Annex to the Statement of Management Responsibility including Internal Control over Financial Reporting of the Public Service Commission of Canada for the 2021–22 Fiscal Year (Unaudited)

1. Introduction

This document provides summary information on the measures taken by the Public Service Commission of Canada (the PSC) to maintain an effective system of internal control over financial reporting, including information on internal control management, assessment results and related action plans.

Detailed information on the PSC’s authority, mandate and core responsibilities can be found in the PSC’s 2021-22 Departmental Plan and 2021-22 Departmental Results Report.

2. Departmental system of internal control over financial reporting

2.1 Internal control management

The PSC has a well-established governance and accountability structure to support organizational assessment efforts and oversight of its system of internal control. An approved organizational internal control management framework is in place and includes:

• organizational accountability structures as they relate to internal control management to support sound financial management, including roles and responsibilities of senior managers for control management in their areas of responsibility
• values and ethics
• ongoing communication and training on statutory requirements, and policies and procedures for sound financial management and control
• monitoring of, and regular updates to, internal control management, as well as providing related assessment results and action plans to the President and senior management and to the PSC’s Internal Audit Committee

The Internal Audit Committee provides advice to the President on the adequacy and functioning of the PSC’s risk management, control and governance frameworks and processes.

2.2 Service arrangements relevant to financial statements

The PSC relies on other departments and agencies for processing certain transactions that are recorded in its financial statements, as follows:

2.2.1 Common service arrangements

• Public Services and Procurement Canada centrally administers the payments of salaries and benefits, procures goods and services that exceed the PSC’s delegated contracting authority, and provides real property services
• Treasury Board of Canada Secretariat provides the PSC with information used to calculate the accrued severance liability
• Justice Canada provides legal services to the PSC
• Shared Services Canada provides information technology infrastructure services to the PSC in the areas of data centre and network services

2.2.2 Specific arrangements

• Public Services and Procurement Canada provides the PSC with MyGCHR application support services and user licences.

3. Public Service Commission of Canada assessment results for the 2021-2022 fiscal year

The following table summarizes the status of the ongoing monitoring activities according to the previous fiscal year’s rotational plan.

The key findings and significant adjustments required from the current year’s assessment activities are summarized below.

3.1 Ongoing monitoring program

As part of its rotational ongoing monitoring plan, the PSC completed the assessment of financial reporting business process. Tests were performed to ensure the operating effectiveness of key controls. For the most part, the key controls tested performed as intended and no significant control issues were found. For areas identified for improvement, corrective actions will be implemented in 2022–23. The design effectiveness of key controls was reviewed to integrate new procedures and tools in the payroll process. Targeted testing was performed to ensure the operating effectiveness of these key controls. The assessment of the expenses and accounts payable and the capital assets business processes were postponed to 2023–24 due to the planned implementation of a new financial system in 2022-23.

As requested by the Treasury Board of Canada Secretariat, the PSC conducted an ongoing review of key controls related to internal control over financial reporting that may have been affected by the COVID-19 outbreak and the teleworking situation of all employees. No significant issues were reported. The PSC will continue to monitor changes to its internal control business processes to identify any new risks or areas for improvement.

3.2 Areas for improvement

• Payroll process: Observations were made on the need to strengthen the effectiveness of controls by ensuring the use and compliance to existing procedures and related documentation, as well as the streamlining of existing procedures and related documentation

4. Public Service Commission of Canada action plan for the next fiscal year and following fiscal years

The PSC’s rotational ongoing monitoring plan over the next 3 fiscal years, based on an annual validation of the high-risk processes and controls and related adjustments to the ongoing monitoring plan as required, is shown in the following table.

In addition, the PSC will conduct an ongoing review of the key controls of all business processes in 2022–23 to identify any new risks related to COVID-19 and the teleworking situation, to implement corrective actions where required.

Note 1: The PSC will conduct targeted testing for the payroll process in 2023–24 and 2024–25 as required to assess the improvements related to recommendations provided in previous internal control action plans. Targeted testing will also be conducted for any changes to this business process resulting from recommendations made by the Government of Canada’s HR-to-Pay Integrated Team.