Report of the Audit Committee to the Chief Electoral Officer for the Fiscal Year 2014–15

April 2015

Table of Contents

• 1. Introduction
• 2. Membership and Meetings
• 3. Committee's Terms of Reference
• 4. Eight Areas of Oversight Responsibility
  • 4.1. Values and Ethics
  • 4.2. Risk Management
  • 4.3. Management Control Framework
  • 4.4. Internal Audit Function
  • 4.5. Office of the Auditor General and Central Agencies
  • 4.6. Follow-up on Management Action Plans
  • 4.7. Financial Statements
  • 4.8. Accountability Reporting
• 5. Conclusion

1. Introduction

The Audit Committee of the Chief Electoral Officer of Canada (Elections Canada) has been established in compliance with 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 management controls and the reporting of plans and results. As required by its Terms of Reference, the Committee has prepared this report to summarize its activities for the fiscal year ended March 31, 2015.

2. Membership and Meetings

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

The Committee convened eight times during the fiscal year: on August 6 and 27, October 22, November 19, December 19, January 14 and March 18 and 19 for both regular and special meetings. There was full attendance by external members. Meetings generally included an in-camera session involving only external members and the CEO.

3. Committee's Terms of Reference

The Audit Committee reviewed and confirmed its Terms of Reference, which guide its activities and conform to the revised Treasury Board Policy on Internal Audit of 2012.

The Committee is mandated to provide advice on eight key areas of management.

4. Eight Areas of Oversight Responsibility

4.1. Values and Ethics

The Committee was briefed on the results of Elections Canada's employee survey and the innovative response to strengthening values and ethics in the workplace. Interventions are focused on continuous education of staff and managers and include an online course as well as expanded use of the values and ethics criterion in performance appraisals.

4.2. Risk Management

Over the years, the Committee has devoted considerable attention to the risks faced by Elections Canada and its approach to mitigating risks to ensure effective delivery of its mandates. The Committee received updates at each meeting on evolving issues and the steps taken by Elections Canada to manage its affairs. In particular, the Committee was apprised of the approach followed by senior management to identify corporate risks and the fact that these assessments had been used to select areas for audit.

During its March meeting, the Committee received a briefing on the development of a risk management document. With the approaching date of a general election, the Executive Committee devoted significant attention to thoroughly assessing risk management plans, gaps, residual risks and the steps required to address them. Explicit roles and responsibilities were established, along with written plans and timetables. The Committee commended this important effort and the progress made to date; it will be kept apprised of further developments in the coming year.

4.3. Management Control Framework

Continuing the practice of prior years, the Committee was apprised of the key management issues and what procedures had been adopted to mitigate these concerns and produce the desired results. Special attention was directed to the issues implicit in Elections Canada's two parliamentary funding streams – annually voted appropriations as well as a statutory authority. Particular attention was directed to plans and financial controls for the upcoming general election.

During its November meeting, the Committee was given an overview of the program evaluation approach for the 2015 general election. This approach aims to cover multiple perspectives, including whether electors and political participants had positive electoral experiences and confidence in both the results and Elections Canada's performance.

In addition, the Chief Information Officer reported on the progress of the Digital Strategy, which has been created in support of both the delivery of the 2015 general election and of medium-to-long-term business planning as well as strategic alignment through to the 2019 general election.

In following up the recommendations of the 2013 compliance review report by Harry Neufeld, the Committee was given an overview of the operational implementation. The focus is on balancing integrity and service, simplifying the process, enhancing training and clarifying guidelines.

During its March meeting, the Committee received a briefing on the Financial Management Framework Policy on Internal Controls; particular attention was directed to the operations of the returning officers who manage the electoral activities at numerous locations across the country. The Committee endorsed the emphasis and the thorough approach evidenced in the presentation.

The Committee also received periodic updates on by-elections, political financing, electoral integrity, human resources and parliamentary affairs.

The Committee was presented with preliminary cost estimates for the 2015 general election during its October meeting. It was noted that improving service to electors, modernizing infrastructure, improving compliance at the polls and changes in legislation all contributed to cost increases.

New legislation modifying the Canada Elections Act was enacted during the year. The Committee was continuously briefed on significant changes and the plans to implement them. The operating and cost implications were highlighted.

Of special interest to the Committee was the provision in the new legislation that requires the Chief Electoral Officer, for each general election and by-election, to engage a suitably qualified auditor to perform an audit and report on whether specified election officers properly exercised their powers and performed their specified duties and functions. The Committee was briefed on the new legislation. In recognition of the uniqueness and importance of this newly mandated audit, the Committee devoted two special meetings (December 19 and March 19) to briefings on the development of criteria and processes to select a suitably qualified auditor. The Committee will continue to monitor the implementation of the new legislation. It plans to review the auditors' report in due course and will place special emphasis on management's plan to address any deficiencies or opportunities to improve noted by the auditor. The Committee was alerted to Bill C-50 now before the House of Commons and the possible broadening of the audit scope.

4.4. Internal Audit Function

As previously reported, the Internal Audit function is part of the corporate secretariat, with the Chief of Staff devoted part-time to the role of Chief Audit Executive. The Manager, Internal Audit is devoted full-time to the audit function.

In compliance with the Treasury Board Secretariat's Policy on Internal Audit, Elections Canada undertook a self-audit practice inspection in August. The detailed responses to the assessment questionnaire were presented to Committee members for review and comment. Following some minor changes, the Committee endorsed the conclusion that the Internal Audit function generally conforms to relevant policies, standards and directives. Further, it directed that the reports should be shared with the Office of the Comptroller General and that a management action plan should be developed for the few areas found to only "partially conform"; these steps were completed and reported during the October meeting.

The Committee was briefed on the implementation of the previously approved "Risk­Based Audit Plan for 2013–14 to 2015–16." In the context of very limited Internal Audit resources, two assurance audits had been scheduled. One had assessed controls over the security of election-period lists of electors and election workers; the second, still underway at year-end, will assess whether Elections Canada's Professional Development Program and related training courses meet the competency development needs of the organization. Final reports for these audits are slated to be reviewed by the Committee in the coming year.

At each meeting, the Committee was updated on the status of audits and plans.

At the meeting on March 18, 2015, the Internal Audit Charter was reviewed and confirmed by the Committee, in line with the requirements of the Treasury Board Policy Suite on Internal Audit.

4.5. Office of the Auditor General and Central Agencies

By virtue of attendance at Committee meetings by a representative of the OAG, the Committee has been kept informed of matters raised by the OAG and of its audit plans. In its August 27 meeting, the Committee received the results of the audit of the 2013–14 financial statements. During its meeting on March 18, 2015, the Committee received a report from the OAG, outlining the Annual Audit Plan for the year ending March 31, 2015.

The Chief Audit Executive and Manager of Internal Audit periodically updated the Committee on audit-related matters coming from central agencies. Two external Committee members attended the November 4, 2014, Symposium for Department Audit Committees sponsored by the Office of the Comptroller General (OCG). At its March 18 meeting, the Committee received a status summary of the horizontal audits included in the OCG's 2014–17 risk-based audit plan.

4.6. Follow-up on 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. On August 27, 2014, and March 18, 2015, the Committee received updates on implementation plans responsive to audit findings.

The Committee continues to be satisfied with the effective follow-up reporting as well as with the progress in implementing action plans.

4.7. Financial Statements

The Committee reviewed and endorsed the disclosure contained in Elections Canada's 2013–14 financial statements. These statements were audited by the Auditor General of Canada, who issued an unmodified audit report and noted good collaboration from Elections Canada staff. The Committee commended all for the good work and recommended the statements for approval by the CEO.

In connection with each meeting, the Committee is presented with the most recent quarterly financial report that Elections Canada is required to publish. Similarly, the Committee is provided with key management reports and financial statements periodically throughout the year.

4.8. Accountability Reporting

During its August 6 meeting, the Committee reviewed a draft of Elections Canada's Departmental Performance Report for the 2013–14 fiscal year. In January 2015, the Committee reviewed the draft 2015–16 Report on Plans and Priorities. The Committee offered some suggestions to strengthen clarity and completeness but, in both cases, was satisfied with the tone and content of the reports.

5. Conclusion

The Committee considers that its activities for the year constitute a satisfactory basis for fulfilling its role. It was provided with relevant and transparent information responsive to its mandate. The Committee is pleased with the candour displayed by the CEO concerning the challenges facing Elections Canada and the genuine interest he shows in the views of Committee members. The Committee notes the professionalism and dedication demonstrated by staff as well as their openness and willingness to accept and implement suggestions. This continues to be especially noteworthy in connection with the newly mandated audit of poll workers; the Committee is engaged in close oversight of this important development, with the active encouragement of the CEO and the senior staff handling this matter.

The Committee considers that it has a reasonable understanding of Elections Canada's considerable challenges: its elaborate legislative and regulated environment, extraordinary operating demands and needs to innovate. Based on its observations over the current and past years, the Committee considers that Elections Canada has adopted a systematic and rational approach to addressing its mandate, monitoring results and reporting publicly.