2023–24 Audit and Evaluation Committee Annual Report

June 2024 – Fifteenth Annual Report
For the year ended March 31, 2024

Annual Plan and Annual Report

The Audit and Evaluation Committee (AEC) carries out its activities in accordance with an annual plan that is prepared by the Chair and approved by the Public Sector Integrity Commissioner of Canada (Commissioner). The document specifies the number of meetings planned for the coming year and the topics to be covered at the meetings. At the end of each financial year, the Chair of the AEC, 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 the Office of the Public Sector Integrity Commissioner of Canada (PSIC).

Membership

The Chair and members are selected by the Commissioner. The membership of the 2023–24 AEC was as follows:

Chair

• Jacques Paquette, external

Members

• Joe Friday (until September 2024) Commissioner
• Harriet Solloway (since September 2024) Commissioner
• Danièle Besner, external

Regular non-member attendees

• Denis Bilodeau and, since January 2024, Nicolas Palanque, Deputy Commissioner and Chief Audit Executive (CAE)
• Ludovic Noubissi, Chief Financial Officer (CFO)
• Heidi Bartman, Chief Results Delivery Officer

Meetings

The Committee met on the following dates during the 2023–24 fiscal year:

• May 12, 2023
• September 12, 2023
• December 7, 2023
• February 22, 2024

During the year, all meetings were held in person. At each AEC meeting, the external members hold a closed session with the Commissioner. A closed session was also held with representatives of the Office of the Auditor General (OAG).

Committee Support

The Committee has received information and support from management to enable it to carry out its duties and responsibilities effectively. The Commissioner has also made available to the AEC his reports to Parliament, including his annual report and his reports on cases handled.

The Chief Results Delivery Officer prepared the agendas in consultation with the Committee Chairman and the meeting minutes for the 2023-24 financial year, and supported the work of the AEC.

Summary of Topics Discussed at AEC Meeting for Financial Year 2023–24

Here are the points addressed by the AEC during the 2023-24 financial year:

OAG audit of financial statements

• The OAG audits the PSIC’s annual financial statements;
• On September 12, 2024, Riowen Abgrall, Louiselle Otis and Sarah Bergeron of the Office of the Auditor General presented the AEC with the results of their audit of the financial statements for the 2022-23 financial year. Ms. Otis reported that no significant errors were found, other than minor ones that were corrected.
• Accordingly, following its review, the OAG did not issue a management letter to the PSIC.
• Ms. Otis thanked the PSIC’s staff for their full cooperation.
• Representatives of the OAG asked members of the AEC and attendees if they were aware of any fraud situations at the PSIC. Members and participants replied that they were not aware of any such situation.
• Committee members expressed their satisfaction with the report.
• A closed session was held between external AEC members and OAG representatives.
• The audit cycle continued on February 22, 2024, with a presentation by Louiselle Otis and Riowen Abgrall of the OAG on the audit plan for the 2023-24 financial statements.
• Ms. Otis explained that in terms of changes from the previous year, an in-depth review of audit work, including a comparison with other agents of Parliament, had been carried out to make their approach more efficient and reduce the hours of auditing required.
• The OAG recommended that Committee members familiarize themselves with their oversight responsibilities regarding the new sustainability disclosure requirements.
• The results of the audit will be presented at the Committee meeting in fall 2024.

PSIC Risk-based Audit and Evaluation Plan (RBAEP)

• At each of its meetings, the AEC discussed the RBAEP. Discussions focused on the implementation of activities identified in the plan. But at its February 2024 meeting, the AEC reviewed the Plan update in detail, as well as the details of the risk profile and mitigation measures.
• Discussions were held on the planned sequence of audits and evaluations to ensure an appropriate distribution of the workload over the years.
• The format of the RBAEP appendix has been revised to facilitate more precise tracking of the various audits and evaluations in progress or planned.

AEC 2022–23 Annual Report

• The Audit and Evaluation Committee’s annual report for the period 2022-23 has been approved and published on the PSIC website.

