Audit reports 2014-2015: 1 - Introduction

Table of contents

• Introduction
  • 2014-2015 Audit reports
  • Selection of audits
  • Mandate and authorities
  • Audit objectives and criteria
    • Table 1: Public Service Commission audit criteria
  • Audit of small and micro organizations
  • Audit approach
  • Audit scope
  • Reliance
  • After an audit

Introduction

1.1 This volume presents the 2014-2015 audit reports and complements the Public Service Commission’s (PSC) Annual Report tabled in Parliament. This Introduction provides information about the PSC’s audit mandate, objectives and the methodology used by the PSC in undertaking its audits.

1.2 The Public Service Employment Act (PSEA) gives the PSC exclusive authority to make appointments, based on merit, to and within the public service. The PSEA authorizes the PSC to delegate appointment authorities to the deputy heads of organizations subject to the PSEA. The PSC is ultimately accountable to Parliament for the overall integrity of the staffing system and holds deputy heads accountable for how delegated authorities are exercised in their organizations. As a result, deputy heads and the PSC are both responsible for the overall success of the staffing system.

1.3 The PSC assures itself of the integrity of the staffing system through its oversight framework as well as its regulatory authority and policy-setting function. The oversight framework provides information on the integrity of the staffing system by systematically examining the different parts of that system and is comprised of three important oversight mechanisms: monitoring, audits and investigations. Collectively, the integrated results of these three oversight mechanisms allow the PSC to report to Parliament on the overall integrity of the staffing system, as well as provide feedback to deputy heads and promote learning about staffing practices in order to strengthen staffing performance. The PSC also uses these integrated oversight results to refine its policy framework and related guidance and to support delegated departments and agencies. The results of these oversight mechanisms, including a summary of audit findings, are presented in Chapter 4 of the PSC’s Annual Report 2014-2015.

1.4 The PSC conducts audits to inform deputy heads and Parliament of how delegated appointment authority is being managed in organizations and whether appointments are being made on the basis of merit. Audit results contribute to deputy heads’ understanding of the governance, controls and staffing risks within their respective organizations. Where appropriate, recommendations are included in the audits to help organizations address issues and make improvements to their staffing practices. Audits may also result in the identification of issues in appointment processes that warrant a PSC or organizational investigation. Through a systematic approach, the audits provide organizations with information on ongoing staffing issues and contribute to learning and improving system-wide performance.

2014-2015 Audit reports

1.5 This year, the PSC completed audits of the following organizations:

• Citizenship and Immigration Canada;
• Agriculture and Agri-Food Canada;
• Treasury Board of Canada Secretariat;
• Canadian Heritage;
• Western Economic Diversification Canada;
• Federal Economic Development Agency for Southern Ontario;
• Office of the Registrar of the Supreme Court of Canada;
• Status of Women Canada;
• Civilian Review and Complaints Commission for the RCMP;
• Veterans Review and Appeal Board;
• Office of the Commissioner of Lobbying of Canada;
• Military Grievances External Review Committee; and
• Farm Products Council of Canada.

Selection of audits

1.6 The PSC’s audit engagement and work plan for 2015-2016 can be found in Appendix 4 of the PSC’s Annual Report 2014-2015. This plan reflects how the PSC is continuing to evolve its approach to oversight, recognizing the maturity of the staffing system and capacity within delegated organizations and the results of the PSC’s review of its policy and delegation frameworks and oversight model. An updated plan will be published in 2016-2017.

Mandate and authorities

1.7 In accordance with the PSC’s authorities under the PSEA, Section 17 authorizes the PSC to conduct audits on any matters within its jurisdiction. In addition, Section 18 provides the PSC with the powers of Commissioners under Part I of the Inquiries Act when conducting these audits.

1.8 Section 135 of the PSEA requires deputy heads and employees to provide the PSC with facilities, assistance, information and access to their respective offices, as required, to conduct its audits.

Audit objectives and criteria

1.9 The objectives of the audits are to determine whether the organization has an appropriate framework, practices and systems in place to manage its appointment activities, and to determine if appointments and appointment processes in the organization comply with the PSEA, any other applicable statutory and regulatory instruments, the PSC’s Appointment Framework, including the Appointment Delegation and Accountability Instrument (ADAI), and the organization’s own appointment policies.

