Audited Financial Statements 2018-19

Office of the Privacy Commissioner of Canada

Unaudited 2018-19 annex to the statement of management responsibility, including internal control over financial reporting

1. Introduction

This document provides summary information on the measures taken by the Office of the Privacy Commissioner of Canada (the Office) to maintain an effective system of internal control over financial reporting (ICFR), 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 Office’s Departmental Plan and Departmental Results Report.

2. The Office’s system of internal control over financial reporting

2.1 Internal control management

The Office has a well-established governance and accountability structure to support the assessment efforts and oversight of its system of internal control. A departmental internal control management framework, approved by the Commissioner, is in place which includes:

• Organizational accountability structures as they relate to internal control management to support sound financial management, including roles and responsibilities of senior managers in their areas of responsibility for control management;
• Mechanisms to help promote and strengthen Values and Ethics, including a Values and Ethics Champion, an organizational Code of Values and Ethics, and ongoing training and awareness programs;
• Ongoing communication and training on statutory requirements, and policies and procedures for sound financial management and control; and
• At least annual monitoring of and regular updates on internal control management, as well as the provision of related assessment results and action plans to the Commissioner and the Office’s senior management and, as applicable, the Office’s Audit Committee.

The Office’s Audit Committee provides advice to the Commissioner on the adequacy and functioning of the Office's risk management, control and governance frameworks and processes.

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 (PSPC) centrally administers the payments of salaries and the procurement of goods and services in accordance with the Office’s Delegation of Authority, and provides the costs of accommodation for inclusion in the financial statements as "Common services provided without charge";
• The Office of the Auditor General provides audit services to the Office;
• The Treasury Board of Canada Secretariat (TBS) provides the Office with information used to calculate various accruals and allowances, such as the accrued severance liability;
• Shared Services Canada (SSC) provides information technology (IT) infrastructure services to the Office in the areas of internet connectivity and email security. The scope and responsibilities are addressed in the interdepartmental arrangement between SSC and the Office, and
• For the purposes of the Financial Administration Act, the Office and the Office of the Information Commissioner (OIC) submit their trial balances jointly to the Receiver General.

Specific Arrangements

• The Office does not contract external service providers to administer programs on his behalf or to capture and report financial transactions.
• In addition to processing the Office’s invoices, the Commission of Human Rights of Canada (CHRC) continued to provide the Office with a G/X financial system platform to capture and report all financial transactions.

3. The Office’s assessment results during fiscal year 2018-19

In recent years, design and operational effectiveness testing of key controls demonstrated that the Office’s systems of internal controls over financial reporting (ICFR) were generally strong and effective. Given that there were few recommendations arising from the reviews, the Office determined that an examination of its approach to ICFR monitoring would be prudent. In 2018-19, a risk assessment was conducted to inform a refresh of its rotational multi-year monitoring plan for ICFR.

As a result of this risk assessment, the classification of the Office’s payroll business process was amended from medium to high risk. Testing of its key controls, both design effectiveness and operational effectiveness, will now be conducted every year, instead of every two years.

To assist the Office in meeting this annual commitment, particularly considering government-wide issues within the Phoenix payroll system and recent revisions to pay administration guidelines from TBS, a third party was engaged to update the Office’s payroll business process narrative, with complementary visuals. This included identifying and assessing stated designed controls and conducting operational effectiveness testing of its key controls (i.e. are the designed controls being applied as intended).

As a result of the testing, it was recommended that the Office continue to closely monitor its new procedure for pay calculations prior to entry into Phoenix, its one-time procedure to correct calculation errors already processed by Phoenix, and, as required, update relevant Compensation procedures and related training to prevent similar errors moving forward.

Of note, the third party acknowledges that these initiatives were already underway prior to commencement of the review.

4. The Office’s action plan

As an Agent of Parliament, the Commissioner is solely responsible for Office’s compliance with the Treasury Board Financial Management Policy and related instruments and for responding to any instance of non-compliance.

Therefore, the Commissioner and senior managers are committed to sustaining and continuously improving its effective system of ICFR, including carrying out ongoing monitoring to ensure that the key controls meet the expectations of management and stakeholders, and appropriately mitigate associated risks.

4.1 Action plan for the next fiscal year and subsequent years

During fiscal year 2019-20, the Office will continue to test the operating effectiveness of its key payroll business process controls and undertake a review of its entity level controls.

Risk-Based Multi-Year Testing Plan

Business Process	Overall Risk	Frequency of Testing	Rotational Plan
			2019-20	2020-21	2021-22	2022-23
IT General ControlsFootnote 1	Based on Service Provider’s ICFR Plan
Payroll	High	Annually	x	x	x	x
Procure to Pay	Medium	Every Three (3) Years		x
Budgeting & Reporting	Low	Every Five (5) Years				x
Year-End / Month-End Close	Low	Every Five (5) Years			x
Entity Level Controls	Low	Every Five (5) Years	x