AEC 2023–24 Annual Plan

• The AEC discussed the annual plan for the current year and planned the agendas for future meetings accordingly, to ensure that all elements of the plan were covered. Certain elements of the plan have also been clarified to specify expectations and deadlines.

AEC Mandate

• The AEC regularly reviews its terms of reference to ensure that they are both complete and relevant. No changes have been made to the version updated in May 2023.

Audit and Evaluation Dashboard

• The audit and evaluation dashboard was discussed at each AEC meeting. Discussions focused in particular on the progress of each audit and evaluation, and on proposed changes to the schedule where necessary;
• The Committee discussed the follow-up to the evaluation of operations in response to the action plan recommendations arising from the 2019-20 evaluation of the Disclosure and Reprisal Management Program, as well as the LEAN exercise.
• The AEC discussed the threat and risk assessment report and the appropriate follow-up to be put in place.
• The Committee discussed the results of the evaluation of the PSIC website, the issues raised and the best way to proceed with the implementation of the recommendations.
• The PSIC reviewed the schedule for auditing the various components of the cyclical internal control system over the next few years.

Business Continuity Plan

• The PSIC was informed of the latest update to the business continuity plan. This update takes into account experience gained during the pandemic. The ability of all staff to further ensures our ability to respond rapidly to certain disruptive situations.
• Given the end of the pandemic, it was decided that the plan would henceforth be reviewed on an annual basis only.

Public Servants Disclosure Protection Act 2017-22 Comparative Report

• The Public Servants Disclosure Protection Act (PSDPA) 2017-2022 Comparative Report was presented to the Committee. This report compares data from the federal domestic regime with data from the PSIC in terms of investigations concerning the PSDPA. The report also highlights the methodological differences between the two entities, which makes comparison difficult. The Committee discussed data for the financial year 2020-21.

Organizational Values and Ethics

• The updated Code of Values and Ethics was presented and discussed at the AEC. Several consultations with employees and the management team had taken place, and that participation had been very good. These consultations included workshops with examples of behaviours to avoid.
• The Committee was informed that a session on the Code of Values and Ethics would take place at the PSIC’s all-staff meeting in March 2024.

Results of the 2022 Public Service Employee Survey

• The Committee discussed the results of the 2022 Public Service Employee Survey (PSES). It was noted that the PSIC is posting very positive results. Committee members reiterated the importance of well-being at work, which seems to be well reflected at the PSIC.

Budget

• The AEC examined the quarterly financial reports prepared by the PSIC and forwarded its observations to the CFO. At each meeting, members received a full CFO report and analysis on expenditures and forecasts.

Human Resources

• The AEC was briefed on various human resources issues, including staffing, turnover, training and planning.

Information Technology

• The AEC has discussed the issue of IT support on a number of occasions, including the various options that the PSIC is considering in this regard.
• The Committee also discussed the implementation of the new case management system and the new approach the PSIC has decided to take in this regard.

PSIC Reports

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

Changes Affecting Audit and Evaluation Staff

• During the period covered by this report, two changes took place. Ms. Solloway took up her post as the new Commissioner in September 2023, and Mr. Palanque became the new Chief Audit Executive in January 2024.

Orientation and Learning Activities

Treasury Board Symposium for Departmental Audit Committees (DACs)

• On November 7 and 15, 2023, Jacques Paquette and Daniele Besner attended the DAC symposium. The symposium was virtual and took place over 2 half-days. The symposium covered a number of themes, including the role of AECs in a context of future budget restrictions, human resources issues, ESG standards and their possible application in the public sector, the dialogue on values and ethics launched by the Clerk of the Privy Council, and finally, the role of AECs in the development of major projects.

