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Report of the Audit Committee for Fiscal Year 2012–2013

April 2013

Table of Contents

1. Introduction

The Audit Committee of the Office of the Chief Electoral Officer of Canada (Elections Canada) was established in compliance with provisions of the Federal Accountability Act. It is composed of external members, and its purpose is to provide the Chief Electoral Officer (CEO) with independent advice on matters relating to management controls and reporting of plans and results. This report outlines the activities of the Committee in the 2012–2013 fiscal year, as required by its Terms of Reference.

2. Membership and Meetings

The Committee is chaired by Mr. Marc Mayrand, CEO, and has as its members: Messrs. W.E.R. Little, J-C. Bouchard and P.G. Boomgaardt. As an ex-officio member, a representative of the Office of the Auditor General (OAG) attended all meetings. The Chief Audit Executive and Internal Audit staff attended all regular meetings as observers and to respond to questions from members. As needed, members of senior management and staff attended to make presentations and respond to questions raised by members.

The Committee convened four times during the fiscal year: July 5, August 16, January 24 and March 21. There was full attendance by members. Meetings generally included an in-camera session involving only external members and the CEO.

3. Committee Terms of Reference

The Audit Committee Terms of Reference as well as the Internal Audit Charter were modified during the year to conform to the Treasury Board Policy on Internal Audit effective April 1, 2012.

The Committee is mandated to provide advice on eight key areas of management.

4. Eight Areas of Oversight Responsibility

4.1. Values and Ethics

During the year, Elections Canada issued its updated Code of Conduct in line with the provisions of the newly issued Public Service Code of Conduct. Information and training sessions for employees are ongoing. The Committee is scheduled to receive a briefing on the implementation and ongoing monitoring of this foundational program.

The Committee was pleased to hear that an information session was held with staff in February 2013 on workforce management and mandated spending restraints.

4.2. Risk Management

Since its inception five years ago, the Committee has devoted considerable attention to the risks Elections Canada faces and the approach it has taken to mitigate them and deliver on its mandate. At each meeting, the Committee received updates on evolving issues and steps taken by Elections Canada to manage its affairs. In particular, the Committee was apprised of plans related to spending restraint, including the results of the Zero-based budgeting exercise. As was done last year, the Committee discussed the implications of a multi-year projection for salary expenditures and the unique challenges that arise from having some expenditures funded by a statutory authority and others by annual appropriations.

As in prior years, the Committee heard from the OAG on its risk assessment for the audit of Elections Canada's financial statements.

The CEO outlined for the Committee a variety of risk assessments used for key activities and initiatives. The Committee appreciates that the complex operating environment and changing circumstances warrant an ongoing identification of risks and periodic realignment of mitigation measures. It commends Elections Canada on its responses to the challenges it faces.

4.3. Management Control Framework

Continuing the practice of prior years, the Committee has been apprised of key management issues and how procedures have been adopted to mitigate concerns and produce desired results. Special attention was directed to the issues surrounding Elections Canada's two parliamentary funding streams – annual appropriations as well as a statutory authority.

The Committee was presented with the Report on the Evaluations of the 41st General Election of May 2, 2011. It was pleased to note the high rate of achievement on many key performance measures and the candid assessment of serious challenges to be faced.

The Committee was periodically updated on the activities of the Contract Review Committee. In addition, it was informed of the modification of certain IT projects and deferral of major e-service initiatives due primarily to the need to reduce spending. Throughout the year, the Audit Committee was informed about plans and activities relating to the consolidation of facilities at new premises in Gatineau in 2013–2014.

During its meeting on March 21, 2013, the Committee received a briefing on the Financial Management Control Framework Policy on Internal Controls; this included actions and findings to date and action plans for the next two years.

The Committee also received periodic updates on Elections Canada's activities in providing support to the 10 federal electoral boundary commissions for the 2012 redistribution process.

As well, the Committee was regularly briefed on Vision 2015 key issues, objectives and initiatives. Integral to Vision 2015 planning are workforce management and staff succession planning as Elections Canada prepares for the general election slated for 2015. The Committee endorses the integrated planning and thorough project management approach implemented to ensure key projects are completed on time, on budget and in sync, while also delivering promised results.

4.4. Internal Audit Function

The Committee reviewed the updated Risk-Based Audit Plan for 2012–2013 and endorsed the selection of audits of security management and political financing. As well, the Committee endorsed a change in the scope of the work on political financing.

The Internal Audit team is very small, and staff turnover during the year (combined with legitimate delays for management in hiring replacements, due to spending restraints) have made it difficult to complete the planned work. Some slippage from the plan was experienced.

At each meeting, the Committee was updated on the status of audits and plans. It received and recommended for approval the audit report on security management. A report on the political financing work will be presented to the Committee in the summer of 2013.

The Committee reviewed the Internal Audit Charter along with its own Terms of Reference, updating both in line with Treasury Board Policy modifications.

Over the past year, Elections Canada reviewed management of its internal audit function and decided to move the activity from Finance to the Office of the Chief of Staff effective April 1, 2013. The Committee fully endorses this realignment, and thanks Chief Audit Executive Helen Belanger and staff for their service and support to the Committee.

As part of the internal audit plan for 2013–2014 and beyond, there was a wide-ranging discussion of options and approaches; this will be further developed in the coming year.

4.5. Office of the Auditor General and Central Agencies

As an OAG representative regularly attends Committee meetings, the Committee was kept informed of matters raised by the OAG and of its audit plans. In its July 2012 meeting, the Committee received the audit results for the 2011–2012 financial statements. In the January 2013 meeting, the OAG outlined plans for its audit of the March 31, 2013, financial statements.

