Audit of the PCH Pay System Control Environment – Executive Summary
Note: You can obtain a copy of the full report by contacting the Department of Canadian Heritage.
In 2016, Public Services and Procurement Canada rolled out the Phoenix Pay System (henceforth referred to as “Phoenix”), the result of its Pay Modernization Initiative. This implementation occurred in two phases. In the first phase, 34 departments and agencies, including the Department of Canadian Heritage (PCH or the Department) were brought online in February of 2016, with the pay information of approximately 120,000 employees being migrated to Phoenix. During the second phase, any remaining departments and agencies were migrated on April 21, 2016 (approximately 170,000 additional employees). From the outset, government-wide challenges occurred with the implementation of Phoenix resulting in significant and direct impacts on federal employees. These ongoing challenges and impacts have and continue to receive local, national and international media coverage.
The implementation of Phoenix resulted in negative impacts on the federal government with thousands of employees being affected financially and in their personal lives. In the Public Service, long perceived as a bastion of workplace and career stability, employees have been deferring promotions and job transfers, refusing overtime, and even delaying retirement because of eroding trust in Phoenix. From data breaches of pay information to employees being under paid, over paid or not paid at all, the Government of Canada, departments, and the Public Service are experiencing the reputational repercussions. In addition, multiple technology projects throughout government have been postponed until Phoenix is fixed because of the uncertainty surrounding the future of the current pay system.
Within the Department, a number of employees have been affected and many continue to experience a variety of pay related issues. New cases are being reported every pay period. On a bi-weekly basis, PSPC provides to all departments a Departmental Dashboard presenting a summary of all open cases that remain unresolved after 30 days. The last PCH Departmental Dashboard closing the fiscal year of 2017-2018, presented a total number of 7057 open cases over 30 days old affecting 2631 active and inactive employees (1902 and 729 respectively).
In order to respond accordingly, PCH quickly put into place emergency measures to assist employees experiencing pay issues, including providing Emergency Salary Advances (ESA) and Hardship Claim Payments.
The objective of this engagement was to provide assurance that PCH’s control responsibilities for pay administration, including integration and interface with the Phoenix Pay System and central pay processing centre, are adequate and effective.
The scope of the audit was from the implementation of Phoenix at PCH in February 2016 to the completion of the fieldwork and included all PCH controls, processes and systems which enable the accurate and timely processing of employee compensation through the Phoenix Pay System including the Emergency Salary Advance and Hardship Claim Payment processes.
Audit opinion and conclusion
Based on the audit findings, my opinion is that PCH has put in place a functional control environment for the Phoenix Pay System and is meeting the needs of its employees for what is within its control. The Department is limited in its access to Phoenix and the information the system provides, therefore its ability to assist employees dealing with pay related issues is limited. As issues continue to persist, longer term solutions need to be put in place to support the Department and its employees as the Government of Canada is still several years away from finding a sustainable solution. The audit details opportunities for improvement to support the operations with regards to:
- Defining accountability and establishing roles and responsibilities for addressing Phoenix-related pay issues;
- documenting and communicating processes; and
- improving tools used to identify and detect Phoenix-related pay issues.
Statement of conformance
In my professional judgment as Chief Audit Executive, this audit was conducted in conformance with the Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing and with the Treasury Board Policy and Directive on Internal Audit, as supported by the results of the quality assurance and improvement program. Sufficient and appropriate audit procedures were conducted, and evidence gathered, to support the accuracy of the findings and conclusion in this report. The findings and conclusion are based on a comparison of the conditions, as they existed at the time, against pre-established audit criteria that were agreed with management and are only applicable to the entity examined and for the scope and time period covered by the audit.
Original signed by
Acting Chief Audit Executive
Department of Canadian Heritage
Audit Team Members
Kossi Agbogbe, Senior Auditor
Houssein Ndiaye, Auditor
With the support of external resources.
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