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Report of the Audit Committee to the Chief Electoral Officer of Canada for Fiscal Year 2011–2012

1. Introduction

The Audit Committee of the Chief Electoral Officer of Canada (Elections Canada) was established in compliance with the Federal Accountability Act. Composed of external members, it provides the Chief Electoral Officer (CEO) with independent advice on matters relating to management controls and reporting of plans and results. This report outlines the activities of the Committee's fourth year, as required by its Terms of Reference.

2. Membership and Meetings

The Committee is chaired by Marc Mayrand, Chief Electoral Officer of Canada, and has as its members W.E.R. Little, J.-C. Bouchard and P.G. Boomgaardt. A representative of the Office of the Auditor General (OAG), who is routinely invited, attended all meetings in 2011–2012. The Chief Audit Executive and Internal Audit staff attended all regular meetings as observers and to respond to questions from members. As needed, members of Elections Canada's senior management and other staff attended to make presentations and respond to matters raised by members.

The Committee convened seven times during the fiscal year: June 23, July 22 (teleconference), August 25, December 22 (special), January 11 (special), January 24 and March 22. With the exception of one member missing a single meeting, there was full attendance by members. Meetings generally included an in-camera session involving only external members and the CEO.

3. Committee Terms of Reference

The Committee's Terms of Reference remain unchanged from those approved in 2010–11 and conform to the Treasury Board Policy on Internal Audit issued in July 2009. The Committee is mandated to provide advice on eight areas of management.

4. Eight Areas of Oversight Responsibility

4.1 Values and Ethics

In January 2012 the Committee was briefed on progress in implementing the recommendations of Elections Canada's 2009 self-assessment of its management of values and ethics (V&E). It was noted that because the new Public Service Code of Conduct was not yet finalized, Elections Canada was holding back on completing its new framework for a code to ensure full conformity.

With respect the issues posed by the large influx of workers to conduct elections, returning officers were provided with V&E information to use in recruitment process. As well, guidance has been developed to address conflicts of interest and post-employment restrictions.

Following the approval of the new public service code, all these matters will be incorporated into Elections Canada's new policies. The Committee will monitor developments and implementation in the coming years.

4.2 Risk Management

During its initial years, the Committee devoted considerable attention to the risks Elections Canada faces and its approach to mitigating risks in order to deliver on its mandate. In 2011–2012, the Committee focused on its Financial Risk Strategy, referring to the A-base review completed in April 2010.

During its January 2012 meeting, the Committee received its annual update on implementation of the A-base review recommendations, using a scorecard presentation of progress. The Committee discussed the implications of a multi-year projection on salary expenditures and the challenges of having certain expenditures funded by statutory appropriations and others by annual appropriations.

During December 2011 and January 2012, the Committee held two special meetings to be briefed and provide comments on the plans to deal with the government's strategic operating reviews and expenditure restraint initiatives.

At its March 2012 meeting, the Committee also received presentations on the developments in information technology project management and three-year plans. The Committee expressed satisfaction with the progress reported.

The Committee heard from the OAG on its risk assessment for the audit of Election Canada's financial statements. As well, the Committee is monitoring the updating of Elections Canada's Corporate Risk Profile.

4.3 Management Control Framework

As previously noted, throughout its existence the Committee has been kept informed of the key management issues and about how procedures have been adopted to mitigate concerns and produce desired results. The Committee has directed special attention to the issues implicit in Election Canada's two parliamentary funding streams: annually voted appropriations and a statutory authority.

During its June 2011 meeting, the Committee received a briefing on the Statement of Management Responsibility Including Internal Control over Financial Reporting for 2010–2011. As well, the Committee heard how Elections Canada is respecting the new Treasury Board directive on project management. In August 2011, the Committee considered the role of the Contract Review Committee.

The Committee was updated during its June 2011 meeting on the Field Application Services Transition project, and it fully endorsed the IM/IT Steering Committee's recommendations to radically change the project. In March 2012, the Committee received a further update and commended the team on its direction and progress.

The Committee received a presentation in June 2011 on Election Canada's Outreach Policy. To address declining electoral participation, that policy and its related action plans are intended to increase target groups' awareness and understanding of the electoral process and their involvement in it.

In March 2012 the Committee was briefed on the roles of the Commissioner of Elections and the Broadcast Arbitrator. The Committee also received an update on the preparations for the Electoral Boundaries Readjustment (2011–2014), focusing on Elections Canada's support role for the 10 federal electoral boundary commissions. The Committee was briefed on Vision 2015, covering issues, objectives and initiatives for the next general election.

