Financial Statements For the year ended March 31, 2014

Annex to the Statement of Management Responsibility Including Internal Control Over Financial Reporting

2. The Agency's system of internal control over financial reporting

2.1 Internal control management

The Agency has a well-established governance and accountability structure to support departmental assessment efforts and oversight of its system of internal control. A departmental internal control over financial reporting framework, approved by the Deputy Head and the Chief Financial Officer, is in place and includes:

• Organizational Accountability Structures: Establish the means by which the leading authorities at the Agency, i.e. Deputy Head, Chief Financial Officer, Chief Audit Executive, the external Departmental Audit Committee, Assistant Deputy Ministers and Governance Committees, ensure proper accountability, stewardship and transparency in the conduct of financial management, risk and internal control, and stewardship over resources.
• Values and Ethics: The Agency adheres to the Values and Ethics Code for the Public Sector and has implemented its internal Code of Conduct, which provides mechanisms for listening to employee concerns, ensuring broad training on values and ethics issues, and linking values and ethics to integrated risk management.
• Ongoing Communication and Training: Ensure that all Agency employees are informed and trained on statutory requirements, policies and procedures for sound financial management and controls.
• Monitoring, Regular Updates and Assessments: Ensure that internal controls are monitored through ongoing assessments and updated as required. Results of such assessments are reported to the Deputy Head, the Agency's senior management, and the Departmental Audit Committee (DAC) with action plans to remediate any deficiencies. The DAC meets at least four times annually and provides advice to the Deputy Head on the adequacy and functioning of the Agency's risk management, control and governance frameworks and processes.

2.2 Service arrangements relevant to financial statements

The Agency relies on other organizations for the processing of certain transactions that are recorded in its financial statements as follows:

Common Arrangements

• Public Works and Government Services Canada (PWGSC) centrally administers the payments of salaries and the procurement of goods and services in accordance with the Agency's Delegation of Authority, and provides accommodation services.
• The Treasury Board of Canada Secretariat provides the Agency with information used to calculate various accruals and allowances, such as the accrued severance liability.
• The Department of Justice Canada provides legal services to the Agency.

Specific Arrangements

• Through a Shared Services Partnership Agreement, Health Canada provides the Agency services including the following related to ICFR: human resources (pay and benefits), financial management (financial operations) and materiel management (procurement and contracting). As a result, assurance is provided by Health Canada to the Agency on the shared controls which represent a significant component of the Agency's system of ICFR. Under this Agreement, the Agency also provides Health Canada with internal audit services which encompass audits related to financial management and controls. The Shared Service Partnership is accountable to both the Chief Financial Officers of the Agency and Health Canada.
• Health Canada provides the Agency with a financial system platform (SAP) to capture and report all financial transactions. Health Canada also provides assurance to the Agency that the key controls in the SAP system are properly managed in accordance with the associated Treasury Board policies including the Policy on Internal Control, the Policy on the Stewardship of Financial Management Systems and the Policy on Financial Resource Management, Information and Reporting.
• Agriculture and Agri-Food Canada provides platform access to its human resources management system of record (Peoplesoft) to Health Canada. These services are also provided to the Agency and addressed in an arrangement between Health Canada and the Agency.
• Shared Services Canada provides information technology (IT) infrastructure services in the areas of data centre and network services to Health Canada. The scope and responsibilities of these services are addressed in an interdepartmental arrangement between Shared Services Canada and Health Canada. These services are also provided to the Agency and addressed in an arrangement between Health Canada and the Agency.