2020–21 Audit and Evaluation Committee Annual Report

June 2021 – Twelfth Annual Report
For the year ending March 31, 2021

Annual Plan and Annual Report

The Audit and Evaluation Committee (AEC) carries out its operations according to an annual plan prepared by the Chair and approved by the Commissioner. The document sets out the number of meetings planned for the coming year as well as topics to be covered at the meetings. At the end of each fiscal year, the AEC Chair, in consultation with other external members, prepares a report (this document) for the Commissioner that describes the AEC’s activities during that year and provides an assessment of the systems, controls and other management tools that are in place at PSIC.

Membership

The Chair and members are selected by the Commissioner. The 2020–21 AEC consisted of the following people:

Chair

• Josée De La Durantaye, External

Members

• Joe Friday, Commissioner
• Jacques Paquette, External

Regular Non-Member Attendees

• Denis Bilodeau, Deputy Commissioner and Chief Audit Executive (CAE)
• Éric Trottier, Manager, Financial Services and Chief Financial Officer (CFO)
• Heidi Bartman, Chief Results Delivery Officer

Meetings

The Committee met on the following dates during the 2020–21 fiscal year:

• April 20, 2020
• July 22, 2020
• September 22, 2020
• November 30, 2020
• February 26, 2021

This year, all the meetings were held by teleconference. An in-camera session was held with representatives from the Office of the Auditor General (OAG).

Support to the Committee

The Committee received information and support from management to help it carry out its duties and responsibilities effectively. The Commissioner also made the Commissioner’s reports to Parliament, including his Annual Report and Case Reports, available to the AEC.

With the help of the AEC Chair, the Chief Results Delivery Officer prepared the agendas and minutes for the 2020–21 meetings and supported the AEC’s work.

Summary of 2020–21 AEC Meeting Topics

Items considered by the AEC in 2020–21 included the following:

Office of the Auditor General (OAG) Audit of Financial Statements

• The OAG audited the PSIC’s annual financial statements.
• On September 22, 2020, Nathalie Chartrand, Audit Principal, and Julie Tremblay presented the results of the audit of 2019–20 financial statements to the AEC. Ms. Tremblay told us that the independent auditor’s report did not include any contingencies and that the financial statements were free of material misstatements. It was to be noted that the audit results had to be reported because of the pandemic.
• She said that there were three risks in the annual plan: (1) the completeness and accuracy of salaries, (2) completeness and accuracy of expenses incurred for the move, and (3) management’s circumvention of controls.
• In the case of the first risk, the OAG had found that no control had been done during the first year, but following receipt of letter from the PSIC in June 2020, this control had resumed on a monthly basis.
• As for the two other risks, the OAG team was satisfied with the controls and did not identify any problems.
• A misstatement had been identified regarding an incorrect amortization period and it had been corrected by management.
• The Committee discussed controls regarding salary expenses and who was responsible for it. Management promised to review certain controls in this regard, so that managers had a better understanding of employee salaries when signing off on expenses.
• Ms. Chartrand thanked the PSIC’s staff for its full cooperation.
• OAG representatives asked the AEC members and participants whether they were aware of any fraud at the Office of the Commissioner. The members and participants replied that they were not aware of any fraud.
• An in-camera meeting of external AEC members and OAG representatives was held.
• The audit cycle continued with a presentation by the OAG on February 26, 2021, on the Audit Plan for the 2020–21 financial statements. Ms. Tremblay noted that the major change from the previous fiscal year had to do with the COVID-19 situation. In addition, the risks remained unchanged from the previous fiscal year.

PSIC Risk-Based Audit and Evaluation Plan (RBAEP)

• The AEC discussed the PSIC RBAEP a few times. The discussions focused on implementing activities identified in the plan, among other things.
• There were discussions about the PSIC’s risk profile in the RBAEP and the need to explain the residual risks and update the associated risk mitigation strategies.
• A new more concise version of the plan that reflected its improvements had been prepared for April 2021.

AEC 2020–21 Annual Plan

• The AEC discussed the annual plan for the current year and planned future meeting agendas accordingly to ensure that all parts of the plan were covered.

Audit and Evaluation Dashboard

• The PSIC Audit and Evaluation Dashboard was discussed at AEC meetings. These discussions included the status of each planned audit and evaluation, and any proposed changes to the schedule.
• The committee was informed of the revisions made to the online service agreement with recommendations from the evaluation of the agreements with suppliers. It also reported follow-up on the recommendations from the operations evaluation.

