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2015–16 Departmental Performance Report

Annex to the
Statement of Management Responsibility
Including Internal Control over Financial Reporting
(unaudited)

For the year ended March 31, 2016

Note to the Reader

Under the Treasury Board Policy on Internal Control (PIC), effective April 1, 2009, departments and agencies are required to demonstrate the measures they are taking to maintain an effective system of internal control over financial reporting (ICFR).

In compliance with this policy, departments and agencies are expected to conduct an annual assessment of their system of ICFR, establish an action plan to address any necessary adjustments, and attach to their Statement of Management Responsibility an unaudited summary of their assessment results and action plan.

Effective systems of ICFR aim to achieve reliable financial statements and provide assurances that:

The maintenance of an effective system of ICFR is an ongoing process designed to identify key risks, assess effectiveness of associated key controls and adjust them as required, as well as to monitor the system's performance in support of continuous improvement. As a result, the scope, pace and status of departmental/agency assessments of the effectiveness of their system of ICFR will vary from one organization to the other based on risks and taking into account the organization's unique circumstances.

It is important to note that the system of ICFR is not designed to eliminate all risks. Rather, it is designed to mitigate risk to a reasonable level with controls that are balanced with and proportionate to these risks.

Table of Contents

1. Introduction

This unaudited document is attached to Office of the Chief Electoral Officer's Statement of Management Responsibility Including Internal Control over Financial Reporting for the fiscal year ended March 31, 2016. As required by the Treasury Board Policy on Internal Control, this unaudited document provides summary information on the measures taken by management to maintain an effective system of ICFR.

1.1 Authority, Mandate and Programs

The Office of the Chief Electoral Officer, commonly known as Elections Canada, is an independent, non-partisan agency that reports directly to Parliament. Its mandate is to:

Elections Canada has a single strategic outcome supported by the following Program Alignment Architecture (PAA):

Program Alignment Architecture (PAA)

Text description of "Program Alignment Architecture (PAA)"

Please note that effective October 1, 2014, the Commissioner of Canada Elections, the independent officer whose duty is to ensure that the Canada Elections Act and the Referendum Act are complied with and enforced, has been transferred to the Public Prosecution Service of Canada. Elections Canada is amending its PAA to reflect this change.

Further details regarding Elections Canada's priorities, strategic outcome and PAA are available in its Departmental Performance Report and Report on Plans and Priorities.

1.2 Financial Highlights

Below are key financial highlights for the fiscal year ended March 31, 2016. During this period, Elections Canada prepared for and conducted the longest general election in 140 years with a duration of 78 days. More financial information can be found in Elections Canada's audited Financial Statements and Notes to Financial Statements.

Elections Canada has a significant number of information systems and hosted services that are critical to its operations and financial reporting.

1.3 Audited Financial Statements

Elections Canada's Financial Statements have been audited by the Office of the Auditor General (OAG) since fiscal year 20032004 and have so far always received an unmodified audit opinion.

1.4 Service Arrangements Relevant to Financial Statements

Elections Canada relies on other organizations for the processing of certain transactions that are recorded in its financial statements:

1.5 Material Changes in Fiscal Year 2015–2016

Two major pieces of legislation were implemented during the fiscal year 2015–2016:

As a result of this new legislation, a significant number of changes were made to electoral material, training material, event delivery systems and procedures to ensure the successful delivery of the 2015 general election and compliance to the newly amended Acts.

In addition, Elections Canada adopted new processes and administrative measures which improved the performance of poll workers, including enhanced recruitment practices, modernized training and, when possible under the Act, simplified procedures and clearer instructions for election workers. To support returning officers in recruiting and retaining its work force, the agency proceeded with a successful Treasury Board submission to increase the fees paid to poll workers and other local office staff.

During the reporting period, Elections Canada improved essential readiness and conducted the 42nd General Election (GE) on October 19.

1.6 Key Organizational Changes in Fiscal Year 2015–2016

In preparation of the 42nd general election, appointments and organizational changes were made to ensure that Elections Canada better fulfilled its mandate and complied with public service-wide policies and acts.

Following the successful delivery of the GE, key decisions were announced to further support the modernization of electoral services for the next general election. The centrepiece of this agenda is the Voting Services Modernization (VSM) program. This program is led by Mr. Jacques Mailloux, Executive Director, who is on assignment from his substantive Chief Information Officer (CIO) position. As champion of both Blueprint 2020 and VSM, Mr. Mailloux provides leadership on business re-engineering and technological innovation to support new and enhanced voting services. Mr. Serge Caron, formerly from the Treasury Board of Canada (TBS), assumes the role of Chief Information Officer (CIO) for the duration of Mr. Mailloux's assignment to the VSM program.