Agenda for Upcoming Committee Meetings

A number of AEC activities take place every year, including:

• Provide advice and recommendations to the Commissioner on service delivery issues, including performance measurement and communication with stakeholders;
• Assess risks and appropriate follow-up, including mitigation strategies;
• Review audit and evaluation reports;
• Follow up on management action plans, including recommendations made in reports from other parliamentary officers;
• Collaborate with the OAG and OCG, if necessary, given the PSIC’s status as an agent of Parliament;
• As a Committee, deepen our understanding of our administration and activities through briefings by knowledgeable staff on our operations, so that Committee members are better able to advise on risks;
• Review quarterly financial reports and provide comments as appropriate on the Report on Plans and Priorities, the Departmental Performance Report and the Commissioner’s Annual Report to Parliament;
• Participate, as needed, in learning activities offered to all auditors to exchange with audit committee members from other departments and agencies.

Evaluation of PSIC’S Internal Controls, Risk Management and Governance Mechanisms

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

In order to fulfill its role, steps have been taken to increase the reliability of the advice provided by the AEC to the Commissioner during the reporting period and in this report:

• At each AEC meeting, external members hold a closed session with the Commissioner;
• During the reporting period, the Chair maintained regular contact with the CAE and the CFO;
• External members reviewed the PSIC’s quarterly financial statements and, at each AEC meeting, questions of a financial nature were put to the CFO;
• Assessments of the various internal financial controls to be carried out by an external firm have been incorporated into the audit and evaluation plan to complement the other audit mechanisms already in place;
• External members held a closed meeting on September 12, 2023, with OAG representatives responsible for auditing the PSIC’s 2022-23 financial statements. The audit did not identify any material misstatements or concerns that should be brought to the attention of the AEC, CFO, CAE or Commissioner.

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

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

The Committee noted the following:

• The AEC meets regularly and has an external Chair. Its membership is reviewed annually and renewed when required.
• There is an OAG audit every year, and OAG staff have expressed appreciation for the cooperation of the PSIC representatives with whom they worked in carrying out the audits and for the cooperation of CHRC representatives, PSIC’s financial service providers.
• An RBAEP was developed and reviewed by the AEC and approved by the Commissioner; it is revised as necessary. The Audit and Evaluation Dashboard is prepared by the CAE and is reviewed at least once every fiscal year by the AEC.
• PSIC brings in external consultants who provide professional services in the areas of risk assessment, audit and evaluation, and audit and evaluation planning. The AEC will continue to monitor the results of these services.
• Sufficient funds are available to carry out the approved RBAEP.

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

(Original signed by)

Jacques Paquette, Chair
On behalf of the PSIC Audit and Evaluation Committee

Appendix A

Audit Committees

The requirement for public sector organizations to establish independent audit committees in which a majority of members are from outside the federal public administration is an essential component of the Treasury Board (TB) Policy on Internal Audit. The fundamental role of such committees is to ensure that the deputy head has independent, objective advice 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:

Internal audit measures (under the Financial Administration Act)

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.

Creation of 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 of Canada (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, PSIC’s audit committee is also responsible for evaluation, in accordance with the TB Policy on Results, and is consequently named the Audit and Evaluation Committee (AEC).

Accountability of the AEC

The AEC’s role is advisory in nature. The AEC’s sole accountability 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 fulfilment of their contractual responsibilities. In addition, the AEC conducts an annual self-assessment of its work.

Responsibilities of the AEC

The AEC’s responsibilities under the TB Policy on Internal Audit (April 1, 2017) are as follows:

• 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 PSIC’s frameworks and processes for risk management, control and governance;
• Using a risk-based approach, review all areas of responsibility for departmental audit committees related to departmental management, control and accountability processes as determined by the Comptroller General of Canada. These include the following:
  • Values and ethics
  • Risk management
  • Internal audit function
  • Internal assurance providers
  • Follow-up on management action plans
  • Financial statements and public accounts reporting
  • Accountability reports
• Provide advice and recommendations on 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 AEC will do the following:

• Provide advice to the Commissioner, through review of the PSIC’s RBAEP, regarding PSIC programs or operations that should be evaluated;
• Review and advise on the terms of reference, scope and timing of any planned evaluation;
• Review the findings of evaluations and monitor subsequent management action plans.