Situation Following COVID-19

• At each meeting, the Committee obtained an operations update related to the situation created by COVID-19, particularly on maintaining operations related to the PSIC’s mandate during this period. This included compliance with service standards, the course of operations related to investigations and specific information technology measures to allow staff to continue their work.
• The committee was informed of the PSIC’s updated business continuity plan. The issue of the eventual return to work was discussed, although teleworking had proven to be effective in ensuring that the Commissioner’s mandate was carried out despite the situation’s challenges.

Corporate Values and Ethics

• The Committee discussed the PSIC’s Code of Values and Ethics, including the expected commitment of employees to this Code, certain situations that could arise and how the Code could be used to deal with them.
• The Committee was satisfied with the process in place to ensure that the Code was effective.

Public Service Employee Survey (PSES)

• The Commissioner provided the AEC with the results of the most recent PSES. PSIC employee participation in the survey had been high and the results were once again very positive.

Operations

• At each meeting, the Committee had an opportunity to review and comment on operations statistics.
• At each meeting, details of the most recent results of the PSIC’s performance standards were provided.
• The Commissioner provided an update on the PSIC’s files, including a Federal Court of Appeal decision in July 2020, concerning a confidentiality order for certain aspects in the Desjardins v Canada file.

Budget

• The AEC reviewed quarterly financial reports prepared by the PSIC and provided comments to the CFO. At each meeting, the CFO gave members a comprehensive report and analysis of expenditures and forecasts.

Human Resources

• The AEC had discussed human resource issues, including hiring, staff turnover, training and planning.

Information Technology

• The risks associated with the CHRC’s delivery of IT services continued to be of particular interest to the AEC during the reporting period, particularly in a situation where the entire team was working from home. The CFO briefed members on the system’s progress, including the management of files, records and information.

PSIC Reports

• The Committee provided advice, where necessary, on the PSIC’s Departmental Plan, the Departmental Results Report and the PSIC Annual Report.

Audit and Evaluation Personnel Changes

• No changes were made to the Committee membership during the period of this report.

Orientation and Learning Activities

Treasury Board Symposium for Departmental Audit Committees (DACs)

On October 22 and December 2, 2020, Josée De La Durantaye and Jacques Paquette attended the DAC Symposium. The symposium was virtual and held over two half days. The symposium was based on the theme of agility in auditing within the post-pandemic public service.

Agenda for Upcoming Committee Meetings

Some AEC activities take place every year, including the following:

• Providing the Commissioner with advice and recommendations on issues related to service delivery, including performance measurement and communication with stakeholders;
• Reviewing audit and evaluation reports;
• Following up on management action plans, including recommendations made in reports from other agents of Parliament;
• Cooperating with the OAG and the OCG, if necessary, given the PSIC’s status as an agent of Parliament;
• As a Committee, increase understanding of PSIC administration and activities through briefings on PSIC operations given by competent PSIC employees so that Committee members are better able to provide advice regarding risks;
• Reviewing quarterly financial statements and providing comments where appropriate on the Report on Plans and Priorities, the Departmental Performance Report and the Commissioner’s Annual Report to Parliament; and
• Participating, if need be, in audit community learning activities in order to exchange views with audit committee members in other departments and agencies.

Assessment of PSIC’s System of Internal Controls, Risk Management and Governance

The AEC meets as a committee with PSIC staff three or five times a year. As a result, it can be difficult for the AEC to fulfill its role of providing conclusive advice to the Commissioner regarding the functioning of internal controls, risk management and governance processes.

To increase the reliability of the advice provided by the AEC to the Commissioner during the reporting period and in this report, the following steps were taken.

• At each in-person AEC meeting, the external members held in-camera sessions with the CFO, the CAE and the Commissioner. This proved to be more difficult during the pandemic because meetings were held via teleconference. But at every meeting, the PSIC was asked if it was possible to have a separate discussion.
• During the reporting period, the Chair was in periodic contact with the CAE and the CFO.
• The PSIC’s Quarterly Financial Statements were reviewed by external members during each AEC meeting and the CFO was asked questions about financial matters (and satisfactory answers were provided).
• At each AEC meeting, members were provided with agendas and minutes of PSIC Executive Committee meetings as well as a presentation on the development of the PSIC results dashboard.
• On September 22, 2020, external members met in-camera with the OAG Principal responsible for the audit of the PSIC’s 2019–20 financial statements. However, the audit did not identify any material misstatements or concerns that needed to be brought to the attention of the AEC, the CFO, the CAE or the Commissioner.