New champions of Official Languages and Diversity and Multiculturalism as well as a new Senior Officer for Disclosure were also announced July 27, 2015.

Ms. Anne Lawson, General Counsel and Senior Director, Legal Services, promotes linguistic duality and the advancement of EC's Official Languages program. She also represents the agency at events relating to Official Languages.

In addition to his current functions, Mr. Duncan Toswell, Senior Director, Electoral Data Management and Readiness, assumed the role of Senior Official of Disclosure of Wrongdoing, in accordance with the Public Servants Disclosure Protection Act (PSDPA). This role was previously performed by the Commissioner of Canada Elections. This added role consists of receiving and dealing with disclosures in accordance with the provisions of the PSDPA.

Ms. Vivian Cousineau, Chief of Staff to the Chief Electoral Officer (CEO) and Acting Chief Human Resources Officer, promotes diversity and multiculturalism within the agency with the support of the Diversity Advisory Committee. She also represents the agency at events relating to diversity, employment equity and multiculturalism.

2. Description of Elections Canada's Entity-Level Controls Relevant to ICFR

Elections Canada recognizes the importance of setting the tone from the top to help ensure that staff at all levels understand their role in maintaining effective systems of ICFR and are well equipped to exercise these responsibilities effectively. Elections Canada's focus is on ensuring that risks are well managed through a responsive and risk-based control environment that allows for continuous improvement and innovation.

Elections Canada's main entity-level controls currently in place and relevant to ICFR are set out below.

2.1 Governance

Chief Electoral Officer (CEO) The CEO is appointed by a resolution of the House of Commons, so that all political parties represented there may contribute to the selection process. Once appointed, the incumbent reports directly to Parliament and is thus completely independent of government and political parties. Elections Canada's CEO has the duties of a Deputy Head. As such, the CEO is the agency's Accounting Officer and assumes overall responsibility and leadership for the stewardship, management and oversight of agency resources, as well as for the measures taken to maintain an effective system of internal control. In this role, the CEO meets regularly with the Audit Committee and the Executive Committee (EXCOM).

Chief Financial Officer (CFO) Elections Canada has a CFO, with a recognized professional accounting designation, who reports directly to the CEO and provides leadership for the coordination, coherence and focus on the design and maintenance of an effective and integrated system of ICFR, including its annual assessment.

Chief Audit Executive (CAE) Elections Canada's CAE reports directly to the CEO. The CAE provides assurance through periodic internal audits, which are instrumental to the maintenance of an effective system of ICFR.

Audit Committee The Audit Committee is an advisory committee that provides objective views on the agency's risk management, control and governance frameworks. Elections Canada established its Audit Committee in December 2007. The Committee is comprised of the CEO and three external members. The CEO chairs the Committee, and at least one member is a financial expert with a recognized professional accounting designation. All members of the Committee are appointed by the CEO and selected in a manner whereby their collective abilities, knowledge and experience allow it to carry out its duties competently and effectively.

Senior Steering Committee (SSC) The CEO established this committee to ensure sound implementation of electoral reform, prioritization of investments and governance throughout the GE readiness period leading to the successful delivery of the general election.

Executive Committee (EXCOM) As Elections Canada's senior decision-making body, EXCOM is responsible for corporate management decision-making, setting internal policies and overseeing all aspects of management and operations. The CEO is the Chair of EXCOM comprised of sector heads and senior directors (refer to organizational chart below).

Corporate Strategy Committee (CSC) To ensure the successful delivery of Elections Canada business plan initiatives, the CEO established in 20122013 a corporate project oversight unit and associated governance: the Corporate Strategy Office and the Corporate Strategy Committee. This committee continued its operations to ensure governance and oversight of key projects throughout this reporting period.

Election Readiness Committee (ERC) This committee continued its operations to ensure the successful planning and prioritizing of key program activities leading to a successful general election in 2015.

Contract Review Committee (CRC) This committee assists Elections Canada in making sound investments in goods and services contracts and ensures adherence to the Government Contracting Regulations. Procurement initiatives are reviewed at this committee for approval and oversight.

