1. Introduction – 2022 Audit of Financial Management by Returning Officers

1.1. Authority for Audit

The mission of the Internal Audit function of the Chief Planning and Audit Officer Branch is to provide independent and objective assurance services. These services are designed to add value and improve Elections Canada's operations. Internal Audit helps Elections Canada to accomplish its objectives by bringing a systematic, disciplined approach to assess and improve the effectiveness of risk management, control and governance.

The Audit of Financial Management by Returning Officers was included in the Risk-based Audit Plan 2021–23. The Audit Committee recommended approval of the audit plan to the Chief Electoral Officer (CEO) in February 2021.

1.2. Context

Elections Canada's core responsibility is to prepare for, deliver and report on federal elections, by-elections and referendums in accordance with the legislative framework, while ensuring integrity throughout the electoral process and promoting regulatory compliance. Returning officers (RO), who are appointed by the CEO, are the officers responsible for conducting events in each of the 338 federal electoral districts in Canada.

Under the direction of the CEO, ROs are responsible for the fair and impartial management and control of events in their electoral district, including the financial management of their office during an event.

Among other duties, the RO is responsible for managing a multitude of complex financial processes with the support of staff from Elections Canada's headquarters. These duties include:

registering and submitting payment claims for all office staff and election officers
paying and reconciling all expenses related to their office and additional assistant RO's office operation such as supplies, meeting rooms and printing expenses
renting their offices and polling places
verifying that all expenses are necessary, complete, correct and in accordance with the contractual arrangements
managing public funds with prudence and sound judgment in accordance with the Code of Professional Conduct for Election Administrators, applicable laws, government policies and regulations, and Elections Canada headquarters' instructions

During a general election period, ROs spend more than $200 million and may hire up to 250,000 election officers to conduct the election.

Given the monetary significance, the short time frame in which expenses are incurred and paid, the widely dispersed locations of the ROs and other risks identified by the Internal Audit Division, an audit of financial management activities by ROs during the recent general election was undertaken.

1.3. Objectives

The Internal Audit of Financial Management by Returning Officers assessed whether ROs exercised their authority in accordance with the CEA and in the spirit of the principles prescribed in the Financial Administration Act (FAA).

Specifically, the objectives of the audit were to:

assess the adequacy and effectiveness of the financial management control framework over RO activities
determine if RO financial activities are undertaken in accordance with applicable policies, procedures, acts and regulations
determine if the training and tools provided to ROs are adequate to support the efficient exercise of their authorities

1.4. Scope

The scope of the audit included financial management activities related to operations within electoral districts taking place during a general election. The audit focused primarily on the 44th general election.

The audit generally excluded the day-to-day operations of Elections Canada's headquarters functions, such as Operational Support Services and Accounting Operations – Field Services, except where their activities and approvals are relevant to the testing of controls in the electoral districts.

1.5. Approach and Methodology

The audit methodology was guided by the Government of Canada's Policy on Internal Audit and related policy instruments, which include conducting audits in accordance with the Institute of Internal Auditors' Standards for the Professional Practice of Internal Auditing.

The planning phase consisted of:

interviews and meetings with headquarters personnel from the Field Governance and Operational Readiness (FGOR) division and the Accounting Operations – Field Services (FS) division
a survey of all FOs and follow-up interviews with select FOs
a process walk-through with two selected ROs
a document review of all relevant acts, directives and regulations; RO manuals and training material; and other relevant corporate information (such as internal controls over financial management documentation)
the acquisition of transactional data for RO operating and payroll expenses from the 44th general election
the assessment of risks to develop objectives and scope
the establishment of audit criteria
validation of the plan with management
development of testing procedures and testing strategy

The audit fieldwork was conducted from December 2021 to March 2022. The examination phase included:

a survey of all ROs and in-depth interviews with 35 ROs selected from across Canada
data analysis, data validation and testing of sample financial transactions from selected electoral districts
a walk-through of various financial procedures with headquarters staff and ROs
analysis of audit results against the audit criteria
documentation of observations and findings

After the examination phase concluded, recommendations for management were developed in areas where opportunities for control improvements were identified.