Following the implementation of these measures, the external members of the AEC expressed the opinion that the PSIC’s system of internal controls and risk management and governance mechanisms are sound from our perspective and to the best of our knowledge.

Assessment of the Capacity and Performance of the Internal Audit and Evaluation Functions

The AEC noted the following:

• The AEC meets regularly and has an external Chair. Its membership is reviewed annually and renewed when required.
• OAG audits take place every year and OAG staff have commended the cooperation of the PSIC representatives with whom they worked in carrying out these audits as well as the cooperation of CHRC representatives, the PSIC’s financial service providers.
• A risk-based audit and evaluation plan has been drawn up and reviewed by the AEC and approved by the Commissioner. The Audit and Evaluation Dashboard is prepared by the CAE and is reviewed at least once every fiscal year by the AEC.
• The PSIC uses external consultants to obtain professional services in the areas of risk assessment, audits and evaluations and audit and evaluation planning. The Committee will continue to monitor the results of these services.
• Sufficient funds are available to carry out the approved risk-based audit and evaluation plan.

The AEC will continue to review the capacity and performance of the PSIC’s internal audit and evaluation functions.

(Original signed by)

Josée De La Durantaye, Chair
On behalf of the PSIC Audit and Evaluation Committee

Appendix A

Audit Committees

The creation, in public sector organizations, of independent audit committees that include a majority of members from outside the federal public service is an essential component of the Treasury Board (TB) Policy on Internal Audit. The fundamental role of these committees is to ensure that the deputy head has independent, objective advice, guidance and assurance on the adequacy of the department’s control and accountability processes.

The importance of audit committees was further highlighted in legislation when the Federal Accountability Act amended the Financial Administration Act to include the following requirements:

Audit Capacity

16.1 The deputy head or chief executive officer of a department is responsible for ensuring an internal audit capacity appropriate to the needs of the department.
2006, c. 9, s. 259.

Audit Committees

16.2 Subject to and except as otherwise provided in any directives issued by the Treasury Board under paragraph 7(1)(e.2), the deputy head or chief executive officer of a department shall establish an audit committee for the department.
2006, c. 9, s. 259.

Appointment

16.21(1) A person who does not occupy a position in the federal public administration but who meets the qualifications established by directive of the Treasury Board may be appointed to an audit committee by the Treasury Board on the recommendation of the President of the Treasury Board.

Audit Committees and Parliamentary Agencies

The TB Policy on Internal Audit makes specific reference to offices of agents of Parliament, including the Office of the Public Sector Integrity Commissioner (PSIC). Deputy heads of these organizations may, subject to compliance with sections 16.1 and 16.2 of the Financial Administration Act, authorize such departures from the specific policy requirements contained in the Policy as they may deem appropriate in light of the governance arrangements, statutory mandate and risk profile of the organization of which they are deputy heads.

Audit and Evaluation

Although audit and evaluation are the subjects of separate policies in the federal government, the management of these functions is closely linked, particularly in small agencies. In the interest of efficiency, the PSIC audit committee also has responsibilities related to evaluations carried out under the TB Policy on Results and consequently, is named the Audit and Evaluation Committee (AEC).

Accountability of the AEC

The role of the AEC is advisory in nature. The sole accountability of the AEC is to the Public Sector Integrity Commissioner of Canada (Commissioner). In this regard, members are accountable for the objectivity, quality and timeliness of their advice and for the performance of their contractual responsibilities. In addition, the AEC conducts an annual self-assessment of its work.

Responsibilities of the AEC

The responsibilities of the AEC as set out in its Charter, are:

• To provide objective advice and recommendations to the Commissioner regarding the sufficiency, quality and results of internal audit engagements related to the adequacy and functioning of the Office’s frameworks and processes for risk management, control and governance;
• To review, using a risk-based approach, all areas of management designated by the Comptroller General of Canada for audit committee review. These areas are:
  • Values and ethics
  • Risk management
  • Internal audit function
  • External assurance providers
  • Follow-up on management action plans
  • Financial statements and public accounts reporting
  • Accountability reports
• To provide advice and recommendations on any other matters for which the Commissioner, as accounting officer, is responsible, and on other related matters as needed or requested by the Commissioner.

With respect to evaluations, the Committee will:

• Provide advice to the Commissioner, though review of the PSIC risk-based audit and evaluation plan, as to programs or operations of PSIC that should be the subject of an evaluation;
• Review and advise on the terms of reference, scope and timing of any planned evaluation;
• Review the findings of evaluations carried out and monitor subsequent management action plans.