For a detailed view of Elections Canada, please refer to the following link:
www.elections.ca/images/ec-org-chart_el.gif

2.2 Key Measures Taken by Elections Canada

The control environment is an important factor for ICFR. By raising awareness, providing appropriate knowledge and tools as well as developing skills, Elections Canada's control environment ensures that staff is well equipped to manage risks. Key measures taken to date include:

  1. The establishment of an Elections Canada Code of Conduct.
  2. Clear guidelines on authorities and compliance with sections 32, 34 and 33 of the Financial Administration Act.
  3. The development and maintenance of a distinct and comprehensive financial stewardship regime, including specific internal controls for the operations of the agency's local offices and the payment of field personnel and suppliers during events in accordance with the Canada Elections Act.
  4. Accountability by responsibility center managers for budgetary control and approvals of all expenditures.
  5. Annual performance agreements with senior managers, which clearly set out financial management responsibilities.
  6. A risk-based internal audit plan.
  7. An established governance structure and provision of strategic direction through EXCOM and the Audit Committee.
  8. The establishment of the Senior Steering Committee (SSC) to take critical decisions leading to the 2015 general election and to confirm accountabilities. It tasked decision execution to Deputy Chief Electoral Officers and standing committees where horizontal coordination was required. It ensures rapid and effective problem solving in the context of electoral reform implementation and readiness.
  9. The continued operations of the Election Readiness Committee (ERC) to support agency preparations for the 42nd general election.
  10. The on-going activities of EC's Advisory Board (ECAB) to study and provide advice on matters related to Canada's electoral system, including the conduct of elections, electoral participation both by voters and political participants, regulatory compliance and electoral reform.
  11. The Corporate Strategy Office, which enables the CEO and EXCOM to make timely and evidence-based decisions/course adjustments on Elections Canada's 20132016 business plan and associated initiatives, investments and risks. The office also strengthens project management practices.
  12. Regular reporting and analysis of financial performance.
  13. A human resources management plan and policies that support learning and succession planning.
  14. A requirement for accounting designations in key financial management positions.

3. Assessment of Elections Canada's System of ICFR

3.1 Assessment Baseline

Whether it is to support controls-based financial statement audits or the requirements of the Treasury Board Policy on Internal Control, an effective system of ICFR must be in place to provide reasonable assurance that:

Over time, this includes assessment of design and operating effectiveness and an ongoing monitoring program leading to continuous improvement of the departmental/agency system of ICFR.

Design effectiveness means that key control points are identified, documented and in place, that they are aligned with the risks and that any remediation is addressed. This includes mapping key processes and IT systems to the main accounts by location as applicable.

Operating effectiveness means that the application of key controls over financial reporting has been tested over a defined period, that they are working as intended and that any required remediation is addressed appropriately and in a timely manner.

The ongoing monitoring program means that a systematic integrated approach to monitoring is in place, including periodic risk-based assessments and timely remediation.

Such an assessment covers all departmental/agency control levels, including corporate or entity-level, general computer and business process controls.

3.2 Assessment Method at Elections Canada

The agency has taken measures to assess the system, starting with documenting and assessing its entity-level controls.

Elections Canada continued its risk-based assessment based on the identification of key accounts in the financial statements that will be subject to the ICFR assessment process. This assessment considered both quantitative and qualitative factors. For each significant account, the agency completed the following steps:

Elections Canada is also committed to documenting and assessing its IT general controls, or ITGCs (IT infrastructure).

Finally, Elections Canada took into account key findings from recent audits or evaluations.

4. Elections Canada's Assessment Results

In 2015–2016, Elections Canada's attention was directed to the implementation of electoral reform changes and the delivery of the 42nd GE. Its internal control efforts were focused in three main areas:

  1. The finalization of statutory changes and adjustments for the 42nd GE, which included the interpretation and application of the new tariff of fees and standardized changes to financial systems, procedures manuals, training material and electoral material for use in each of the electoral districts. This included 30 new electoral districts as a result of the electoral boundaries redistribution which took effect on August 2, 2015.
  2. The implementation of the Directive on Certain Field-Acquired Goods and Services in Conduct of Electoral Events and field delegation instrumental to support the delivery of the 42nd GE and subsequent events.
  3. The streamlining and implementation of several financial processes, including the purchasing of goods and services, guidelines, tools, templates and systems for field personnel in the context of preparation for the conduct of the 42nd general election.

Elections Canada did recognize the need to modernize key business processes and promote efficiencies in a streamlined environment. Elections Canada is committed to ensuring the design effectiveness of control activities, to identify and strengthen key controls through statistical sampling and additional testing of specific controls to ensure operating effectiveness across all business lines.

The findings presented below provide a summary of key developments during the period covered by this report.

4.1 Design Effectiveness of Key Controls

Elections Canada adapted its detailed action plan to address the decennial redistribution of electoral boundaries and legislative changes and their impact on key controls. The agency continued to progress with documenting its entity-level controls (i.e. clarification of roles and responsibilities) and validation of key controls with internal stakeholders. EC also continued to ensure that the documented controls were in place and corresponded to actual practices, and that key controls were adequately adapted to the risks in accordance with the risk assessments.