The Chief Audit Executive or Director of Internal Audit periodically updated the Committee on audit-related matters arising from central agencies. In particular, the Committee was informed about the internal audit initiatives of the Office of the Comptroller General (OCG); moreover, two Committee members attended the November 8, 2012, Symposium for Department Audit Committees sponsored by the OCG.

4.6. Follow-up on Management Action Plans

The Committee follows a systematic approach to monitoring action plans presented by management to execute its mandate, as well as those that respond to external and internal audits. During the July 2012 and March 2013 meetings, the Committee received updates on implementation plans that responded to audit findings.

Certain initiatives relating to e-services have been rescheduled or deferred indefinitely as part of spending restraint plans.

The Committee continues to be satisfied with the effective follow-up reporting and satisfied with the progress in implementing action plans.

4.7. Financial Statements

The Committee reviewed and endorsed the disclosure contained in the 2011–2012 Elections Canada financial statements. These statements were audited by the Auditor General of Canada, who issued an audit report without reservations and noted good collaboration from Elections Canada staff. The Committee commended all for their good work and recommended the statements for approval by the CEO.

At each meeting, the Committee is also presented with the most recent Quarterly Financial Report that Elections Canada is required to publish. Similarly, the Committee is provided with key management reports and financial statements throughout the year.

4.8. Accountability Reporting

During its July 2012 meeting, the Committee reviewed a draft of the Departmental Performance Report (DPR) for the 2011–2012 fiscal year, including the audited financial statements. In January 2013, the Committee reviewed the draft 2013–2014 Report on Plans and Priorities (RPP). The Committee offered some suggestions for strengthening clarity and completeness, but in both cases was satisfied with the tone and content of Elections Canada's reports.

5. Conclusion

The Committee concludes that through its activities during 2012–2013, it has satisfactorily fulfilled its role. The Committee was provided with relevant and transparent information that enabled it to carry out its mandate. The Committee is pleased with the candour that was shown regarding challenges facing Elections Canada and with the CEO's genuine interest in Committee members' views. The Committee wishes to acknowledge the professionalism and dedication of staff, as well as their openness and willingness to accept and implement suggestions.

The Committee believes that it now has a full appreciation of Elections Canada's considerable challenges: its elaborate legislative/regulatory environment, extraordinary operational requirements and need to innovate. Based on its observations over the current and past years, the Committee is of the opinion that Elections Canada has adopted a systematic and rational approach to addressing its mandate, monitoring results and reporting publicly.

6. A Look Ahead

Appendix A contains the Committee's schedule of activities for 2013–2014.

Appendix A – Schedule of 2013–2014 Planned Activities

The following table presents the activities planned for 2013–2014. These activities may need to be revised and updated during the year.
Subject Activity July 2013 August 2013 January 2014 March 2014 June 2014
A     Internal Audit Engagements
A1 Follow-up on political financing continuous audit (quality assurance of self-assessment) Review and recommend for approval   Planned      
B     Follow-up of Management Action Plans
B1 Status report of November 30, 2013
(Internal Audit and Office of the Privacy Commissioner)
Review and advise     Planned    
B2 Follow-up on OAG's recommendations as of March 31 Review and advise Planned       Planned
C     Internal Audit Function
C1 Internal Audit Charter Review and recommend for approval       Planned  
C2 Chief Audit Executive Report – independence, proficiency, performance, resources, results Review and recommend for approval       Planned  
C3 Status of activities Review and advise Planned Planned Planned Planned Planned
C4 Risk-Based Audit Plan (three-year plan for 20132016) Review and recommend for approval   Planned
C5 Risk-Based Audit Plan
annual update (20132014)
Review and advise         Planned
D     External Assurance Providers
D1 Not applicable        
E     Values and Ethics
E1 Values and Ethics Code Review          
F     Risk Management
F1 See C4          
G     Management Control Framework
G1 Financial Management Control Framework (FMCF) Policy on Internal Controls Review and advise       Planned  
H     Financial Statements and Public Accounts Reporting
H1 OAG's year-end audit of financial statements (including inventory) Review report Planned    
H2 OAG fraud and errors Review and advise Planned   Planned    
H3 Elections Canada's financial statements annex Review and advise Planned        
H4 OAG audit plan Advise     Planned    
I     Accountability Reporting
I1 Policy, Planning and Public Affairs: RPP Review and advise     Planned
I2 Policy, Planning and Public Affairs: DPR Review and advise   Planned      
I3 Chief Financial Officer:
Financial Year-End Report
Review and advise   Planned      
I4 Chief Financial Officer:
Financial Situation Report Period 9
Review and advise     Planned    
J     Strategic Advice (Presentations)
J1 Chief Information Officer:
E-Registration update
Discussion       Planned  
J2 Chief Information Officer: IT Security (REVISE) Discussion       Planned  
J3 Chief Information Officer: Revised Strategic Operational Plan (SOP) Discussion       Planned  
J4 Political Financing: Political Entities Registration System (PERS), quality assurance, time management Discussion   Planned      
J5 Human Resources: Departmental Staffing Accountability Report (DSAR) self-assessment, other audits and reviews Discussion     Planned    
K     Audit Committee
K1 Terms of Reference Review and approval       Planned  
K2 Annual plan and meeting schedule for coming year Review and approval       Planned  
K3 Audit Committee annual report Review and approval Planned       Planned
K4 In-camera meetings (including self-assessment) Discussion Planned Planned Planned Planned Planned