2018–19 Departmental Results Report
Annex to the Statement of Management Responsibility Including Internal
Control over Financial Reporting
For fiscal year ended March 31, 2019
Office of the Chief Electoral Officer (the Office)
This document provides summary information on the measures taken by the Office to maintain an effective system of internal control over financial reporting, including 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 2018-19 Departmental Results Report and the 2018-19 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. The Financial Management Framework demonstrates the accountability of all managers and employees in charge of financial management within the Office and provides additional reasonable assurance that:
- Public resources are used prudently and in an economical manner;
- Roles and responsibilities for financial management are communicated;
- Decision-making is informed and management of risk is effective;
- The financial management processes are effective and efficient;
- There is regular monitoring and reporting as well as action plans presented to the Deputy Chief Financial Officer or Chief Financial Officer as required;
- Relevant legislation, regulations and financial management policy instruments are respected.
The Office ensures the objectivity and integrity of the data in its financial statements.
Elections Canada's Financial Management Framework helps ensure that:
- Records that support and represent all financial transactions are maintained;
- 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 the following:
- 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, planning and program results;
- Support to the program community to effectively lead to results;
- Improved reporting, demonstrated accountabilities and effective policy implementation;
- Regular monitoring and updates 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 the Office Senior Managers reporting directly to the Chief Electoral Officer and, as applicable, to the Agency Audit Committee.
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:
- Public Services and Procurement Canada (PSPC), 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 2018-19
During 2018-19, the Office has completed the majority of the design effectiveness tests and all operating effectiveness testing of the key control areas as planned. The Office has a contract with a professional firm that specializes in the evaluation of internal financial controls and policy development to perform the work.
3.1 Design effectiveness testing of key controls
In 2018-19, the Office completed design effectiveness testing on entity-level controls, salaries and benefits – Headquarters, accounts payable and operating expenses (acquisition cards, interdepartmental settlements, other payments, petty cash, management of the procurement cycle of payment and travel) and the information technology general controls. The Office has begun the design effectiveness testing for transfer payments at the end of 2018-19, which will be completed in the first quarter of 2019-20. The Office has postponed the design effectiveness testing for accounts receivable to 2020-21 due to the high number of by-elections during 2018-19 and due to the general election to be held in October 2019.
The Office also completed the design effectiveness testing of field operations for acquisition cards and petty cash. The Office has begun the design effectiveness testing for salaries - electoral administrators and poll clerks and this will be completed in the first quarter of 2019-20.
As a result of the design effectiveness testing, the Office determined the need for the following required remediation:
- The Business Process Owners of the Office will make the necessary changes to various forms to improve them based on the recommendations made during the evaluation of the design effectiveness testing.
- The Office will develop a human capital workforce planning strategy and ensure better links between integrated sector plans and the objectives of this planning strategy.
- Quarterly monitoring will be conducted by the internal controls team on the progress of the gap corrections and approved by the Deputy Chief Finance Officer.
3.2 Operating effectiveness testing of key controls
In 2018-19, the Office completed the operating effectiveness testing of key controls of the entity level controls. The Office has begun the operating effectiveness testing for salaries of Electoral administrators and workers and will be completed in the first quarter of 2019-20.
As a result of the operating effectiveness testing, the Office determined that the following corrective action is required:
An account verification procedure including a chain of authority is being developed by the internal control team to address errors related to financial and spending authorities. The Office will also develop and approve an internal policy to govern the limitation or revocation of spending and financial authorities in the event of non-compliance with the Directive on Delegation of Spending and Financial Authorities.
3.3 Ongoing monitoring of key controlsIn 2018-19, the Office did not initiate ongoing monitoring of its business processes.
4. The Office action plan
4.1 Progress during fiscal year 2018-19
During 2018-19 the Office continued to make significant progress in assessing and improving its key controls. The following table summarizes the Office's progress based on the plans identifies in the previous fiscal year's annex;
|Element in previous year's action plan||Status|
|Salaries and Benefits – Internal Staff||
|Salaries – Electoral Administrators and Workers||
|Information Technology General Controls||
|Operating expenses and accounts payable||
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 2019-20. Starting in 2020-21, the Office will be applying its rotational ongoing monitoring plan to reassess control performance based on the overall risk assessment 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.
|Key control areas||Design effectiveness testing and remediation||Operational effectiveness testing and remediation||Ongoing monitoring rotation|
|Budgeting and Forecasting||2021-22||Future years||Future years|
|Financial Statement Close||2019-20||2019-20||Future years|
|Entity Level Controls||Completed||Completed||2021-22|
|IT General Controls||Completed||2021-22||Future years|
|Account Receivables||2020-21||2021-22||Future years|
|Accounts Payable and Operating Expenses||Completed||2019-20||Future years|
|Tangible Capital Assets||2019-20||2020-21||Future years|
|Transfer Payments||2019-20||2020-21||Future years|
|Salaries- Electoral Administrators and Workers||2019-20||2019-20||Future years|
|Salaries and benefits – Internal Staff||Completed||2019-20||Future years|