A statistical sampling guideline focusing on three (3) key criteria, namely, sensitivity, structural and significance were developed and implemented to support the high volume of financial transactions.

The agency targeted four (4) field accounting processes for streamlining and strengthening: the reconciliation of acquisition cards, the reconciliation of accountable advances, the leasing of returning offices and polling sites, and other field payments. The design changes promote timely reconciliations, provide assurances of stewardship and reduce the administrative burden on field personnel. In addition, the payroll processes were reviewed and documented based on the new regulatory framework (i.e. new tariff of fees).

4.2 Operating Effectiveness of Key Controls

In 2015–2016, Elections Canada applied newly developed processes and controls at its headquarters and field offices. These controls are prevalent during all phases of program management, including the preparation, conduct and close-out of electoral events.

Leading to the 2015 GE, changes to the Tariff of Fees used for federal elections resulted in the removal from the Tariff of a number of items not related to the employment of an individual (i.e. printing costs and polling station rental costs). The agency updated its internal controls and took a number of measures to ensure the effective delivery and oversight of these activities which now fell under the direct authority of Elections Canada.

During this reporting period, the agency also launched an external review and benchmarking exercise related to the overall procurement and contracting services function. This identified a need for:

The on-going monitoring of key contracts and the adoption of sound contract management practices provided additional assurances that EC's procurement activities continued to align with government contracting regulations and values.

Finally, continuous monitoring and testing continued to take place to verify the effectiveness of key controls and to ensure compliance is verified with random and targeted statistical sampling.

Looking ahead, as shown in section 5, the agency will seek opportunities to further strengthen its entity-level controls, taking into account results from annual assessments and audits, lessons learned from the performance of revised systems and processes resulting from new legislation introduced prior to the 2015 general election and the ongoing modernization of its services and tools.

5. Elections Canada's Action Plan

5.1 Progress as of March 31, 2016

In response to its assessment results, Elections Canada delivered on its action plan focusing primarily on the field services area, as previously mentioned.

Below is a summary of the main progress made by the agency amidst the completion of significant changes related to the decennial electoral boundaries redistribution and the implementation of the Fair Elections Act before the general election of October 19. Key accomplishments include:

Field Services
Procurement
Other Controls

5.2 Action Plan for Next Fiscal Year and Subsequent Years

Building on progress to date and moving toward an Integrated Elections Canada Financial Framework maintains and updates its multi-year action plan focusing its efforts using a risk-based approach. This ensures a better usage of its overall resources, namely, human, time and budgets. Using a model tailored to its context, Elections Canada looks at risks from two perspectives, namely, 1) potential impacts on internal control failures and 2) current level of vulnerability.

The business processes are reviewed focusing on the impact and probability of exposure to risks. Transactions are assessed based on materiality and risk ratings which will range from negligible to severe. Risk exposure is measured based on the significance (materiality), sensitivity (reputation) and structural (pervasiveness) to the organization.

Underpinning this risk-based approach leading to broader testing of its operating effectiveness of key controls and building upon lessons learned to date, Elections Canada will also focus on:

5.3 Ongoing Monitoring Program

As described in section 2, Elections Canada has a well-established governance model. In particular, the Audit Committee is instrumental in providing independent advice relating to the agency's system of internal control and in identifying opportunities for further strengthening.

In the long term, Elections Canada will ensure that there is a well-integrated monitoring program in place to raise awareness and understanding of the agency's system of ICFR at all levels, and to equip its workforce with the knowledge, skills and tools they need.

The following table illustrates where Elections Canada will focus its efforts in the three-year action plan:

Continuous Improvement
2016–2017 2017–2018 2018–2019
Compliance Monitoring
  • Salary Management (HQ only)
    • Time and Leave Management
    • Supplementary Payments
    • (e.g. Perf. Bonus, OT)
  • Salary Management (Field only)
    • Election Administrators
    • RO/AARO Office Staff
    • Poll Officials
  • Environmental Scan and Statutory Changes
    • Electoral Reform
Compliance Monitoring
  • Assessment of operating effectiveness of key controls
    (Continued from previous years)
    • Operating effectiveness testing plan documented and initiated (e.g. Enhanced Statistical Sampling Action Plan)
    • Operating effectiveness testing of key controls completed and remediation addressed
  • Assessment of operating effectiveness of key controls
    • Asset Management Lifecycle

      (e.g. Modernizing Asset Management in Digital Era such as Integrated Resource Planning System (IRPS))
  • Field Budget Management
    • Strengthening of Budget Controls
    • Simplification of Financial Tools