Unaudited 2021-22 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 Canadian Human Rights Commission (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 2021-22

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.

In the current year, 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 continued to be ranked as high risk but based on the recent assessment results, testing of its key controls, both design effectiveness and operational effectiveness, will now be conducted every two years, starting in 2023-24.

Entity Levels Controls

In 2021-22, the Office tested its Entity Levels Controls (ELCs). The assessment, conducted by external auditors, concluded that the majority of the Offices ELC-related key controls were appropriately designed and effectively implemented to satisfy the COSO principles. A number of areas of strength were noted including: Audit Committee independence and oversight; the Office’s reporting and accountability structure; the Office’s assessment of risk including risk statements, current controls, residual risks, and risk mitigation strategies; and alignment with value and ethics code and directive on conflict of interest. Of interest, 38 of 43 (88%) unique key controls were considered effective or effective with an opportunity for improvement.

The assessment identified five key findings which management will work to address. Two of these relate to the need to formalize the Office’s fraud risk management framework which the Office will address as part of its broader work on its Risk Management Framework. The other three are associated to the information management practices which the Office will address as part of the audit of its Information Management Framework to be completed in 2022. The assessment also identified the need to update the Office’s Internal Control Over Financial Management (ICFM) Framework, work that was initiated in 2021-22.

4. The Office’s action plan

As an Agent of Parliament, the Commissioner is solely responsible for the 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 2022-23, the Office will address the key findings following the review of its entity level controls. The Office is planning to undertake the design effectiveness testing and operating effectiveness testing for its procure to pay business processes.

Risk-Based Multi-Year Testing Plan

Business Process	Overall Risk	Frequency of Testing	Rotational Plan
			2022-23	2023-24	2024-25
Payroll	High	Every Two (2) Years		X
IT General ControlsFootnote 1	High	Every Two (2) Years			X
Procure to Pay	Medium	Every Three (3) Years	X
Budgeting and Forecasting	Low	Every Five (5) Years		X
Entity Level Controls	Low	Every Five (5) Years