The Committee received its annual presentation on Human Resources Trends on the Health of Elections Canada. Members were assured that the agency will share key issues with its employees.

Management implemented a new program activity architecture with the full endorsement of the Committee.

4.4 Internal Audit Function

The Committee reviewed the updated Risk-based Audit plan for 2011–2012 and 2012–2013 and also recommended approval of the terms of reference for an audit of security management.

At each meeting, the Committee was updated on the status of audits and plans. It received and recommended for approval audit reports on a) Procurement and Contracting, b) Financial Management of Offices of Returning Officers, c) Audit of Inventory Counts and d) Continuous Audit of Human Resources.

The Committee places particular emphasis on audit recommendations and management action plans to address audit concerns. It continued to apply its systematic approach to monitoring progress on implementing the recommendations during its August 2011 and January 2012 meetings.

The Internal Audit Charter was reviewed by the Committee, along with own Terms of Reference; it endorsed both without changes.

The post of Chief Financial Officer / Chief Audit Executive passed in September 2011 from Brian Berry to Helen Bιlanger. The Committee noted that the department's resources were constrained during 2011–2012 by the departure of two staff members. During its December meeting, the Committee was advised that internal audit will be headed by a new employee who functions as both Director of Internal Audit and Deputy Chief Financial Officer. The Committee accepts this management decision and will monitor future audit work with a focus on the conflicts of interest inherent in the dual role of the internal audit director and her reporting lines.

The Committee thanked Brian Berry and to departing staff for their hard work and dedication.

4.5 Office of the Auditor General and Central Agencies

Because an OAG representative regularly attends Committee meetings, the Committee has been kept informed of matters raised by the OAG and of its audit plans. In its July 2011 meeting (via conference call), the Committee received the results of audit of the 2010–2011 financial statements. At the January 2012 meeting, the OAG outlined plans for its year-end audit.

The Chief Audit Executive or Director of Internal Audit periodically updated the Committee on audit-related matters arising from central agencies. In particular, the Committee was informed about the Office of the Comptroller General's (OCG) Three-Year Horizontal Audit Plan and the results of its Horizontal Audit of Information Technology Asset Management.

Two Committee members attended the November 3, 2011, Department and Agency Audit Committee Symposium sponsored by the OCG, to keep abreast of developments in the internal audit area.

4.6 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. During its August 2011 and January 2012 meetings, the Committee received updates on implementation plans that responded to audit findings, using a scorecard presentation of progress. Security of information technology remains an important issue, especially when moving to web applications.

During its June 2011 meeting, the Committee was briefed on update reports provided to the Office of the Privacy Commissioner and to the OAG concerning the status of their recommendations from past years.

The Committee is pleased with the effective follow-up reporting and satisfied with the progress in implementing action plans.

4.7 Financial Statements

The Committee reviewed and endorsed the disclosure in the 2010–2011 Elections Canada financial statements. These statements were audited by the Auditor General of Canada, who issued a clean audit report and noted good collaboration from Elections Canada staff. The Committee commended all staff for their good work and recommended that the CEO approve the statements.

The Committee also reviewed the Annex to the Statement of Management Responsibility Including Internal Control over Financial Reporting. After making some minor modifications, the Committee recommended that it be approved.

At each meeting the Committee is also presented with Elections Canada's most recent quarterly financial report.

4.8 Accountability Reporting

During its August 2011 meeting, the Committee reviewed a draft of the Departmental Performance Report for the 2010–2011 fiscal year, including the audited financial statements. In March 2012 the Committee reviewed the draft 2012–2013 Report on Plans and Priorities. The Committee offered a number of suggestions to strengthen clarity and completeness, but overall was satisfied with the tone and content of both reports. The Committee encourages staff to continue the work underway to develop and report meaningful performance indicators.

5. Conclusion

The Committee considers that through its activities during 2011–2012, it has satisfactorily fulfilled its role. The Committee received relevant and transparent information that enabled it to carry out its mandate, and it is pleased with the candour concerning the challenges Elections Canada faces and with the CEO's genuine interest in Committee members' views. The Committee notes the professionalism and dedication that staff demonstrate, as well as their openness and willingness to accept and implement suggestions.

The Committee considers that it now has a mature appreciation of Elections Canada's considerable challenges: its elaborate legislative/regulated environment, extraordinary operating demands, and requirement to innovate. Based on its observations over the current and past years, the Committee is of the opinion 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

Appendix A contains the Committee's schedule of activities for 2012–2013.

The Committee plans to address these issues in particular: