Report of the Audit Committee to the Chief Electoral Officer for the Fiscal Year 2015–16

April 2016

Table of Contents

• Introduction
• Membership and Meetings
• Committee's Terms of Reference
• Eight Areas of Oversight Responsibility
  • 1. Values and Ethics (V&E)
  • 2. Risk Management
  • 3. Management Control Framework
  • 4. Internal Audit Function
  • 5. Office of the Auditor General and Central Agencies
  • 6. Follow-up on Management Action Plans
  • 7. Financial Statements
  • 8. Accountability Reporting
• Conclusion
• A Look Ahead

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 on 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, 2016.

Membership and Meetings

The Committee was chaired by Mr. Marc Mayrand, Chief Electoral Officer of Canada, and has as its external members Messrs. W.E.R. Little, J-C. Bouchard and P.G. Boomgaardt. 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 five times during the fiscal year: on August 12, September 2 and 30, January 27 and March 15 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.

Committee Terms of Reference

The Audit Committee has written 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.

Eight Areas of Oversight Responsibility

1. Values and Ethics (V&E)

The Committee was presented with an update on initiatives to integrate V&E into all aspects of the workplace. During its March 15 meeting, the Committee viewed a video (one of several) produced for staff that highlights workplace situations calling for the application of V&E. This innovative way of raising the topic with staff serves to promote discussion and to increase sensitivity to V&E. Management will continue to stress the importance of this matter and to monitor the impact of its initiatives.

2. Risk Management

One of the key points of attention for the Committee is to understand the risks faced by Elections Canada; following this, the Committee assesses Elections Canada's approach to mitigating risks to ensure effective delivery on its mandates.

The Committee received periodic updates on evolving issues and 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 of how assessments led to written plans, assignment of roles and responsibilities, and explicit timetables for the 42nd general election in 2015.

As noted in the Committee's annual report last year, special attention was directed to the provision in legislation enacted in 2014 that requires the CEO, for each general election and by-election, to engage a suitably qualified auditor to perform an audit and report on whether specified poll workers properly exercised powers and performed specified duties and functions. The Committee was briefed on the establishment of an external panel (whose membership included external members of the Committee) to provide guidance on defining key controls and on assessing audit findings. At several meetings during the year, the Committee was briefed on the implementation of the new legislation. On March 15, 2016, it was briefed on the draft report of the auditors; special emphasis was directed to management's response and plans to address both deficiencies and opportunities for improvement noted by the auditor. During the coming year, the Committee will monitor both the development of more detailed plans and management's execution of the plans.

3. Management Control Framework

Continuing the practice of prior years, the Committee has been apprised of the key management issues and how procedures have been adopted to mitigate concerns and produce desired results. Special attention has been 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 September 2 meeting, the Committee received a briefing on the Returning Office Modernization initiative, focusing on the Financial Management Framework. This is a multi­year initiative directed to strengthening internal controls while enhancing local authority. As well, the Committee received a demonstration of a new general election dashboard designed to facilitate the monitoring of key activities and statistics by the CEO.

As part of the Committee's ongoing monitoring of major initiatives, it received a briefing from an external consultant on the review of contracting procedures for major contracts; special attention was directed to management action plans that respond to recommendations.

During its September 30 meeting, the Chief Information Officer briefed the Committee on the tactical agenda for the 42nd general election as well as on strategic issues and cyber security matters.

The Committee received the Report on the 42nd General Election of October 19, 2015 for Parliament dated February 3, 2016. As well, the Committee was briefed on matters currently under consideration that will be included in further reports to Parliament during 2016.

4. Internal Audit Function

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 of Internal Audit is devoted full-time to the audit function.

In compliance with the Treasury Board Secretariat's Policy on Internal Audit, Elections Canada completed a self-audit practice inspection last year which indicated that the Internal Audit function generally conforms to relevant policies, standards and directives. During its March 15 meeting, the Committee received a briefing on the implementation of the management action plan to remedy the few areas that had been found to only "partially conform"; the Committee will continue to monitor the execution of plans.

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 for the current year; only one was completed. For the second, the Audit of the Professional Development Program, procurement is underway with audit work expected to start in May 2016. The Committee was briefed on the Audit of the Security of the Lists of Electors as well as on the recommendations and resulting management action plan; the Committee requested more specific details and explicit timeframes for the action plan and approved the audit report.

Work is starting on the development of a new risk-based audit plan for fiscal years 2017 to 2019, with a presentation to the Committee scheduled for its November meeting.

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. At its September 30 meeting, the Committee received the results of the audit of the 2014–15 financial statements. During its meeting on March 15, 2016, the Committee received a report from the OAG outlining the Annual Audit Plan for the year ending March 31, 2016.

The Committee was provided with a report of the Office of the Commissioner of Official Languages entitled Audit of Services Provided to Electors in English and French by the Office of the Chief Electoral Officer of Canada – Final Report August 2015. Following a briefing and discussion, the Committee indicated its support for Elections Canada's ongoing approach.

The Chief Audit Executive and Manager of Internal Audit periodically updated the Committee on audit-related matters coming from central agencies, including the audit plans of the Office of the Comptroller General.

6. Follow-up on Management Action Plans

The Committee follows a systematic approach to monitoring action plans presented by management to execute its mandate as well as those that respond to external and internal audits. At the time audit findings are presented, the Committee stresses the importance of explicit management plans that are responsive to remedying deficiencies and take advantage of opportunities to improve. On a periodic basis, the Committee monitors progress against the agreed implementation timetable.

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

7. Financial Statements

The Committee reviewed and endorsed the disclosure contained in Elections Canada's 2014–15 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.

The Committee is presented with copies of the Quarterly Financial Report that Elections Canada is required to publish. Similarly, the Committee is provided with key management reports periodically throughout the year.

8. Accountability Reporting

During its August 2015 meeting, the Committee reviewed a draft of Elections Canada's Departmental Performance Report for 2014–15. In January 2016, the Committee reviewed the draft 2016–17 Report on Plans and Priorities. The Committee offered some minor suggestions to strengthen clarity and completeness, but in both cases it endorsed the tone and content of the reports.

Conclusion

The Committee acknowledges that the 2015–16 reporting period was a hectic one for Elections Canada, with the agency's principal focus on the 42nd general election (readiness, delivery and reporting). Special effort was directed to ensuring that the newly mandated independent audit of poll workers would be effectively conducted. Consequently some other areas of interest to the Committee received less attention than in other years. On balance, the Committee considers that its activities for the year constitute a satisfactory basis for fulfilling its role. The Committee was provided with relevant and transparent information responsive to its mandate.

The Committee is pleased with Elections Canada's candour concerning the challenges it faces and the genuine interest that the CEO 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. As noted in last year's report, this has been especially noteworthy in connection with the newly mandated audit of poll workers. With the active encouragement of the CEO and the senior staff handling this matter, external Committee members participated in the oversight of this important development and met with the auditors both before and after election day.

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, to monitoring results and to reporting publicly.

A Look Ahead

Attached is the Committee's Forward Agenda for 2016–17.

(To be appended)

April 27, 2016