trends on the Health of Elections Canada"; members noted that it is important to share issues with employees and obtain their feedback.

In August 2010 and January 2011, the Committee also received briefings on Political Financing programs and the procedures adopted to assess compliance. In November 2010, the Director of Finance made a presentation on quarterly financial reports.

Management completed a thorough budgetary review, has approved a new Program Activity Architecture (PAA) and is further tightening procedures. The Committee will continue to monitor developments and review finances by reviewing periodic internal management reports.

4.4 Internal Audit Function

At each meeting, the Committee was updated on the status of audits and plans. It received and recommended for approval audit reports on a) the inventory control framework and b) the management of the Human Resources Information System. The Committee was also briefed on the work started on the audit of procurement and contracting, and it expects to receive the results of the audit at its next scheduled meeting in June 2011.

The Risk-Based Audit Plan, which was endorsed by the Committee in March 2010, called for continuous audits; in June 2010, plans for carrying out these continuous audits within the Finance function were presented, and in January 2011, plans for continuous audits of Human Resources and Political Financing quality assurance were added. This work will be performed by examining selected components on a rotating basis. Internal Audit also presented an addendum to its three-year Risk-Based Audit Plan for 2010–2011 to 2012–2013. The Committee reviewed all of the plans and recommended them to the CEO for approval. It noted that a suitable means of reporting on the various continuous audits will be determined once initial results are presented.

The Committee places particular emphasis on audit recommendations and management action plans as a way to address audit concerns. It continued to apply its systematic approach to monitoring progress on implementing recommendations during the August 2010 and January 2011 meetings.

The Committee reviewed its Internal Audit Charter as well as its Terms of Reference; both were endorsed with only minor changes. It is noted that the OCG is continuing to refine its expectations of audit coverage and annual reporting by the internal audit function.

The Committee noted that resources in the Internal Audit Directorate were constrained in the last part of the year with the departure of the Director of Internal Audit. It thanked the departing director and wished him well in his new position. The Committee is satisfied with the Directorate's current plans.

4.5 Office of the Auditor General and Central Agencies

Since a representative of the OAG has attended Committee meetings regularly, the Committee has been kept informed of matters raised by the OAG and its audit plans. At the November 2010 meeting, the OAG representative outlined the impact of new audit standards on the work for 2010–2011 and subsequent year-ends. The Chief Audit Executive or Director of Internal Audit periodically updated the Committee on audit-related matters coming from central agencies.

On September 15, 2010, one Committee member attended a presentation in the Department and Agency Audit Committee Series, sponsored by the OCG, on Management Control Framework. Two Committee members attended the Department and Agency Audit Committee symposium, held on November 4, 2010 and sponsored by the OCG, to keep abreast of developments in the internal audit area.

4.6 Follow-up of Management Action Plans

The Committee follows a systematic approach to monitoring the action plans presented by management to execute its mandate as well as those that respond to external and internal audits. During the August 2010 and January 2011 meetings, the Committee received updates on implementation plans drawn up to respond to audit findings; progress was shown using a score card presentation. IT security remained an important issue, especially with Elections Canada moving to Web-based applications. The Committee was pleased with the effective follow-up reporting and generally satisfied with the progress made in implementing action plans.

4.7 Financial Statements

The Committee reviewed and endorsed the disclosure included in Elections Canada's financial statements for 2009–2010. These statements were audited by the OAG, who issued a clean audit report and noted good collaboration from Elections Canada staff. The Committee commended everyone for their good work and recommended that the statements be approved by the CEO.

4.8 Accountability Reporting

During its August 2010 meeting, the Committee reviewed a draft of Elections Canada's Departmental Performance Report for the 2009–2010 fiscal year, including the audited financial statements. In January 2011, it reviewed the draft 2011–2012 Report on Plans and Priorities, which had been prepared using the new PAA. The Committee offered some minor suggestions to strengthen clarity and completeness, but in both cases, it was satisfied that Elections Canada was presenting fair and reasonable reports to Parliament. The Committee encouraged continuing the work underway to develop and report meaningful performance indicators.

5. Conclusion

The Committee believes that its third year of activity is proof that it is fulfilling its role in a satisfactory manner. It was provided with relevant and transparent information that corresponded to its mandate. The Committee is pleased with the candour expressed by everyone who presented information to them about the challenges facing Elections Canada and with the genuine interest that the CEO shows in the views of Committee members. The Committee notes the professionalism and dedication demonstrated by staff members as well as their openness and willingness to accept and implement suggestions.

The Committee considers that it now has a maturing appreciation of Elections Canada's considerable challenges: its elaborate legislative and regulatory environment, extraordinary operating demands and need to innovate. Based on its observations over the past three years, the Committee believes that Elections Canada has adopted a systematic and rational approach to addressing its mandate, to monitoring results and to reporting publicly.

6. A Look Ahead

Attached is the Committee's Forward Agenda for 2011–2012.

In addition, specific issues that the Committee plans to address include:

  • election readiness planning
  • corporate risk profile
  • project management policy
  • Elections Canada's investment plan
  • planning for the move to Gatineau in 2013
  • IT strategic planning and "Wave 1" projects

June 2011