1.10 The audit objectives are supported by the following seven audit criteria, drawn from, among others, the PSEA, the Public Service Employment Regulations and the PSC’s Appointment Framework. See Table 1 below.

Table 1: Public Service Commission audit criteria^{Footnote 1}

Audit of small and micro organizations

1.11 In 2014-2015, the PSC undertook broad consultations with deputy heads of small and micro organizations on the renewal of its approach to these organizations. Given the nature, size and scope of small and micro organizations, it can be challenging for these organizations to meet requirements in the same way as larger ones.

1.12 Small and micro organizations often have highly specialized mandates, have few employees and undertake a low number of appointment activities. Some of these organizations have limited human resources (HR) capacity and many use external service providers. Given a limited number of staff to draw upon, they often need to act quickly to fill vacancies of experts in critical positions.

1.13 Taking these factors into consideration, as well as a desire to provide greater support to deputy heads of small and micro organizations, the PSC has been reviewing its expectations of these organizations. As an immediate step, the PSC renewed its audit methodology, including the scope and frequency of its audits, to ensure it is adapted to the size, level of risk and unique context of these organizations.

1.14 The PSC’s renewed approach to auditing small and micro organizations, which was piloted in 2014-2015, focused on the most commonly reported risk areas for organizations of this size. The audits reviewed the management of sub-delegation, organizational capacity to support staffing, whether the organization was able to demonstrate that appointments were based on merit and whether persons with a priority entitlement were considered prior to making appointments.

Audit approach

1.15 While conducting its audits, the PSC carries out a number of standard audit activities, such as the following:

• Interviews with HR advisors and managers involved in appointment activities, bargaining agent representatives and any other party who is identified as having relevant information;
• Reviews of organizational documentation regarding plans, policies, programs, communications and reports with respect to the staffing framework; and
• Examination of appointment process documentation.

1.16 The PSC makes use of representative and other sampling approaches when conducting audits. The sampling strategy used for each audit is based on the specific objectives and scope of the audit. Compliance assessments of appointments use representative sampling approaches. Sample sizes for representative sampling are based on maintaining a minimal level of accuracy necessary for gauging the overall compliance rate of appointment processes. All samples maintain a confidence interval no larger than +/-10%, at a confidence level no smaller than 90%, based on a deviation rate no larger than 20%.

1.17 In some audits, another sampling approach, referred to as “purposeful sampling”, is used to examine cases that may offer useful information and answer specific questions on performance and opportunities for future learning. However, such a sample is not representative and does not allow extrapolations to be made to cover all appointments during the period covered by an audit.

Audit scope

1.18 The audit scope, including the number of appointment activities chosen, is selected for each audit, based on the PSC’s risk assessment of the organization and its operational context, as well as the size of the organization. Furthermore, the audit period, which may range from less than a year to two or more years, can be influenced by various risk factors including, for example, the results of a recent internal audit, changes to senior management or the transformation of the organization’s HR delivery model.

Reliance

1.19 In some instances, the PSC may be able to rely on and accept the results of an organization’s internal reviews or audits. In 2014-2015, the PSC found that an adequate basis existed to establish reliance on the comprehensive monitoring of appointments exercise performed by Citizenship and Immigration Canada.

After an audit

1.20 Once completed, audit reports are forwarded to the deputy head of the organization being audited. Where appropriate, recommendations are included in the audits to help organizations address issues and make improvements to their staffing practices. Two actions generally follow: the deputy head responds to the recommendations and develops an action plan with the support of the PSC, and the PSC determines whether it is satisfied with the response and action plan or whether additional action is required. Depending on the issues raised, the PSC may take additional action, ranging from working with the organization to address the issues to imposing additional terms and conditions on delegation to these organizations.

1.21 Following the 2014-2015 audits, the deputy heads of departments and agencies audited this year have provided the PSC with action plans that respond to the audit recommendations, where recommendations have been issued. The PSC expects the deputy head to monitor the implementation of the organizational action plan and the PSC may request an update to the action plan. The PSC can provide assistance for this implementation, as required.

1.22 The PSC will refer to deputy heads any internal appointment files in which issues have been found, in order that they may take appropriate action in an area of their authority. The PSC will monitor these files to ensure that appropriate action is taken. For external appointments, or if there are indications of fraud or political influence in either internal or external processes, files can be referred to the Investigations Branch of the PSC to determine whether an investigation is warranted.

Footnotes