Appendix B: Recommendations and Management Action Plans – 2022 Audit of Financial Management by Returning Officers

1. To ensure common understanding, it is recommended that all instructions related to financial transactions be communicated through a single authoritative source, no matter if the origin is operational or financial.

Management supports this recommendation.

The roles of the functional authority (Finance) and the operational authority (FGOR) will be clarified, with clear financial delegation at all levels, taking into account FGOR's delegation of authority to instruct and communicate with field personnel. Training, training support materials, delegation and communication tools and associated financial manuals will be updated accordingly.

In addition, in 2023, FGOR senior management will renew the field support network operations model. This will allow field administrators and personnel to benefit from a single source of information when seeking clarifications related to functional or operational authorities.

All actions to be completed by April 2024.

2. To improve efficiency in the review of financial transactions, it is recommended that control activities be commensurate with the risks associated with the consequences of a control failure: that is, reduce/streamline the number of checks on small purchase transactions and increase review of payroll transactions.

Management supports this recommendation.

A working group will be established to identify payment processes that can be streamlined or automated. This payment process review will be used as part of the e-signature initiative, and targeted processes will include those for leases, credit cards, special account forms and petty cash. An action plan will be put in place to link business process improvement to the introduction of digital tools, including the e-signature initiative. Digital deliverables will be selected and piloted based on prioritization related to election readiness, digital transformation capacity, and tools already available on the market.

Risk-proportionate control activities: For the purpose of this recommendation, a risk-based payment sampling process must be put in place. A working group will therefore be tasked with developing a risk management framework to ensure that riskier transactions are subject to tighter controls. Standardization and automation of several financial processes are required, including a thorough assessment of internal controls and financial risks. In order to achieve this goal, EC plans to use the various functionalities of SAP and start in the fall of 2024.

All actions to be completed by April 2024.

3. To improve the efficiency and effectiveness of the RO performance management process, it is recommended that:

1. the timing of the performance management assessment for ROs be reviewed to ensure that feedback from Field Services can be adequately incorporated
2. the performance management framework for ROs be clarified to set out more effective consequences for poor financial management during and after an election

1. Management supports the intent of the recommendation but suggests alternative actions in order not to delay the reporting to ROs of their overall evaluation. Performance assessment should be completed and communicated to stakeholders as soon as possible after the general election. This is necessary to put in place individual performance management plans for those administrators who require remediation. As an alternative action, management proposes a supplement to the performance evaluation that will be provided to ROs related to the financial management criteria (as it is for the election material management criteria, which are also evaluated several months after a general election).
2. Management supports this recommendation. The performance management framework will be clarified with field liaison officers and ROs to foster a better understanding of and compliance with financial management responsibilities, expectations and consequences. This will be done through training modules and within the information notes sent to returning officers in the lead-up to and at the beginning of the next general election.
   
   In support of this approach, the training of ROs in financial management will be renewed in order to reinforce their understanding and mastery of the role, responsibilities and accountabilities that they must assume with respect to the management of expenses, budgetary controls and follow-ups, as well as their supervisory responsibilities with respect to their staff, including the FO.

All actions to be complete by January 2024.

4. To optimize the value of the FO role, it is recommended to:

1. realign duties currently being performed by FOs, such as considering the addition or reassignment of a clerk position with appropriate security clearance to complete data entry tasks until systems can be updated to reduce these tasks
2. reinforce the FO role as a controllership function as per the FO manual
3. make the FO training mandatory and explore possibilities to facilitate compliance by starting training prior to the writ

Management supports these three recommendations.

1. Duties performed by FOs will be reorganized and in doing so consideration will be given to the reassignment or addition of a financial support clerk position to the RO office staff complement for data entry into the payroll system.
2. Training and guidelines for FOs and their role in supporting the RO will be reviewed, developed and reinforced. Emphasis will be placed on the required experience and skills. Insofar as the RO remains financially accountable, the training of ROs in financial management will be renewed to reinforce their understanding and mastery of their role, accountabilities and responsibilities in terms of expenditure management, budgetary controls and monitoring, as well as their supervisory responsibilities with respect to their staff, including the FO.
3. Training for FOs will be made mandatory. Consideration will also be given to the inclusion of pre-writ training for FOs among the pre-writ training of key RO office staff. This training will focus on the FO's role, responsibilities and expectations to achieve better compliance.

All actions to be completed by April 2024.

5. To identify unusual transactions and common errors for review and process improvement, it is recommended that management employ data analytics and/or continuous monitoring of payroll transactions.

Management agrees with the intent of the recommendation but feels the risks will be addressed through other means.

The existing payroll system is outdated and does not allow us to perform data analysis. Therefore, the current process involves a post-audit of timesheets. Given the very short election period, the large number of timesheets processed, and the timeframe for paying all election workers, it would be impossible to conduct continuous monitoring during the election period. The RO is independent and responsible for the validation and approval of timesheets. In post-election audits conducted by Finance, any discrepancies must be reimbursed.

To address the recommendation, the pre-GE45 process to establish specific audit criteria is being reviewed and the number of statistical samples to be audited increased.

The payroll system renewal project leading to a modern, automated solution will address this issue in a timely manner. Continuous monitoring capability is a requirement for the new payroll system. The implementation of appropriate controls will allow us to perform effective analytical/statistical data reviews and quickly identify errors and/or unusual transactions.

In support of this approach, financial management training for ROs will be renewed to reinforce their understanding and mastery of the role, accountabilities and responsibilities they must assume with respect to expenditure management, controls and budget monitoring, as well as their supervisory responsibilities with respect to their staff, including the FO.

All actions to be completed by the 45th general election.

6. To ensure appropriate and consistent application of overtime provisions across all electoral districts, it is recommended to:

1. review Elections Canada's overtime policy as per the Federal Election Fees Tariff
2. provide training and guidance to election officers and support staff during the next electoral event, clarifying who qualifies for overtime and in what context and explaining how overtime is to be submitted, especially when two positions are worked in the same day

Management supports these recommendations.

1. A working group composed of Legal Services, Information Technology, Polling and Innovation and Finance will be established to analyze this request and implement an action plan.
2. In support of this initiative, the training of ROs in financial management will be renewed in order to strengthen their understanding and mastery of their role, accountabilities and responsibilities with respect to expenditure management, controls and budget monitoring, as well as their supervisory responsibilities with respect to their staff, including the FO.

All actions to be completed by April 2024.

7. To streamline the field financial processes, it is recommended that management prioritize the renewal of the payment system. An ideal solution would feature a single user interface and integration between different functions (such as recruitment, payroll and automated timekeeping, financial transactions and the software SAP) with a goal to:

• improve efficiency
• provide better reporting
• eliminate the possibility of workarounds
• reduce errors and manual processes for field staff and polling-day workers

Management supports this recommendation.

In April 2022, the CEO confirmed the importance of the project to replace the payroll system. This project is part of the Digital Transformation initiative and is awaiting formal approval. Implementation is based on prioritization, digital transformation capacity as well as tools already available on the market. An action plan will be put in place.

Between the 45th general election and 2028, this new system will have a single user interface and will be able to integrate different functions or modules that can meet other operational needs such as recruitment and training.

Other pay functions will be streamlined through the e-signature initiative described in the action plan for recommendation #2.

The action plan will be completed by September 2023.