2017–18 Departmental Results Report

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

For fiscal year ended March 31, 2018

Office of the Chief Electoral Officer (the Office)

1. Introduction

This document provides summary information on the measures taken by the Office to maintain an effective system of internal control over financial reporting, which includes information on internal control management, assessment results and related action plans. 

Detailed information on the Office's authority, mandate and program activities can be found in the 2017-18 Departmental Results Report and the 2017-18 Departmental Plan.

2. The Office system of internal control over financial reporting

2.1 Internal control management

The Office has a well-established governance and accountability structure to support agency assessment efforts and oversight of its system of internal control. A revised Financial Management Framework has been developed and will be presented for approval by the Chief Financial Officer and the Chief Electoral Officer. The revised Financial Management Framework will provide additional reasonable assurance that, at a minimum:

• Public resources are used prudently and in an economical manner;
• Financial management processes are effective and efficient;
• Relevant legislation, regulations and financial management policy instruments are being complied with.

Elections Canada's Financial Management Framework helps ensure that:

• Records are maintained that support and represent fairly all financial transactions;
• Financial transactions are recorded in a manner that allows for the preparation of internal and external financial information,
• Reports and statements are in compliance with financial management policy instruments;
• Expenditures made are in accordance with delegated authorities, and unauthorized transactions that could have a material effect on the financial statements are prevented or detected in a timely manner;
• Financial resources are safeguarded against material loss due to waste, abuse, mismanagement, errors, fraud, omissions and other irregularities.

Effective implementation of this Financial Management Framework attests to the accountability of all delegated managers and staff involved in financial management across the Office and forms part of managerial performance agreements, when applicable.

The Financial Management Framework includes:

• Organizational accountability structures as they relate to internal control management to support sound financial advice and stewardship management;
• Roles and responsibilities of senior managers for internal control management, as well as those of delegated managers and delegated financial officers;
• An integrated approach to management with high quality data for informed decision making;
• Value through the provision of better overall financial management, investment planning and program results;
• Support to the program community to effectively lead to results;
• Improved reporting, demonstrated accountabilities and effective policy implementation; and  
• Regularly monitoring and updating on internal control management, as well as the provision of related assessment results and action plans to the Chief Financial Officer, the Chief Electoral Officer and Agency Senior Management and, as applicable, to the Agency Audit Committee.

The Agency Audit Committee is an independent advisory committee that provides objective guidance on the Office's stewardship, management, and accountability practices, in keeping with the Treasury Board's Directive on Internal Auditing. Its mandate is to provide independent advice and assurance on the effectiveness of the Office's governance, risk management, control, audit and reporting practices. The Committee is composed of the Chief Electoral Officer who chairs the Committee and three other members. At least one member is a financial expert with a recognized professional accounting designation. All members of the Committee are appointed by the Chief Electoral Officer and selected in a manner whereby their collective abilities, knowledge and experience allow it to carry out its duties competently and effectively.

2.2 Service arrangements relevant to financial statements

The Office relies on other organizations for the processing of certain transactions that are recorded in its financial statements as follows.

Common Arrangements

• Public Services and Procurement Canada, centrally administers the payments of salaries and benefits of public service employees, fees and allowances for electoral workers, the procurement of some goods and services and the provision of accommodations on behalf of the Office;
• Treasury Board Secretariat, including the Office of the Comptroller General, provides the Office with information used to calculate various accruals and obligations, such as the severance pay liability, percentage for the insurance benefit plans received without charge, details regarding the employer's share of employee benefit plans;
• Office of the Auditor General of Canada conducts an independent audit of the Office that promotes government accountability for the collection and use of public funds. It also provides objective information, advice and assurance to Parliament for the results achieved by the Office's financial reporting. This in turn serves to maintain and enhance the confidence of the public based on evidence collected in accordance with government policies and professional auditing standards. The Office of the Auditor General of Canada is funded directly by Parliament and their costs are paid from an annual appropriation.

3. The Office assessment results during fiscal year ended March 31, 2018

During 2017-18, the Office has put in place a contract with a professional firm that specializes in evaluation of internal financial controls and policy development. Several business processes for Headquarters and Field Operations were documented and most of the design effectiveness testing was completed during the first quarter of 2018-19.

3.1 Business Process documentation

Business processes with an overall *High* risk assessment were documented and design effectiveness testing has started. Furthermore, a revised Financial Management Framework has been established supported by a new policy on Internal Financial Control.

3.2 Design effectiveness testing of key controls

During the first months of 2018-19, the Office completed design effectiveness testing of Headquarters and Field Operations business processes.

4. The Office action plan

4.1 Progress during fiscal year 2017-18

During 2017-18 the Office continued to make significant progress in assessing and improving its key controls. The following table summarizes the Office's progress.

Progress During Fiscal Year 2017-18

Element in previous year's action plan	Status
Salaries and Benefits – Internal Staff	Flowchart and control matrix are under review by subject matter expert. Design effectiveness testing will be performed before the end of September 2018.
Entity-level controls	Established the assessment matrix with the key control objectives to evaluate. Documentation gathering and interviews with Senior Management personnel has started. Assessment is underway and should be completed by the end of September 2018.
Operating expenses and accounts payable	Headquarters: Completed the design effectiveness testing for Travel, Payments to Procure, Other Payments, Acquisition Cards and Petty Cash business processes. The Interdepartmental Settlement business process is at the review stage by the subject matter expert. Following the recommendations of the consultant, changes have been made to various forms. In fall 2017 the Office of the Procurement Ombudsman initiated a procurement practice review. The reporting period covered January 2016 to March 2017 with emphasis on the bid solicitation process. Field Operations: Completed the design effectiveness testing for Acquisition Cards and Petty Cash business processes. Travel, Leases and Special Account Forms business processes are at the review stage by the subject matter expert. Corrective measures (Procurement and Contracting): Establishing clear bidding periods, with particular emphasis on requirements below $25K. Ensuring evaluation criteria and selection methodology are included in the solicitation documents, with particular emphasis on requirements below $25K.

4.2 Status and action plan for the next fiscal year and subsequent years

Building on progress to date, the Office is positioned to complete the full assessment of its system of internal control over financial reporting in future years. Please note that delays may occur due to the fact that general elections will be conducted in 2019-2020. Starting in 2020-21, the Office will be applying its rotational ongoing monitoring plan to reassess control performance on a risk basis across all control areas. The status and action plan for the completion of the identified control areas for the next fiscal year and for subsequent years are shown in the following table.

Status and Action Plan for the Next Fiscal Year and Subsequent Years

Key control areas	Design effectiveness testing and remediation	Operational effectiveness testing and remediation	Ongoing monitoring rotation
Entity-level controls	2018-19	2018-19	2020-21
Operating expenses and accounts payable	2018-19	2019-20	Future years
Salaries and benefits – Internal Staff	2018-19	2019-20	Future years
IT general controls	2018-19	2020-21	Future years
Transfer payment	2018-19	2020-21	Future years
Salaries- Electoral Administrators and Poll Clerks	2018-19	2019-20	Future years
Accounts Receivable	2018-19	2020-21	Future years
Financial Statement Close	2019-20	2019-20	Future years
Budgeting and Forecasting	2019-20	2020-21	Future years
Tangible Capital Assets	2019-20	TBD	Future years
Inventory	2020-21	TBD	Future years